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BUSINESS WITH PERSONALITY

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Government warned

it must boost growthto avoid a backlash

BUSINESS WITH PERSONALITY

SIR MICHAEL Rake has held on tohis chairmanship of easyJet, after arebellion led by founder Sir SteliosHajj-Ioannou narrowly failed to

garner enough support to oust him.Around 47 per cent of easyJet

investors yesterday backed Steliossattempt to get rid of Rake, includingthe tycoon and his familys 37.2 percent holding.

EasyJet said after the investor

BRITISH businesses are increasinglyfrustrated at the governments failureto address the recession and are plan-ning to cut back on investment if poli-cies keep being delayed or torn apartby infighting, the Confederation ofBritish Industry has warned.The influential group has been sup-

portive of the deficit reduction planand schemes like Funding for Lendingthat seek to boost credit to firms.

But it is beginning to lose patiencewith a government it sees as lackingany real focus on the economy.

We do not have a sense the govern-ment has a coherent strategy forgrowth, deputy director Neil Bentleytold City A.M. Businesses are gettingfrustrated at the amount of time it istaking to build momentum towards agrowth plan.

Bentley pointed to rows between theTreasury and the Department ofEnergy over low carbon technologiesas evidence that the government isfailing to give industry any stabilityover long-term policies.

He also called for clarity over thetimetable of future policy announce-ments, including upcoming aviationchanges.

Firms base long-term planning deci-sions on policies. The worst thing forbusinesses is for the government tofudge policies, creating ambiguity, heexplained.

It comes after a weekend in whichCBI chairman Sir Roger Carr called for

a greater focus from the governmenton big business and the developmentof a more active industrial policy.

But the government disputed theclaim that it is making slow progress,arguing that positive steps are beingtaken to boost growth.

www.cityam.com FREE

We are recovering from the worstfinancial and debt crisis of our life-times and the UK is not immune tothe turbulence in the Eurozone, saida Treasury spokesperson.

The government has set out a com-prehensive growth strategy and given

businesses the certainty they need bysticking to its economic plan. Despitethe difficult conditions, employmentis rising and inflation is falling.

However, the government facesopposition from some of its own MPsto its policies and those of the CBI.

The CBI is right to say the govern-ment has policy wrong the policy ofContinuity Brown at the Treasury isnot working and the overdependenceon monetary stimulus is never goingto work, said Conservative MPDouglas Carswell.

But they are calling for corporatism,in effect state handouts for big busi-ness. This might boost firms in theshort-term but doesnt create wealth.

Endless handouts have not worked we need to address the underlyingissue of competitiveness instead.

FTSE 100 5,831.88 -15.23 DOW 13,169.43 -38.52 NASDAQ3,022.52 +1.66 /$ 1.57 unc /1.27 -0.01 /$ 1.23 unc

COALITION ATTACKEDBY BUSINESS LOBBY

ISSUE 1,695 TUESDAY 14 AUGUST 2012

Certified Distribution28/05/2012 till 01/07/2012 is 132,857

BY TIM WALLACE

meeting that Sir Michael actuallywon support from 96 per cent ofshareholders, excluding Steliossshares and ignoring the one in sixinvestors who did not cast a vote.

Stelios called yesterdays meetingat easyJets hanger in Luton as partof his long-running attempt todethrone Sir Michael, most recently

due to his role as deputy chairmanat scandal-hit Barclays.

Rake had been favourite to takethe chair at Barclays after thefurore over Libor-rigging felledincumbent Marcus Agius and chiefexecutive Bob Diamond, but hassince ruled himself out of the job.

EasyJet had long claimed it was

confident of a victory, havingrevealed before the meeting thatseveral large institutions had giventheir blessing to Sir Michael. Anumber of smaller shareholdersand Stelioss spokesperson quizzedthe board on the chairmanssuitability yesterday.

Stelios, who founded easyJet in

AU REVOIR TO THE LONDON OLYMPICS AS ATHLETES HEAD HOME

THOUSANDS ofOlympic athletesleft Londonyesterday as thecity returned tonormal followingtwo weeks of medalglory and sportingsuccess. MayorBoris Johnson saidLondon 2012 hadbeen the greatestGames ever butadmitted it a greatrelief that it wasnow over.At St PancrasInternational theFrench pole vault

gold medallistRenaud Lavillenie(left) was joined bycycling silvermedallist GregoryBauge beforecatching theEurostar back toParis.Workers havealready beguntransforming theOlympic Park to besuitable for theParalympics, whichwill begin on 29August.

1995, claimed a moral victoryyesterday. The more people askthese questions, the moreaccountability we have, he said.

In my mind the City hasconfirmed its reputation as theplace where conflicts of interestand web of directorships areencouraged and protected for the

benefit of a handful of insiders.EasyJet said its board continues

to seek a constructive relationshipwith all its shareholders.

BY MARION DAKERS

Rake narrowly clings on to easyJet chair

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IN BRIEFJP Morgan boss defends recordn JP Morgan chief executive Jamie

Dimon has admitted that his initialresponse to the London Whalederivatives losses was stupid, buthas played down the impact on thebanks bottom line. He said in aninterview with New York Magazinethat the Whale has been harpoonedand that JP Morgan has crossed thets and dotted the is and put in newrules, and were fine. He said henever considered resigning over theresulting furore, and also hit out at theculture of bank-bashing andincreasing regulation, saying in theinterview: This is the United States ofAmerica. Thats what I remember.Guess what, its a free f***ingcountry.

PwC hit with RSM Tenon proben Professional services firm PwC faces

an investigation from the accountingregulator over its handling of RSMTenon Groups 2010 and 2011 audits,the Financial Reporting Councilannounced yesterday. TheAccountancy and Actuarial DisciplineBoard will probe the conduct of PwCand other members of the Institute ofChartered Accountants in England andWales (ICAEW) over theirpreparation, approval and audit ofthe financial statements of RSM. TheAADB also plans to look at PwCshandling of RSMs London StockExchange listing. We will becooperating fully with the AADBinvestigation. We will be vigorouslydefending our audits and other workcarried out for RSM Tenon Group,said PwC in a statement.

Greece sinks deeper intodevastating depressionGREECES battered economy shrankby an annual rate of 6.2 per cent inthe second quarter of the year as itsank further into a devastating reces-sion, data revealed yesterday.The figure came ahead of todays

GDP figures for France, Germanyand the Eurozone.The Greek economy shrank by 6.5

per cent annualised in the first threemonths of the year, meaning thepace of decline has slowed.Yet the troubled Eurozone member

states economy is now 16 per centsmaller than its 2008 peak, return-ing to a size last seen nearly a decadeago, in 2003.

Hopefully its some sign that therate of decline is starting to bottomout, said Markit economist ChrisWilliamson. And hopefully the firsthalf of the year was as bad as it getsand well see some improvementnow.

But the think tank IOBE expectsGreek GDP to shrink 6.9 per cent dur-ing the course of this year as a whole.The dire economic situation con-

tinues to harm any attempts to reinin the substantial annual govern-ment deficit towards sustainable lev-els the core target of Greecesbailout programme.

Meanwhile, Bank of Greece datayesterday revealed that Greeklenders turned to their countrys

Emails tell of EADS payments fearsSenior EADS executives were alerted fiveyears ago about questionable paymentsmade to Cayman Island bank accountsand lavish gifts given to the Saudi Arabianroyal family and military by a Britishsubsidiary that is now the subject of acriminal probe by the UKs Serious FraudOffice.

Housebuilding push to be unveiledMinisters are preparing to unveil a newpackage of measures next month to

stimulate the flagging housebuildingsector, in an attempt to help drag Britainout of recession. The plan has beendrawn up by Oliver Letwin, the primeministers head of policy, along withGrant Shapps, housing minister, andDanny Alexander, chief secretary to theTreasury.

INM receives offer for S Africa unitIndependent News & Media, the indebtedIrisih media group, has received a 240moffer for its South African media businessfrom a local consortium but said it wouldcontinue to explore interest from otherpossible bidders.

Curtain finally down on Tyco fraudFor nearly a decade Dennis Kozlowski livedthe high life, splurging millions of dollars ofcompany money on art, property and evena $6,000 shower curtain. But now theformer Tyco chief executive is to berelieved of his ill-gotten gains.

The key to the door gets cheaperHotel operators across Europe are beingforced to cut room rates to attract guestsas the Eurozone crisis hits corporatebudgets.

Three guilty of 10m Ponzi schemeThree individuals who funded luxurylifestyles in Majorca by cheating investors oftheir life savings have been convicted ofrunning a multi-million pound Ponzischeme.

Popes butler to stand trialThe Pope's private butler stole a raft ofdocuments from the Pontiff's own office aspart of a campaign to rid the Vatican of"evil and corruption", it was claimed as a

judge ordered him to stand trial.

Focus Media gets buyout offerThe head of Focus Media Holding andother investors are offering to take theShanghai-based advertising companyprivate in a $3.66bn deal that wouldremove it from the sceptical eye of USinvestors.

Facebook shares unlockingAn avalanche of privately held Facebookshares could begin hitting the market thisweek, as rules expire that have kept someearly investors from cashing out.

STANDARD Chartereds chiefexecutive Peter Sands last nightflew to New York to bolster histeam, which is working toquickly settle accusations thatthe bank broke US financialsanctions against Iran.

The bank says it has identified$14m (8.9m) of trades in breachof the rules, while theauthorities claim the figure is inthe region of $250bn.

Regulators from the New YorkState Department of FinancialServices (DFS) summoned the

bank to a hearing tomorrow, butthe set up has not yet beendecided it may be a closedmeeting of lawyers, or a publichearing including top bank

bosses.In the hearing the bank is

expected to have to defend itsright to a banking licence in thestate, while analysts have warnedit could face a fine of up to $1bn.

At the start of this monthStandard Chartered reportedstrong second quarter results,

with profi ts rising nine per centon healthy emerging markets

growth, bucking the industry-wide downward trend.

But the Iran claims from NewYork regulators last week haveknocked over 14 per cent off the

banks shares.

StanChart boss

in US to clear upIran accusations

Greek PM Antonis Samaras had expected even worse GDP figures for quarter two

2 NEWS

BY TIM WALLACE

BY HARRY BANKS

To contact the newsdesk email news@cityam.com

FOR many, yesterday was like thehangover one suffers after anexcessive night out. The Gamesare over, the post-Games post

mortem has begun.The arguments are many. How do

we inspire children to take up moresport? What will happen to the

Olympic Park once the ParalympicsGames finish in a few weeks time?How do we as a nation recreate andhang on to the tremendous goodwilland sheer exuberance that overcameus all during the past few days againsta background of economic austerity?There are so many questions and as

ever, so many answers, not all of themfacing in the same direction.

One thing on which there can be lit-tle dispute is that the UK as a wholeneeds more than ever to pull togetherin order to wrest the economy, onwhich we all depend, out of its cur-

TUESDAY 14 AUGUST 2012

rent malaise.There are undoubtedly issues of reg-

ulation, taxation, political uncertain-ty etc that can and are holdingbusinesses back at the moment. Butthe Olympians have shown above allelse that often what seem to be insur-mountable barriers to progress can beovercome.

Here at City A.M.we are building upto the equivalent of our ownOlympics Ceremony in October ourthird annual awards at which we

celebrate exactly the sorts of peoplewho have helped to drive our econo-my forwards despite the obstacles intheir way.There is a certain symmetry here,

for it was at the inaugural event, nownearly two years ago, that Lord Coe asthe keynote speaker shared with us

his vision for London 2012 thatbecame such a spectacular reality inthese past few days.

Not surprisingly, Lord Coe is one ofthose shortlisted in this years awardsto be Personality of the Year for histremendous work as chairman ofLocog, the Games organising com-mittee.

Our high powered panel of judges,which includes CBI president SirRoger Carr and Katherine Garrett-Cox, CEO of Alliance Trust, will haveto assess his work against the achieve-ments of others such as Richard

JEFFERIES AND MAN UTDTheres much debate in the bankingworld about the performance ofJefferies, the US-owned broker, on theManchester United flotation at theend of last week.

In kicking the flotation of the UKsmost popular football club over the

line in New York, Jefferies hasachieved something its larger rivals,such as Morgan Stanley (who failed totake the club to market in Singapore)couldnt achieve.

But theres talk that ManchesterUnited stock, even if issued at a belowexpectations $14 a share, was massive-ly overvalued and has only traded halfdecently due to considerable finan-cial support from the underwriters. Itwill be a few weeks yet before we canjudge this one.

Scudamore of the Premier League,who secured a mouth-watering rightsdeal for his clubs, and HelenaMorrissey of Newton AssetManagement, whose tireless cam-paigning to get women better repre-sented in the boardroom is beginningto show results.

In other categories, some of theCitys best known bankers are pittedagainst each other, as are marketingcampaigns, insurance companies andinvestment banks.The awards wont take place at the

Olympic Park but they will be stagedcentrally in the City, at the St PaulsGrange Hotel. And the crowd will begenerous in its acclaim of the Citysvery own Olympians.

For further information and detailsof how to secure a place for the eventon 17 October, visit www.cityamawards.com.

central bank for liquidity last monthafter the European Central Bank (ECB)stopped accepting Greek governmentbonds as collateral from 25 July.

The ECB has cut off the banks pend-ing the latest report on Greece by EUand IMF inspectors, stepping up pres-sure on Athens to adhere to the termsof its bailout programme.

ECB funding to Greek banks fell by49.67bn in July from a month earlierwhile emergency liquidity assistancefrom the Greek central bank increasedby44.37bn, according to the figures.

The ECB also confirmed yesterday

that it did not restart its bond buyingprogramme last week, although it stillplans to launch a new and more trans-parent scheme for purchasing sover-eign debt that will be tied tointervention by the European rescuefunds and political action.

Italy yesterday sold 8bn (6.3bn) of12-month Treasury bills at an auctionyet had to pay 2.767 per cent slightlyhigher than at a similar auction lastmonth. Germany, meanwhile, sold3.77bn of six-month Treasury bills ata negative yield.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

EDITORSLETTER

DAVID HELLIER

david.helllier@cityam.comfollow me on twitter: @hellierd

Dont fret: its not long until City A.M.sown Olympics

Greece GDP four-quarter running totalbn (2005 prices)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

220

210

200

190

180

170

160

150

Source: Markit, National Statistical Service of Greece

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MANCHESTER United shares closedup yesterday, having traded consis-tently above their reduced floatprice, despite widespread claims thatthe shares were grossly overvalued.The footballing giants IPO opened

on a valuation of $14 on Friday,down from an initially planned $16to $20 range, but analysts at PrivCoreckon shares are worth less than $5each.

The magnitude of the overvalua-tion of Manchester Uniteds IPO and therefore the potential for a dis-astrous collapse in the companysstock is reminiscent of IPOs fromZynga and Groupon, said PrivCochief Sam Hamadeh.Talking to City A.M., Hamadeh also

suggested the lack of voting rights ora dividend, combined with the gar-gantuan debt burden, as further rea-sons the share price will head down.

Looking at nine comparable firmsand using three different methods tovalue the shares, PrivCo comes upwith a value of $4.97, less than two-fifths of the initial price.

Man Utd shares

are propped up,claim analysts

BY BEN SOUTHWOOD But the analyst puts the current rel-ative buoyancy of the shares down tothe fact that underwriters continueto maintain $14 buy orders.

Over the short term the shares cantrade at a premium to what theyreworth, Ken Perkins, an analyst atMorningstar, told City A.M. [They]potentially could have gone lower butpeople are stepping in any time itthreatens to go beneath $14.

But in the coming days and weeksPrivCo and others expect financialfundamentals to reassert themselvesas lead bank Jefferies & Co withdrawtheir support. Jefferies declined tocomment.

Economists reduce forecasts topredict a worldwide slowdown

GROWTH will brake sharplythroughout the world in thecoming years, a widely-regardingeconomics consultancy announcedthis morning.

Even fast-growing emergingeconomies will be hit by theweakening global situation, theCentre for Economics and BusinessResearch (CEBR) said.

China, where GDP growth was inthe double figures for much of thelast decade, will see its rate fall toseven per cent by 2016, the CEBRexpects. Nearby India will enjoy onlysix per cent growth both this yearand next, it also expects.

BY JULIAN HARRISAn emerging markets slowdown

coincides with recession in theEurozone and stuttering progress inthe US recovery, said the CEBRs TimOhlenburg.

Exporting nations such as Japanand Germany will be hit, along with

those relying on commodity prices.While food prices are being forcedup, other commodities are set totumble, the CEBR said.

Ohlenburg added that a MiddleEastern conflict or Eurozoneimplosion would risk turning theslowdown into a global recession.

Even without such shocks, the UKwill only recover with 0.7 per centgrowth next year, the CEBR said.

Jeferies & Underwriters orced to stabilise bid

40%

30%

20%

-10%

0%

10%

20%

30%

Zynga

Dayoftrading

Facebook

1514131211109876543210

A TREASURY select committee MPyesterday demanded a new tax onfirms including Google andFacebook that channel funds outof the UK to avoid corporation tax.

Labour MP John Mann told CityA.M. that members of thecommittee were increasinglyconcerned about tax avoidanceand suggested a transmission taxon the revenue that firms make inthe UK and declare in countries

with lower rates.There needs to be some sort of

transmission tax. This is a problemfor lots of internet companies who

are freeriding on us, Mann saidyesterday. They should pay a

Treasury MP calls for new taxeson Google and other web firms

BY JAMES TITCOMB modest tax. Its about time we getwise to non-physical goods, headded, singling out Google,Facebook and Microsoft. Mannalso called for Google executives toface the Treasury selectcommittee. We should be indialogue with them about whattaxes they should pay, he said.

Google made $4bn (2.6bn) inthe UK last year, but only declared396m to the Treasury, meaning itpaid just 6m in corporation taxon a 21m loss. Google, Microsoftand Facebook declare the majorityof their UK revenue in Ireland,

where they benefit from a lowercorporation tax. A Google

spokesman said: We comply withall the tax rules in the UK.

TUESDAY 14 AUGUST 20123NEWScityam.com

BRAZIL 3.1%

EASTERN & CENTRAL EUROPE 3.4%

MIDDLE EAST 3.4%

CHINA 7.6%

INDIA6%

AFRICA 8 Group 4.6%

CANADA 2.1%

USA 1.7%

UK 0.7%

EUROZONE -0.1%

ASEAN Group 4.4%

ESTIMATED GROWTH RATES FOR NEXT YEAR

Economic expansion will be more sluggish than expected next year even if theworld avoids sharp shocks from conflict or other crises, the CEBR said thismorning. Global growth for 2013 was downgraded by 0.5 percentage points,with the Eurozone facing another year of demoralising recession.

Worldgrowthtoslowto2.7%

in 2013

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JULIUS Baer, the Swiss wealth man-

ager, saw its shares plunge 7.4 percent yesterday after announcing anew SFr750m (490m) rights offerto help fund its purchase of MerrillLynchs non-US assets from Bank ofAmerica.

The firm will buy Merrillsinternational wealth managementfirms for 1.2 per cent of the valueof assets under management whenthe deal is completed, it saidyesterday.

It predicts it will pay SFr860mfor the business and the deal couldadd up to SFr72bn to Julius Baersasset base increasing assets undermanagement by 40 per cent.

The bank plans to fund the dealwith existing capital earmarked fora share buyback plan, new sharecapital and the issuance of newhybrid instruments.

It will also hold a SFr500m rights

issue for the deal and a furtherSFr250m rights issue for futurestrategic flexibility.

Chief financial officer DieterEnkelmann said: For ourshareholders the acquisitionrepresents a substantialinvestment in our future growth.

Investors recoilon Julius Baerasset purchase

BY MICHAEL BOW

STAGNATION in the British jobmarket is here to stay, accordingto the head of recruitment firmMichael Page International, whoyesterday announced a slump inhalf-year profits at his firm.

Things dont seem to be gettingany better, chief executive SteveIngham said. Our strongestregion continues to be Asia-Pacific we ended the first half withrecord performances inSingapore, China and Japan butit clearly remains tough [inBritain] and clearly tough in the

Eurozone.Its UK banking business has

been particularly badly affected,with gross profit at the unit thetotal income from fees down 50per cent in the first half of 2012on a like-for-like basis.

Michael Page, which specialisesin white-collar recruitment, hasfound its business hit by recessionas firms are reluctant to hire andcandidates are not as willing toswitch companies.

Trading in the second half ofthe year is anticipated to remainchallenging given tough compara-tors and the ongoing backdrop ofeconomic uncertainty, said ana-lyst Caroline de La Soujeole ofSeymour Pierce.

In the light of these uninspir-

Stagnant jobsmarket dents

Michael PageBY JAMES WATERSON ing results, we see no reason to

change our sell recommendation.Adjusted worldwide pre-tax profit

dropped almost 21 per cent to36.1m, with fee income edgingdown 0.5 per cent to 273.9m. TheUK, which provides almost a quarterof Michael Pages gross profit, saw feeincome decline 10 per cent in thefirst six months of 2012.The firm continues to look to devel-

oping markets, opening new officesin Casablanca, Cape Town and Rio deJaneiro, as well as entering theColombian market.

Michael Page is not alone, with theentire recruitment sector suffering

during the downturn. Rivals Haysand Robert Walters also reportedpoor results in recent months.

Shares in the firm, which havealready fallen by a quarter sinceMarch, closed down a further 1.9 percent at 371.20p.

Chief executive Steve Ingham can not see an end to stagnation in the UK job market

A big bet on emerging marketsrisks leaving nowhere to turn

EMERGING markets are a trickybeast. Michael Page has hardlybeen following a controversialstrategy in pursuing their

promise. It has, on paper, investedto expand its global recruitment

business where long-term growthpotential was generally agreed tolook the best and given theeconomic situation in the UK, thatcould still seem a prudent decision.

Page now generates 78 per cent ofits gross profit outside the UK. Itseyes are set on rising furtheralongside the hopes of previouslyuntapped markets. Yet its problemsare not just local, but global: pre-taxprofit was down 37.9 per cent in thefirst half of the year overall whencompared to the same period of2011. Even after adjusting forexceptional items, pre-tax profitwas down 20.6 per cent.

The trouble is, when you make aplay on a huge macro trend like EMexpansion, you can look like youare diversifying your business so

many offices in different countries yet in practice, that network isnot just costly to establish but itsfortunes risk being highlycorrelated in an extreme scenario.Such as being sideswiped by aglobal economic downturn.

There are also other practicaldownsides that spoil the grand EMnarrative adverse exchange ratesturned small increases in revenueand gross profit into flat or slightlynegative numbers for the recruiter.

Page is playing a long game, andif the fundamentals of emergingmarkets look less good than theydid, they retain promise. Yet itsproving a costly short-term strategy.

BOTTOMLINE

MARC SIDWELL

Michael Page International PLC

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395 p 371.2013 Aug

One important barrier to competitive entry into UK personal sectorbanking is obvious the fact that the core product, the current account,is usually given away for free, sold at below cost of production.

LORD ADAIR TURNER FINANCIAL SERVICES AUTHORITY

In short, I think that the reform of retail banking in this country cannotmove ahead unless we tackle the issue of free in-credit banking, and havea much better sense of what we are paying for and how we are paying.

ANDREW BAILEY BANK OF ENGLAND

There is no such thing as free banking, someone has to pay for it. If

you offer free banking, how do you cope with people who arentgoing to pay for anything?

COLIN KERSLEY M&S BANKING

THE WAR of words betweenBarclays and Guardian Care Homes(GCH) intensified yesterday as thefirm accused the bank ofintimidation in its legalwrangling.

Barclays is accused of mis-sellinginterest rate swaps to GCH a claimit staunchly denies, arguing the

firm is large and sophisticated, andunderstood exactly what it did.This business had a suite of

advisers, including Rothschild, aswell as several law firms and a lotof financial experience and skill in-house, said a Barclays spokesman.

Barclays understands the cliententered into their swap agreementswith sufficient understanding toexercise their own judgment as towhether the products would meettheir business objectives.

The bank filed its defence in thecase on Friday, meeting thedeadline given to it five days earlier.

But GCH yesterday claimed thebank was unfairly slow in filing.

Serving this defence at the verylast minute of a Friday afternoonhas caused me stress and worry,said boss Gary Hartland. I believeBarclays have sat on this defence for

several days and are just using it asan intimidation tactic.

Barclays hitsback at carehome critics

BY TIM WALLACECONSUMER groups yesterday

warned that banks customerscould be badly ripped off if thepopular free banking model ofcurrent accounts is scrapped.

Incoming Barclays chairman SirDavid Walker revealed he inprinciple favours chargingcustomers for current accounts,

joining FSA boss Lord Turner whobelieves the system prevents newbanks entering the market.

Providing accounts withoutcharges means banks must raisefees and prices elsewhere to cross-subsidise the accounts a set-up

BY TIM WALLACEwhich Walker told the SundayTelegraph may even have led tomis-selling as banks sought greaterprofits on certain products.

But Which boss Richard Lloydrejected claims that consumers

would benefit from the extracharges.

Consumers should not keephaving to foot the bill when the

banks have let us down so badly,he said, adding that customersalready tend to receive very littleinterest on current accounts.

There must be fundamental

change to the culture and practicesof the banks, including greatertransparency about the true cost of

banking.

TUESDAY 14 AUGUST 20124 NEWS

cityam.com

The newjobs websitefor London

professionalsThenewjobswebsiteforLondonprofessionals

C

ITYAMCAREERS.

com

Julius Baer Gruppe AG

8 Aug 9 Aug 10 Aug 13 Aug7 Aug

33.00

33.50

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Which warns banks not to startcharging for current accounts

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IN BRIEFPeltz joins Ingersoll-Rand board

n Ingersoll-Rand named Nelson Peltz toits board yesterday, months after theactivist investor pushed for changes at

the manufacturer of air conditioners andsecurity systems. The move averts apotential proxy fight between Ingersolland Peltz, whose Trian FundManagement holds a seven per centstake in the company. Ingersoll has saidit is evaluating a number of strategicoptions, including those put forth byPeltz.

Pfizer unit to float in the States

n Pfizers animal health unit Zoetis yes-terday filed for a $100m initial publicoffering as the largest US drugmaker nar-rows the focus on its core prescriptiondrug business. Pfizer, which bought USrival Wyeth for $67bn in late 2009 to bol-ster its array of medicines, has developedfew big-selling drugs of its own sinceimpotence-treatment Viagra was intro-duced in 1998. J P Morgan, Bank of

America Merrill Lynch and Morgan Stanleywill underwrite the offering.

Dandy may close after 75 years

n The UKs oldest comic may ceasepublication, as its circulation dipsbelow 8,000, from a peak of 2m. Thehome to characters including DesperateDan, the cow pie loving cowboy, waslaunched in 1937 but is facing difficultycompeting with new media. Aspokesperson for publisher DCThomson said: We are carrying out areview of our magazines business tomeet the challenges of the rapidlychanging publishing industry.

CITY broker Northland CapitalPartners yesterday said it was explor-ing opportunities to buy a fundmanagement business as it reposi-tions itself away from market mak-ing for Aim stocks.

The firm, which was formed in2010 and offers services to smallfirms, said it was activelyexploring acquisitionopportunities in the fund andwealth management arena.

Managing director TimMetcalfe told City A.M.: Wehave looked at a number ofacquisition opportunitiesin London but we haventfound one at the rightprice yet.

Theres a lot of changehappening with newregulations comingthrough and thatscreating somechange in themarket. One

Northland is on

the hunt to buyfund manager

BY MICHAEL BOW of the issues remains priceexpectations, and any acquisitionhas to be done at the right price andmake sense.

Northland is owned by parentcompany Northland Bancorp, basedin Canada.

Its chief executive Bob Johnsonyesterday said it would grow the UKbusiness both organically andthrough selected M&A activity.

Northland Partners posted a post-tax loss of 1.84m in its latest

accounts dated up until March2012 up from 1.46m the

previous year.The firm has recently

announced plans to pull outof market making for Aim

stocks as it refocuses on otherclient needs.

Northland is led by Metcalfeand executive chairman Stuart

Lane.

Google cuts one infive Motorola staffMOTOROLA Mobility, the mobilephone maker bought by Google last

year, is set to lose 4,000 staff as ittargets a return to prof itability.The cuts 20 per cent of

Motorolas workforce representthe first big step Google has taken torevive the ailing manufacturer sinceits $12.5bn (8bn) acquisition wascompleted in May. Motorola said itwill shut a third of its 94 offices.

Google did not give details of howMotorolas 250 staff in the UK willbe affected, although two-thirds ofthe cuts will be outside of the US.

BY JAMES TITCOMBThe web giant said severance costs ofaround $275m will be included in itsnext round of accounts.

Motorola will now focus on

making fewer phones and look atexiting unprofitable markets. Googlesaid: We expect this strategy tocreate new opportunities and helpreturn Motorolas mobile devicesunit to profitability.

GOOGLE is buying travel guidepublisher Frommers in an effort toimprove the reviews on its mappingservice. The deal, announcedyesterday by Frommers ownerWiley, comes nearly a year afterGoogles $151m purchase of Zagat.

Stuart Lane is Northlandsexecutive chairman

ANGLO American yesterday playeddown reports of shareholder unrest,saying it believes just one of its insti-tutional shareholders is unhappywith chief executive CynthiaCarrolls performance.The mining giant claims that

Carroll, who joined the company in2007 and has since presided over a 20per cent drop in Anglos share price,has the support of the majority of itsshareholders.

It is understood that a large institu-

Anglo American leader stands

firm against shareholder wrathBY CATHY ADAMS tional investor in the British compa-ny is unhappy with Carrolls leader-ship, and has contacted chairman SirJohn Parker to ask him to lead thesearch for a new chief executive.A source close to Anglo said that

while Carroll had been instrumentalin building a relationship with theSouth African authorities, growthprojects have not delivered andinvestors are disappointed withshare price performance.

On 27 July, Anglo announced a 31per cent drop in earnings to $4.9bn(3.1bn) for the first half of the year,blaming a drop in commodity prices.

THE Investment ManagementAssociation, the fund managerlobby group, yesterday called forinvestment banks to face morescrutiny to prevent poorly judgedmerger and acquisition deals.

The group said last monthsgovernment-backed review intoequity markets, led by economist

John Kay, missed an opportunityto focus on the role of investment

banks in botched M&A deals.Kays report said UK corporate

governance failures could havebeen prevented by moreengagement from asset managers

to vote down bad deals.But IMA chief executive Richard

IMA urges reformers to focus

more on investment bankingBY MICHAEL BOW Saunders said investment banks

held more sway over such dealsand should have faced morescrutiny in the report.

He said: I find it puzzling thatthe report focuses on the assetmanagement industry particularly given the initialdiagnosis of poor merger strategyleading to corporate failure.

He added: I for one would haveliked to see a little more focus onthe role of investment banks.

IMA corporate governancedirector Liz Murrall added: TheKay Review was a missedopportunity. It fails to look atM&A deal and how they could

have been motivated byinvestment bank strategies.

TUESDAY 14 AUGUST 20126 NEWS cityam.com

Anglo chief Cynthia Carroll has overseen a 20 per cent drop in the firms share price

Canary Wharfs majority ownerstrikes deal with shareholdersSHARES in the holding companyand main shareholder behindCanary Wharf Group were given aboost yesterday after it changed theterms of its preference shares, in amove it said will improve thegroups financial position.

Songbird Estates, which owns 69per cent in Canary Wharf, said ithas reached an agreement withChina Investment Corporation (CIC)and Qatar Holding, who togetherhold 275m of preference shares.

The changes include the removalof an early redemption option that

BY KASMIRA JEFFORD would have allowed shareholders tocash in their preference shares in2014, leaving Songbird to come upwith the cash or pay hefty interestcharges.

The deal also lowers the couponpayable on the preference sharesfrom the current fixed rate of 10 percent a year. It also allows thepayment of dividends on ordinaryshares without the consent of thepreference shareholders.

Songbird said it will seekapproval at its annual generalmeeting on 30 August, when it will

also propose to buy back ordinaryshares of up to a maximum of five

per cent of the issued share capitalof the company.

Shares rose 1.69 per centyesterday to 105.25p.

DAME Helen Ghosh, the top-ranking civil servant at the HomeOffice, yesterday quit to becomedirector general of the NationalTrust.

I have been privileged to leadthe Home Office and feel very tornabout leaving, she said.

Several permanent secretarieshave left Whitehall in recentmonths, raising the prospect ofcivil service instability at a time

when the government is trying topush through major reforms.

I will be doing my utmost overthe next few weeks to ensure thatthe Home Secretary and herministers have all the support they

Home Office civil service chiefquits to lead National Trust

BY JAMES WATERSONneed in this period so that thedepartment is in the best possibleshape for the future, Ghosh said.

Home Secretary Theresa Maypraised Ghoshs contribution: I am

very grateful to Helen for hersupport, wise counsel and

outstanding leadership of theHome Office during an extremelybusy period for the department.

Ghosh has spent 33 years in thecivil service and has never workedfull-time in the heritage industry.She will take over the NationalTrust, one of the largestmembership organisations in thecountry, from Dame FionaReynolds, who is leaving to becomemaster of Emmanuel College,Cambridge.

Songbird Estates PLC

8 Aug 9 Aug 10 Aug 13 Aug7 Aug

103.50

104.00

104.50

105.00

105.50

106.00 p 105.2513 Aug

GROUPONS share price tumbled18 per cent in after hours tradinglast night after it reported worsethan expected quarterly revenuegrowth.

Revenue was $568.3m (362.5m)in the second quarter, up from$392.6m in the same period lastyear but below forecasts of $573m.

The Chicago-based firm postednet income of $28.4m, a bigimprovement on its $107.4mlossthis time last year. Chieffinancial officer Jason Child putthe poor results down to Eurozoneproblems: Europe really was thedriver [due to] macro headwindsand currency [crisis].

Groupon failsto fulfil hopes

BY BEN SOUTHWOOD

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GETTY

GERMAN Chancellor Angela Merkelhas returned from holiday to a famil-iar scene of strife in the battle to holdtogether the beleaguered Eurozone.A senior political ally of Merkels

yesterday issued a stark warning toGreek officials, insisting thatGermany will withhold further aidpayments if the indebtedMediterranean state does not stick tothe conditions of its bailout.

Meanwhile there were reports thatGermanys constitutional courtcould face a delay in ruling over thelegality of Brussels new per-manent rescue fund, after acomplaint was filed by aBerlin-based Euroscepticgroup.After holidaying in

neighbouring Austria,Merkel now faces weeksof managing renewedtensions between theEurozones core eco-nomic powerhouseand its struggling cri-sis-threatened memberstates.

Germany flexesits muscles overGreece bailout

BY JULIAN HARRISEven if the glass is half full, that

wont be sufficient for a new aidpackage. Germany cannot and willnot agree to that, said MichaelFuchs, the deputy parliamentaryleader of Merkels ChristianDemocrats (CDU).The troika of lenders which con-

sists of the European Commission,the European Central Bank (ECB) andthe International Monetary Fund(IMF) is set to decide on the disburse-ment of the next tranche of moneyfrom Greeces 130bn (102.2bn)bailout package next month.

We long ago reached the pointwhere the Greeks must show they arecapable of delivering a shift. A policyof the last, last, last chance wontwork anymore and must come to an

end, Fuchs added.Yet Germany received its own

warning from the EuropeanCommission yesterday, accord-ing to the FT Deutschland.Brussels wants Germany toshrink its current account sur-plus.

Economy minister Motohisa Furukawa

IN BRIEFRents in the City shoot upwards

n Residential rents in the City shot upby more than 30 per cent over the lastyear, real estate group the CBRE saidyesterday. The average rent in the Cityis now over 3,000 per month. Thefigure partly reflected a small numberof exclusive new penthouses.Elsewhere in London, the sharpest risein rents were found in Newham,Greenwich and Tower Hamlets.

Supply to housing market declinesn The supply of properties into thehousing market continued to drop lastmonth, according to a widely-regardedsurvey released this morning. A netbalance of 15 per cent of surveyors

reported weaker demand in July, theRoyal Institution of Chartered Surveyorsfound. And five per cent more charteredsurveyors reported falls rather thanrises in demand last month. A separatereport from the Council of MortgageLenders said yesterday that the numberof new mortgages was down 0.8 percent in June compared to a year earlier.

Online job vacancies down in Julyn The number of jobs being postedonline dropped in July for the first timein 30 months, the Monster employmentindex claimed this morning. The indexfell three per cent compared to thesame time in 2011. The governmentsector posted a sharp rise in jobs,however, due to part time vacancies.

The price of oil hit a three-month high yesterday on supply worries in the Middle East.Brent crude jumped $2 to settle at $114 a barrel, on support from tightening North Seasupplies and Middle East tensions, including an intensifying debate in Israel on whetherto strike the disputed nuclear programme in Iran, led by Mahmoud Ahmadinejad.

OIL SURGES ON IRANIAN WORRIES

Germanys Angela Merkel isback from summer holiday

JAPANS economy expanded just0.3 per cent in April-June, half thepace expected, raising doubtsabout the strength of its recovery.

The data, released yesterday,provides fresh evidence of a globalslowdown as growth in the US,Europe and China flounders,raising expectations in financialmarkets that monetarypolicymakers will take moreaction to lift the world economy.

Economists had expectedJapans growth to pull back to 0.6per cent after a strong expansionof 1.3 per cent in the first quarter

Global demand weakness seesJapans growth slump to 0.3pc

BY CITY A.M. REPORTERwhen government subsidies onlow-emission cars drove upprivate consumption.

But private consumption wasweaker than expected in quartertwo and exports, traditionally

the driver of Japan's economicgrowth, shaved 0.1 percentagepoint off of the quarters GDP.

Japans economy minister,Motohisa Furukawa, yesterday

blamed the Eurozone debt crisisand global weakness of demandfor the decline.

Furukawa did not rule outextra fiscal stimulus to kick startthe countrys economy.

TUESDAY 14 AUGUST 20128 NEWS

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IN BRIEFWPP buys out Turkish agency

n Advertising giant WPP yesterdaysaid yesterday it has bought outTurkish agency Manajans ThompsonReklam Isleri AS for an undisclosedsum. WPP has owned a minority stakein the firm since 1985. Istanbul-basedManajans employs around 70 peopleand saw revenue of 8m Turkish lira(2.8m) last year. The agencys clientsinclude Nokia, Shell and Byer.

Tata Steel misses profit forecast

n Tata Steel yesterday missed quarterlyprofit expectations, hit by weakeningdemand and prices in its main Europeanmarket, offsetting a solid performanceat home. The steelmaker, whoseEuropean operations account for twothirds of its capacity, said consolidatednet profit for the quarter to the end ofJune fell to 5.98bn rupees from 53.5bnin the 2011 period, which included one-time gains of about 40bn. Excluding thegains, profit declined about 55 per cent.

Elan to spin off research armn Irelands Elan is to spin off itsNeotope drug discovery businessplatform as a separate publiccompany, making Elan immediately

profitable and potentially moreappealing as a takeover target. Thedecision to split the company comeshard on the heels of the failure of anexperimental Alzheimer's drug beingdeveloped with Johnson & Johnsonand Pfizer, although chief executiveKelly Martin said it had been plannedfor more than a year.

PETROFAC said yesterday it is confi-dent it will deliver full-year profitgrowth of at least 15 per cent in2012, despite the award of several con-tracts being delayed.

Net profit for the international oiland gas company was up 32 per centto $325.3m (207.3m) in the first halfof the year, with the dividend up 21per cent to 21 cents per share.

Despite the upbeat figures, the stockslumped by more than five per centyesterday, due to warnings of delayedcontracts and lower profit growth inthe second half of this year.The oil giant said contracts would be

delayed in its onshore engineeringand construction projects in theMiddle East, due in part to the unrestin several nations.The delayed work is focused pre-

dominantly in Iraq, Saudi Arabia andKuwait. Despite the setbacks, Petrofacis confident that it can double its 2010earnings by 2015.Tim Weller, chief financial officer,

Petrofac slumpsdespite upbeat

growth targetsBY CATHY ADAMS said he is confident that the contractswill come through by early next year.

The customers are fully intent onawarding the contracts, its just takenthem longer to go through theirappraisal activity and their decisionmaking around who to award the con-tracts to, he said.The slowdown in contract awards is

difficult to attribute to just one factor,he added.

The upside of that means that 2013is likely to be a bumper year in termsof contract awards, so if you like, everycloud has a silver lining.

BP has sold its Californian oilrefinery to a Texan-based refineryfirm for $2.5bn, the oil majorannounced yesterday.The sale, to Tesoro Corporation,

is the latest move to restructure itsUS business, which has sufferedsince the Deepwater Horizon oilspill in 2010.Tesoro will acquire the 266,000

barrel-per-day refinery near LosAngeles, as well as a network ofpipeline and storage terminals,subject to regulatory approval. It

BY CATHY ADAMS will also acquire the Arco retailbrand network in SouthernCalifornia, Arizona and Nevada.The deal is expected to go

through before the middle of nextyear.

Since the start of 2010, FTSE 100-listed BP has agreed $26.5bn ofdivestments. This sale is the latestin the programme to sell $38bn-worth of assets by the end of nextyear.

The sale follows the oil behe-moths announcement that it is tosell off two gas processing plants inTexas the Sunray and Hemphill

plants to Eagle Rock EnergyPartners in a cash deal worth$227.5m.

Petrofac chief executive Ayman Asfari warned on contract delays for this year

Petrofac Ltd

8 Aug 9 Aug 10 Aug 13 Aug7 Aug

1,480

1,500

1,520

1,540

1,560

1,580

1,600 p 1,486.0013 Aug

The results were ahead of market expectations. The group remains wellplaced for the long term to meet increased demand for new infrastructure tomeet rising energy needs with strong exposure to the Middle East andnational oil companies.

ANALYST VIEWS

These are good numbers (earnings of $325m are above expected $320mand dividend increased 21 per cent to 21 cents) and growth targets have been

reiterated. But, the statement flags that some engineering and construc-tion contract awards have slipped from 2012 to 2013.

The numbers are 4.5 per cent ahead of our forecasts, but they are likely

to be first half weighted. The management has suggested the potential for aflurry of larger awards post-Ramadan, which we believe is required toprovide comfort to financial year 2013 consensus forecasts.

WHAT DO YOU THINK OFPETROFACS FIRST HALFRESULTS?By Cathy Adams

JONATHAN JACKSON KILLIK & CO

ANDREW WHITTOCK LIBERUM CAPITAL

SANJEEV BAHL NUMIS SECURITIES

MITIE has enjoyed a solid start to2012, thanks to a lucrative contract

with Lloyds Banking Group.The FTSE 250 company said

yesterday that by 30 June, it hadsecured 87 per cent of budgetedrevenues for the financial year, upfrom 85 per cent last year.

The five-year contract withLloyds, worth 775m, is progressing

well, according to the outsourcingfirm. Mitie provides facilitiesmanagement services for the

banking group, including catering,cleaning engineering maintenanceand security.

Lloyds contractbolsters Mitie

BY CITY A.M. REPORTER

E.ON, Germanys biggest energycompany, has seen its profits triplein the first half of 2012.

Net income for the six months tothe end of June was 3.3bn (2.1bn),up from 900m a year ago.

E.ON cited Germanys acceleratedphase-out of nuclear energy, whichbenefited first-half earnings to thetune of1.5bn, and a 39 per centincrease in Russian earnings to400m as reasons for the jump inprofits. At the start of July, E.ONreached a lower gas price deal withRussias Gazprom, which has alsoflattered first-half results.

E.ON first-halfprofits triple

BY CATHY ADAMS

TUESDAY 14 AUGUST 20129NEWS

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I am a great believer thatpoliticians are human beings,claimed David Cameron after theclose of the Olympics, and theyneed to have holidays.

And so the PM f ired thestarting gun on a fortnight ofmini-breaks for Westminstersfinest. Coalition partners NickClegg and Cameron are jetting off(separately) to Spain, while

Labours Ed Miliband hasplumped for Greece.

Bon voyage, gentlemen butremember that its going to takemore than some paella and around of double ouzos to getEuropes economy chuggingagain. Something Germanys

Angela Merkel, who returnedfrom her summer jaunt to Austria

yesterday, knows too well.

Eurozone breaks for Clegg,Cameron and Ed Miliband

MOST of us spent the last twoweeks being constantly surprisedby the record-breakingperformances of Team GB athletesat the Olympics. But The Capitalist

would like to award its own goldmedal to two men who fullyexpected this Goldman Sachsanalysts Jose Ursua and KamakshyaTrivedi.

Last month the two men usedeconometric models to predict the

results of every country in thegames. Taking into account

previous performances andeconomic factors, they stuck theirnecks on the line and predictedTeam GB athletes would win 65medals, including 30 golds.

At the time this seemed wildlyoptimistic. But when the gamescame to an end on Sunday theTeam GB haul was...65 medals,including 29 golds.

The bank would not commentdirectly on its success. But if youre

after sporting tips, we recommendkeeping an eye on Goldman Sachs.

CITY WORKERS rejoice. Drake &Morgan, the quirky bar and restau-rant group behind the Anthologistand the Folly in the City, is set tolaunch two more venues for thirstyemployees to visit after a hard days

work, this time nearer to Holbornand St Pauls.

Fund manager Axa Real Estaterevealed yesterday it has signed Drake& Morgan as its first tenant at two ofits major office developments, 60London on Holborn Viaduct and 1 StPauls in the City, which are both dueto be finished next year.

In keeping with its tradition ofunusual names, Drake & MorgansSixty London venue has been coinedthe Haberdashery. It will comprise ofa deli, a caf, restaurant and bar as

well as a wine and flower shop trad-ing across three floors.

Its a concept we have been work-ing on for a little while now and itsderived from the idea that an oldfashion haberdashery would almost

be like a general store that wouldhave sold different things like but-

Drake & Morganopening morequirky City bars

tons, cottons or wool, TaskinMuzaffer, head of operations, told CityA.M.

The idea around the haberdasheryis to bring together various elementsunder one roof.At 1 St Pauls, the group is planning

a bar and restaurant concept calledthe Happenstance, which Muzaffersaid comes from the idea of findingsomething that is unexpected.The two venues will bring Morgan &

Drakes total estate to seven. It alsoowns the Refinery, its first site openedin Southwark, the Parlour in Canary

Wharf and the Drift, which openedlast year in the Heron tower.

Named after the two buccaneers SirHenry Morgan and Sir Francis Drake,the company was founded by its ownpioneer Jillian MacLean, a formeroperations director at Mitchells &Butlers and Novus Leisure in 2008.

MacLean said: We are delighted tobe opening these new sites next year,and its fantastic that we can continueto provide the City with something

thats a little bit different, fresh andinnovative.

Drake & Morgans Sixty London venue will be called the Haberdashery

Got A Story? Emailthecapitalist@cityam.com

10cityam.com

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11TUESDAY 14 AUGUST 2012cityam.com

LONDON REPORT

Hill Residential

The property development

group has appointed TonyWoodman to the position ofsales director. He will beresponsible for overseeing thecompanys increased focusedon residential development.Woodman joins from TaylorWimpey, where he was salesand marketing director. He hasalso held similar roles at George Wimpey and LaingHomes.

Rathbone Investment Management

Stephen Hunter has been appointed as investmentdirector at the investment services firm. He joins fromCornelian Asset Managers, where he was a director in itsprivate client and charity team. Hunter was also

previously head of investment research at Cornelian, andstarted his career as a graduate trainee at ABN AmroAsset Management.

Adam & Company

The private bank has appointed Linda Urquhart andAlexa Henderson as non-executive directors. Urquhartstarted her career as a solicitor, and later became chiefexecutive of Morton Fraser. She is currently also a non-executive director for the Confederation of BritishIndustry. Henderson was previously managing director inDeutsche Banks investment performance business. Sheis also currently chairman of the Scottish BuildingSociety.

Collinson Group

The brand development and marketing group hasappointed Christopher Evans as its global marketingdirector. He was most recently marketing director for

Coty UK, the beauty and fragrance company, and hasover 15 years experience in marketing and businessdevelopment roles.

Goldplat

The Aim-listed gold producer has appointed RussellLamming as chief executive, effective 1 September. Hewas previously a precious metals analyst at DeutscheBank, and has since held a number of senior positions atAfrica-focused resource companies. Lamming was mostrecently chief executive of Chromex Mining.

Buchanan

Louise Mason has been appointed as an account directorin the natural resources team of the financialcommunications advisory firm. She joins from WalbrookPR, where she built and headed up its natural resourcesfranchise. Mason began her career at CNR International,the Canadian oil and gas specialist.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

US stocks dipon Japanesegrowth data

US stocks ended slightly loweryesterday as fatigue set in aftera six-day rally anddisappointing Japanese growth

data provided a fresh reminder ofthe headwinds facing the globaleconomy.The benchmark S&P 500 index had

risen three per cent over the prior sixsessions, its longest rally since

December 2010. But gains had slowed,with the index hovering at highs notseen since May. The S&P 500 was stillup 1.8 per cent for the month.

Stocks have been buoyed by expecta-tions central banks would step insoon to support the flagging globalrecovery and roll back the Eurozonedebt crisis.

Much of the action, however, isunlikely before September, when theFederal Reserve and European Centralbank next hold policy meetings, leav-ing markets in a holding pattern untilthen.

Coming off the heels of a lightweek on the economic front, the mar-kets remain in what some have calleda state of melting up. Whether themarkets strength is artificiallyinduced or not, the greater risk fortraders at the moment is in missingout on the upside, said RandyFrederick, managing director ofActive Trading & Derivatives atCharles Schwab.With the European Central Bank,

the US Federal Reserve and thePeoples Bank of China all standing inthe wings ready to take action to sup-port their respective economies, thedownside risks in the market havebeen greatly reduced at the moment,he added.The CBOE VIX Volatility index, seen

as a proxy for investors fears, fellmore than seven per cent to 13.70, itslowest level in over five years. Thedecline was unusual as the index typi-cally moves inversely to the S&P 500,suggesting investors were not overlyconcerned about the markets out-look.

Bullish sentiment in equitiesremains high with S&P 500 one-

month call-side skew now at the 98thpercentile, said the Credit Suisseequity derivatives strategy team. Askew refers to the balance betweenoptions betting on the S&P 500 fallingor rising.The Dow Jones industrial average

ended down 38.52 points, or 0.29 percent, at 13,169.43. The Standard &Poors 500 Index dropped 1.76 points,or 0.13 per cent, at 1,404.11. TheNasdaq Composite Index was up 1.66points, or 0.05 per cent, at 3,022.52.Japans gross domestic product

expanded just 0.3 per cent in theApril-June period, half the expectedpace, raising doubts about thestrength of the recovery and high-lighting the impact of Europes debtcrisis on worldwide demand.

On Friday, the head of the SanFrancisco Federal Reserve said the Fedshould launch a fresh round of bond

buying to lower the US unemploy-ment rate more quickly.

BRITAINS top shares fell in thin

volume yesterday while investorswere unnerved by signs the globaleconomic slowdown is deepening

and Europes response to its debt crisismay face political hurdles.

Cyclical mining and oil & gas stocksweighed after data showed Japans econo-my expanded at half the pace expected inthe second quarter and Chinas July cop-per output fell 6.8 per cent drop from amonth earlier on weak demand.Traders said the markets direction in

the coming month depended on inter-ventions by the European Central Bankand the Federal Reserve to ease a sover-eign debt crisis in Europe and stimulateglobal growth.

The market has been dragged up onthe hopes of easing in various areas andessentially the longer it takes for anynews to come through, the more weak-ness were going to sell into, said DanReed, a trader at HB Markets.

The Japanese data took the wind out ofthe sails. Volumes are very thin so direc-tion is hard to find at this point in time Iwould have more a short bias at this

stage.Investors had already started to bet onnew monetary action, pushing the FTSE100 to four-month highs last Thursday,although no official announcement isexpected until September.

But expectations of forthcoming ECBaction to bring down borrowing costs forstruggling countries were tempered overthe weekend, when governing councilmember Luc Coene raised concerns thatnew bond purchases could take the pres-sure off governments to repair theirfinances.The FTSE 100 closed 15.23 points lower,

or 0.3 per cent, at 5,831.88 points, havingtraded less than half of its full-day vol-ume average.The index was pulling back after failing

to break above a technical resistance at5,865, the 161.8 per cent projection of the1-20 June rise.

The way the market struggled to make

much headway towards the end of lastweek gives me the impression that resist-

ance is starting to bite, Bill McNamara,technical strategist at Charles Stanley,said.

I dont see a massive selloff initially. Forthe time being we could just see it... backdown to 5,700 or so.The FTSEs 14-day relative strength

index also pointed to weakening momen-tum as it extended its fall from six-monthhighs hit on Thursday.

Oil services firm Petrofac led fallers,shedding 5.6 per cent in volume, nearlytwice the average, on concerns over con-tract delays as it reported first-halfresults.

Fund manager Schroders was the topFTSE 100 riser, up 0.85 per cent to 1,410p,followed by Lloyds Banking Group,whose shares rose 0.84 per cent to 31.6p.In the banking sector, StandardChartered shares rose 0.53 per cent to133.5p, bolstered by reports that theBritish bank is trying to reach an earlysettlement over charges it hid $250bn(159.12bn) of transactions tied to Iran.Though analysts estimate the bank

could be forced to pay a fine of up to$1bn, investors see an early payout as

preferable to drawn out court procedures.Recruitment giant Michael Page saw aslump in its share price, down 1.9 percent to 371.2p, after it revealed half-yearprofits have fallen and tough economicconditions have hit is UK banking busi-ness especially hard.

Shares in outsourcing group Mitie alsodropped 4.13 per cent to 274p, despite thefirm reporting it had achieved the bulk ofits annual budgeted revenues.

FTSE falls as market shows cautionover further economic slowdown

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7 Aug 8 Aug 9 Aug 10 Aug 13 Aug

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Deutsche Bank yesterday downgraded the owner of Costa Coffee andPremier Inn from buy to hold, despite raising its price target to2,350p from 2,200p. Analysts at the bank said that after such a strongperformance, with shares up 32 per cent in the past year, we can see aperiod of consolidation for the shares, a bsent of any corporate activityor material forecast upgrades.

FTSE

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IWAS recently waiting at the portof Dover and noticed that thenewsagents were advertisingroad safety equipment. Ivedriven in France before, and

already have a first aid kit,emergency warning triangle andhigh visibility vest. But they werenow advertising breathalysers.

My immediate instinct as a law-abiding adult was to assume that Ineeded to buy one. But did I? Ichecked the small print and sawthat it was to ensure compliance

with the law and guidelines. Therewas some ambiguity about whetherI should have one, or whether Imust have one. (For readers whodo intend to go to France, they have

been compulsory since July).

THE economy is in a mess.Business confidence is low,unemployment remains highand underemployment meansthat many who are officially in

work are struggling to get by on a part-time wage. The entire country isengaged in a hunt for growth.And yet, in some circumstances, busi-

nesses are forced to shut their doors inthe faces of eager customers. UnderBritains Sunday trading laws, anyshop over a certain size is forbidden

from selling goods for more than sixhours each Sunday.The law leads to some absurd situa-

tions. Customers can be forced to waitoutside, while staff and goods waitinside, or they may be permitted to

browse the aisles but not buy any-thing, like a child under strict ordersin a sweet shop.Were told there are good reasons for

this policy.Firstly, it is claimed that no one

wants to shop on Sundays. Then, itsexplained that convenience stores

would lose masses of business to largerrivals if this protectionism was lifted

Spread betting, CFDs Trade today atwww.cityindex.co.uk

FACT OF

THE DAY

UK Inflation is expected to slow to 2.3% yearon year, which would mark its lowest readingsince November 2009.

cityam.com/forum

With Sunday trading

laws suspended for theOlympics, Britain wastruly open for business

THEFORUM

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

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

12TUESDAY 14 AUGUST 2012

MARK WALLACE

London 2012 proved the absurdityof restrictions on Sunday shopping

a claim that rather invalidates the firstargument.After that, we are told that Sunday is

a special, religious day. And yet the

laws apply to those of all religions andto the irreligious.

Even more oddly, it seems thatSunday is only special for those who

work in large shops. Hotel reception-ists, chefs, taxi drivers and even onlinemoneylenders are allowed to work ona Sunday. But, if someone was to oper-ate a supermarket till for seven hoursrather than six, there would be a prob-lem.The argument follows that, without

restricted hours for large shops,Sunday would cease to be a family day,

when parents can spend time withtheir children. Again, this anomalous-

ly applies to shop workers rather thanto other sectors, and disregards thefact that many families enjoy goingshopping together as a leisure activity.

Furthermore, no consideration isgiven to the impact on the family livesof the huge numbers of people whoare unemployed or underemployed,leaving them unable to provide themoney they need to pay the bills. It isironic and sad that, in the name ofenforced preservation of a family life,many parents are forbidden from pick-

ing up extra shifts to keep their house-hold budget afloat.

Finally, it is asserted that, if shops areallowed to open full time on Sunday,shop workers would be forced to workthe new hours against their will. Theimplication is that shop staff will becompelled to work seven day weeks, all

year round.This is obviously not the case.

Countless other businesses, from fac-tories and offices to call centres andrestaurants, open on Sunday and yetthey overwhelmingly come to a fairand sustainable arrangement withtheir staff. Many businesses are open

right around the clock, all year, andaddress this challenge supremely well

with shift working.There are two reasons for this first-

ly, employers are human beings withcompassion. Secondly, a business suf-fers if it demoralises and exhausts itsemployees.This debate had been hypothetical

for many years, but now we have had achance to test unrestricted Sundaytrading in practice. For the duration ofthe Olympics and Paralympics, thelaws have been temporarily suspend-ed. It is remarkable for a free countrythat it should be newsworthy thatshops can now sell when they wish,and shoppers can buy things in all of

their spare time.What has been the result? The good

news is that the sky has not fallen in.Of course, the policy has not been a sil-

ver bullet to slay all economic demons,but no one ever pretended that itwould be.

In reality, it has worked well. Goodscan be sold and bought by everyone asthey find necessary. Shop workershave gained more earning potential intough economic circumstances.

By the same stroke, high street retail

has become more competitive. Afterall, the internet is never closed to cus-tomers, so it is only sensible to putshops on as equal a footing as possible.We regularly hear politicians declare

that Britain is open for business.During the Olympic and Paralympicperiod, with the Sunday trading lawssuspended, Britain truly is open for

business with beneficial results forcustomers, businesses, job seekers andthe Exchequer. The obvious next stepis to abolish these restrictions entirely,forever.Mark Wallace is head of media relations at

the Institute of Directors.

This ambiguity was especiallyannoying given how pointless thesedevices are. There are two types of

breathalyser digitally-based onesthat sell for around 100, andchemical ones that are muchcheaper. There are major doubtsabout the validity of the chemical

version. Also, you are encouraged totake the reading when you get in

the car, but alcohol can take time to

enter the bloodstream. What shouldmatter is whether youreintoxicated when driving, not

before you set off.But the main problem here is that

it encourages people to outsourcejudgement. Instead of you beingresponsible for assessing your ownfitness to drive, the law mandates acheap chemistry set to make thatdecision for you. Breathalysers are asufficient but not necessary meansto tell if you are impaired. And theyare positively dangerous if peoplefeel that a negative readingautomatically means they are safeto drive.

To improve road safety, we shouldbe placing more discretion and

more accountability onto drivers.

And the same thing applies to otherforms of regulation.

The public likes to blame banksfor the financial crisis. But howmany of us were paying attention to

what they were doing? How many ofthose with savings at Northern Rock

were looking at its balance sheetand monitoring its ability to findfunding? Very few, I imagine. Andthe reason for this is because wedoutsourced judgement to theregulator, the FSA. But arguing for a

better FSA is like causing a massivepile-up and then blaming it on the

breathalyser. Maybe thebreathalyser did malfunction, butthe problem is using it as asubstitute for personal judgement.

One of the most regrettable

aspects of the last few years is theextent to which governments havereinforced this culture of wilfulignorance. They tell us that we

werent to blame, and that theregulators will be improved. Butthere is no better regulator than aninformed public. And there is no

better decision maker than aresponsible and accountableindividual.

Next time I go to France Ill have abreathalyser in the car. But I wontuse it. Ill just make sure that I dontdrive if Ive had a drink.

Anthony J. Evans is associate professorof economics at ESCP Europe BusinessSchool. Website: www.anthonyjevans.com

Email: anthonyjevans@gmail.com

Twitter: @anthonyjevans

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ANTHONY J. EVANS

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Running from tax[Re: Olympic champion Usain Bolt shunsLondon over tax fears, yesterday]With the closing ceremony ringing in ourears, so too is Usain Bolts concern aboutcompeting in the UK due to tax. The OECDmodel tax treaty allows the income ofsports people from personal activities tobe exempted from tax. Yet the UK choo sesto disapply this rule. Although there may bemerit in not relaxing our tax rules toofrequently, it may be short-sighted to takesuch a forceful approach. The presence ofthese sports personalities could wellproduce a more long-term tax dividend, aswell as keeping the flame of sportingexcellence alight in the UK.Chas Roy-Chowdhury, head of taxation at

Acca.

Voluntary support[Re: Volunteers alone will not guarantee a2012 Games legacy, Friday]David Helliers editorial has it spot on.Volunteering is economically valuable andgood for society, but it cant do everything.And it works even better when the privatesector supports it. The Olympic volunteers(of which I was one) did not succeed bythemselves. They made such a good showbecause they had the support ofprofessional organisers from the public,private and charitable sectors.Tom Levitt

I hope volunteering will be the greatestlegacy of the Games. Itd improve so manymore lives than a new stadium in London.

Scott Curtain

TO TOP off a successfulOlympics, David Cameronput Londons time in theglobal spotlight to good useby hosting a Hunger Summit

at Downing Street, with the aim oftackling malnutrition in thedeveloping world. Unfortunately,yet again, Camerons governmentfailed to go the distance.

Sundays outcome gave noindication of any shift in

government policy that could helpthe 900m people suffering fromhunger. Rather than more fundingmeasures and investments, thethreat of long-term hunger andensuring food security should haveforced Camerons hand intoembracing innovative thinking. Yetinnovation does not appear to ratehighly in British aid policy.

The solution is simple. To meetthe burgeoning demand for food,global food production mustincrease. Yet, over the last decade,British aid in support of agriculturehas fallen from 8 per cent of the aidprogramme to 5 per cent. Britain isnot alone. Western donors are nolonger focused on boostingeconomic growth and eradicatingpoverty, but only in embracing nongovernmental organisation (NGO)-driven programmes to builddeveloping countries in theirimage. Cameron may claim thatgovernance, transparency andsustainability are a priority. But thepolicies he promotes actuallyundermine his good intentions.

Early in its term, the governmentundertook a review of its aidpolicies. The aim was to redirect aidto where it would be most effective.But there was a key exception theUK would continue to fundprogrammes to halt deforestationand reduce carbon emissions. Thishas been disastrous. The campaign

TOP TWEETSWhat an incredible Olympic Games. Thankyou so much to everyone who helped make itrun so smoothly. Im sad to leave.@GregJRutherfood

Quantitative easing has failed miserably in theUK, so of course Bank of England policy-maker Adam Posen demands more.@pietercleppe

Im glad that David Cameron thinks politiciansshouldnt be in charge of the Olympic legacy.Theyd only ruin everything.@rolandwoliver

Surely relaxing Sunday trading laws is a goodthing, providing nobody is forced to work. Noteveryone wants to be forced to relax.@thestocktales

Is the Bank of Englands Adam Posen right tosuggest expanding QE beyond gilt purchases?

YESLast year, Adam Posen stood alone on the Monetary Policy

Committee in predicting that Britains recovery was faltering. Nowwere back in recession, his advice on unconventional quantitativeeasing (QE) should be heeded. QE has been a modest success inpreventing the economy from slipping into a depression. And,despite siren warnings, it has not been inflationary. But the measurehas done little to boost bank lending one of the key constraintsholding back our economy. The Bank of England has purchased125bn of bonds since last October but credit in the economy hasrisen by just 30bn. To remedy this, the government should allowthe Green Investment Bank to borrow immediately, and use QE tobuy up its bonds. This new capital should be used to lend to smallfirms and to kick-start infrastructure projects, for example inhousing, low carbon energy and sustainable transport.Will Straw is associate director of the IPPR.

Will Straw

NOPatrick Minford

The theory is that using QE to purchase gilts puts money in the

hands of banks, which then lend it out so causing a rise in the totalmoney supply. But instead, credit growth remains negative, andmost negative of all for small to medium-sized enterprises. The onlyeffect has been that the government has been able to finance itsdeficits at very low cost: 375bn of QE has been enough to fundthree years of deficits with printed money. The government bill fordebt interest is unusually low, at the expense of savers. QE has noeffect on credit because banks are being asked by regulators to holdmassive amounts of equity capital, penalising lending. Bankregulation urgently needs to be eased if we are to get credit and theeconomy moving properly again. Meanwhile, QE must be stoppedand reversed so that savers can once again get a proper return.Patrick Minford is professor of applied economics at Cardiff BusinessSchool and a member of the IEAs shadow monetary policy committee.

RAPIDresponses British aid policy

is harming thoseit seeks to rescue

against palm oil shows theconsequences. It is a food staple indeveloping countries and one of

the most successful industries forbreaking the poverty cycle. Insoutheast Asia, where most isproduced, it accounts for no morethan 2 or 3 per cent of forestclearance. But Greenpeace and theWorld Wildlife Fund (WWF) say itmust be stopped because all forestclearance should be stopped. Giventhat the hungry and landless causeup to 70 per cent of unnecessaryforest clearances, these veryconservation policies are actuallyresulting in yet more deforestation,not raising living standards andenhancing food security.

Its tragic that the WWF, and itsallies in government, will never tellyou that forest conservation issecure in developing countries.Most have already set aside nearly aquarter of forest for conservation.This exceeds the United Nationssstandard. There is ample land toexpand agricultural production offood staples. But as long asCameron and his governmentoppose the clearance of forest landfor sustenance, the moralimperative that should beinforming British policy toovercome these Olympian struggleswill continue to go wanting.

Alan Oxley is chairman of WorldGrowth. He is a former ambassador to,and chairman of, the General Agreementon Tariffs and Trade, the predecessor tothe World TradeOrganisation.

TUESDAY 14 AUGUST 2012

ALAN OXLEY

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TUESDAY 14 AUGUST 201214

cityam.com

LIKE a petulant schoolchild,its about this time in thesummer holidays when theequity markets run out of

steam and sit around

lethargically complaining ofboredom. Yesterday was a slowtrading day, with all exchangesseeing their lowest volumes of2012 so far.

With most of the FTSE 100 big-gies having reported already, anycompany news is going to be verylimited in the short term, saysMichael van Dulken, head ofresearch at Accendo Markets. Ifthere was anything good toreport, then it would surely have

been shoe-horned into results totry to sweeten things up andmaintain share price momen-tum. With this lack of companydata being released, only the cen-tral banks seem to be able to getmarkets attention.

JAPANESE DISAPPOINTMENTThe FTSE didnt find much direc-tion until the US open yesterday,

with trading thin and flat. Butwhen the US session opened, itwas a negative hit as Wall Streetreacted badly to the weak datacoming in from Japan overnight.

The Bank of Japan reported thatthe country had missed its GDPestimates the news compound-ed the effects on the marketcaused by the soft macro datacoming out of China last week.Japans GDP print came in at

just a 0.3 increase in the secondquarter, a sharp drop off from the1.3 per cent first quarter rise. The

Japanese drop off compoundedworries about the effects of theEuropean debt crisis and its dragon worldwide demand. The FTSElost 0.26 per cent, or 15 points, toclose at 5,832 and the FTSE Mid

250 lost 0.3 per cent, or 34 points,

Equity indices relianton central bank action

Waiting for announcements

With little companynews traders arewaiting for policies,writes Craig Drake

TRADINGMANAGEMENTWEALTH

THE TIPSTER Talvivaara wants to finish a bad run

SHAREHOLDERS of Finnishminer Talvivaara wont likelooking at a chart for theyear it shows a continuationof 2011s sharp downtrend. The

share price has recently plunged tonew depths. Continual forecastdowngrades and worries aboutcommodity prices have hurt thestock, and it will take a significantturnaround in outlook for thecompany to revive faith in itsoperations, lest it be finished off byyet another poor update. IGs price onTalvivaara is 143p-145p.

Standard Chartered has had achallenging time of it. Having been

branded a rogue institution by a US

regulator, the bank faces a fight forsurvival as it seeks to avert concernsand keep its US banking licence. Thestock has lost one fifth of its valueand any fundamental news mayexert upward or downward pressureon the price. Spread Co quotes1,336.97p-1,338.9p for StandardChartered.

When the Irish building materialsmanufacturer CRH releases interimresults today, investors will belooking to see if the company hasturned the tide. The weak earningsmomentum of recent years has beendriven by the sluggish housing and

construction sectors in Europe and

the US. But with real estate pricesshowing some support in the US,construction spending may see arebound. The interim results willalso give details of the companysrecent acquisitions in India. IG Indexquotes a 1,216p-1,219p for CRH.

Resolution will release secondquarter results on Wednesday andinvestors will be keen to see theoutcome of the insurers launch ofits asset management business,Friends Life Investments, with anestimated 6bn of assets undermanagement. IG Index quotes216.4p-216.6p for Resolution.

CRAIG DRAKE

ed 7 per cent. Also, the Italian 12-month bill auction went smooth-ly. Although it drew higher yields,it saw higher demand than thelast offering, with a bid-to-coverratio of 1.69. But that these twoevents were seen as a positive issign of the dire state of Europeaneconomies. And with growingspeculation of GermanChancellor Angela Merkels oppo-sition to the idea of bond buyingfrom the European Central Bank,all eyes will be on Germanys con-sumer price