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BUSINESS WITH PERSONALITY

A GROUP of oligarchs last night bowedout of buying British oil major BPsstake in embattled Russian joint ven-ture TNK-BP, opening the way for BP tobegin talks on a multi-million pounddeal in a Russian state oil producer.

Russian consortium AAR last nightcalled time on its troubled relation-ship with BP over joint venture TNK-BP,by confirming it will not be making anoffer for the British oil majors 50 percent stake after months of speculation.AAR controlled by Russian tycoons

Mikhail Fridman, German Khan,Viktor Vekselberg and Len Blavatnik also yesterday signed a preliminarydeal to sell its 50 per cent stake in trou-bled TNK-BP to state-controlled oil pro-ducer Rosneft for an estimated $28bn(17bn), it is understood.

Providing the sale goes ahead, BP willhave the option of remaining in thejoint venture with Rosneft as its newpartner, or selling its own stake nowexpected to be valued on a par withAARs stake at $28bn to Rosneft.

Rosneft is still understood to be con-sidering a bid for BPs 50 per cent stake

in TNK-BP giving it total ownership ofthe vehicle. Rosneft chief executiveIgor Sechin yesterday flew into Londonfor talks over the purchase of BPsstake.

However, if Rosneft goes ahead withthe purchase of AARs stake, analystsargue that the state-owned producer

might not have sufficient funding tomount a bid for BPs stake in TNK-BP.Analysts at Deutsche Bank said yes-

terday that a potential Rosneft-BP tie-up would be a logical one, althoughit stressed that it would be difficult forRosneft to finance the acquisition ofthe entirety of TNK-BP, worth around$58bn.Additionally, the $28bn figure

stamped on AARs 50 per cent stakecould make it difficult for BP to acceptlower offers for its 50 per cent stake.

Malcolm Graham Wood, oil analystat VSA Capital, yesterday suggestedthat BP is targeting a low value for itsstake. The latest worry has been thatBP have been talking down the possi-ble value of their 50 per cent stake,recently to as low as $20bn, this is waybelow the number expected by themarket and in our view unacceptable

to BP, he said.BP first announced in June that it

had received an offer of interest fromAAR for its stake.

In July, AAR and BP began negotia-tions for the stake, kicking off a 90 dayperiod in which BP could exclusivelyreceive an offer for the stake from the

four tycoons.Several days later BP confirmed itwould begin separate negotiationswith Russias state firm Rosneft overthe stake.The 90-day period came to an end

last night, leaving BP free to acceptoffers from other interested parties.

BP said last month that it would beinterested in buying a stake in Rosneft understood to be shares rather thancash using some of the proceedsfrom the sale of its stake in TNK-BP, tomaintain a financial footprint in theRussian energy market.The relationship between the

Russian oligarchs and BP has been atroubled one. BP previously tried toteam up with Rosneft in 2011, but AARblocked the deal.

BP shares yesterday closed up 2.99per cent at 448p.

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ISSUE 1,741 THURSDAY 18 OCTOBER 2012

Certified Distribution27/08/12 til 30/09/12 is 128,785

BY CATHY ADAMS

THE FBI last night arrested aman after he allegedly planned

to blow up the New York FederalReserve Bank.Officers swooped on the 21-

year-old Bangladeshi nationalfollowing an elaborate stingoperation that involved anundercover agent providing him

with a fake 1000-pound bomb.The FBI say Quazi Mohammad

Rezwanul Ahsan Nafis travelledto the United States in Januaryand considered several targetsfor his attack, including a high-ranking government official andthe New York Stock Exchange,

but eventually decided to focuson the Federal Reserve Bank inlower Manhattan.

Yesterday afternoon it allegedNafis left a van containing thesupposed explosives outside the

building, before retreating to anearby hotel room and callingmultiple mobile phones that

were supposed to set off the

detonation process.According to court documentsfiled by the FBI, he told aninformant before the plannedattack: All I had in my mind arehow to destroy America... I cameup to this conclusion thattargeting Americas economy ismost efficient way to draw thepath of obliteration of America.

Officials insisted that therewas never a credible threatbecause Nafis was under closesurveillance and the bombmaterials were not in workingcondition.

He faces charges of attemptingto use a weapon of massdestruction and attempting toprovide material support to al-Qaeda.

BP EYES $28BN DEAL ASOLIGARCHS BOW OUT

BY JAMES WATERSON

Plot to bomb Fed Reserve foiled

LORD COE SCOOPS GOLD AT THECITYA.M.

AWARDS

FIND OUT WHO WON PLUS ALL THE GOSSIP FROM THE PARTY See Pages 14, 16, 18 & 19

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[email protected]

Follow me on Twitter: @allisterheath

REGULATORS could lower severalbank capital requirements to allowmore lending and help boost theeconomy, top regulator AndrewBailey said yesterday.

The boss of the PrudentialBusiness Unit at the FinancialServices Authority said the newregulatory system has two targets primarily financial stability, but alsosupporting growth and jobs.

As a result, he said banks shouldbe able to free up capital currentlyheld against non-core assets thatthey will dispose of at a later date, aswell as reducing requirements underthe Pillar 2 capital buffer.

We are not against releasingexisting capital to support newlending where that capital iscurrently tied up in non-core assets,which can either be sold or run offbecause they are not needed on thebalance sheets of banks to supportthe real economy, such as tradingbook proprietary assets, Bailey toldthe British Bankers Associationconference.

And overall, it mayeven be good for thestability of banks toreduce capital

buffers, as morelending would helpthe economy, he said.

Capital rulesmay ease toraise lending

BY TIM WALLACE

Tucker warns bankers theworst may be yet to comeBANK of England deputy governorPaul Tucker warned the Cityslargest lenders yesterday that theyshould guard against anotherpotentially huge crash in globalfinancial markets.Tucker, a leading candidate to

replace governor Sir Mervyn King atthe top of Threadneedle Street nextyear, was addressing the BritishBankers Association (BBA) annualconference in London.

There is still a tangible probabili-ty, not a high probability, that theworst may still be ahead, Tuckerwarned the assembled bankers.

The Basel regulations, intended tomake the international financialsector safer, are not calibrated forthe kind of end of the world risksthat lie within the realms of thepossible at the moment, he added.Tucker put the financial crisis

down to a toxic mix of distortedincentives, myopia, complexity, andeasy global monetary conditions.

Speaking on the challenges ofsteering the post-crisis industry,Tucker suggested that authoritiescould force lenders to pay seniorbankers in subordinated debt.

In the event of a bank going bust,subordinate debt is paid only afterother more senior debt holdershave been satisfied, although before

Paris steps in over Peugeot unitThe French government has been forcedto step in with a rescue package fortroubled carmaking group PSA PeugeotCitrons financing arm, which isthreatened with a credit ratingdowngrade. The government said it willseek a solution using the French bankingsystem and the support of the state.

Datatec eyes Latin American growthAn increasing focus on its Latin Americanbusinesses helped Datatec, the London-

listed IT services group, beat weak marketconditions in Europe and increase its salesin its first-half results. Datatec continuedits rapid expansion into Latin Americawith the July acquisition of Afina, thesecurity and data centre company, whichalso has a presence in Iberia.

PepsiCo hampered by restructuringPersistent struggles in PepsiCos USbeverage business hampered its third-quarter earnings yesterday, raisingquestions about whether chief executiveIndra Nooyis plan to revive the companyis on track. Net revenues in PepsiCos USdrinks unit were down seven per cent.

New Citigroup boss faces lower payThe new boss of Citigroup will be paid 10per cent less than his predecessor VikramPandit who himself faces being left $33mout of pocket if the bank withholds abonus. Mr Pandit resigned on Tuesdayafter clashing with the banks board.

CVC loses 1.2bn on Australian TVCVC Capital Partners has recorded one ofthe largest losses by a private equity fundafter agreeing to a 1.2bn debt-for-equityswap in Australias Nine Entertainment.

Germany blocks Airbus loanThe German government is withholding600m (487m) of funding for the Airbus350 in an attempt to ensure futureproduction takes place in the country. Itbelieves Airbus has reneged on anagreement on how much work on theaircraft would be carried out in Germany.

One billion smartphones in useThere are now more than 1bn smartphonesin use around the world, just five yearsafter Apple launched the first iPhone.

Gupta could face decade in jailRajat Gupta, a former Goldman Sachsdirector, should spend as much as thenext decade of his life behind bars afterhe was convicted of insider trading earlierthis year, prosecutors said yesterday.

Advertisers drop Lance ArmstrongCommercial fallout from LanceArmstrongs doping allegations hityesterday as Nike, RadioShack, Anheuser-Busch InBev NV, and others distancedthemselves from the ex-cycling champ.

THE COALITION yesterday madegood on its promise to make themanipulation of key inter-bankinterest rate Libor illegal, byinserting provisions into theFinancial Services Bill currently

before parliament.The Financial Conduct Authority,

the new city watchdog, will begiven powers to force banks tomake Libor submissions, and tocreate a code of conductsurrounding those submissions.

The government plans to removethe British Bankers Association asadministrator of Libor.

Paul Tucker is a front runner in the race to become the new Ba nk of England governor

2 NEWS

BY BEN SOUTHWOOD

BY JULIAN HARRIS

To contact the newsdesk email [email protected]

REMEMBER all those peoplepredicting that unemploymentwould rocket because ofausterity? How the private

sector would never be able tocompensate for the cuts in the publicsectors workforce? Fortunately, itturns out that the doom-mongers got

it wrong. The economy is hardly in agood state, of course, and tragicallyfar too many people remain jobless.Large parts of the country are in deepfinancial trouble. But overall theemployment situation has beenpretty good all considering, especiallyin the broader London area.The total number of people in work

in the UK is at a record high. There arelots of caveats, of course, but ultimate-ly the resurgence in UK jobs since thecrisis has been the great good newsexception in an otherwise gloomyand depressing economic narrative.

EDITORSLETTER

ALLISTER HEATH

Jobs are the one good news story in an otherwise gloomy UK

THURSDAY 18 OCTOBER 2012

There were 29.59m people aged 16and over in employment in June-August, up 212,000 on March to May2012 and up 510,000 on a year earlier.So what are the caveats? Total hoursworked per week were 936.5m forJune to August 2012, down 2.6m fromMarch to May 2012 but up 13.6m on ayear earlier. The figures were clearlydisrupted by the extra Bank Holidayand by the Olympics. However, theydo suggest that the total number ofhours worked remains below the

949.3m seen in January-March 2008.On that measure, the total amount ofwork in the UK economy is still 1.4 percent lower than at the height of thebubble, even though the populationhas increased during that time.Around 17.8 per cent of part-time

workers would like but were unable

to secure a full-time job, the CEBRpoints out. Over the past five years,full time employment has fallen by355,000 and part-time employmenthas increased by 724,000. This is thebiggest downside to the figures.

Another useful indicator is theemployment rate for those aged from16 to 64, which has increased to 71.3per cent in the most recent period.This is the highest figure sinceFebruary to April 2009; but it remainsbelow the pre-recession peak of 73 percent in March-May 2008. There is alsono doubt that a minority of the jobs

cent in one quarter) in the number ofthose who are economically inactivethrough long-term sickness.

So why is the jobs market doingmuch better than most people pre-dicted? When the price of a commod-ity drops, people want more of it.Total pay (including bonuses) rose 1.7

per cent on a year earlier, while regu-lar pay (excluding bonuses) rose twoper cent. In both cases, that is stillbelow the rate of consumer priceinflation (2.2 per cent) and retail priceindex inflation (2.6 per cent), whichmeans that real wages are still falling.Workers are understandably miser-able because their pay packets areallowing them to buy less but that isalso the reason why so many bosseshave become happier to hire.

created over the summer were causedby the Olympics and were temporary.

Another interesting shift in the fig-ures is that UK-born workers and UKcitizens are finding large numbers ofjobs again; for a long time, it was onlythose born overseas who were suc-ceeding in the labour market. The

number of UK nationals in employ-ment over the past year in April-Junewas up 246,000; the number of non-UK nationals was up just 15,000. Thenumber of UK born people in employ-ment rose 190,000; the number ofnon-UK born people in employmentrose 67,000.There are also promising signs that

welfare reform is beginning to work,despite all the teething problems, andthat people are being reclassified tothe correct out of work benefit orfinding work. There has been a sub-stantial reduction (of around five per

shareholders see any return.Having managers exposed to

instruments whose value depends onthe survival of their firm would givethem a healthy incentive to maintaina safe and sound bank, Tucker said.The authorities also need to review

pay structures for desk level bankers,Tucker added, in order to make itless easy to get rich quick irrespectiveof the quality of business transacted.

In the week that incoming regula-tors the Financial ConductAuthority (FCA) and PrudentialRegulation Authority (PRA) outlined

their plans, Tucker praised the newso called Twin Peaks supervisorystructure.

The reforms will finally giveLondon a dedicated securities regula-tor a quarter century after the BigBang that made it so necessary,Tucker said.

The FCAs approach to enforcementwill need to preserve and, wherenecessary, restore honesty in a mar-ket community for which side-step-ping rules and principles has becometoo close to being part and parcel ofcommercial life.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

Andrew Baileywants more loans

Libor abuse tobecome illegal

GREG Coffey, who spent decadesinvesting money at some of the

worlds biggest and best-knownhedge funds, is understood to beleaving Moore Capital and plansto retire from the industry.

The 41-year-old Australian,who oversaw several portfolios atthe $15bn (9.2bn) firm fromLondon, told investors by letterthat the demands of his job werecolliding with his desire to spendmore time with his wife andchildren.

Coffey produced an annualised22 per cent since 2004.

BY CITY A.M. REPORTER

Fund managerCoffey to retire

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NAT Rothschild and his business

partner took $15.5m (9.6m) inexpenses from troubled Indonesianminer Bumi between 2010 and 2011,according to official reports.

Rothschild and fellow Bumifounder James Campbell received$10.6m for professional services,while Rothschild personally netted$4.9m last year, understood to coverthe purchase of his private jet.

Julian Horn-Smith, seniorindependent director at Bumi,yesterday told City A.M. that the firmis to meet with individuals andinstitutions this week in Singapore

to help bring things to anorderly conclusion.

He added thatconclusions from aninvestigation into thefirm by law firmMacfarlanes areexpected in the next

few weeks.

Nat Rothschildshared 10mBumi expenses

BY CATHY ADAMS

THE worlds biggest money manager,BlackRock, yesterday said global prof-its rose eight per cent year on year asinvestors funnelled billions moreinto its exchange traded fund range.The firm, led by combative chief

executive Larry Fink, said investorspoured $25.2bn (15.6bn) into itsiShares ETF range the highest levelsince it took over the business in2009. The surge accounted for morethan 80 per cent of net inflows overthe quarter, helping take BlackRocksassets under management up ten percent year on year to $3.67 trillion.

Fink, who founded the New Yorkbased firm in 1988, said it was amyth a price war had broken outwith its ETF rivals VanGuard.BlackRock, which recently embarked

BlackRock getslift as demand

for ETFs surgesBY MICHAEL BOW on an ambitious branding exercise,

has a client base split equallybetween institutional, retail and ETFmoney.

We were told we needed morebranding. Great brands have a greatbrand message over time, Fink said.This is my number one priority, con-nection with the retail client.

WHILE yesterdays figures

beat analystsexpectations, BlackRocksshare price still hasnt

fully recovered from its 20 per centslide across April and May,remaining some $17 below its $207peak in early April.

One area of concern isexchange-traded funds (ETF). Thislooked superficially like a successyesterday with iSharesgenerating $25.2bn in net inflowsthis quarter, its best showingsince 2009. However, there areseveral problems.

Firstly, a migration into suchlow-cost, passive products risks a

reduction for active equityproducts and their higher fees.

Secondly, these giant inflowsare a reflection of a fast-growingmarket, rather than growth inmarket share. BlackRockcontinues to dominate ETFs, withiShares having $6.87bn undermanagement at the end of thethird quarter according to theconsultancy ETFGI, compared

with $2.58bn and $2.31bnrespectively for its nearest rivals,

State Streets SPDR and Vanguard.But year-to-date inflows for bothSPDR and Vanguard haverespectively grown by 127 per centand 53 per cent compared with2011, beating BlackRocks growthof 50 per cent.

The bind BlackRock is in wasvisible earlier this week, when itannounced it will cut fees on sixETFs to try and stay competitivewith rivals. That was fewer thanexpected, which helps keeprevenue up but wont beatVanguard, which has droppedMSCI indexes to cut its costs. Theworlds largest money manager isa tricky position: caught in a

competitive race to rock bottomprices it doesnt want to win.

Bank of America profits takea tumble on huge legal costsPROFITS were battered bylitigation payouts dating fromacquisitions made at the height ofthe financial crisis, Bank ofAmerica said yesterday.

Last month it agreed to pay$2.4bn to settle claims it hidcrucial information fromshareholders when it boughtMerrill Lynch.

But despite the $1.6bn chargebooked in the quarter, the bankstill recorded a profit thanks totough staff cuts and risinglending to retail customers.

Profits came in at $340m, down95 per cent on the year.

BY TIM WALLACE On top of the litigationexpenses, the bank was also hit bya UK tax-related charge of $0.8bn.

Total revenues slid 28 per centon the year to $22.66bn. Consumerrevenues dropped on new debitcard interchange fee rules, whileaverage loan balances fell and thewider low-interest rateenvironment hit earningopportunities.

However, it cut headcount by16,145 on the year to 272,594,driving personnel expenses down4.9 per cent to $8.43bn, helping tokeep the bank in the black.

And the banks provision forcredit losses fell by $162m on asharp improvement in

delinquencies and bankruptcies.However there may still be some

legal costs to come chief financeofficer Bruce Thompson saiddisagreements with state-backedFannie Mae are ongoing.

BOTTOMLINE

MARC SIDWELL

BlackRock Inc

17Oct11 Oct 12Oct 15Oct 16 Oct

184

186

188

190

$189.1317 Oct

Bank of America Corp

17Oct11Oct 12Oct 15Oct 16 Oct

9.10

9.20

9.30

9.40

9.50

$9.44

17 Oct

THURSDAY 18 OCTOBER 20123NEWScityam.com

Growing market for cut-price

funds looks a mixed blessing

US BANKS THIRD QUARTER PROFITS

Rank 2012 Bank Name Profit Change on Q32011

1 JP Morgan $5.71bn 34%

2 Wells Fargo $4.9bn 22%

3 Goldman Sachs $1.51bn Up from loss

4 Bancorp $1.4bn 14%

5 BNY Mellon $720m 11%

6 State Street $654m 20%

7 Citigroup $468m -88%

8 Bank of America Merrill Lynch $340m -95%

9 M&T Bank $273.9m 66%

1

2

3

4

5

6

7

8

9

TOP CUSTODY bank BNY Mellonjoined the industrys profits boomyesterday reporting stronginvestment management and assetservicing revenues.

Profits came in at $720m(445.4m) in the third quarter, up11 per cent on the same period of2011.

Assets under management hit arecord $1.4 trillion, up 13 per cent

on the year, driving investmentmanagement fees up seven percent, while net long-term inflowscame in at $58bn over the last 12months, compared with $9bn at

BNY Mellon earnings boostedby rising management fees

BY TIM WALLACEthe same point last year.

Foreign exchange revenueplummeted 45 per cent on the

year to $121m, reflecting lowervolatility and volumes.

Foreign exchange is going theroute of the equity markets more electronic, higher-speed andstreaming prices to clients on aconsistent basis, said BNY Mellonchief executive Gerald Hasselladmitting the area might not stagea complete comeback.

But other trading predominantly in fixed income saw revenues of $61m, in contrast

with the $21m loss made in thethree-month period last year.

Rothschild rana successfulhedge fundbefore Bumi

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EMPLOYMENT in the UK rose to an all-time high in the three months toAugust, data showed yesterday, whileunemployment dived, continuing thebuoyant but puzzling trend in thelabour market.

Employment grew 212,000 com-pared to the previous three months tohit 29.6m, a new all-time high, datafrom the Office for National Statisticsrevealed, while unemploymentdropped 50,000 to bring the ratedown from 8.1 per cent to 7.9 per cent.The rise in employment drove a fur-

ther wedge between gloomy outputfigures and the buoyant labour mar-ket, an apparent contradiction that isperplexing analysts.

The great employment mystery

Employmentsoars to new

all-time highBY BEN SOUTHWOOD deepens, said Graeme Leach, chiefeconomist at the Institute of Directors.The headline rate of unemployment,the number of people claiming JobSeekers Allowance and those econom-ically inactive have all fallen, and yetan optimistic description of economicgrowth is that its pretty much flat.And it was not just headline rates

that improved: men and women; part-time workers and full-time workers;staff and the self-employed all saw animprovement in overall employment,as did all age groups.The wedge between public and pri-

vate sector wages widened to 22 aweek in August, the data also showed.Public sector wages grew three percent compared to a year earlier, to hit491 per week on average, whereas pri-

vate sector wages rose just 2.3 per cent.

IS LONDONS LABOUR MARKETIMPROVING? Interviews by Faiza Malik

Ive seen a lot more activity in the City andwith corporates. I mainly deal with M&A. Its

probably due to more confidence, and in my case withthe corporates not wanting to be so reliant on banks.

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

SIMON WILLIAMSHYDROGEN GROUP

I think its improving in London as we expandthe telecom and communication sector, with

broadband, fiber optic and more lines being laid down.The IT and communications sector is growing.

MARTIN SMITHSIX DEGREES

I know a lot of roles in financial services aregoing overseas for cost-cutting reasons. Over

the last few years 100,000 jobs have left London. Itmakes the recruitment consultants job very difficult.

ANDREW BULMERADVANTAGE PROFESSIONAL

MPC split over effectof future stimulusBATTLE lines were drawn at the Bankof Englands last rate-setting

meeting, the minutes releasedyesterday showed, with somemembers arguing a case for morequantitative easing (QE) and othersbelieving that the steam was comingout of the asset purchase scheme.

Though the vote was unanimouson keeping rates and QE constant,with policymakers on the MonetaryPolicy Committee (MPC) agreeingthere was little to be gained inchanging policy before the current

50bn programme of purchases wascompleted, members were dividedon future policy.

While all members agreed that

more QE could bring long-termyields even further down,policymakers were divided overwhether this would be positive forthe economy overall.

Robert Wood, chief economist atBerenberg, said the minutes madethe November policy decisionalmost too tight to call, but a votefor no change was slightly morelikely than a decision in favour ofbeefing QE up.

CITYVIEWS

ENERGY companies will be forced bylaw to put their customers onto thecheapest possible tariff, DavidCameron said yesterday.

We will be legislating so that

energy companies have to give thelowest tariff to their customers, hetold parliament at Prime MinistersQuestions.

The new rules will ensureconsumers enjoy the cheapestpossible gas and electricity pricesavailable and are not left paying overthe odds on inappropriate tariffs.

Full details will be in the EnergyBill, which is due to be publishedbefore the year end.

Law set to cutenergy prices

BY JAMES WATERSON

THURSDAY 18 OCTOBER 20124 NEWS cityam.com

Unemploymentbetween June and

August was

2.53mdown 50,000 compared

to between March and May

Three months to August anotherstellar period for UK labour market

Employment in the UK hits an all-time high

2003 2004 2007 2009 2012

28.228.4

28.6

28.0

28.8

29.0

29.2

29.4

29.6 totalinemployment,millions

Unemploymentrate hit

7.9%down from

8.1 %

Employment rate hit

71.3%up from 70.8%

Employment betweenJune and August was

29.59mup 212,000 compared

to between March and May

Source: Ofce or National Statistics

BY BEN SOUTHWOOD

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STATE-BACKED bank RBS yesterdayexited the scheme set up to insure itstoxic assets at the height of the finan-cial crisis, indicating the lender andregulators have confidence that it ismoving back to health.The Asset Protection Scheme (APS)

was established to backstop a 282bnportfolio of risky loans and invest-ments, as part of the wider bailout andplan to turn the broken bank around.

But in the event the bank did notneed to claim on the APS, and has nowquit the scheme as soon as was con-tractually possible.

By selling off and running down

assets, RBS has reduced the portfolio inquestion to 105bn 63 per cent belowits original size.

RBS paid the Treasury a total of2.5bn for the cover, as well as roughly

BY TIM WALLACE1.5bn for liquidity support during thecrisis.

Bank chief Stephen Hester said themove shows the bank has come a longway in turning itself around in the pastfour years.

We all want a system in which bankswill never again need to seek credit sup-port from the government in a financialcrisis, he said.

Huge progress has been madetowards that goal and our exiting theAPS is a significant milestone in RBSrecovery.And chancellor George Osborne wel-

comed the move, as it reduces taxpayerexposure to the bank.

During this parliament the support

provided by the taxpayer to the banks inthe form of guarantees has fallen byalmost 95 per cent.

RBS shares rose 1.82 per cent on theannouncement.

Progress for RBSas it drops state

insurance cover

CORMAC LEECHLIBERUM CAPITAL

This represents apositive catalyst

given the implicit voteof confidence from theFinancial Services

Authority it sends avery strong signal thatthe regulator is willingto give the all-clear to amove that increases therisk profile of the group. That is why shareswent up, despite the real core tier one capitalimpact from leaving, of around 0.8 per cent,though the APS was an irrelevance from thepoint of view of RBS claiming on it.

MICHAEL SYMONDSDAIWA CAPITAL MARKETS

RBS saves on the500m annual

fee and moves a smallstep closer to privatisa-tion. This was designed

to insure the majorityUK-government ownedbank against outsizedlosses on a 282bnportfolio of the banksriskier loans and investment. Those assetshave since fallen by around 63 per cent to105bn, owing to run-offs and divestments,and the bank never made a claim under thescheme.

GARY GREENWOODSHORE CAPITAL

As the insuranceprotection is

unlikely to be required,RBS reasons that thereis little point continuing

to pay for it. However, itis worth highlightingthe scheme also provid-ed RBS with a core tierone capital ratio benefitequivalent to 77 basis points at the end ofJune, so by exiting the APS this benefit will belost. That said, we note that this benefit hasbeen reducing over time as the company hasbeen running-off the insured assets.

ANALYST VIEWS IS RBS RIGHT TO LEAVE THE GOVERNMENTSASSET PROTECTION SCHEME? Interviews by Tim Wallace

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IN BRIEFDirect Line sells extra shares Newly-floated Direct Line Groupyesterday announced that 34.5 percent of the companys shares weresold in its initial public offering, afterGoldman Sachs exercised an over-allotment option. This leaves RBSowning 65.3 per cent of the insurancegroup following the firms float on theLondon Stock Exchange. The banksremaining shares are expected to besold in two further tranches before theend of 2014.

Portugals short-term yields fall Portugal successfully shiftedhundreds of millions of euros of short-term bonds at drastically lower yieldsyesterday, in its first debt auctionsince it returned to the bond marketearlier this month. It sold 770m(624.9m) worth of 12-month debt atyields averaging 2.1 per cent welldown on the 3.5 per cent it paid inJuly. However six-month debt yieldscrept up from 1.7 per cent inSeptember to 1.8 per cent yesterday.

Eurozone construction improves Construction production in theEurozone recovered slightly inAugust, according to data released byEurostat yesterday, but output wasstill well down on 2011. Seasonallyadjusted production in theconstruction industry rose 0.7 percent between July and August, thedata showed, but this left outputsome 5.5 per cent below the samemonth a year before. And productionwas almost a quarter lower than at itspeak at the very start of 2007.

LARGE companies are turning to thebond market in growing numbers asmore traditional sources of cashremain in the doldrums, research outtoday claims.

In the first eight months of the year,non-financial firms raised $75bn(48bn) in corporate bonds, comparedto 35bn raised in syndicated loans,according to TheCityUK, an interestgroup for financial services.

The drop in bond sales by UK banksand other financial institutions, andhealthy overall demand for UK bonds,opens up an opportunity for non-

financial UK companies to fill, theresearchers said.

Large caps including Tesco, GSK andNational Grid have tapped the bondmarket this year.And yesterday property group St

Modwen demonstrated that mid-capfirms can raise money in this way bylaunching its first retail bond to raisebetween 50m and 100m.

However, the corporate debt marketis still dwarfed by the governmentand international bond markets that

Firms turningto bond market

to raise moneyBY MARION DAKERS operate in the UK, making up less

than one per cent of the 3,500bnmarket. And some fund managershave called the top of the market forcorporate debt, warning that theinvestor hunt for high yields is becom-ing overcrowded.

While there is no guarantee offuture performance, returns frombonds have historically become nega-tive when bond markets returns are ashigh and yields as low as they current-ly are, said Alan Higgins, UK chiefinvestment officer at Coutts, yester-day. The greatest risk to bonds is thatinvestors become more confidentabout the outlook for equities.

THE BANKING ringfence in the UKmay fail as the investment andretail operations will still be too

closely linked, former FederalReserve chairman Paul Volckersaid yesterday, arguing a fullseparation of entities is moreappropriate.

These things tend to bepermeable over time. You want toseparate operations decisively?Dont put them in the sameorganisation and tell them theycannot interact, the industryheavyweight told theparliamentary commission on

Volcker warns bank ringfenceis too weak to improve market

BY TIM WALLACE banking standards yesterday.Volcker told the MPs and peers

this is particularly vital in the caseof bankers like proprietary traders

being kept separate from rational

retail staff, blaming highly paidinvestment staff for infecting theculture of other bankers.

The former Fed boss also arguedit is impossible for a ringfence to

work if the investment banksboard is meant to maintain someindependence from the group.

If the group board is worriedthe investment part of theorganisation, they are going tothink about how they can use the

bank part to support it, he said.

Paul Volcker said there is no reason why proprietary trading should take place at banks

UK corporate bond and corporate loans

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FRENCH bank Credit Agricole yester-day sold its Greek subsidiary toAlpha Bank for 1 (0.81), taking amulti-billion euro loss on the entityas it at last managed to slash its expo-sure to the recession-struck economy.The bank is taking a 2bn write-

down on the Emporiki unit, and hasincreased its recapitalisation of thesubsidiary by550m on top of the2.3bn pumped into the Greek entityin July.The deal reduces Credit Agricoles

2.1bn funding of the unit by700mimmediately, and completely inthree more installments by the endof 2014.

While Credit Agricole will take acirca 2bn profit hit in the thirdquarter of 2012 as a result of the dis-posal, the impact on capital ratioswill be offset somewhat by the corre-sponding reduction in risk-weightedassets, said analyst MichaelSymonds from Daiwa CapitalMarkets.

Exiting Greece is undoubtedly pos-

Credit Agricole

sells Greek unitEmporiki for 1BY TIM WALLACE itive for Credit Agricoles credit pro-

file, but this development is alreadylargely reflected in credit spreadsfollowing recent sharp tightening.The bank said the move would help

it reach its 2013 solvency targets,while at the same time aid the Greekbanking systems consolidation,which is an essential conditionfor the recovery of the countrysfinancial sector.

Credit Agricoles shares dropped 1.9per cent yesterday, but remain upalmost 20 per cent on the start of themonth when the divestment planwas outlined.

Credit Agricole

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Gloomy forecasts will comeas a blow to Angela Merkel


Germany slashes 2013 growth hopesGERMANY sliced its 2013 growthforecast yesterday, with t heEurozone powerhouse draggeddowny by tough currents in theworld economy.

The biggest economy in theeuro area will grow just one per

cent next year, the Germaneconomy ministry said, downfrom a more optimistic previousforecast of 1.6 per cent.

The Eurozone heavyweight, ledby Chancellor Angela Merkel, hadpreviously proved resilient toworld and European troubles,posting 4.2 per cent growth in2010 and three per cent growth in2011, but the predictions suggestit has finally succumbed though

BY BEN SOUTHWOODit will still grow.

Germany is navigating stormywaters because of the Europeansovereign debt crisis and aneconomic weakening in emergingnations in Asia and LatinAmerica, said economy ministerPhilipp Roesler in a statement.

But Tobias Blattner and EmilyNicol at Daiwa Capital Marketssaid the forecasts were still toooptimistic. [The newforecasts do] not properlytake global headwinds aswell as the new round ofdeep budget cuts

forthcoming in large parts of theeuro area, they said. They wenton to predict growth of just 0.7per cent next year.

This came as finance ministerWolfgang Schuble called for theestablishment of an EU currencycommissioner with the power toscrutinise and reject member

state budgets, as part of ageneral package ofEuropean political andeconomic integration.

We must now makebigger steps in thedirection of a fiscalunion, Schuble toldreporters on his wayback from a trip toAsia, We must usethis chance.

INTERNATIONAL regulators wantsystemically importantinsurance firms to hold extracapital to safeguard the rest ofthe financial system if they go

bust.The International Association

of Insurance Supervisors set outplans yesterday to avoid insurers

becoming too big to fail, byseparating traditional insuranceactivities from riskier ones suchas credit default swaps, and byholding instruments comprisingthe highest quality capital tocover losses.

The proposed policy measuresare intended to reduce moral

hazard and the negativeexternalities stemming from the

BY MARION DAKERSpotential disorderly failure posed

by global systemically importantinsurers, said Peter Braumueller,head of the IAIS.

Regulators focus on insurersnon-traditional activities stemsfrom heavy losses absorbed bySwiss Re and AIG through creditdefault swaps that forced both toraise emergency funding duringthe 2008 crisis.

The G20s Financial StabilityBoard will name the insurersdeemed systemically important in

April, with most of the new rulesset to be introduced within 18months.

Such firms will also be subjectto closer scrutiny by regulatorsand will be required to draft

living wills for windingthemselves down if they ever fail.

Too big to fail insurers will be

forced to stockpile more capital

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THURSDAY 18TH OCTOBER 20128 NEWS cityam.com

GATWICK has kicked off a campaignto build a second runway at the southof London airport, arguing it wouldserve the south east of England betterthan an enlarged Heathrow or a newThames Estuary hub.

Britains second-biggest airport saidit will study options for a new run-way, turning Gatwick from a mostlypoint-to-point airport into an interna-tional hub.While an agreement with Sussex

County Council means work on a newrunway cannot begin until 2019,Gatwick has spoken up ahead of a gov-

ernment-commissioned investigationinto expanding Britains air capacity,which is due to report in 2015.

The airport said in its Master Plan inJune that it has no current plans fora second runway, in the face of gov-ernment and residents opposition.

We have always promised the localcommunity that if we ever got to thepoint where we were doing work on asecond runway, we would tell every-one, chairman Sir David Rowlandstold City A.M.

Gatwick wantscontroversial

second runwayBY MARION DAKERS Rowlands believes airlines linking

Europe to the Far East would beattracted to a bigger Gatwick, follow-ing in the footsteps of Korean Air andVietnam Airlines, which launchedroutes at the airport in the last year.

Gatwick boss Stewart Wingate addedyesterday: I believe a new runway atGatwick could be affordable, practicaland give passengers a greater choice ofroutes to key markets.

As for the Estuary airport concepts,there are major questions on afford-ability, environmental issues andwhether they are deliverable.

Heathrow hit back yesterday, argu-ing that the UK is not short of the

point to point capacity provided by air-ports like Gatwick. Rowlands pointedout, however, that two-thirds ofHeathrow traffic travels point-to-point,rather than using the airport as a hub.The Gatwick Area Conservation

Campaign yesterday warned it wouldmount a massive campaign of opposi-tion if Gatwick continues talking upa new runway.

Meanwhile the chief executive ofQatar Airways, Akbar Al Baker, urgedthe government to expand Heathrow.

BRITISH retailers closed morestores than they opened in thefirst half of the year, with around20 shops a day pulling down theirshutters, a study has revealed.

The report, by PwC and theLocal Data Company, examined500 town centres in the UK andfound toy shops, clothes andfurniture retailers, jewellers,card & poster shops and furniturestores were the worst hit.

In contrast, discount stores,

Retailers close 20 shops a dayas value chains take their place

BY KASMIRA JEFFORD convenience stores, coffee shops,bookmakers and charity shops all

showed growth in the first half.The report showed the number

of closures has increased to 32per day for July and August dueto administrations, like that ofsports good seller JJB.

Retailers in distress have toomany locations, Mike Jervis, PwCinsolvency partner said.

Retailers need to face thatreality and formulate a strategicplan...with landlords, not inconfrontation with them.

THE CITY of London Corporation said yesterday it has sold 20 Finsbury Circus to NTTUrban Development, the property arm of Japanese telecoms firm Nippon Telegraph &Telephone Corporation for 42.5m. The building is let to Deutsche Bank until 2015.

20 FINSBURY CIRCUS SOLD TO JAPANESE FIRM IN BRIEFManchester bids for Stansted Manchester Airports Group (MAG)yesterday confirmed that it hasteamed up with infrastructurespecialist Industry Funds Managementto make a takeover bid for StanstedAirport. Final bids are due in nextweek for Stansted, which was put onthe block by BAA after a competitionruling. MAG chief executive CharlieCornish said his firms track record inrunning airports should play to itsadvantage.

MPs to examine Starbucks tax Two parliamentary committees aredue to quiz tax officials about howStarbucks was able to avoid paying taxon 1.2bn of sales since 2009. MPs saidreports that showed Starbucks had beentelling investors its UK unit was highlyprofitable while telling UK authorities theunit was loss making, and so not liablefor tax, undermined public trust in thetax system. Margaret Hodge, chair of thePublic Accounts Committee, is amongseveral MPs who said they wanted HMRCto launch an investigation.

Exxon Mobil buys Celtic for $2.6bn Exxon Mobil agreed yesterday tobuy Celtic Exploration for C$2.6bn(1.6bn), as the world's largestpublicly traded energy company looksto raise its presence in some ofWestern Canadas most promisingshale oil and gas regions. Exxon saidits Canadian subsidiary, ExxonMobilCanada, will pay C$24.50 for eachshare of Celtic, a 35 per cent premiumto Celtics closing price on the TorontoStock Exchange on Tuesday but belowits 52-week high of C$27.08.

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EBAY last nightannounced thatrevenues grew 15per cent in the lastquarter to $3.4bn(2.1bn), producingprofits of $718m.The firms onlineauction site andPayPal payment

service continue toperform well butchief executiveJohn Donahoe(pictured) isbranching out intonew services, suchas providingtechnical supportfor purchases.

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DIAGEO yesterday posted a five percent jump in underlying sales drivenby demand for spirits such asSmirnoff vodka in the US and strongsales of scotch in emerging marketslike China.The drinks giant said net sales in

North America, which accounts for athird of its sales, rose six per cent inthe quarter to 30 September, boostedby campaigns behind its Smirnoffvodka and Captain Morgan brands.

The group has also been benefittingfrom a recovery in the US spirits mar-ket and more consumers opting forits super-premium brands likeCiroc, its luxury French Vodka label.

Sales rose by 16 per cent in its LatinAmerica and Caribbean region itsfastest growing market despite atough comparison in the prior yearwhen sales rose 30 per cent.

In Africa, sales rose 11 per cent inthe quarter, with strong growth inspirits in South Africa and in beer inEast Africa helping to offset weaknessin Nigeria.

BY KASMIRA JEFFORDOverall, sales in Europe declined by

one per cent despite double-digitgrowth in emerging market Turkey.Russia was dragged down by weaktrading in western and southernregions, with consumer demand inFrance hit by Januarys duty hike.

Meanwhile in Asia Pacific, sales rosetwo per cent, below analyst expecta-tions of around eight per cent, whichthe group blamed on weakness inSouth Korea and Australia.The group expects half its turnover

to come from fast-growing Asian,African and Latin American marketsby 2015, up from 40 per cent last year.

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MARKETING budgets took their

biggest hit in three years in thelast quarter amid shrinkingbusiness confidence, new datareleased today shows.

Statistics from Markitsinfluential IPA Bellwether surveyshow that budgets shrank for thesecond successive quarter in thethree months to October, with 23per cent of companies sayingbudgets had contracted. Just 18per cent said there had been arise.

This resulted in a net balance the reports metric of budgetchanges of -5.5, a fall not seensince the end of 2009.

The message provided by theBellwether survey is consistentand indicative of the economicsituation as a whole which is oneof underlying stagnation, IPApresident Nicola Mendelsohn said.

We had hoped when the yearstarted that things were pickingup but as time has gone on theeconomy has stuttered andconfidence isnt particularlystrong.

The report said the latest figureshad brought its prediction of anoverall rise in budgets in 2012 intodoubt. Internet advertising buckedthe trend however, with a netbalance of 7.1 per cent reporting arise in marketing budgets.

Marketing spendsuffers worst fallfor three years

BY JAMES TITCOMB

888 HOLDINGS has reaped therewards from an ambitious market-ing campaign and expansion in thenewly regulated Spanish gaming mar-ket, the company said yesterday, lead-ing it to better than expected sales.The online poker and casino opera-

tor said turnover had jumped sevenper cent year-on-year in the quarterto October. While growth in casinogaming was steady, poker saw a riseof 21 per cent, and turned a profit inthe new Spanish market despite allexpectations to the contrary.

Our core business has continued

to perform well during the quarter,with our targeted marketing cam-paigns contributing towards ourongoing success and Spain outper-forming our expectations, 888schief executive Brian Mattingleysaid, adding that the fourth quarterhad started positively.

888 Holdings saw sales of $92m(56.9m) in the period, and said thenumber of customer accounts hadincreased 24 per cent to 12.5m. Thesuccess drove the share price up to

888 hits jackpotthanks to poker

growth in SpainBY JAMES TITCOMB levels not seen for two and a half

years as a host of City experts upgrad-ed the company.The value of the firms shares have

increased more than 2.5 times sincethe start of the year.

Nick Batram at Peel Hunt upgradedthe firm to a buy rating, and said:888 is demonstrating that an onlinebusiness with a strong product propo-sition and excellent execution cangrow the bottom line, even in mar-kets where the costs of regulation arerising.The companys year-to-date revenues

are currently running at aroundthree per cent above last year.

MOBILE software companyCrimson Tide yesterday signed adeal with Microsoft to use the

tech giants cloud-basedinfrastructure.

Crimson Tide, which developsand operates the mprosmartphone app, said theagreement would providecurrent and future customers

with the most secure, reliable androbust enterprise applicationavailable.

Microsofts cloud platform,Windows Azure, allows companiesto run applications via the

Crimson Tide announces mobilesoftware tie-up with Microsoft

BY JAMES TITCOMB internet and store their dataonline.

By launching our mprosolution on Microsofts Windows

Azure platform I believe that we

will be offering one of the mostpowerful, reliable and adaptableenterprise applications currentlyon the market, said CrimsonTides executive chairman Barrie

Whipp. As a company we strive tomake continual enhancementsand improvements to our system.

The tie-up with a trustedoperator like Microsoft is crucialto Crimson Tide, whose officeadmin apps are used extensivelyin the medical industry.

Crimson Tides executive chairman Barrie Whipp started the company in 1996

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IN BRIEFCWC confirms Macau sale talks Cable & Wireless Communications(CWC) yesterday said it was in talksover a sale of its business in Macau, afurther step as the mobile networkcompany focuses its operations on itsCaribbean and Panama operations.The FTSE 250 firm, formed in 2010when it split from Cable & WirelessWorldwide, is negotiating with Pacificoperator Citic Telecom over CWCs 51per cent stake in its Macau network. Asale could net CWC around $650m.

Speedy Hire sees steady growth Speedy Hire, the tools andequipment rental service, remains ontrack for impressive growth this yearafter saying yesterday that sales hadrisen 5.3 per cent in the first half of thefinancial year, when the effects ofrecent disposals were stripped out.The company said its progress in linewith expectations was mainly drivenby its international arm, with revenueup 77 per cent o n last year. UnderlyingUK sales were up 3.2 per cent, thecompany added.

European slowdown hits Danone French food group Danone saidgrowth slowed sharply at its dairydivision as shoppers in Italy and Spainswitched to cheaper alternatives inrecession conditions unlikely to ease intonext year. Kicking off the third-quarterreporting season yesterday ahead oflarge food makers like Nestle andUnilever, the worlds largest yoghurtmaker, whose brands include Actimeland Activia, said third-quarter salesreached 5.26bn (3.25bn), with like-for-like sales growth at five per cent.


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DUTCH microchip equipment makerASML is set to spend1.95bn (1.6bn)on Cymer, a US technology companywhose technology is crucial to mak-ing the next generation of smart-phone chips, the company saidyesterday.

ASML saw a flood of investmentfrom microchip manufacturersSamsung, Intel and others over thesummer, in order to fund newresearch and development products.The worlds leading microchip

parts maker, which is seen as a bell-wether for the European technology

sector, also said yesterday that its per-formance in the last few months hadbeen somewhat slower than expect-ed due to more consumers choosingcheaper smartphones.ASML posted a275m pre-tax profit

for the last quarter, slightly underexpectations, along with sales of1.2bn. Many global chipmakers,including heavyweight manufactur-er Intel, have reported flagging salesover the summer due to consumersin southern European countries,

Dutch chip firmASML buys USs

Cymer for 2bnBY JAMES TITCOMB especially Spain and Italy, buying

cheaper phones.Cymers light-based semiconductor-

building technology allows chipmak-ers to ink intricate circuit patterns onmicrochips, which enables the pro-duction of smaller, faster and moreefficient processors. ASML said anacquisition was the natural evolu-tion in the two companies relation-ship, after they had worked closelytogether for the last 12 months.

Despite predictions that the dealwill improve earnings in two years,ASMLs share price fell yesterday asmanagement said the next quarterwill be at the low end of expectations.

POLARISATION between Britishfootballs haves and have-nots is

growing, with most clubs outside

the English top flight reliant onowners to cover losses, according toa survey published today.

Some 66 per cent of all teamswho responded said they did notexpect to make a profit beforeplayer trading and amortisation, anincrease from 42 per cent last year,the study by accountants PKFfound. In the Championship,English footballs second tier, only12 per cent of sides forecast aprofit, compared with 89 per cent

Survey reveals financial chasmbetween top UK football teams

BY FRANK DALLERES of Premier League clubs.Reliance on shareholders to keep

them afloat is also greater outsidethe elite, with 87 per cent ofChampionship sides needing owner

bailouts twice the ratio of theirPremier League counterparts.

The divide between the rich andthe poor in football is growing

wider, said PKF Football IndustryGroup head Charles Barnett. Yousimply need to contrast thefortunes of Premier League giantssuch as Manchester United, whichrecently tapped Wall Street forfunding, with lower league sidessuch as Port Vale and Portsmouth,

which are both in administration.

Manchester United raised funds on the Nasdaq earlier this year

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BY MICHAEL BOW

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Lender IPF closeto wrapping upshare buyback

EMBATTLED professional servicesfirm RSM Tenon tried to draw a lineunder an unsatisfactory year yester-day, after reporting a pre-tax loss of101.8m.The firm said it is cutting 400 staff,

more than first planned and withsome compulsory redundancies, aspart of its turnaround. It has over-hauled its top staff this year after dis-covering accounting errors in Januarythat sparked a profit warning.

It was unacceptable to haveallowed a situation where costs had

grown to be in excess of revenues, and

bank indebtedness had become amultiple of the companys marketcapitalisation, said Tim Ingram, whocame on board as chairman in May.

To say that the year ended 30 June2012 was a disappointment would bean understatement; this year hasbeen totally unsatisfactory for share-holders and other stakeholders.

RSM Tenon has also agreed a dealwith Lloyds Banking Group to raise itslending facility to 93m and extend it

until December 2014 to give it breath-

ing space during its recovery efforts.Revenues fell 8.8 per cent to 208.min the year to the end of June, whileoperating costs rose 33.5 per cent to300.5m due to redundancies andwrite-down costs. This pulled the firmto a pre-tax loss of 101.8m, from a1.5m loss in the previous yearsrestated accounts.

New chief executive Chris Merrysaid the figures were the end of achapter.

DOORSTEP lender InternationalPersonal Finance (IPF), which operates

in Eastern Europe and Mexico,hoovered up 15m of its own sharesduring the third quarter, it said

yesterday, in a share buyback.IPF, listed on the FTSE 250, began a

25m share buyback programme atthe end of July and yesterday said 60per cent of the programme wasfinished after it snapped up 100,000shares a day at 3.10- 3.20.

The firm said yesterday it wouldlaunch new products and push intodifferent regions in Eastern Europe in2013, as it reported flat pre-tax profitsfor the third quarter of 2012.

It posted 27.2m of pre-tax profitsbetween July and September, versus27m a year ago. Net revenues weredown slightly year on year, but upnine per cent at constant exchangerates. Underlying growth was good

with the firms key East Europeanmarkets all posting profits. Its

Mexican business reported 800,000profit with customers up seven percent. New chief executive GerardRyan, who took the helm in February,said it was a good quarter.

RSM Tenon tries to turnthe page after dire year

BY MARION DAKERS

Chief exec Chris Merry is optimistic

7/31/2019 Cityam 2012-10-18

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CITYA.M.AWARDS2012

LAST night was an occasion to

remember: City A.M.s thirdannual awards celebrating thebest and brightest of Londons

business, financial and investmentcommunities. Over 500 guests from116 different firms attended thecelebration, held at the Grange Hotelin St Pauls.There was great food, music and

company, as well as a rousing speechfrom Boris Johnson. I wish to extendmy thanks to Lexus, our headline

sponsor, and also to Brewin Dolphin,who sponsored the reception. Ourwinners, profiled in these pages, werechosen in unique fashion. Each was

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responses from professionals workingacross the City. We then held a meet-ing of our expert panel of judges,which as you can see from their pro-files include many of the most influ-ential people in Britains businesscommunity. The winners wereannounced last night to a packedroom, chaired superbly as ever by theBBCs Katie Derham.

Like last year, we examined a broadrange of sectors spanning the finan-

cial world in all of its forms, includ-

ing banking, law, accounting, fundmanagement and trading, as well asinnovators and entrepreneurs, withthe aim of singling out the highestachieving teams and individuals aswell as the most promising new kidson the block. Selecting the best wasfar from easy but our winners are allremarkable in their own ways.They are at the forefront of develop-

ing new and better business modelsthat will help Britain return to pros-

perity and in Lord Coes case, show-

ing the world London is still thegreatest city in the world. Britainneeds to learn to love real, hard-earned, unsubsidised success again.We need a thriving capitalist sector tohelp create jobs and finance Britainsmassive deficit. We need successfulfirms and people who build and inno-vate and grow. Last night was a won-derful evening and proof thatdespite the crisis, there is more to eco-nomic life than doom and gloom.

EDITORSLETTER

ALLISTER HEATH

An evening celebrating the best of London businessTHECAPITALIST

AT THE

Allister Heath, City A.M.

Allister joinedCity A.M. as editor in2008. He oversees allof the content in thenewspaper and alsowrites a dailyEditors Letter. He isalso a frequent contributor to otherprint and broadcast media, and is aregular guest on TV news.

David Hellier, City A.M.

David has been atCity A.M. since2005. He is anestablished financial

journalist, havingreported on the fieldduring a careerspanning three decades. He is nowdeputy editor of the paper, writing aweekly column on investment banks.

Nigel Boardman, Slaughter & May

Nigel, one of theCitys mostrespected lawyers,has been a partner at

Slaughters since1982, and hasadvised on manyhigh profile deals, including the saleof Liverpool Football Club. Hes adeal-doer par excellence.

Alison Carnwath, Land Securities

Alison currentlychairs LandSecurities, havingresigned earlier this

year from herposition as adirector at Barclays.Shes a forceful contributor tomeetings, proving this time and againat the City A.Mjudging sessions.

Sir Roger Carr, Centrica

Sir Roger, who sat onthe judging panellast year, is chairmanof Centrica, deputychairman of theCourt of the Bank ofEngland and ispresident of the Confederation ofBritish Industry. He is also a senioradviser to private equity firm KKR.

Katherine Garrett-Cox, Alliance Trust

Katherine joinedAlliance Trust in 2007as chief investmentofficer, and nowholds the position ofchief executive arole she wasappointed to in 2008. This is the firsttime that Katherine has served on the

judging panel for the City A.M. awards.

Simon Mackenzie-Smith, BoA Merrill Lynch

Simon is chairman ofUK and Irelandcorporate andinvestment bankingat Bank of AmericaMerrill Lynch. He is awell-known deal-maker. Additionally he is also on theCouncil of Members for the charitablefoundation, Heart of the City.

Phil Raper, Goldman Sachs

Phil is head of UKequity capitalmarkets andchairman ofcorporate broking atGoldman Sachs. Hejoined the firm in2000 and was named managingdirector in the same year.He was brought up in Bradford.

Roland Rudd, RLM Finsbury

Roland is thefounder of RLMFinsbury, probablythe Citys best-connected financialpublic relations firm.He is a consummatenetworker who prides himself onentertaining, sometimes at home,most days and evenings.

Truett Tate, Arora

Returning judgeTruett is currentchairman of thehotels group Arora,having retired fromLloyds BankingGroup. Truettenjoyed a long career in globalbanking at Lloyds, joining fromCitibank.

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THURSDAY 18 OCTOBER 201216 THECAPITALISTAT THE

And the winners are...CITYA.M. AWARDS2012

PERSONALITY OF THE YEAR BUSINESS OF THE YEAR

Chris Hohn,The Childrens FundAs the chiefexecutive of TheChildrensInvestment Fund(TCI) Hohn hascampaigned with the firm to demandbigger dividend payouts from JapanTobacco and against Coal Indiaspricing policies.

CITYA.M.

FUND MANAGER OF THE YEAR

Clive Black,Shore CapitalBlack has beenahead of the packon arguably thebiggest retail storyof the year thestruggle for Tesco to cling on to itsmarket share. He downgraded full

year forecasts forthe firm and haswarned that it will

continue to strugglein the US.

ANALYST OF THE YEAR

Mark Sorrell,Goldman SachsMark was promotedto co-head of theUK investmentbanking business inMay of last year,and played an instrumental role inadvising Walgreens on its two-part$28bn purchase of the pharmacychain Alliance Boots.

DEALMAKER OF THE YEAR

Driss Ben-BrahimBefore departingfrom GLG earlierthis year Drissestablished asuccessfulreputation fortrading in currencies, sovereign bondsand interest rates. Ben-Brahim started

his career atGoldman Sachs in1994 and wasmade partnerthere in 2004.

TRADER OF THE YEAR

RothschildHaving moved intostriking newpremises in StSwithins Lane,Rothschild hasbeen gainingmarket share in the advisory busines,

for exampleadvising the HongKong Exchange onthe $2.1bn bid forthe Global MetalExchange.

INVESTMENT BANK OF THE YEAR

Paul Lindley,Ellas KitchenPaul Lindley isfounder ofchildren's foodbrand EllasKitchen, one of thefastest growing companies in the UK doubling revenue every year since itwas founded in 2004. In 2011, familiesspent over 50m on Ellas Kitchen.

ENTREPRENEUR OF THE YEAR

DeloitteFor Deloitte thisyear will be definedby one event theLondon 2012Games. Signed upas a lead partner in2003, the firm estimated it hascontributed more than 750,000 hoursof work to help plan the events thatdefined London this summer.

PROFESSIONAL SERVICES

John Lewis,

Christmas campaignThe stores 6m

campaign, createdby Adam & Eve, sawa seven year oldboy stare at theclock as he waited for Christmas Day.Set to a cover of The Smiths PleasePlease Please, it has over 4m hits onYouTube. It gets us every time.

MARKETING CAMPAIGN OF THE YEAR

Market InvoiceFounded by AnilStocker(right) andCharles Delingpole,the firm offerscompanies a way tofinance theirbusiness via an online marketplace forinvoices. The innovation has madewaves in the lucrative but somewhathidebound invoice finance sector.

INNOVATION OF THE YEAR

WestfieldWestfield openedits 1.9m square feetStratford Cityshopping centre inSeptember,transformingLondons East End and setting the

bar high for retail in the UK. The1.45bn mall is Europes largestshopping centre, and stands as aprestigious gateway to the OlympicPark, with 300 shops, 70 restaurantsand a 14-screen cinema.

PROPERTY GROUP OF THE YEAR

Norton RoseNorton Rose reapedthe benefits of itsacquisitions thisyear, seeing goodgrowth in overseastie-ups. The firm, ledby Peter Martyr (pictured), ensured itsdomestic practice is at the forefront of itssector specialisms, including advisingthe buyers of Battersea Power Station.

LAW FIRM OF THE YEAR

PrudentialSpeculation over itsthreats to relocateoutside Europecannot detract fromthe Prus globalsuccess. Chiefexecutive Tidjane Thiam has overcomethe failure of his bid for part of AIGand survived a shareholder pay revoltto lead a firm that shows more growthpotential than most British insurers.Profits at its Asian business have risen

by 32 per cent.

INSURER OF THE YEAR

CITYAMCAREERS.com

DiageoThe drinks gianthas made severalbold acquisitionsthis year andinvested in newprojects such as a1bn plan to increase whiskyproduction in Scotland. Shares havealso increased by 28 per cent.

Lord Coe,

Locog chairmanFormer Olympicmiddle distancerunner and

politician Lord Coewas a clear stand-out winner. He put London on theglobal stage for the Olympic Games.2012 has undoubtedly been his year.

RISING STAR OF THE YEAR

Michael Steele,FreshfieldsMichael becameone of the magiccircle firmsyoungest partnersthis year, at theage of 30. He joined the company in

2008, having begun his career inAustralia.

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To the Grange Hotel in theheart of St Pauls last nightfor City A.M.s third annualawards ceremony.

After a day of glorious autumnalsunshine, 500 of the City's best and

brightest worked the red carpet andwere greeted in t he atrium of The

Grange with glasses of bubbly at thechampagne reception, sponsored byBrewin Dolphin, as the Siren stringquartet played in the background

before dinner began.Tables were in high demand for

the annual event, with City bigshots including professional servic-es firms PwC and Deloitte,Brunswick PR, law firm NortonRose, as well as representatives ofBank of America Merrill Lynch and

Jefferies, among other bankinggiants.Welcoming guests to the ceremo-

ny, City A.M. editor Allister Heathsummed up the spirit of theevening: Tonight is an evening for

joy, celebration and optimism. Wecelebrate people who win. We are anoptimistic publication. And here weare celebrating success, growth,innovation, job creation.

He then introduced the eveningssurprise guest of honour Mayor ofLondon and City champion Boris

Johnson, who, fresh from winningfriends up north at the Tory partyconference was obviously on a rollas his delivered a rousing testimonyto the capitals financial servicesindustry.Johnson addressed the audience in

typical BoJostyle: I speakas theproud win-ner of oneof yourf i r s ta w a r d s ,its in myo f f i c e .Granite orsome such.

But Idigress...I

want to congratulate my favouritenewspaper, City A.M.! You were rightabout the euro, you were right aboutinfrastructure and aviation. And

Allister is right, London is the great-est city on earth!And on a more serious dare The

Capitalist suggest hustings-esquenote, Boris continued: ReadershipofCity A.M. has gone up by an incred-ible 30 per cent and couldnt resistsuggesting: No doubt it is up by thisamount because it is by exactly 30per cent that we have increased thecapacity of the Jubilee line!Thrilled to be back compering the

awards for a third year running wasthe BBCs Katie Derham, who con-fessed: I didnt offend anybody last

year so I must try harder. Especiallyafter Boris Johnson - what a hard actto follow! Last time I did that Borisdeclaimed an ode in Ancient Greek.All eyes soon shifted from the

nights delicious dinner to theevenings winners.Those taking home trophies

included Norton Rose for Law Firmof the Year, with chairman StephenParish taking to the stage to receivethe trophy, Driss Ben-Brahim untilrecently at GLG Partners for Traderof the Year, Mark Sorrell of GoldmanSachs for Dealmaker of the Year andthe most popular category (mea-sured by audience applause) whichturned out to be Analyst of the Year- won by Clive Black of Shore Capital.

Lord Sebastian Coe, who deserved-ly swooped the Personality of the

Year trophy to a rapturous audiencereception said: I would like tothankCity A.M. for its rock solid sup-port and understanding about what

we were trying to deliver during theOlympics. The first mistake I madeduring our campaign wasnever follow Boris Johnsononto any public platform,so luckily I have avoidedmaking the same mis-take twice tonight!

As one dinner jacket-ed reveller, wine glassin hand, informed TheCapitalist as theyheaded toward thehotels dancefloor:They nailed it interms of awards.Pretty damngood.

BBCs Katie Derham with professional services firm winner, Deloitte senior partner David Barnes, and Roland Rudd, founder of RLM Finsbury

THURSDAY 18 OCTOBER 201218 THECAPITALISTAT THE CITYA.M. AWARDS2012

Paul Marshall of headlinesponsor Lexus (l) was on hand

to help present the awards

THECAPITALIST

CALLY SQUIRES

Bubbly, Borisand banter allsparkle at our2012 awards

City A.M. editor Allister Heath welcomes guests to the awards (above)and (left) Brewin Dolphins Sasha Dabliz with Michael Walker of BAA

oldman Sachs Mark So rrell (above) and (l-r) Sellar Properties Irvine Sellar with Truett Tate of Arora Capital and Erin Hepher, founder of Aura Limited

PICTURES:LAURALEAN/CITYAM

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THURSDAY 18 OCTOBER 201219THECAPITALISTAT THE CITYA.M. AWARDS2012cityam.com

Were not into white-washing reputations:

were into rebuilding them

6th Floor, Holborn Gate, 330 High Holborn, London, WC1V 7QD

Tel: +44 (0)20 7861 3232 Fax: +44 (0)20 7861 3233

www.pelhambellpottinger.co.uk

City A.M. columnist and Ryder cup winning golfer Sam Torrance (above right), with Deirdre Muncaster (above left); City A.M. chief executive Jens Thorpe; Mayor of London Boris Johnson raises a glass to the nights winners

(l-r) Business minister Michael Fallon with Alliance Trust chief executive KatherineGarrett-Cox and Arbuthnot Group chairman and chief executive Henry Angest

Above: Fund manager of the year Chris Hohn of The Childrens Investment Fund (l)with City A.M. managing director Lawson Muncaster (r)

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AFRICA-focused explorer ShantaGold yesterday unveiled an equityoffering to raise $30m (18.5m) tofund the ramp-up of operations atthe Aim-listed firms flagship NewLuika Gold Mine in Tanzania.

Combined with existing cash of$3m and expected fourth quartergold sales of $9m, the proceedsfrom the placing will help finaliseoperating costs and debt repaymentsurrounding New Luika.

Operationally, Shanta is workingon resolving issues at its flagshipasset. Initial production at NewLuika, started at the end of August,was lower than expected as a resultof reduced crushing capacity.

Overall, Shanta said that goldoutput to 14 October came in at 570ounces, compared to 199 ounces forthe whole of September.

Meanwhile, the exploreryesterday announced amanagement shake-up. JonathanLeslie has been appointed asstrategic adviser to the board, whilemining corporate financier LukeLeslie has been appointed non-executive director. Additionally,technical director and former chiefexecutive Gareth Taylor has steppeddown, while executive chairmanWalton Imrie will step down when anew chairman candidate has beenfound.

Shanta Goldlaunches $30m

share placingBY CATHY ADAMS

Michael Rawlinson, director of the mining,metals and resources team at LiberumCapital, is the lead adviser on the placing,working alongside colleagues Clayton Bushand Christopher Kololian. Rawlinson has 20years investment banking experience in themining sector, both in research and corpo-rate finance. Rawlinson has previouslyworked in the mining corporate financeteam at Flemings and has worked on bothmining analysis and corporate finance at

Cazenove, before it merged with JP Morgan.

In terms of mining deals, he has held keyroles in the initial public offerings of majorminers in London such as BHP Billiton,Xstrata, Vedanta, Anglo American andKazakhmys. Last April, the Liberum Capitaldealmaker was an adviser on the GlencoreIPO. Rawlinson has also helped the listingand subsequent development of numeroussmall- and mid-cap miners to the Londonmarket, including Hochschild Mining, GemDiamonds, Talvivaara Mining, Lonmin, PeterHambro Mining (now Petropavlovsk),Highland Gold, Vallar, Ncondezi,Hummingbird Resources, Zanaga Iron Oreand London Mining. Liberum more widelyhas also been involved with the IPO of NatRothschilds cash shell, Vallar, before itbecame Bumi in April 2011.

ADVISERS LIBERUM CAPITAL

MICHAELRAWLINSONLIBERUM CAPITAL


PRECIOUS metal producer Polymetalyesterday posted record gold outputof 317,000 ounces, up 48 per centyear on year, revising up its full-yearproduction guidance.

For the nine months to 30September, gold production was up46 per cent year on year. On a quar-terly basis, production increasedseven per cent.The Russian producer cited strong

production growth at its Omolonmine, progress at Albazino-Amurskand an improved gold grade atKhakanja for the rise in production.Annual production for 2012 is now

expected to come in at 1.05m ouncesof gold equivalent, up from 1m.

However, its 2013 production esti-mate has been revised down by50,000 ounces, largely due to thedelay in the expected commissioningof the Mayskoye gold concentrator inRussias Far East, previously expectedto be operational this year.

On the back of strong results, theboard has raised the minimum divi-

Polymetal ups

sales guidanceon high output

BY CATHY ADAMSdend payout ratio to 30 per cent ofnet earnings. The board added that itwould introduce interim dividends,and proposed that a special dividendbe considered at the end of eachfinancial year.

Chief executive Vitaly Nesis said yes-terday that strong performance atboth its older and newer operationshave helped to beat original salesguidance.

Mining analyst Cailey Barker atNumis Securities yesterday hailed thestrong result, adding thatPolymetals business continues toget better and better.

Securitas launches cost-cuttingplan following European slumpSWEDISH security services groupSecuritas yesterday announcedplans to cut costs and merge twodivisions after posting sevenstraight quarterly earnings drops.

The company, the worldssecond largest security firm afterBritish-Danish G4S has sufferedfrom weakness in Europe duringthe sovereign debt crisis, whichhas affected key contracts.Profitability in the US market hasbeen weaker than expected.

A cost-savings programme hasbeen initiated at Security Services

BY HARRY BANKS North America and at SecurityServices Europe, the group said ina statement, referring to two coredivisions which togetheraccounted for 76 per cent of saleslast year.

The firm said it was aiming forannual cost savings of 300mSwedish krona (28.1m) from 2013with estimated restructuring costsof about 360m Swedish krona.

The firm also said it wouldmerge its mobile and monitoringdivision which accounted for 10per cent of sales in 2011 with the

Security Services Europe division.The changes will lead to job

losses of about 400 people withinmiddle and higher levelmanagement. In 2011 the groupemployed about 300,000 peopleworldwide in 51 countries.

Xstrata copper production dipsas flagship mine suffers slumpCOPPER production at minerXstrata dipped by 16 per cent year

on year in the third quarter, hurtby falling production at itsCollahuasi mine in Chile.

Xstrata, which is currently inthe final throes of a merger withcommodity giant Glencore, saidyesterday total production ofcopper fell to 187,800 tonnes overthe three months to September.

It said yesterday thatproduction at Collahuasi, a jointventure with Anglo American andMitusi, will ramp up through thefourth quarter, and output levels

BY CATHY ADAMSabove 400,000 tonnes of copper ayear are targeted from 2013. Overthe quarter, production atCollahuasi fell 44 per cent.

Xstrata added that coalproduction edged up to 24mtonnes from 23.6 tonnes over thequarter, while zinc output fellslightly to 181,992 tonnes from184,220 tonnes a year prev iously.Nickel production remained flatyear on year.

The Swiss miner made noreference to the 56bn mega-merger with Glencore in theupdate.

Analysts at Macquarie said in anote yesterday that it anticipates

the shareholder vote will be heldin mid-to-late November, and thatit expects Xstrata shareholders tovote in favour of the merger.

EU REGULATORS said yesterdaythey had given approval for 3bn inBritish state aid being used for thecreation of the Green Investment

Bank, which is intended to spurprivate investment in low-carbonprojects.

The Commission said in astatement an investigation foundsufficient safeguards to avoid thecrowding out of privateinvestment, and that theprovisions governing the bank

would also ensure fair competition.In particular, project holders

seeking funding from the GreenInvestment Bank will be requestedto provide evidence that they have

EU approves state funding toUKs Green Investment Bank

BY CITY A.M. REPORTER been denied funds or have notobtained all the necessary fundingfrom market operators, theCommission said.

The banks operating principlesalso include providing funding in

addition to market financing,where possible.This should allow green projects

to materialise while minimisingpotential distortions ofcompetition, it added.

The bank, headquartered inEdinburgh, began to invest directlyin projects earlier this year and isexpected to be given full borrowingpowers by around 2015. Its initialtargets are projects in the offshore

wind, waste and non-domesticenergy efficiency sectors.

Shanta wants to ramp up production at the Luika mine

Polymetal International PLC


1,120

1,110

1,130

1,140

1,150

1,160

1,180

1,170

p 1,155.0017 Oct

Securitas AB


49.75

50.00

49.25

49.50

50.25

50.50

50.75 SEK 50.5017 Oct

IN BRIEFJapan Residential mulls offer Japan Residential InvestmentCompany, the Aim-listed fund investedin Japanese homes, yesterday said itwas mulling selling fund assets afterbeing approached by a listed buyer. Thecompany, which has a portfolio of2,200 homes in Tokyo, Osaka, Nagoya,said it had been approached by a firmto buy assets and was reviewing theproposal. The fund, which has itsbiggest holding in Tokyos SpaciaAkihabara complex, reported a smallincrease in net asset value for the fundto 71.5p a share for the end of Augustcompared to 71.2p a share at the end ofNovember 2011. It also said occupancyrates had surged 1.5 per cent year onyear at the end of September, leading toa 95.5 per cent occupancy rate at theend of the month.

Vertu Motors profits zoom ahead Car dealer Vertu Motors yesterdayposted a 26.8 per cent increase inprofits to 5.2m on the back of strongrevenue growth

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