cityam 2012-07-16

7/31/2019 Cityam 2012-07-16

1/23

you, day in and day out.It also emerged over the weekend

that Barclays is making preparationsto withdraw from the panel that sets

another similar rate, the UAEsEmirates interbank offers rate(Eibor).

Emails accuse Lloyds of rate fixing US planning criminal prosecutions BoE governor told of fix in 2008

Alpha-beta. Active-passive. Style-judgement. Core-satellite.Master the language, seize the opportunity.Narayan Naik, Professor of Finance

Investment Management Evening Programmes

Equity Portfolio Management programme starts 25 September 2012

Visit www.london.edu/imp/ | Email [email protected] | Call +44 (0)20 7000 7397 Leading Financial Thinking

Recently released emails show Timothy Geithner (left) and Sir Mervyn King (right) discussed their concerns over Libor submissions as early as 2008

LLOYDS became the latest UK bankto be dragged into the ongoing Liborscandal over the weekend, after theNew York Fed made public emailssent by Barclays staff to the USauthorities that accuse Lloyds ofentering false Libor submissions inmid-2007.A swathe of previously unseen doc-

uments also show Bank of Englandgovernor Sir Mervyn King and USTreasury secretary Tim Geithner dis-cussed problems in the way Liborwas set in early 2008, and that therewas widespread concern over thelack of effective control exercised bythe British Banking Association overthe key interbank rate.At the time, Geithner was presi-

dent of the New York Fed.Meanwhile Barclays has told its

staff that the reputational damagesuffered by the bank will be put inperspective when other banksactions are made public indicatingit believes other institutions behavedas badly or even worse than the bat-tered financial giant.And the New York Times has

revealed that the US JusticeDepartment is building criminalcases against several financial insti-tutions and their employees relatedto the manipulation of interest rates.The scandal widened dramatically

with the publication of an emailsent by a Barclays staff member tothe New York Fed on 28 August 2007which warned that the days US dol-

lar Libor readings look too low.The informant pointed to Lloydssubmission of 5.48 per cent for threemonth borrowing, and argued

probably the lowest rate you couldattract liquidity in threes would be5.55 per cent suggesting the bankwas also entering falsely low read-ings.

Draw your own conclusions aboutwhy people are going for unrealisti-cally low libors, the Barclays workeradded.

Other emails sent during the earlymonths of the financial crisis showregular and growing concern thatseveral banks were entering incor-rect readings.

We are not going to comment onspeculation by traders at otherbanks, said a Lloyds spokeswomanin a written statement.

In 2007, Lloyds was one of thehighest rated banks in the world,with a triple-A rating and was in astrong position in relation to fund-ing itself in the markets, comparedto some other banks.The Fed has also released corre-

spondence between US and UK regu-lators, showing concern over the wayin which Libor was set in the earlymonths of 2008.Tim Geithner suggested a list of

ways in which the Libor-settingprocess could be strengthened,

including by adding more US banksto the panel and enhancing trans-parency in the system proposalsthat Mervyn King described as sen-

sible, adding that he would ask theBBA to study the ideas.

Meanwhile an internal Barclaysmemo to staff, leaked to Sky News,shows the bank firmly expects otherfirms to be engulfed in the crisis.

As other banks settle with author-ities, and their details become pub-lic, and various governmentsinquiries shed more light, our situa-tion will eventually be put in per-spective, said the note, co-written byexecutive chairman Marcus Agius.

Meanwhile Agius also wrote to cus-

tomers to apologise again for thescandal, promising that we will notallow ourselves to be distracted fromwhat really matters delivering for

FTSE 100 5,663.13 +57.88 DOW 12,777.09 +203.82 NASDAQ 2,908.47 +42.28 /$ 1.56 +0.02 / 1.27 +0.01 /$ 1.22 unc

MORE: Pages 2, 4

BUSINESS WITH PERSONALITYwww.london.edu/imp/

Leading FinancialThinking

LONDON2012

days to goSee interview: Page 18

HIGH-FREQUENCY TRADING: A DEFENCE See Forum: Page 16 11

BY TIM WALLACE

LIBOR CRISIS SPREADS

Certified Distribution

28/05/2012 till 01/07/2012 is 132,857

STEPHEN CATLINFROM TWO-PERSON COMPANY TO 2.8BN INSURANCE GIANTwww.cityam.com FREEISSUE 1,674 MONDAY 16 JULY 2012

LIBOR recommendationsTimothy Geithner to: mervyn.kingSent by: Marlene WilliamsCc: Paul.TuckerBcc: Michael Silva06/01/2008 05:00 PM1. Strengthen governance andestablish a credible reportingprocedure

2. Increase the size and broaden thecomposition of the USD panel

3. Add a second USD LIBOR fixingfor the U.S. market

4. Specify transaction size

5. Only report the LIBORmaturities for which there is a netbenefit

6. Eliminate incentive to misreport

Barclays workers email to the NY Fed

TodaysUSDliborshave come outandtheylook too lowtome.Lloydsforinstance has printed5.48%for3months. Probablythelowest rate youcould attractliquidity inthrees wouldbe5.55%andIam not toosurehowmuchyouwouldget at that level.

7/31/2019 Cityam 2012-07-16

2/23

[email protected]

Follow me on Twitter: @allisterheath

JERRY del Missier, the Barclays exec-utive who instructed traders toreduce the banks Libor rate sub-missions, will today attempt toexplain his actions to MPs.

He will be joined in front of theHouse of Commons Treasury selectcommittee by three leading offi-cials at the Financial ServicesAuthority (FSA), including LordTurner, who raised concerns aboutBarclays aggressive interpreta-tion of regulations in April this year.

It will be del Missiers first publicappearance since he resigned aschief operating officer on 3 July,taking responsibility for his role ina scandal that has costBarclays 290m infines and caused itsshare price toplummet.

He had onlybeen in the jobfor 11 days.A close associ-

ate of formerchief executiveBob Diamond, delMissier was previ-ously co-head ofBarclays investment

Europes banks face tougher demandsThe head of Europes top bankingregulator has raised the bar for lenderscapital requirements, insisting that thenine per cent capital ratio they had to hitas a temporary buffer by June is tobecome permanent. The key thing willbe capital conservation, Mr Enria told theFinancial Times. We dont want thecapital to be released.

Oil and gas have most bribery casesThe oil and gas industry was subject to

the most prosecutions for bribery andgraft in the UK of any sector over the pastfour years. The study by Ernst & Youngfound that of 26 completed cases since2008, oil and gas made up nearly one-fifth of prosecutions. Most of theminvolved payments made abroad, orkickbacks to foreign government officials.

Women on boards boosts headhuntersCity headhunters have enjoyed a boom inboard-level recruitment mandates in thepast year following new rules thatencouraged firms to appoint more femaledirectors. Companies used headhuntersrather than the old boys network.

Gatwick airport aims to double in sizeGatwick is set to publish an expansionplan that is likely to state its existing twoterminals and one runway are capable ofhandling 12m more passengers a year thisdecade but a second runway would let itdouble in size to handle 70m passengers.

Tablets could conquer smartphonesA Deloitte report argues that the smart-phone has the most to lose from the prolif-eration of tablet computers, as internetbrowsing was likely to move from the smallscreen to the (slightly) larger one.

Was the petrol price rigged too?Motorists may have been paying too muchfor their petrol because traders are likelyto have tried to manipulate oil prices in thesame way they rigged interest rates. Areport for the G20 found the market iswide open to manipulation and tradershave an incentive to distort it.

Hospedias first buy is ExtramedHospedia, the firm formed from controversialtelephone provider Patientline, is to buyExtramed, a provider of patient flow and bedmanagement services to 22 hospitals.

Slate of deals to test marketThis week will show whether somesought-after US IPOs can shine despiteless-than-stellar market conditions. Theyinclude computer security firm Palo AltoNetworks, search engine Kayak Software,guitar maker Fender and discount retailerFive Below.

France aims to support car industryFrances government will unveil a plan tosupport the country's automotiveindustry on 25 July, including measuresdesigned to boost spending on cars.

LONDON will gain an electrifiedrailway service to Sheffield andplans to reopen the line betweenOxford and Cambridge will take astep forward as part of a 9bn railfunding package that the

government is expected toannounce today.

Transport secretary JustineGreening will unveil a UK railinvestment plan for 2014-2019 thatincludes a commitment to providefaster and more efficient electrictrains on the Midland Main Line toLeicester, Derby and South

Yorkshire.Funding will also be provided to

reopen part of the Varsity Line,which ran between Oxford and

Cambridge until 1967. This shouldenable services between Oxford andMilton Keynes to resume by 2017,

with the intention of restoring theentire route in the future.

Previously announced plans toelectrify the Great Western MainLine from London to Cardiff willnow be extended to Swansea, while

bottlenecks on the East Coast MainLine will also be removed.

Around 5bn of the totalinvestment is earmarked forcompleting existing projects suchas Thameslink and Crossrail, with4bn reserved for new plans.

The programme is part of thegovernments plan to boost theeconomy through constructionprojects, though passengers couldface higher fares as a result.

2 NEWS

BY JAMES WATERSON

BY JAMES WATERSON

To contact the newsdesk email [email protected]

FIRST, the good news: the housingmarket is becoming lessunaffordable for young peopleacross the UK. The average price

paid by a first-time buyer in June wasaffordable for someone on averageearnings in 54 per cent of all UK localauthority districts, the highest

proportion for 10 years, according tothe Halifax. At the peak of themadness in 2007, this was only trueof seven per cent of districts.A home is deemed affordable if it is

worth no more than four times thegross income of someone on averageearnings in the area; the housingmarket is gradually moving more intosync with earnings.

But its not all good news. Just nineper cent of all af fordable areas were insouthern UK even though that iswhere so many of the jobs are. Firsttime buyers in London had to put

EDITORSLETTER

ALLISTER HEATH

London homes still horribly expensive for first time buyers

MONDAY 16 JULY 2012

down the largest deposit (59,221) tosecure a property, followed by theSouth East (34,843). It was just16,753 in the North of England.London accounts for nine of the 10least affordable districts (Oxford is thesecond worst); the worst is Brent,where first time buyers prices are 8.8times gross earnings in the area. Thenext most expensive London districtfor first-timers is Harrow, followed byHammersmith and Fulham, Hackney,Haringey, Camden, Ealing, Hillingdon

and Hounslow in 10th position.There is only one solution: the gov-

ernment needs to liberalise the law toallow far more private homes to bebuilt, in London itself but also in com-mutable reach. First time buyers needthousands more homes in manycases family houses, not just tiny

flats. The present, scandalous lack ofsupply is a blight on modern Britain.

PUNISHING FAILUREIT is pleasing to see that G4S looks asif it will be paying for its pathetic andinexcusable Olympic incompetence.Its share price is down, it is being hitby penalty fees and will make a loss of35-50m on the 284m contract. ItsCEO could be on the way out and thefirms reputation has suffered amajor blow. The government didrecently renegotiate its contract, mas-sively increasing its order for security

reason for this is that the public sec-tor is deemed to be nobler than theprivate sector, presumably becausethe former is not for profit and thelatter is profit seeking. That, ofcourse, is nonsense: what counts iswhat works. In this case, G4S hasntworked and is rightly being held

accountable, by the customer forwhom it failed to deliver, by themedia but also by the City. One keyforce for accountability is the stockmarket: there is nothing that angersinvestors more, and that encouragesthem to scrutinise their CEOsactions, than a tumbling share price.The public sector doesnt have suchan inbuilt alarm bell and that is yetanother reason why it tends torespond so slowly to failure.

staff, but G4S should have said so atthe time if it felt it couldnt deliver onthe new terms. G4S the companyonce known as Group 4 Security, abrand sullied by prisoners escapes has also damaged itself with its woe-ful communications effort.The whole point of governments hir-

ing private contractors is not only tosave money but also because thosethat fail can be penalised or fired.When a public sector body fails asthey do frequently they cant mean-ingfully be fined (its already the tax-payers money) and it is much harderor entirely impossible to fire them.

It is also interesting that public sec-tor failure tends to be rationalisedaway as caused by under-fundingbut the failure of a private sector con-tractor even though they tend tooperate on smaller, leaner budgets are greeted much more harshly. One

Jerry del Missier spent 15years at Barclays.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

QWhy did Jerry del Missier instructBarclays employees to fix Libor?

ABarclays has said that del Missiermisinterpreted an account of a

2008 phone call between his fellowexecutive Bob Diamond and a Bankof England official. MPs will want toknow how he came to the wrongconclusion.

QDid del Missier discuss Libor-rigging withany other executives?

ARegulators in the US and UK say

Diamond did not think Barclayshad been told to fix Libor. So why did

del Missier not double-check before tellingtraders to lower their submissions and did he discuss his actions withothers at any point?

QHow soon did the FSA know about Libor-rigging and how did it respond?

AUS regulators had concerns about

the interest rate in 2007 so whydid the FSA not intervene earlier?

And if the organisation knew aboutdel Missiers involvement, why did itallow him to be promoted to chiefoperating officer in June?

What MPs will be asking today QAandJustine Greenings plan means all five major UK Main Lines are set to be electrified

Barclays director who ledLibor fixing to face MPs

banking arm.Lord Turner will be asked whyhis organisation only beganinvestigating abuse of theLibor rate in 2009, despite

the New York FederalReserve learning in 2007that Barclays underreport-ed its submissions.

He will be joined infront of MPs by AndrewBailey, the FSAs head of

banking supervision,and Tracey

McDermott,t h e

FSAs acting director of enforce-ment.The hearings were arranged in a

hurry, with MPs on the committeekeen to hear as much evidence aspossible before parliament rises forthe summer recess tomorrow.

But on Friday it was announcedthat the new parliamentaryinquiry into Libor-fixing would notinclude several of the Treasuryselect committees more outspokenmembers such as ConservativeAndrea Leadsom and Labours JohnMann, who had been fiercely criti-cal of Bob Diamond.

Government to announce9bn railway scheme

7/31/2019 Cityam 2012-07-16

3/23

CULTURE secretary Jeremy Hunt yes-terday voiced his support for embat-tled Olympics contractor G4S, sayingthe firm had been quite honourablein admitting it could not supplyenough security staff just two weeksbefore the Games begin a failure hebranded completely normal.

They put their hands up. NickBuckles, the chief executive, has saidyou know they got it wrong. Theyveapologised, theyre going to cover allthe costs, Hunt, whose department isresponsible for overseeing theOlympics, told the BBC Andrew Marrshow.

I think its completely normal thatyoure going to find some contractorson a project of this size who arentable to deliver what they promise, headded.

But he distanced the coalition fromthe companys blunders, saying:[W]hat youve got to do as a ministeris make sure that youve got contin-gency plans in place so that the over-all project is not at risk, and thatswhat weve done.

He did not rule out the prospect ofsending further troops to man theOlympic sites, if more staffing short-

falls emerge, noting we have contin-gency plans for all eventualities.

G4S failure was

expected, saysJeremy HuntBY MARION DAKERS

Meanwhile Buckles, who said overthe weekend he would considerresigning over the debacle, is due toappear before the home affairs selectcommittee tomorrow.

His company signed a 284m con-tract to provide 13,700 security guardsfor the Games, but the army was lastweek drafted in when G4S admittedjust 4,000 staff were trained up andaround 9,000 more were in thepipeline. The army has pledged 3,500extra troops to fill the gap.

Buckles told the Sunday Telegraphthat he feels accountable, but notresponsible for the fiasco, which G4Ssaid at the weekend will cost itbetween 35m and 50m.

Preparations for the sporting eventare entering the final stretch, with thefirst Olympic rings roads set aside forofficial Games use opening today onthe M4.

G4S boss Nick Buckles is coming under pressure after the Olympics staffing blunder

G4S PLC

13 Jul9 Jul 10 Jul 11 Jul 12 Jul

275

280

285

290

295 p 278.7013 Jul

MONDAY 16 JULY 20123NEWS

cityam.com

DIRECT Line could see plans for aflotation dashed by two takeover

bids, just weeks before its ownerRoyal Bank of Scotland is expectedto file for the 3.2bn listing.

American private equity firmsBlackstone and Bain Capital arepreparing a joint bid while aconsortium of Kohlberg KravisRoberts, Apax and BC Partners is

also planning an offer, The SundayTimes reported yesterday. The

Takeover offers threaten to hitDirect Line plans for flotation

BY JAMES TITCOMBtakeover offers are due to be made

by the end of the month.A Direct Line spokesman told

City A.M.yesterday that it is stilltargeting an initial public offeringin the second half of the year,

which remains the top priority.The EU has ordered RBS to sell

Direct Line, the UKs largest carinsurer, as a condition of the

banks 45bn bailout in 2008.RBS needs to boost funds before

the government can sell its 83 percent holding in the bank.

WHEN I interviewed MarkHamilton, G4Ss managingdirector of security servicesfor London 2012, this

January, he admitted that becomingthe official security provider to thissummers Olympics blended riskwith reward. The consequences for

failure, even for something thatwasnt the firms fault, were veryhigh, and had been weighedcarefully by G4S against the rewardsof being seen to succeed.

The worlds largest securitysolutions provider must be wishingright now that it had weighed thingsup rather differently.

That said, the risks that G4S had toweigh up have proved not to beexactly what it anticipated. Rather

than the danger of a security breach,it was the tendency of Olympicrequirements to swell beyond initialestimates that has damaged itsreputation. Fulfilling its initial 2010contract to provide 2,000 securityguards would have been far easier.Meeting the organising committeesincreased request for more than10,000 guards made in Decemberlast year was apparently not.

Yet G4S is the largest employerlisted on the London Stock Exchange,with over 657,000 employees across125 countries. If any firm had theexperience, scale and resource tomanage the Olympian task it shouldhave been this one.

A public failure is also a public

opportunity to make amends. Thecompany needs to explain itsinability to supply at such shortnotice. Being the security providerfor an event that effectively paints agiant bullseye on London was nevergoing to be an enviable task. But bywinning the right to publicise itsrole, G4S painted a second bullseyeon its brand.

Marc Sidwell is City A.M.s managingeditor.

BOTTOMLINE

MARC SIDWELL

Weighed up and found wanting

7/31/2019 Cityam 2012-07-16

4/23

THE NEW funding for lendingscheme (FLS) has received only a cau-tious welcome from economists, ana-lysts and banks, with many worryingthat there is insufficient demand forcredit for the plan to make much of adifference to the economy.The scheme will see the Bank of

England take illiquid assets off banksin exchange for government bills,allowing them to increase lending.This cheap source of funding will be

a huge help to families and firms,said chancellor George Osborne.

But analysts are sceptical.The success of the scheme is likely

to hinge largely on whether there issufficient demand for additional

lending and the position here is farfrom clear, said RBSs Ross Walker.Given that large UK corporations

Analysts fearnew loans plan

cannot succeedBY TIM WALLACE with ample holdings of cash continueto hold back from significant capex,there are grounds for caution.The scheme was dealt a major blowalmost immediately, with HSBC refus-ing to take the support, instead aim-ing to fund through deposits.

Use of previous state-sponsoredschemes have been routinely encour-aged then thrown back in the face ofparticipating institutions as demon-strating the tax-payer subsidy theybenefit from that is then used as anexcuse to raise taxes and regulatoryhurdles, said Nomuras Philip Rush.

RBS and Lloyds will be stronglyencouraged to use it though, so we doexpect the FLS to get used.

We just do not expect it to get thewidespread usage that the govern-

ment and BoE are hoping for, nor dowe expect it to have much of animpact on net lending.

Coalition needs to do more tokick-start ailing property sector

BY MARION DAKERSCountrywide said yesterday the

ongoing overhaul of planning lawsalongside a raft of other measures issorely needed to kick-start the

construction and property sectors.The firm also wants banks thatreceive money from thegovernments direct lending schemeto be forced to lend out more inmortgages.

More appropriate credit isurgently required in the housingmarket, but lending volumes forhouse purchases are only one thirdof what they were five years ago,said chief executive Grenville Turner.

Previous government initiatives toget banks to pass on improved ratesto retail customers, including ProjectMerlin, have fallen short of

expectations.Countrywide also suggestedyesterday removing outdated andprohibitive stamp duty onproperties worth less than 250,000,which it said would remove barriersto entry for first-time buyers whilehaving only a small impact on taxreceipts. It also called for a housingpolicy that, by stabilising supply,reduces house price volatility.

HOUSE PRICES: Page 14

MONDAY 16 JULY 20124 NEWS

cityam.com

NAGUIB Kheraj could be in the running to take the top job at Barclays, it emerged over theweekend. The former finance director joins former JP Morgan boss Bill Winters, corporateand investment banking head Rich Ricci and Lloyds deputy chairman David Roberts as afrontrunner in the search, which is being conducted by executive chairman Marcus Agius.

KHERAJ IN RACE TO REPLACE BOB DIAMOND

GOLDMAN Sachs is set to recordanother downbeat set of resultstomorrow, a top analyst has

warned, with poor profits driven bythe weak economic outlook.

Barclays Roger Freeman believesthe banking giants second quarterprofits will be down 23 per centcompared with the same quarter of

2011. In a research note Freemanwarned profits are likely to come in

Goldman Sachs profits set todisappoint as trading slows

BY CITY A.M. REPORTER at $839m (539m), down from$1.09bn in the same three monthperiod last year.

In part, that is due to slowertrading conditions as the sovereigndebt crisis intensified and the gainsfrom the flood of cheap cash fromthe European Central Bank faded.

The decline is expected to bebroad-based, Freeman said, withfalls predicted from areas

including equities, currencies,fixed income and commodities.

BRITAINS planning and propertytax laws should be ripped up and

banks should be forced to offermore mortgages in order to boostthe countrys moribund real estatemarket, the countrys largestproperty services group arguedyesterday.

The number of house salesremains near historic lows, withfigures from LSL suggesting Junewas the second worst month byvolume since 1995, when LandRegistry records were digitised.

7/31/2019 Cityam 2012-07-16

5/23

7/31/2019 Cityam 2012-07-16

6/23

7/31/2019 Cityam 2012-07-16

7/23

HEALTH and safety regulation is dueto be cut back and simplified, thegovernments safety regulator haspledged, following warnings thatbusiness is being stifled by red tape.

Judith Hackitt, the chairman of theHealth and Safety Executive (HSE),said that workplace regulation hasbecome a burden of bureaucracyand promised to confront a com-pensation culture.

She said that small businesses wereoften advised to be risk averse, andthat insurance firms needed tobe bolder in fighting spuri-ous claims.

You do unfortunatelyget a whole host of spu-rious claims made bypeople who essentiallyjump on the bandwag-on, Hackitt told TheSunday Telegraph. Wewant to take away thatburden of bureaucracythat seems to getin peoplesway.

Earlier thisyear, DavidCam e r on

Red tape to be

cut says healthand safety bossBY JAMES TITCOMB

called health and safety rules a mon-ster that damages the economy, andsaid the government needs to kill offthe culture for good.The HSE is reviewing health and

safety laws after an independentreport recommended scrapping sev-eral measures including the principleof strict liability, which holdsemployers responsible for accidentsregardless of the steps they take toprevent them. Several regulations aredue to be scrapped in October.

Hackitts comments would be wel-comed by many businesses, theConfederation of British Industry(CBI) said yesterday. Over the years,

the principles of good health andsafety have been made morecomplex by a culture of over-compliance, which puts havingthe right paperwork above see-ing the right behaviours on theground, Neil Carberry, theCBIs director for employment

and skills, told City A.M.Hackitt pledged to get rid of redtape without affecting the level

of protection providedby HSE laws.

Ofgem set to give National Gridgo ahead on 44bn investmentNATIONAL Grids plans to invest asmuch as 44bn in the UKs energy

infrastructure are set to be approvedby Ofgem, although it could have tofund the spending by selling offassets or cutting dividends.

The energy regulator is expectedto give National Grid the green lightthis morning when it announces itsinitial decision on the companysplans, the Sunday Telegraphreported yesterday.

National Grid plans to investmore than 21bn in links between

BY JAMES TITCOMBnew electricity plants in Englandand Wales over the next eight years,as well as spending 9bn on gaspipelines and 13.5bn on gas

distribution networks.Last week analysts said theybelieve Ofgem will not allowNational Grid to significantly raiseits prices, meaning that theinvestment will have to be paid forby selling assets, raising capital ordecreasing its dividends.

The company has indicated itspreferred fundraising measurewould be selling off assets, withchief executive Steve Holliday keen

to keep investors happy aftercriticism over the way he handled asurprise 3.2bn rights issue in 2010.Holliday was accused of misleading

shareholders about the companyscash reserves.National Grid has said bills could

increase by up to 20, but the energyregulator is expected to demandstricter terms under its new pricecontrol system, which aims to keepprices down. Ofgem will announceits initial proposals this morningand make a decision later this year.

National Grid and Ofgem did notcomment on the plans yesterday.National Grid CEO Steve Holliday wants to keep investors happy after past criticism

Judith Hackitt promised tofight workplace regulation

CHANCELLOR Angela Merkel lastnight announced she wasconfident that a majority ofGerman lawmakers would back aidfor Spains ailing banking sector ina Bundestag vote this Thursday.

Eurozone finance ministersagreed last Monday on a rescuepackage of up to 100bn (78.8bn)for Spanish banks, which have

been crippled by a burst housingbubble.

But Merkels government needs

a green light from the parliamentbefore finance minister Wolfgang

Merkel confident of Germanbacking for Spanish bank aid

BY CITY A.M. REPORTER Schaeuble can commit to payingout Germanys share of the bailoutat a meeting of Eurozone financeministers on Friday.

Although some coalitionlawmakers voted against the

bailout fund and EU budget rules,Merkel insisted in a televisioninterview that we always get themajority we need.

Michael Grosse-Boehmer, chiefwhip of Merkels conservatives andVolker Kauder, the conservativesparliamentary leader, both saidthey were confident Merkel would

get a majority, even if it was notabsolute.


cityam.com

Lines open 7 days a week, 8am-8pm, except bank holidays. Call us free on your landline; standard network charges apply to all calls made from a mobile phone.

Subject to credit check.

36 a month plan

includes:

600 mins to all UK mobiles

and landlines (starting 01, 02, 03)

Unlimited standard UK texts

1GB UK mobile internet

Offer extended

until 31 JulyPhone cost normally 59 now 29

on a 24-month contract

Search online for Vodafone press or go in store today

Call 08080 00 00 52today and ask about next day delivery

Now just 29 on a 36 a month plan

iPhone 4S

7/31/2019 Cityam 2012-07-16

8/23

AIRLINE owners are known for beingcolourful characters. They have to be,given the lengths they go to makemoney from air travel amid surgingcosts, awkward regulations and fearsabout damaging the planet.

In the current climate, the samecould be said about bank owners. ButSir Richard Branson is excited at theprospect. He warns rivals that VirginMoneys current account, created onthe back of the firms Northern Rockacquisition in January, will give ascare to discredited retail bankswhen it launches in the autumn.

Virgin Money is going down astorm. Weve had about 400,000 peo-ple switch over in the last four or fivemonths and I think when the currentaccount comes out in about threemonths time the amount of businessis really going to explode, the Virginfounder tells City A.M. during his air-lines inaugural trip to Cancun.Adding that our products general-

ly, theyre not the absolute best, but asa package theyre very good value,Branson says Virgin Money will bemaking moves that will impress peo-ple over the next six months.

The bigger banks are discredited, ora lot of them are, so I think peopleseem to want to change.

But Branson was still saddened tosee Barclays chief executiveBob Diamond step downafter the banks Libor rig-ging, though its goodthat people still do thatat a company.

He confesses to notclosely followingthe scandale n g u l f i n gBarclays andhis othersoon-to -becompetitors.

Branson isalso unfamil-

Virgin is ready

to take on highstreet banks

iar with fellow airline tycoon SirStelios Haji-Ioannous attempts to fol-low in Virgins ill-fated footsteps by set-ting up a new airline in Africa. Hejokes, however, that he would be veryhappy to have a discussion with him,tell him what to watch out for.Virgin Atlantic chief executive Steve

Ridgway, on the other hand, has thedetails of his firms doomed attemptsto crack the Nigerian market in the2000s at his fingertips.

We put together a very good air-line the first airline in west Africathat was ever IOSA [IATA OperationalSafety Audit] accredited but unfortu-nately it got tied down in the politics.

Ridgway, who has led the airline for11 years, is at his most talkative whenrailing against politicians, watchdogsand rivals. Like Virgin Money, the air-line started life as an underdog tolong-established players.

His latest ire is directed at nemesisBritish Airways takeover of smallercarrier BMI, resulting in the sale of 12coveted landing slots at Heathrow atthe behest of competition bodies.

It would be a gift to BA, wouldnt it,to find that the miserable number ofslots gets divided up among a numberof carriers, Ridgway says, urging regu-lators to allow Virgin to buy the slots.A long-standing critic of Britains

meandering aviation policy, Ridgwayhopes the current review marks aseminal moment for Britain. Tobelieve you can just put the whole ofaviation back in the box is just crazy, ata time when the governments desper-ate for growth, to create jobs.

Weve still got some great compa-nies in this country and we need tomake sure that its very easy to fly inand out of the UK, its very easy to setup headquarters, its very easy to keepyour headquarters in the UK.

With fights in so many corners, the61-year-old rolls his eyes when askedabout his rumoured plans to retire at

60. I dont know, I guess youalways set yourself targets andtheyre always blown off courseby events, but I try to keepmyself young and agile. Im nottoo decrepit yet, am I?

Universal set to spin off label tomeet EU rules in EMI takeoverUNIVERSAL Music is planning to sellBritish label Virgin Records in order

to comply with EU regulationsfollowing the music publishers1.2bn deal to buy record label EMI.

Virgin, which has been owned byEMI since Sir Richard Branson soldthe record company for 560m in1992, is included in the takeoveragreement, but competitionconcerns have forced Universal tospin off the label.

The European Commission saidUniversals purchase of EMI

BY JAMES TITCOMBthreatens to reduce competition inthe recorded music market.

Universal, the worlds biggestrecord label, would control 40 per

cent of the European music marketin Europe if the deal goes through,a level considered anti-competitive.

The business, owned by Frenchmedia conglomerate Vivendi, wonthe bid for EMI last year but lastweek Brussels warned that atakeover could be vetoed if asolution is not offered.

Universal will present itsproposals later this week before theEU makes its decision on 8 August.

The label needs the deal to gothrough because it has alreadyagreed to pay 1.2bn to EMIs ownerCitigroup, whether or not the

purchase is approved.If the acquisition is scupperedand EMI is sold for less to anotherbidder, Universal will have to makeup the difference.

Virgin Records was formed byBranson in 1972, and now operatesas Virgin Music in many countriesincluding France, Germany andBritain. Artists on the label includeJoss Stone and Bryan Ferry.

Universal did not comment.

Sir Richard Branson says Virgin Money will profit from other banks discredit

Virgin Atlantics chiefexecutive Steve Ridgway


cityam.com

Moveupto

managementfaster.As a teaheryou are twie aslikely to get thereafter four years.If you are ambitious you anprogress quicly in your areer asa teaer. Plus, as a top graduateyou ould reeive a 20,000* tax-freetraining bursary, but only if youapply to start this year. Also, there

is a full programme of supportavailable from the Teaing Agenyto guide you all the way throughthe appliation proess.Search get into teachingor call 0800 389 2500.

RewardingChallengingTeaching

*Conditions apply. See eduation.gov.uk/teaonditions for full details.

Virgin bosses talkindustry rivalrieswith Marion Dakers

7/31/2019 Cityam 2012-07-16

9/23

7/31/2019 Cityam 2012-07-16

10/23

MANCHESTER United is struggling tofind supporters for its initial publicoffering in the US, with potentialinvestors put off by the huge cost ofpaying players and the clubs debtpile.The club revealed its float earli-

er this month, but fund man-agers who have looked at itspreliminary prospectus havebeen either negative or luke-warm on the prospect ofbuying shares in the club,which is controlled by theGlazer family.They say Manchester

United faces signifi-cant financial risksgiven its 423m ofdebt, and thestructure puts itsfans at oddswith investors.

With a sportsfranchise, its aconstant tug of warbetween player

BY HARRY BANKS salaries cost and the rest of the opera-tion, said Wallace Weitz, presidentand portfolio manager at Weitz Funds.

Manchester United, which shelved aHong Kong listing last year, declined tocomment and the Glazers could notbe reached.

The Glazers plans for a dual sharestructure allow them to retain almost

complete control even after selling alarge stake. It also makes a dividendpayout unlikely.

A dual class structure is definite-ly a red flag, said MohannadAama, senior portfolio manager at

Beam Capital Management.The deal is a strong vanityplay in terms of being part

of a winning franchisebut whether or not thatmystique around theteam translates to moneyfor shareholders I doubt

it, said Jeff Sica, chiefinvestment officer of Sica

Wealth Management.

Malcolm Glazer has not yetrevealed the size of the IPO

PHARMA group GlaxoSmithKlineis hoping to secure the takeoverof Human Genome Sciences (HGS)in the coming days, after last-minute talks over the weekend.

HGS, which spurned Glaxos$2.6bn (1.67bn) offer in April,has set a deadline of today foralternative suitors to comeforward.

But executives from Glaxo,whose $13 per share bid expireson Thursday, are understood tohave met with HGS in recent daysto try and seal a deal after a

Glaxo closes in on deal to buyAmerican pharma rival HGS

BY MARION DAKERS three-month stalemate overprice.

A spokesperson for Glaxodeclined to comment, whileofficials at Human Genome werenot immediately available.

The UK drugs firm already hasclose ties to HGS, having jointly

worked on lupus drug Benlysta,which won approval last year.

The companies alsocollaborating on two otherexperimental drugs in late-stagetrials for heart disease anddiabetes, where Glaxo owns alarge majority of the economicinterest.

10 NEWScityam.com

BT Business

Open up new ways of working

with BT Infinity for business.Its the new standard in business broadband giving you superfastaccess to the web with speeds of up to 76Mb.

-C?B474A77BJA?B47?4E:89

7/31/2019 Cityam 2012-07-16

11/23

AFTER the recent non-appearance ofBritains barbecue summer, whocould be lower in the nationsestimation than weatherforecasters? According to XLNBusiness Services, small businessowners still trust predictions aboutwhether to expect rain or shine overthe models of economists.

Some 700 small firms were askedto rate a number of professions interms of how good each was at

predicting the future.Politicians scored

even worsethaneconomistsand

journalists,but did rateslightly

higher thanfortune tellers

and astrologers.

Crystal balls gocloudy for UKeconomists

No fear of dead cat bounces hereEARLY risers were greeted yesterdayby a bungee ballet over the Thames.At 7.30am, 16 performers leapt fromthe Millennium Bridge to touch thewater before flying back up.Inspired by a Latin American rite ofpassage, this hair-raising spectaclewas the opening act in a whole dayof gravity-defying action commis-sioned by the Mayor of London andthe London 2012 Festival.

Quick-witted Twitter followerscould then track the performers to

dry land, for a sky walk runningdown the side of City Hall. Atlunchtime, a giant wheel appearedin Paternoster Square, with dancersspinning their way around its rotat-ing frame against the backdrop of StPauls Cathedral.The dancers moved to Trafalgar

Square in the afternoon, whichbecame the stage set for an endlessclimb on a spinning ladder.Apparently the ever-revolvingSisyphean ascent to the unreachabletop of the ladder was a metaphor,though not necessarily for Citycareers.That said, the unlucky recent fate

of some who had climbed to the topof the ladder at Barclays could haveinspired the following act, asHuman Fountain saw a series ofgymnasts thrown down from high

places.Surprises:STREB was a one-off cre-

ation by the Brooklyn choreographerElizabeth Streb, staged as part of thisyears London International Festivalof Theatre.

Got A Story? Email

[email protected]

11cityam.com

cityam.com/the-capitalistTHECAPITALIST

FUTURES firms who pridethemselves on keeping their eye

on the ball should get in training forthe third annual Futures Fives footballtournament. Taking place on 3September at PowerleagueDocklands, the contest will see someof the biggest banks, hedge funds,and brokerage houses competing tohelp raise money for Futures for Kidshttp://futuresforkids.org.uk.To sign up, contact [email protected]

MONDAY 16 JULY 2012

The newjobs websitefor London

professionals

CITYAM

CAREERS

.com

A team of daredevil gymnasts brought art to unexpected corners of the City on Sunday

JULIANANDR

EWS

7/31/2019 Cityam 2012-07-16

12/23

VISA, Mastercard and banks thatissue their credit cards have agreed toa historic $7.25bn (4.65bn) settle-ment with US retailers in a lawsuitover the fixing of credit and debitcard fees.The settlement agreed over the

weekend, if approved by a judge,would be the largest antitrust settle-ment in American history and resolvedozens of cases filed by retailers in2005.The card companies and banks

would also allow shops to start charg-ing customers extra for using certaincredit cards in an effort to steer themtoward cheaper forms of payment.

Swipe fees charges to cover pro-cessing credit and debit payments are set by the card companies anddeducted from the transaction by thebanks that issue the cards, passing onthe cost to merchants, the lawsuitssaid.The proposed settlement involves a

payment to a class of retailers of $6bnfrom Visa, Mastercard and more thana dozen of Americas largest bankswho issue the companies cards.

The card companies have alsoagreed to reduce swipe fees by the

Mastercard and

Visa settle $7bnretailer lawsuitBY HARRY BANKS equivalent of 10 basis points for eight

months for a total consideration tostores valued at about $1.2bn, accord-ing to lawyers for the plaintiffs.The settlement will help shift the

competitive balance from one former-ly dominated by the banks which con-trolled the card networks to the sideof merchants and consumers, saidCraig Wildfang, who represented theclaimants.

Noah Hanft, general counsel forMastercard, said the company believedits interests were best served by anamicable resolution of the case.Visa chief executive Joseph Saunders

said the settlement was in the bestinterest of all parties and did notexpect the settlement to impact itscurrent guidance.

Visa Inc


120

121

122

123

124 $124.09

13 Jul

CHINESE premier Wen Jiabaowarned yesterday that thecountrys economic growth waslikely to remain slow for sometime, but was still withinexpectations.

At present, our countryseconomic growth rate remains

within the target range set earlierthis year and we are seeing theeffectiveness of stabilisationpolicies, he said, speaking at aconference in Chengdu.

Chinas latest GDP figures,released on Friday, showed the

China warns growth slowdownwill linger as it cuts foreign tax

BY CITY A.M. REPORTER slowest rate of growth since thefirst quarter of 2009, with theeconomy expanding by 7.6 percent in the three months to June.

A leaked government circularyesterday suggested that China isplanning to encourage foreigninvestment in the country bycutting taxes applied to theprofits of overseas companies byup to half.

Jiabao also promised that thegovernment will step up efforts inthe second half of the year toincrease policy effectiveness and

foresight.DEBATE: Page 17


cityam.com

THEFORUMcityam.com/forum

JOIN THE DEBATE PAGES 16-17

FIVE years on from the startof the financial crisis, havemarkets become immuneto central bank action?

Three recently unveiledanother batch of stimulus: theBank of England increased itsasset purchase programme by

50bn; the European CentralBank cut its marginal lendingrate, cut interest rates by 25basis points and, perhaps mostimportantly, cut its deposit rateto zero per cent; and thePeoples Bank of China steppedin to cut rates too. What didmarkets do? Nothing.

Focus has now turned to theFederal Reserve but minutesfrom its last meeting show that

while Americas central bank is opento buying more Treasury bonds, itsnot ready yet. Fed chairman BenBernanke testifies to the HouseFinancial Services Committee thisweek, but just expect him to repeatQE3 is on the cards if the datacontinue to weaken.

Not that the Fed has been inactive it has bought a total of $2.3 trillion

(1.48 trillion) in state andmortgage related debt so far.

NO CAVALRY IN SIGHTWe are facing synchronisedglobal weakening, and neitherthe US nor China can come tothe rescue. China announced

7.6 per cent growth for thesecond quarter of the year, theslowest expansion in threeyears. Meanwhile the USeconomy is expected toweaken to around two per centthis year, and StrategyEconomics says the Eurozoneis set to contract 0.7 per cent.

Today the economic focus ison the US Empire Statemanufacturing survey and US

retail sales, ahead of the PhillyFed on Thursday. We also getUS housing starts and buildingpermits for June (Wednesday),along with US existing homesales (Thursday) good gaugesfor the real economy.

In Europe, its the German

ZEW survey and UK Juneinflation data on Tuesday,with UK unemployment andMPC minutes on Wednesday.Have MPC members started toquestion how effectivequantitative easing really is?Are they looking into otheroptions? We shall see.Louisa Bojesen is anchor of CNBCsEuropean Closing Bell.Twitter: @louisabojesen

CITYCOMMENT

LOUISA BOJESEN

Returns diminish as central banks act

7/31/2019 Cityam 2012-07-16

13/23

BLACKBERRY maker Research inMotion (RIM) has said it will fight anorder to pay $147.2m (94.6m) indamages for using patented technol-ogy in its smartphones.

RIM was last week ordered to paysoftware firm MformationTechnologies the fee $8 for each ofthe 18.4m BlackBerrys sold in the USsince claims were filed in 2008 after a San Francisco jury upheld theclaims.The technology allows companies

to access their employees phonesremotely for upgrades or passwordchanges.

RIM said it was disappointed bythe outcome and does not believethe patent in question is valid.The company said it would decide

whether to appeal after the judgehas decided certain legal issues thatmight impact the verdict.The payment order is the latest

blow to RIMs fortunes after it was

RIM pledges toappeal $147.2m

damages orderBY JAMES TITCOMB forced to cut 5,000 jobs a third of itsworkforce after reporting a $192mloss for the three months to June. Ithas also delayed its next generationof handsets until next year.

We believe [the patents have] beenfundamental to the success of RIM,said Mformations lawyer AmarThakur.

Shares in RIM, which has seen itsmarket share hit by Apples iPhoneand handsets running GooglesAndroid software, fell to their lowestlevel since 2003 last week.

IN BRIEFPremier to develop Iraq oil blockn Premier Oil is teaming up withRussia's Bashneft to develop Iraq's oilblock 12, an Iraqi oil official saidyesterday. Last month Iraq awardedBashneft rights to develop the field.Bashneft has now chosen Premier Oil asa partner, Abdul-Mahdy al-Ameedi,head of the oil ministrys contracts andlicencing directorate, told reporters.Bashneft will hold 70 per cent and

Premier Oil 30 per cent in the project,he said.

Nokia slashes smartphone pricen Nokia has cut the US price of itsflagship smartphone in half, barely threemonths after its launch, in an effort tostaunch losses in market share to rivalssuch as Apple and Samsung Electronics.

The cost of the Lumia 900 Windowsphone has been reduced to $49.99 from$99 with a two-year agreement, Nokiaspokesman Keith Nowak said yesterday.Nowak said the price cut is part of ourongoing lifecycle management, which isjointly done between Nokia and carriercustomers."

Airbus boss sees Boeing price warn The chief executive of Airbus said US

rival Boeing has slashed the prices ofBoeing 737 Max aircraft in a bid to grabmarket share from Airbus A320neo, aGerman newspaper reported yesterday.Boeing is desperately trying now toboost the market share of B737 Max.They are very aggressive when it comesto pricing, Fabrice Bregier said in aninterview with Welt am Sonntag. Forthe full year, Boeing will likely

announce a higher level of new ordersfor the whole group than Airbus, headded.

Galliford Try to develop St Clementsn Construction firm Galliford Try hasbeen selected as the preferreddeveloper to build more than 200homes at the former St Clementshospital site in Mile End, TowerHamlets. Mayor of London Boris

Johnson will this morning announcethat the company had been chosen todevelop the capitals first communityland trust. The development will see thefreehold of the entire site being held intrust for the local community. Somehomes will be directly owned by theEast London Community Land Trust andresidents will be involved in managingthe future neighbourhood.

Research In Motion Ltd


7.50

7.75

8.00

8.25

8.50 CAD

7.3513 Jul


cityam.com

Spread betting and CFD trading can result in losses thatexceed your initial deposit.

Spread Co Limited is authorised and regulated by the Financial Services Authority. Register no 446677

Make your opinion count

TRADE WITH OUR MORE ADVANCED AND MORE INTUITIVE PLATFORM

AND STILL BENEFIT FROM 0.8 SPREADS ON EURUSD, UK100 & US30.

Enhanced Trade Ticket Improved Order Management

New Charting Package Improved Hedging Functionality

Apply today at www.spreadco.com

OUR NEW SPREAD BETTINGPLATFORM HAS ARRIVED

Brought to you by

IN ASSOCIATION with Repskan.com,City A.M. is measuring the relative Olympicmedia buzz around the London 2012Olympic and Paralympic Games partners,week by week. The leaderboard, right,reflects their ranking over the past week, inthis case from Wednesday 4 July toWednesday 11 July.

Samsung has been picking up coverage forits Galaxy S3 smartphone promotion. This ispartly because David Beckham appears inthe campaign, but also due to the launch ofits London 2012 Olympic app. Otherwise,Samsung has been running a series of TakePart events across the country, aimed atreaching 1m people. The events are linked tosocial networks, and users are encouragedto tag themselves in crowd photos.

OLYMPIC MEDIA BUZZLONDON 2012 PARTNERS

Brand Position change

McDonalds -

Coca-Cola 1

Samsung -1

Visa -

Brit ish Airways 2

BP -

Adidas -2

Atos 9

BMW -

BT -

TOP TEN PARTNERS BY MENTIONS

%

9

53

141

4 19

Blogs

Regionals

National News

Topicals

Twitter

Other

SAMSUNGMENTIONS BY

CATEGORY

7/31/2019 Cityam 2012-07-16

14/23

PLANS to vary public sector wages byregion could hurt both jobs andoutput, the Trades Union Congress(TUC) and New EconomicsFoundation (NEF) have claimedtoday.

The rationale for the plan is thatwages and the cost of living varywidely across the country thefamiliar London weighting is a bluntexample of the basic idea in action.

These variations in wages andprices mean not only that real wagesare higher for public sector workersin low-cost areas, but also that publicjobs crowd out private employment,as workers hold out for attractivejobs on the state payroll.

But the NEF and TUC believe thatthe hit to purchasing power willharm consumption and thus theeconomy as a whole, reducingoutput by nearly 10bn andpotentially leading to some 110,000net job losses.

Tim Worstall at the Adam SmithInstitute argued that even if true,this was inconsequential.

We know very well that nationalpay scales harm people in high wageareas, he said.

The idea and aim of havingregional or local pay scales is not toreduce wages in cheap areas it is toincrease them in expensive ones.

TUC and NEFclaims on local

pay criticisedBY BEN SOUTHWOOD

HOUSE PRICES dived in July, after adouble hit from bad weather andsporting distractions, according toRightmoves July House Price Indexreleased today.The average property asking price

was 242,097 in July, 1.7 per centlower than the 246,235 recorded inJune. However this average was still2.3 per cent up on the year, and 97 percent above the prices recorded back inJanuary 2002.

Those keen to sell this summerhave the challenging confluence ofmiserable viewing weather, the con-tinuing credit-crunch, plus a sportingdistraction of Olympic proportions,said Rightmoves director MilesShipside.A shock revelation was that Greater

London actually led the decline, witha 3.6 per cent fall on the month though prices are still 6.4 per cent upcompared to last year.While new listings over the last year

were on average 102,121 a month,

London leads

July drop-offin house prices

BY BEN SOUTHWOOD average sales completions were justabove half that, at 56,220 a month.Stock levels have grown for five consec-utive months, so that there are now 75unsold properties per estate agent.

Even though the supply of newproperties remains constrained com-pared to pre-credit-crunch levels, sellerlevels substantially outnumber thoseof buyers, Shipside went on to say.The report also revealed that buyers

spend minimal time looking at sum-mary adverts before deciding whetherto follow them up or move on.

As a seller your property advert hasless than three seconds to make a pos-itive impression with a potentialbuyer, Shipside warned, Making animmediate impression is more impor-tant than ever, and this means findingthe perfect combination of attractiveprice, compelling photographs andalluring description.The data comes from 107,915 asking

prices, representing about 90 per centof the UK market, put on Rightmoveswebsite by estate agents between 10June and 7 July.

GROWTH should return to theeconomy over the next six months,

according to forecasts out todayfrom the Ernst and Young ItemClub, but the pace will be so slowthat unemployment will get worsebefore it gets better.

The squeeze on householdincomes should slow as consumerprice inflation falls to 1.7 per centby the end of the year, allowing theeconomy to expand through the restof the year, the group forecast.

That will leave GDP unchangedfor 2012 as a whole, with growth of1.6 per cent in 2013 and 2.6 per

BY TIM WALLACEcent in both 2014and 2015.

But poorgrowth in the

year so far meansgovernmentspending is soaringwhile revenues aredisappointingly slow,the economists warned.

Central governmentspending was 7.9 per centhigher than a year earlierin May, the strongestgrowth in eighteenmonths, said the report.

Revenue growth hasweakened significantly

in recent months and in May centralgovernment receipts were up just 1.6per cent on a year earlier, well shortof the OBR full year forecast of four

per cent.And despite the projectedgrowth for the rest of 2012, the

forecast still seesunemployment rising in thecoming months, from 8.2per cent in the threemonths to April to 8.6 percent by the end of theyear and peaking at 8.7per cent in early 2013.

SOURCE:RIGHTMOVE

Share of private sector gross value added

1990 1994 2002 2009

5

0

10

15

20

25

10 %

Tangibleintensity

Intangibleintensity

Totalinvestmentintensity

ITALYS government will revise itsforecasts to predict an even deeperrecession, when it updates itsofficial estimates in September,new economy minister Vittorio

Grilli said in an interviewpublished yesterday.The government will forecast a

contraction of just under 1.9 percent in 2012, deeper than the 1.2per cent previously forecast.

That brings it close to the Bankof Italys estimate of a two percent contraction but moreoptimistic than the employerslobby Confindustrias predictionof a contraction of more than 2.4per cent.

Grilli said the Italian government

Italy faces harsher contractionthis year as austerity kicks in

BY HARRY BANKSwas wrestling with the question ofhow to reduce its debt. Italys

borrowing costs were still too high,he said, but short-term rates hadfallen from a year ago whenfinancial market pressureeventually led to the toppling of

former Prime Minister SilvioBerlusconis government lastautumn.

Grilli said markets had not yetrecognised the full effect of the

governments deficit-reductionmeasures and structural changes tolabour and pension laws. He saidthat 40 per cent of Italys debt is inforeign hands.

Grilli said in the interview thatmost feasible path to debtreduction is a multi-year plan toreduce Italys debt pile.


cityam.com

UKs lost decade for innovationas focus is on bricks and mortarTHE UK has undergone a lostdecade of investment intoinnovation, instead piling intocash and concrete, said charityNesta today.

Between 2008 and 2011innovation investment collapsed

by over 24bn, according to theirsurvey of 1,200 businesses a fallequivalent to five times the

governments budget for scienceand technology research.

This was made up of a seven per

cent fall between 2008 and 2009,and a further 14 per cent collapse

BY BEN SOUTHWOODbetween 2009 and 2011.

Everyone agrees thatinnovation is the only route tolong term growth, claimed GeoffMulgan, chief executive of Nesta.

The concern is that todaysreport and investment index showthat investment didnt just fallduring the immediate aftermathof the financial crisis, butcontinued falling as the economyappeared to stabilise, Mulgan

warned.Nesta believe that more

innovation is necessary for

continued sustainable growth,arguing for the implementation of

its Plan I, which aims atinnovation led growth, and whosedetails they will release over thecoming months.

SAVINGS have been increasinglysqueezed over the last year,households are having a toughertime making ends meet and morepeople have been forced to borrowfrom their families, according toresearch published by Scottish

Widows today.In a survey of 1,500 adults aged

18 and over, 54 per cent of womenand 45 per cent of men reportedhaving less money at the end of themonth than they did last year.

Thirty per cent of men and 37per cent of women say they havehad to stop regularly saving, while

26 per cent of women and 17 percent of men said theyd been forced

People borrowing more fromtheir family during recessionBY BEN SOUTHWOOD

to sell items online to raise cash.There was also a gender divide in

reports of borrowing from families,where nearly a quarter of womenbut only 14 per cent of menreported being forced to borrow.

We know that women are morelikely to worry about financialissues, claimed panel member LizFraser, However, women are beinghit hard by the current recessionmany have part-time jobs to fitaround their children, and thesetend to be the first jobs to go in adownturn.

But both genders were beinghammered by financial challenges,

with 42 per cent of men, and 48 per

cent of women seeing them as thebiggest issues facing their families.

NORTHWEST

2.1%

YORKSHIRE

2.5%

EASTMIDLANDS

0.8%

EASTANGLIA

1.2%

NORTH

1.3%

WALES

0.4%

SOUTHWEST

3.1%

WESTMIDLANDS

2.0%

SOUTH

EAST

0.8%

GREATERLONDON

3.6%

Monthly averages of transactions and new property listings

Mar12Mar11Mar10Mar09Mar08Mar07

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

AveragenewpropertylistingspermonthAveragesalestransactionspermonth

Time on market indicator

JunMayAprMarFebJanDecNovOctSepAugJulJun20122011

12011010090807060504030

1020

0

Days

National

London

London leads monthly house price slump, bucking long-term recovery

George Osborne is battlingto bring spending down

Economists warn slow recoverywill lead to unemployment rise

7/31/2019 Cityam 2012-07-16

15/23

MONDAY 16 JULY 2012 15cityam.com

The Supreme CourtThe UKs final court of appeal for

civil cases has announced thatLord Neuberger of Abbotsburywill become Britains top judgefrom October when he takes upthe role of president of theSupreme Court. Our story onFriday 13 July contained anincorrect photograph, for whichwe apologise.

Norton RoseThe law firm has appointed Simon Lew as a shippingpartner in its London banking practice. Lew has been apartner in Clifford Chances banking and finance practice forthe past 16 years, and has headed its ship finance practicefor the last five years. He specialises in structured finance,leasing and restructuring.

Towers WatsonRoss Howard has been appointed global leader for the

professional services firms insurance and reinsurancebrokerage business. He has over 35 years experience in theindustry, and joined Towers Watson in 2002 after itsacquisition of M Clayton & Co.

SNR DentonThe law firm has announced three senior hires into itsbanking and finance division. John Stansfield will join itsMoscow office. Qasim Aslam joins the Dubai office. Jean-Norbert Pontier joins the firms Paris office.

Perella Weinberg PartnersNick Johnston has been appointed managing director inthe financial services firms London-based healthcaresector advisory group. He was most recently an executivedirector in JP Morgans healthcare investment bankingdivision.

One MediaThe music and visual rights acquisition firm has appointed

Julian Wall as managing director of its One MediaPublishing subsidiary. He is currently director ofindependent member services and international events atthe BPI, the music industrys trade federation.

ProskauerThe law firm has announced three new partner hires in itsLondon office, effective September 2012. Peter Castellonjoins from Citigroup, where he is currently deputy generalcounsel, banking and capital markets. Katherine Mulhernjoins from Kaye Scholer and Roberto Bruno joins fromCravath Swaine & Moore.

Liberty GlobalNick Marchant has been appointed managing director andtreasurer of the international cable company. He joins fromJP Morgan. Marchant replaces Dennis Okhuijsen.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

UK firms set toupdate marketin busy week

ASLEW of company results this

week culminates with a busyThursday, when retail giantSports Direct, Halfords,

KingfisherandMothercare are all setto update the market.Accountancy software maker Sage is

set to give an interim managementstatement today, which will be fol-lowed with a Capital Market Day for

investors tomorrow.Panmure Gordon says todays update

is likely to be hampered by the grimstate of affairs in Europe and hasreduced its earnings forecast from19.9p to 19.3p a share.Tomorrows economic news includes

details of the Consumer Price Indexand Retail Price Index. IG Groupwillalso give its full-year report.

On Wednesday, the minutes fromthe July meeting of the Bank ofEnglands Monetary Policy Committeewill be published, where the majorpoint of interest will be the vote on thedecision to beef up the banks assetpurchase programme. The unemploy-ment rate is also set to be announced.

Cable and Wireless Worldwidewillhost its annual general meeting whileEbayand Ericsson are set to give sec-ond quarter updates.

On Thursday DIY retailer Kingfisheris forecast to give a solid second quar-ter update, despite the poor weatherrecently. Broker Jefferies predicts thefirms second quarter earnings beforeinterest and tax to be broadlyunchanged.

Sports Direct is set to give a finalreport, while Britvic, Halfords andImperial Tobacco will give interimmanagement statements andMothercarewill also deliver a tradingannouncement.

Gulf Keystone, JJB Sports, LandSecurities and Mothercarewill havetheir annual general meetings.Technical companies updating the

market include Microsoft, Nokia andVerizon.

In economic news, the EU willannounce its balance of payments.Meanwhile the UKs retail and inter-net sales figures for June will be

released, with investors hoping for aspike from Jubilee celebrations.On Friday, mobile phone networks

giantVodafonewill give a first quarterupdate. Nomura predicts the groupwill deliver year-on-year organicgrowth of 0.7 per cent, down from 2.3per centAGMS include CWW, Mulberry,

Homeserve andWalker Crips.

INVESTORS are looking at an onslaughtthis week. If its not corporate earnings,its Ben Bernanke talking abouteconomic issues before Congress.

Recent warnings from a number of com-panies, including chipmaker AdvancedMicro Devices, helped drag the S&P 500lower for six straight days before a Fridayrebound.The S&P 500 and Dow erased losses for

the week, barely finishing higher by 0.2 percent and less than 0.1 per cent, respective-ly. The Nasdaq composite fell 1 per cent forthe week.With a slew of companies set to report

results this week, the hope amonginvestors is that the bad news has been fac-tored in, but the broader picture remainslacklustre. That may limit the marketsgains even if companies clear a low bar.

Expectations have been beaten down alot, said Robbert Van Batenburg, head ofequity research at Louis Capital in NewYork. The problem is were dealing with aglobal slowdown, and Im sure thats goingto be reflected in some of the commentsyoure going to be hearing.

Data showing slower growth in Europe,

China and the United States has weighedon the stock market, while US companieshave warned about overseas weakness anda stronger dollar hurting profits onexports.The minutes from the Federal Reserves

June meeting suggested it is not ready toinject more monetary stimulus into theeconomy, but traders will be hanging onFederal Reserve Chairman Bernanke'severy word for mention of such a possibili-ty and how he views the slowing economy.This week, dozens of Standard & Poors

500 companies are set to report. From toptechnology names including Intel andMicrosoft, to General Electric and Coca-Cola.

Earnings estimates have already fallensharply. S&P 500 earnings for the secondquarter now are expected to rise just 5 percent from a year ago, down from an esti-mate of 9.2 per cent at the beginning ofApril, according to Thomson Reuters data.

Nearly all sectors have seen estimates falldue in part to weak demand in Europe.

Energy and utilities are expected to be theweakest performers this quarter after bigdeclines in energy prices in the secondquarter.The fall in estimates could be enough so

that the majority of companies end upbeating expectations, as they typically do,inspiring a relief rally. That could bolsterthe S&P, where trading has narrowed to arange between 1,310 and 1,370 for most ofa month.

Investors could see some downside sur-prises in high-end consumer companies,industrials and financials, said PaulMangus, head of equity research and strat-egy for Wells Fargo Private Bank inCharlotte, North Carolina.

For example, Bank of America is expect-ed to report earnings of 15 cents a share onWednesday, but Thomson ReutersStarMines SmartEstimates put expecta-tions at 13.5 cents per share, or a miss ofabout 9 per cent.The technology sector could be a mixed

bag, Mangus said.On one hand, there are very good trends

on the software side. (But) there may besome disappointments among some of the

hardware manufacturers, he said.BesidesAdvanced Micro Devices, a weakforecast was issued by fellow chipmaker

Applied Materialslast week, while enginemaker Cummins warned on sales. AMDreports results on Thursday.

Negative to positive earnings guidancefor the second quarter is 3.3 to 1, the worstsince 2008, Thomson Reuters data showed.Among other S&P companies scheduled

to report are Goldman Sachs, CitigroupandJohnson & Johnson.The final details of a Spanish bank

bailout are expected this week amongdevelopments in the 2 1/2-year old Eurozone debt crisis.

Bernanke is due to deliver his semi-annu-al monetary policy report to Senate andHouse of Representatives committeestomorrow and on Wednesday, althoughanalysts said he is not likely to divulgeplans of further economic stimulus.

Stocks lost ground last week as Federal

Reserve minutes showed further fiscalstimulus is unlikely for now.

Investors hope for market lift fromcompany reports and Fed policy

BESTof the BROKERSBooker Group PLC

9Jul 10Jul 11Jul 12Jul 13Jul

p94

93

91

92

90

88

87

89

88.9513 Jul

BOOKERPeel Hunt rates the wholesale retailer buy with a target price of 100pahead of an interim management statement on Wednesday. The broker isexpecting to see a two per cent rise in like-for-like sales, excludingtobacco, and sees an opportunity to buy into the shares if the figures endup disappointing the market. Peel Hunt is particularly keen on buying atthis stage following Bookers 140m purchase of Makro in May.

FTSE

9 Jul 10 Jul 11 Jul 12 Jul 13 Jul

5,700

5,680

5,660

5,640

5,620

5,600

5,666.1313 Jul

DASHBOARDCITYCITY MOVES

To appear in CITYMOVES please email your career updates and pictures to [email protected]

LONDONREPORT

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

in association with

Mothercare PLC

9Jul 10Jul 11Jul 12Jul 13Jul

p196

194

192

188

190

186

184

192.2513 Jul

MOTHERCARESeymour Pierce rates the high street chain sell with a target price of145p. The broker expects the recent miserable weather to have dented

sales at several retailers due to update the market on Thursday,including Kingfisher, Halfords and Sports Direct. But Seymour Pierceexpects struggling Mothercare to come off worst, with a nine per centfall in first quarter UK sales.

Aegis Group PLC

9 Jul 10 Jul 11 Jul 12 Jul 13 Jul

p240

230

220

200

210

190

170

180

235.5013 Jul

AEGISUBS has downgraded the media group from buy to neutral and hikedits target price from 195p to 240p following a 3.15bn takeover offer fromDentsu. The broker thinks the current bid price of 240p per share appearsto fully value the firm and expects the deal to close in spite of some rival

interest. UBS also points out that, due to very little client andgeographical overlap, the deal is unlikely to have anti-trust problems.

THE WEEK AHEAD

7/31/2019 Cityam 2012-07-16

16/23

AFTER weeks of problemsin the banking sectormaking front pages, itstime we start taking stepsto move business back to

where it belongs: the businesssections of our papers (thoughthat would, of course, be hard inthe case of this newspaper).Reputation matters and its thedriving force behind any goodbusiness. And a good reputationis based on trust.

In 1923, the London StockExchange received its own coat ofarms bearing the motto dictummeum pactum my word is mybond. The vast majority ofworkers in the City of London still

follow this principle closely. It not

TO SAY that high-frequencytrading (HFT) is blamed forevery big financial mishap isto exaggerate but onlyslightly. Regardless of the

hard evidence from academics,exchanges and regulators about thepositive impact of HFT, the criticscontinue to dominate headlines.

Its not hard to see why. Innovationin any industry has always attractedcritics. To compound matters, themedia and policy makers alike are

receptive to anti-HFT rhetoricbecause it is anti-financial industry.But the evidence tells a very differ-ent story.Take the May 2010 flash crash.

Again and again the critics cite it asexhibit A in their indictment of HFT.Yet a joint report by the CommodityFutures Trading Commission andthe Securities and ExchangeCommission, the two governmentagencies that oversee the US mar-kets, concluded that HFT wasnt thecause. Moreover, a report by theChicago Mercantile Exchange showsthat far from causing the flash

in association with category sponsorsvenue sponsorchampagne reception sponsor

Are you one of the citys top businesses of the year?Visit: www.cityamawards.com to enter the City A.M. Awards 2012.

Extended deadline: 20 JulyFive days left to register.

cityam.com/forum

Transaction costs in

US equities have fallenby about 60 per centin the last 15 years

THEFORUM

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.

16MONDAY 16 JULY 2012

REMCO LENTERMAN

High-frequency trading is not thedevil behind every market mishap

crash, high-frequency traders actual-ly absorbed the initial sell orders.The latest example of anti-HFT crit-

icism came with the Facebook fias-co. Once again the critics pointedtheir fingers at high-frequencytraders and blamed them for thebungled offering. This is an absurdaccusation. Nasdaq has acknowl-edged that its own technical issueswere to blame for the problems thatdogged Facebooks market debut.Contrary to claims, HFT firmscaused no disruption to Nasdaqsproblems in opening up Facebooksshares for trading.Yet the myths persist. Our mission

at the FIA European PrincipalTraders Association (EPTA) is to

bring balance to the HFT debate. Werecognise that fact can be less com-pelling than fiction, and we knowthat we often stand in the way ofthe medias never-ending search fora good story for tomorrows paper.But financial market policy mustnot be driven by emotive language,anecdotes and fabrications.The great thing about electronic

markets is that there is plenty ofmarket data available for analysis,and we think this empirical evi-

dence convincingly demonstratesthe benefits of HFT.

Lets look at some of that evidence.HFT has substantially reduced fric-tional costs in the markets and istherefore of benefit to end-users,including pensioners. As Vanguardhas stated, transaction costs in USequities have decreased by about 60per cent in the last 15 years. Theselower transactions costs will enablemutual fund investors to expect aninvestment balance around 30 percent higher than they would haveotherwise.

Equally misguided are assertions

that HFT causes volatility. Much aca-demic evidence shows that it eitherdoes not affect volatility, or evenreduces it. Volatility is more likely tobe caused by macroeconomic andfinancial developments. And ratherthan leaving the market at times ofhigh volatility, as is claimed, the evi-dence suggests that HFT firms do

the opposite. Our organisations fig-ures on the amount of trading byour members shows that our mar-ket shares peak in periods of volatil-ity.Then there is the charge that high-

frequency traders provide fake liq-uidity, withdrawing quotes before

they can be acted upon. This isimpossible. Automated and regulat-ed exchanges simply do not enablefake quotes. These markets are not acat and mouse game, where themouse gets back in its hole as soonas he sees the cat. In the exchangetraded markets the only way themouse knows that there is a cat iswhen hes already been eaten. Inaddition, in a large amount of thetrades executed on exchanges, ourmembers are involved on at least

one side of the trade. The liquiditythat we provide is very real and veryessential.

Our critics choose to overlook thevalue we add to the real economy.We lower transaction costs andincrease liquidity. As such, we urgepolicymakers to weigh up the costsof regulatory reforms. No one bene-fits if badly designed regulationsdisrupt liquidity and drive up costsfor traders and investors.Remco Lenterman is chairman of FIA

EPTA. FIA EPTA represents firms thattrade their own capital in the Europeanexchange-traded markets.

only supports ethical behaviour,but it makes very good businesssense. Yet although the vastmajority of those who work in theCity had no involvement in, oreven knowledge of, the Libor issue,we cannot dismiss it as a matter ofone bad apple spoiling the bunch.The culture and working practices

in some financial institutions were

not acceptable. Should further suchactivity be uncovered byinvestigators, we expect theperpetrators to feel the full force ofregulatory action.

This scandal has been damagingto the City and those who work init, so it is important that we startdealing with the problems at theheart of this issue. We must alsomake sure that we are seen to bedoing so. We must be more active,receptive to change and firm withthose who have behaved badly.

The depth and breadth of anyproblem should not gounacknowledged. This is not justabout British banks and the City ofLondon. It is one thing when an

individual bank is implicated in a

scandal like this, but we arelooking at a problem of a wholedifferent order wheninvestigations are taking placeinto the conduct of over 20 banksworldwide.

Justice needs to be done, andswiftly. The reason for thisurgency is because banking on itsown itself just one component ofthe financial services industry isa critical part of our economy. Asuccessful financial services sectorsupports jobs and growth in allparts of the country. Financialservices contributed 63bn inannual tax revenues in the year toMarch 2011.

Contrary to what the industrys

critics might suggest, changes are

taking place. Investment and retailbanking operations are beingpartly separated following theVickers report.

There is certainly a need toreview the way Libor is calculatedand mechanisms must be put inplace, such as living wills, to helpensure that, should banks fail,there would be no cost to thetaxpayer.

We must prove ourselves onceagain worthy of the publics trust.This means putting the widerpublic, as well as clients andshareholders, at the heart ofpractice upholding the higheststandards of ethics.

Mark Boleat is policy chairman at

the City of London Corporation.

CITYMATTERS

MARK BOLEAT

The whole City must work to rebuild the trust destroyed by a rotten few

7/31/2019 Cityam 2012-07-16

17/23

General enquires: 020 8267 4043 | [email protected] | Awards night: Wednesday 17 October.

17

Health solutions[Re: Demographic timebomb will forcegovernment to downsize, Friday]There are plenty of other healthcare modelsto explore to avoid the incipient fundingcrisis. One is the Singapore model of healthsavings accounts, which provides directsubsidies to the less well-off andcatastrophe insurance to pay for huge one-off costs. Another is the Dutch socialinsurance model, a private insurancescheme in which everyone pays the same.Neither of these alternatives is the completesolution. For that, we need significantsupply-side reform, including in the way wetrain doctors. Unfortunately, the BritishMedical Associations recent successes overpay have come at the expense of taxpayers.

Paul Devenish

Generation dividePeople are living longer, so we will eitherhave to work longer, take a smaller pension,or pay more in contributions. And as a coun-try, well have to adopt more voluntary andcharitable networks to support our elderly.Wealthier people should also be encouragedto use private health insurance. As a youngperson, Im disheartened that I pay for suchexpensive services, used so liberally.

Aled Lumley

How many young people can truly say theycan expect the same standard of care in 2040as the elderly get now, if we keep the samefunding model? Were worrying about thewrong issues university fees wont seem soimportant at 65.

David Pole

THE so-called shareholderspring in whichshareholders have beenrevolting against the pay ofchief executives of major

corporations like Barclays, Aviva,and William Hill is gainingmomentum. And activist hedgefunds, which pressure publiccompanies to make changes toimprove a companys share price,will increasingly drive this

phenomenon. Many regard hedgefunds as self-serving vultures but this stereotype is beingoverturned.Activist funds, a common phe-

nomenon in the US, are spillingover to the UK. Along with privateand institutional investors, activistfunds are increasingly gettinginvolved to try and improve share-holder returns, curb excessive payand add their representatives toboards of directors.

Europes largest activist fund,Swedish-based Cevian Capital, hasbeen active in Britain and success-ful in improving shareholderreturns. Cevian built a stake inCookson Group, the British indus-trial materials supplier, beforealmost a third of shareholdersrevolted against excessive executivepay proposals for 2012. TheChildrens Investment FundManagement (TCI) is a Londonbased hedge fund known for itsshareholder activism. Most recent-ly, TCI has been a major sharehold-er of Deutsche Borse, the GermanStock Exchange, where it forced theresignation of its chief executive,who refused to abandon his plan totake over the London StockExchange.

The recent successes of activisthedge funds in the US in changingthe management of companies spearheaded by activist investors

TOP TWEETSThe government gets away too easily withthe current dire situation. Increasing publicspending must be denounced as insane.@symphara

I no longer expect this coalition to make thebold, radical changes Britain so urgentlyneeds.@DouglasCarswell

Are any of the 17 army units cut by the gov-ernment last week being put on standby thisweek for Olympic security?@jimmurphymp

If its possible to prosecute traders for manip-ulating Libor, can we prosecute the Bank ofEngland for manipulating the base rate?@DanHannanMEP

After Chinas growth slowed to 7.6 per centlast quarter, should we remain optimistic?

YESChinas economy slowed in the last six months but, in contrast to thedownturn of 2008, the local jobs market has held up well. Its hardto be that worried about a country in which the average city-dwellersaw their income rise 13.3 per cent between the first half of this yearand the same period in 2011. A tight labour market will continue topush up wages, supporting consumption going forward. Meanwhile,things are beginning to look up in the property market, the maineconomic black spot. According to one closely-watched series,home prices rose in June, for the first time in 10 months.Government efforts to boost infrastructure investment will alsobegin to have an impact in the second half of 2012. Growth is easingfrom the boom rates seen in the recent past, but it should remainstrong for many years to come.Duncan Innes-Ker is China analyst at the Economist IntelligenceUnit.

Duncan Innes-Ker

NOMichael Derks

These latest GDP figures out from China simply affirm the

distinct loss of momentum experienced by the Chinese economyin the first half of this year. Major sectors within the economy,particularly construction and real estate, heavy industry a ndautomobile production, have all slowed much more rapidly thanexpected. The vast majority of Chinese firms are also reportingshrinking profit margins and slowing profits growth. Lookingahead, notwithstanding recent policy initiatives, the pace ofrecovery will remain subdued. China is very reliant on globaltrade to sustain its domestic growth, and the prognosis for theformer looks subdued at best. We can expect much more fromChinese policy-makers over coming months in terms ofmonetary and fiscal measures, as well as a weaker exchangerate.Michael Derks is chief strategist at FxPro

RAPIDresponses

like Carl Icahn, Bill Ackman, DanLoeb and Nelson Peltz demon-

strates that positive changes can becarried out without more govern-ment interventions. In most cases,intervention by hedge funds resultin management changes, represen-tation in the board, reduced chiefexecutive pay, better share per-formance and dividends, as well asan increased chance of emergingfrom Chapter 11 bankruptcy.

In the past, corporations with amarket capitalisation of $100bn(64.3bn) or more had the power toignore calls from activist funds.Not anymore. They are nowresponding quickly to any fundthat holds below one per cent oftheir shares.

Some of the US governmentsnew regulation has been successfulin empowering shareholders tovote on executive pay. US share-holders are now in a position toregulate major corporations and,for a change, have public opinionon their side. It is not clear to whatextent shareholders in the UK willbe as effective as those in the US incurbing executive pay. British chiefexecutives are likely to be spared anannual vote on their bonus and pay more likely it will be only everythree years. These are early days foractivist funds in the UK.

Gil Shidlo is an academic who hasworked at international organisations.He contributes to various London Schoolof Economics publications.

MONDAY 16 JULY 2012

GIL SHIDLO

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

Distribution helplineIf you have any comments about the

distribution of City A.M.please ring 0207 015 1230, or email

[email protected]

EditorialEditorAllister Heath |Deputy EditorDavid Hellier |Managing EditorMarc SidwellNews EditorElizabeth Fournier |Business Features EditorPhilip Salter |Lifestyle EditorZoe Strimpel |Sports EditorFrank Dalleres

Art DirectorGavin BillennessCommercial Sales DirectorJeremy Slattery | Commercial DirectorHarry Owen |Head of DistributionNick Owen

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

Editorial Statement: This newspaper adheres to the system of self-regulation overseen by the Press Complaints Commission. The PCC takes complaints about the editorial content of publications under the Editors Code of Practice, a copy of which can be found at www.pcc.org.uk

The Forum is open for you to take part. Got a sharp comment onone of todays columns? Do you have another subject you wantto share your opinion on? We want to hear your views.Email [email protected] or comment at cityam.com/forum

Shareholders can

find a potent allyin activist funds

7/31/2019 Cityam 2012-07-16

18/23

18MONDAY 16 JULY 2012 cityam.com

IT WAS depressing: the

business was makingcontinual losses. Wed triedeverything we could think of,

but nothing seemed to work.Wed made many mistakes andhad an unfair share of bad luck.

We reached a decision: find abuyer an

cityam 2012-07-16

Documents