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[email protected]

Follow me on Twitter: @allisterheath

TAX RATES, immigration caps andhand-wringing over airport capacityare causing London to suffer in aglobal race for competitiveness,according to the latest studies offinancial centres around the world.A report from business group

London First, seen byCity A.M., showsthat while the UKs capital remainsone of the worlds most attractiveplaces to do business, it is losing outto emerging cities such as Singapore,and faces renewed threats from thelikes of Paris and Frankfurt.The group has blamed Londons

perilous position on instability inthe tax regime, an immigration poli-cy that potentially deters top busi-ness people and students, restrictedcapacity for expanding connectionsto the emerging markets, and anincreasingly burdensome regulatoryframework.The report has aggregated data

from key global indices to show thatLondons tax system has become lessfriendly in recent years, that flightsto emerging hubs lag behindFrankfurt and Paris, and that nation-al exports to Brazil, Russia, India andChina the so-called BRIC countries are lower than other countries.A combination of rises to the top

rate of income tax (now the joint

Warning on cost of shares for rightsGeorge Osbornes shares for workersrights initiative could end up costingBritain 1bn a year in lost revenues, theOffice for Budget Responsibility haswarned, at the same time as thegovernment battles to clamp down on taxavoidance schemes. The long-termpotential cost of the chancellors policy,buried in an annex to the AutumnStatements costing documents, is likelyto fuel controversy over the employmentinitiative that got the go-ahead last weekin spite of a poor welcome from business.

UK ready to trust US on failing banksUK authorities are prepared to trust UScounterparts the next time a big Americanfinancial company runs into financialtrouble and will refrain from seizing localassets and capital, said Paul Tucker, thedeputy governor of the Bank of England.

Internet regulation plan droppedA controversial proposal that would haveled to international regulation of internetcompanies such as Google and Facebookhas been sidelined after losing thesupport of Russia and China, it emergedyesterday.

Johnson hires City veteran LyonsBoris Johnson has hired Gerard Lyons,who stepped down as StandardChartereds chief economist this month,to bolster his policy team as Londonsstatus is challenged by emerging markets.

Diageos tequila deal hits rocksDiageo chief executive Paul Walsh is closeto calling time talks over an estimated2bn deal to acquire the Mexican tequilamaker Jose Cuervo, following frustrationat the owners failure to agree terms.

Ex Rolls-Royce employee cheatedA whistleblower at the centre of briberyallegations concerning Rolls-Royce claimshe was left feeling depressed andcheated by his experiences at the FTSE100 manufacturer.

Huawei in middle of US tensionsControversial telecoms giant Huawei is thevictim of political tensions between the USand China, the companys chairman andfounder, former Peoples Liberation Armyofficer Ren Zhengfei, has claimed.

King warns of exchange rate warsBank of England governor Mervyn Kingwarned of the risk of currency wars in thecoming year as nations search for newways to spur their economies in a world ofslow growth and few other good options.

Audit regulator criticises big firmsThe US Public Company AccountingOversight Board reported an increase inthe percentage of audits of internalcontrols at companies that were flawedbecause of failings by accounting firms.

HOW LONDON MEASURES UP TO RIVALS

Tax-friendliness rankingLondon: 8

New York =14

Frankfurt =14

Paris 23

Singapore 3

Top rate of income taxLondon: 50% (45% proposed)

New York 35%

Frankfurt 45%

Paris 45% (75% proposed)

Singapore 20%

Top rate threshold ()London: 150k

New York 388.35k

Frankfurt 199k

Paris 56.2k (780kForproposed75%Rate)

Singapore 160k

National exports to BRIC countries in bnUK 22.2

USA 71.6

Germany 106.6

France 26.3

Singapore N/A

Flights to Shanghai per weekLondon: 17

New York 7

Frankfurt 28

Paris 31

Singapore 63

NEW YORK

LONDON

PARISFRANKFURT

SINGAPORE

Source: PwC

Source: Thomson Reuters

2 NEWS To contact the newsdesk email [email protected]

IF you work or live in centralLondon, you could be forgiven fornot believing that the UK remainsstuck in a nasty stagnation, let

alone at risk of a triple-dip recession,as Vince Cable intimated yesterday.The shops are full, the tubes jam-packed and new skyscrapers are

being built; Fortnum and Mason, thedepartment store, says its sales werethe highest ever on Saturday.There can be little doubt that our

great capitals central business, resi-dential and leisure districts are in astrangely healthy state, despite jobcuts in the City. Unlike previous reces-sions, when London suffered a largerfall in GDP, greater increases in unem-ployment and bigger drops in houseprices than the rest of the UK, theopposite has been true this time even though the London-dominatedfinancial sector was at the epicentre

EDITORSLETTER

ALLISTER HEATH

Buoyant central London is in an economic world of its own...

TUESDAY 11 DECEMBER 2012

of the crisis.Yet for once this is not a simple

London/commuter belt versus therest of the UK story. It is a centralLondon versus everywhere else story.As an excellent research note from

Vicky Redwood of Capital Economicson this subject points out, whileLondon is doing better than the restof the UK, the real star is centralLondon, which accounts for just 1.7mresidents. Large chunks of our capitalare performing poorly.

Take retail: central London shoprents are up 15 per cent since 2007 but in the rest of London they havetumbled, as they have across Britain.Local Data Company figures reveal ashop vacancy rate of 12.7 per cent inLondon, poor but healthier than the18.5 per cent seen in Wales, the

Midlands and North. But Colliers datacited by Capital Economics suggeststhe Central London shop vacancy rateis a fantastically low two per cent.

So while greater London overall issuffering as can be seen by boardedup shops in secondary and tertiaryshopping areas in outer boroughs anddeprived areas it is still doing betterthan the UK overall central London(and outposts such as WestfieldStratford) are booming. UK con-sumers are spending 10 per cent lessin restaurants and pubs than at theheight of the bubble; footfall in stores

tors to the UK has surged 40 per centsince 2005, even though visits are up10 per cent. UK residents have slashedtheir foreign holidays by 25 per cent,which means more are staying put, inmany cases going to London. KnightFrank says that 59 per cent of primeresidential lets over the past year have

gone to international tenants, whileclose to 70 per cent of central Londonshops and offices sold in the last yearwere to foreign buyers. DevelopmentSecurities says that the proportion ofthe Citys office stock owned by for-eigners has risen from a quarter inthe mid 1990s to 52 per cent today.

Central London is a wonderful aber-ration but dont be fooled intothinking it is representative of all ofLondon, let alone the whole country.

has collapsed even more sharply(though there has been a surge inonline shopping) but that is clearlynot true in central London.

Or take the housing market. Thebuoyant prices everybody talks aboutonly really exist in prime centralLondon, where they are now an aston-

ishing 30 per cent higher than pre-recession in nominal terms, buoyedby foreign cash (the pound is down, sohomes havent gone up as much inforeign currency terms). But in non-prime central London, prices are justfive per cent above their previouspeak, while prices in Outer Londonare only just about back to where theywere and often remain lower (andthese areas have suffered substantialreal term declines).

Londons openness is a central rea-son for its resilience. Partly because ofthe cheaper pound, spending by visi-

highest in the G20), increased stampduty for businesses buying high-valueproperties, and the banking levy havehit Londons tax competitiveness, thereport highlights.

PwC figures show that London hasthe eighth-friendliest tax regime out of27 financial centres. This is above thelikes of New York and Frankfurt, butdown from fifth in 2009.

George Osbornes recent cuts to cor-poration tax and the proposed changein the top rate of income tax to 45 percent were highlighted as evidence of aturnaround.

However, the governments immigra-tion policy aiming to reduce netmigration to tens of thousands wascriticised as a threat to the influx oftalent, especially when it comes to

encouraging international students.And the research showed that Londonruns fewer flights a week to emergingcities such as Beijing and Shanghaithan either Paris or Frankfurt.

Londons position remains vulnera-ble, especially in certain key businesssectors, such as financial services, thegroups Review of LondonsCompetitiveness 2012 warns.

THE US Treasury is selling itsremaining stake in insurer AmericanInternational Group (AIG), bringingan end to government ownership ofthe company four years after it wasrescued from the brink ofbankruptcy.

In a statement last night, theTreasury said it launched anunderwritten public offering for itsremaining 234.2m shares ofcommon stock.

At last nights closing prices thestake would be worth some $7.81bn.Treasury said that the sale would bejointly led by Bank of AmericaMerrill Lynch, Citigroup, DeutscheBank, Goldman Sachs and JPMorgan.

Treasury also said it wouldcontinue to hold warrants to buycommon stock even after the shareoffering is complete.

In September 2008 AIG wasrescued minutes before it wouldhave been forced to file forbankruptcy protection. The bailoutultimately totalled $182bn.

At one time the governmentestimated it would never recover allof those funds, but as AIGrestructured and returned toviability it was able to repay theentire rescue plus generate a profitfor the state.

US Treasury to

sell final stakein insurer AIGBY HARRY BANKS

EXCLUSIVEBY JAMES TITCOMB

AIG SELLS LEASE FIRM: Page 17

The new jobs website for LondonprofessionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

...but business warns of threatto the capital from tax and caps

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PACE, the British digibox

manufacturer, has launched a bid totake over the set-top box division ofMotorola, the electronics giantowned by Google.

Since Motorola Home is believedto be worth far more than Pace, anydeal would constitute a reversetakeover under British law, Pacesaid, as it suspended trading in itsshares.

Google is looking to sell off partsof Motorola following its $12.5bn(7.8bn) acquisition of the companyearlier this year. The web giant isfocusing on Motorolas coresmartphone business.

The Home division is expected tobe worth around $2bn, far abovePaces stock market value of 566m,so the acquisition would most likelybe funded through debt and equity,with Google understood to beretaining a slice.

The deal would create a globalleader in the set-top box market,which has become more crowded inrecent years as Asian competitorssuch as Samsung have waded in.Pace is understood to be one ofseveral interested parties.

Discussions with Google arecurrently at a preliminary stage andthere is no certainty as to whetherany agreement regarding anytransaction will be reached, Pacesaid yesterday.

Pace in Googletalks on buyingMotorola unit

BY JAMES TITCOMB

BUMI co-founder Nat Rothschild saidyesterday he had secured the backingof 11 investors for his counter proposalto restructure the London-listed miner.

Bumi yesterday confirmed it hadreceived an updated letter fromRothschild to counter the Bakriebrothers proposal from October todivorce themselves from the Londonminer.

Rothschilds updated proposal isunderstood to include plans for arights issue to buy out board membersRosan Roeslani and Samin Tan, as wellas agreeing to the Bakries share swap

plan to cancel their shareholding inBumi in return for the Indonesianassets they brought in two years ago.

Rothschild said yesterday he had sup-port from the largest five institutionalshareholders of Bumi Abu DhabiInvestment Council, Schroders,Standard Life Investments, TaubeHodson Stonex and Artemis as wellas investors Robert Friedland andHashim Djojohadikusumo.

In my letter to the board, I attachednon-binding letters of support from

Rothschild saysplan is backed

by 11 investorsBY CATHY ADAMS these investors, which together with

my own commitment of $75m (47m),represents a total of $342.5m to bemade available in the form of newequity at Bumi, Rothschild said.

Meanwhile, Rothschild dismissedclaims made by the Bakrie Brothersthat documents used as the basis of aninvestigation into alleged financialirregularities at the minersIndonesian arm could have beenfalsified, calling them a trivialdistraction.The Bumi board is due to meet

tomorrow to review initial findingsfrom London law firm Macfarlanes,which was commissioned in

September to investigate alleged finan-cial irregularities at Indonesian armBumi Resources.A spokesman for key Bumi share-

holders the Bakries said yesterday theybelieved the documents used as a basisfor the legal investigation were stolenor hacked, with some even doctored togive a misleading impression of busi-ness transactions at Bumi Resources.The Bakries also disputed the idea thata whistleblower had leaked docu-ments to the Bumi board.

METRO Bank is set for anothershowdown with the FinancialServices Authority (FSA) over its

plans to appoint its founderVernon Hill as chairman.

The FSA forced Metro Bank intoappointing Anthony Thomsoninstead of Hill as chair in 2010,

when it became the UKs first newHigh Street bank for decades.

Hill has since served as vicechairman, but with Thomson setto retire at the end of the year,Metro Bank wants to put Hill inhis position, banking sources said.

The bank is understood to have

Metro Bank clashes with Cityregulator over new chairman

BY JAMES TITCOMB believed that, having establisheditself on Britains high streets, theFSA would be more open to

waving through Hillsappointment. However, the City

regulator is believed to retain itsconcerns stemming from a 2007US investigation into CommerceBank, also founded by Hill.

Commerce Bank was examinedby the US Office of theComptroller of the Currenciesover alleged links between other

businesses owned by Hill. He wascleared and Commerce Bank wassold in 2008.

Neither Metro Bank nor the FSAwould comment yesterday.

TUESDAY 11 DECEMBER 20123NEWScityam.com

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Official government fuel consumption figures in mpg (litres per100km) for the new SL-Class range: urban 16.6 (17.0)- 28.5 (9.9), extra urban 33.6 (8.4)- 46.3 (6.1), combined 24.4 (11.6)- 37.7 (7.5).

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TUESDAY 11 DECEMBER 20124 NEWS cityam.com

Man needs more than a new head to spark Roman revivalBOTTOMLINE

ELIZABETH FOURNIER

WHEN he looks back over hisfive years as chief executiveof Man Group, Peter Clarkewill probably want to focus

solely on his first 18 months in charge.Stepping up from finance chief in

early 2007 to lead the hedge fund thathe had joined in 1993, Clarke must

have thought he had an easy rideahead of him.Shares were riding high at more

than 600p, it was firmly in the FTSE100, and its key computer-driven AHLfund had more than 16bn in fundsunder management.

Fast-forward to yesterday and the pic-ture is far less pretty. Shares closed at75.48p, AHLs funds have shrunk to10.1bn, and in June the firm slippedinto the FTSE 250. So its not surpris-

ing that investors and analysts alikegreeted yesterdays news with a fiveper cent boost to the share price, andwidespread welcome for incomingboss Manny Romans cost-cuttingprowess and solid fund credentials.

Unlike Clarke, Roman is untaintedby the GLG acquisition, having joinedMan as part of the $1.6bn deal for thesmaller hedge fund in 2010.

GLG, far from being Clarkes man-

made antidote to the AHL disaster, hasso far failed to offset the volatility thatits machine-controlled counterpart isso vulnerable to. In addition, analystsare predicting investors will continueto bail out of the struggling fund.According to RBC analysts AHLs per-formance has declined 3.5 per cent in

the year to date compared to an 8.1 percent rise in the MSCI World index and the broker expects lacklustreinflows for the foreseeable future.

Romans appointment certainly putsa turbo booster behind changes at thegroup. Hes already been instrumentalin driving through recent cost cuts working closely with new recruit andfinance chief Jonathan Sorrell to showinvestors that the once-great firmsrevival is in the right hands.

But initial optimism that changes atthe top will turn Mans fortunesaround could be short lived particu-larly for those investors that have beenhanging around to make the most ofMans ever-healthy dividend payouts.The group has already signalled it

will lower dividends from next year,

and if Roman is serious about cost cut-ting hell have to tread a fine linebetween giving investors what theywant and alienating them completely.

MERRY CHRISTMAS, MR WERNERMeanwhile, HSBC has been busy nego-tiating one of the biggest banking pay-outs in history to settle multipleinvestigations with the US authorities.The headline amount of $1.9bn

(1.2bn) will of course make a dent in

the banks balance sheet (making therecent $9.4bn disposal of Chineseinsurer Ping An rather more under-standable), but as with so many ofthese scandals, its the reputational hitthat will linger longest. As part of thesettlement, HSBC will have to admitbreaking terrifying-sounding US laws

including the Bank Secrecy Act andthe Trading with the Enemy Act.It scrambled to set up a financial

crime compliance unit in the wake ofthe scandal, and yesterdays appoint-ment of ex-US Treasury man BobWerner to lead it looks savvy in theface of last nights news.

Lets hope hes ready for one hell of afirst day on the job.Elizabeth Fournier is News editor of City

A.M. @ej_fournier

HEDGE fund Man Group, the largestlisted alternatives asset manager onthe FTSE, yesterday turned the reinsof the business over to its chief oper-ating officer in a bid to drive home acost cutting agenda and turn thefaltering outfit around

Emmanuel Manny Roman, whois the former co-chief executive ofMan subsidiary GLG and also cur-rent president of Man, will take

charge of the busi-ness at the end ofFebruary next year,replacing outgoingchief Peter Clarke.The ex Goldman

Sachs derivativeschief said heintended tomaintain pres-sure on costsin his new roleadding, I amconfident thatwe can delivers i g n i f i c a n tlong termvalue.

Hedge funds

new man to puta leash on costsBY MICHAEL BOW

Top of his in-tray when he takesover will be the dismal performanceof the groups AHL arm, its black-box trading programme, whichmakes up more than 70 per cent ofMans earnings but has lost 3.6 percent this year.

Roman will also have to quell share-holder rumblings and discontent,following over a year of underperfor-mance. Man posted its fifth quarterof fund outflows in its most recentfinancial statement, and its shareprice has fallen from as high as 153pto as low as 61p over the past year.A source close to the company said:

Its a new lease of the life andManny will be very focused and per-formance orientated. Hes alreadybeen getting on and doing the grindwork of making the place moreefficient.The rise of Roman to lead Man is a

startling coup for GLG, which wastaken over by Man Group in 2010 for$1.6bn and sits alongside AHL and itsfund of fund model FRM.

Goldman Sachs said in a client notelast night: Insofar as Mr Roman wasformerly Man Groups COO, webelieve that this will help reassureinvestors that these efficiency sav-ings will be realised at minimum

impact to the groups operations.

THE European Union is expectedsoon to accuse several banks ofattempted collusion in the settingof lending rate benchmark Euribor,the Wall Street Journal reported,citing people briefed on the probe.

Barclays has alreadyacknowledged trying to rig theEuribor rate, and other banks arelikely to be pressed by regulators inthe United States, Britain and

elsewhere into similar admissions,the Journal said.

More banks set to be draggedinto EUs rate rigging scandal

BY HARRY BANKS At least a dozen banks are underinvestigation, at least four of themfor allegedly working with Barclays,the newspaper said, citingdisclosures by banks andregulators.

Nobody from the office ofJoaquin Almunia, the EuropeanCommissioner with responsibilityfor competition and who has beeninvestigating Euribor, was availableto comment, and spokespeople

from the banks allegedly involveddeclined to comment.

Manny Romanhas come up from

GLG to lead Man

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A BUBBLE in risky assets could keepinflating for at least another yearbefore bursting and causing chaos,analysts warned yesterday.

Quantitative easing (QE) is designedto raise the price of government bondsand reduce the return on such safeassets, pushing investors into othermarkets to find yield.

But that could cause a dangerousbubble if asset prices no longer reflectmarket fundamentals.

Currently it seems there is more liq-uidity sloshing around than is neededto support economic activity, whichhistorically creates bubbles, said

Simon Henderson from Henderson.Typically those burst when the liq-

uidity situation changes for exampleif valuations get pushed to sillyextremes, that can lead to a bursting.

Economists fearQE is fuelling

asset bubblesBY TIM WALLACE It comes after the Bank forInternational Settlements noted aflood of cash into risky assets despitethe poor economic outlook.

QE is designed to support assets likehousing and equities to improve confi-dence said Deutsche Banks GeorgeBuckley. But it is about striking theright balance you dont want to makeinflation rise or stoke bubbles.

EMEA banking head Vis Raghavan

orpora e on y e s are a ng

2012201120102009

2

3

4

5

6

7

8 Investment-grade debt, %

JP MORGAN yesterday unveiled itsnew regional heads in an internalmemo, with global equity capitalmarkets boss Vis Raghavan taking

the top job in Europe, the middleeast and Africa.He is upbeat on Europes outlook,

telling City A.M. the region is pastthe worst of the crisis.

Under the banks new structurehe will head investment banking,

global corporate banking andtreasure services, rather than the

bank splitting their corporateoffering into separate operations.

We are focused on improving our

New JP Morgan exec bullish onEuropes peripheral economies

BY TIM WALLACE market share and increasing ourfootprint in EMEA across the

board. We have been in many ofthe countries for a long time andremain committed to the region,

which includes peripheral Europe,

Vis told City A.M. We have healthycompanies in EMEA withincreasing interest in growingthrough mergers and acquisitionsand that needs financing, he said.

It is thought that the banksstrategy to seize market sharerevolves around doing deals even in

weak markets to maintain clientrelationships and on taking groundas rival banks cut back operationsand close businesses.


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PASTY shop Greggs yesterday beganthe search for a new chief executiveafter current boss Ken McMeikan,who led a rebellion against govern-ment proposals for a pasty tax, saidhe was quitting the business.

McMeikan, who is credited withturning the high street Steak Bakemaker from a small scale bakery intoa thriving national icon, is to becomechief executive of Brakes Group, acatering company owned by privateequity firm Bain Capital followinga similar move by other FTSE chiefexecutives into the world of privateequity.

McMeikan, who was made leaderin 2008, will stay on until a successoris appointed. It is understood it islikely he will still be in charge whenGreggs delivers its next set of resultsin mid-January.The board is currently exploring

internal and external candidates forthe role.Yesterday he said it was a great

Greggs pasty

tax rebel flakesaway to Brakes

BY MICHAEL BOW honour to have led Greggs over thepast four years.

Shares in the Greggs collapsedaround 2.5 per cent in trading yester-day, as investors grew bearish on thefuture direction of the business with-out McMeikan at the helm.

McMeikan was a vociferous critic ofchancellor George Osbornes plans tolevy a tax on reheated pastry snacks,a policy which was defeated.

McMeikan was also responsible forpioneering Greggs wholesale busi-ness in a deal with Tesco, where hewas once an executive.

IRN-BRU maker AG Barrs salesfizzing ahead of Britvic mergerIRN-BRU maker AG Barrs revenuesfizzed nine per cent higher than

last year in the 18 weeks to thestart of December.The Scottish drinks maker,

which is set to merge with Britvic,also saw volume increase by 6.6per cent for the same period year-on-year.

Year-to-date revenues as of 1December also increased 6.5 percent on the previous year.

Predicting a competitiveChristmas season, AG Barr stated:

BY JENNY FORSYTHOur core brands have performedwell in what has continued to be acompetitive but robust soft drinksmarket. The market, as measured

by Nielsen, increased in value by3.3 per cent over the 26 weekperiod ending 24 November 2012with volume flat.

In the period our margins haveperformed in line with ourexpectations.

The company, which also makesTizer and Orangina, said it ismaking good progress with itsnews manufacturing plant inMilton Keynes, which it expects to

A.G.Barr PLC

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10 Dec

Greggs PLC


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We cannot hide our disappointment for Greggs shareholders on theannouncement of Mr. McMeikans resignation. With the inevitable uncertaintythat a change of such a key position brings, we feels that it is right todowngrade our recommendation on Greggs stock from Buy to Hold.

ANALYST VIEWS

Greggs is at a difficult point in its evolution at the moment, with pres-sure on trading and decisions to be made on how best to allocate capital. Thetiming of this departure is therefore unhelpful, though there is a strongand experienced management team underneath.

McMeikan possesses a wealth of experience in the food retail sector andhis presence was certainly an asset to the company. We expect Greggs to find astrong successor who will continue Kens work in realising strategicpotential whilst counteracting current headwinds.

WHAT DOES THIS MEANFOR GREGGS?

By Michael Bow

CLIVE BLACK SHORE CAPITAL

SANJAY VIDYARTHI ESPIRITO SANTO

SAHILL SHAN N+1 SINGER


start fitting our from nextFebruary.

Shares yesterday closed up 0.44per cent at 480p.

Former Alliance Boots bossRichard Baker (far left)departed Boots to joinAdvent International in2009. Gerry Murphy (left),former boss of Kingfisheruntil 2008, left his role tojoin Blackstone.

Hugh Osmond, founder ofFTSE listed firm PunchTaverns, is now partner atboutique private equityoutfit Sun Capital Partnershaving floated the Punchbusiness in 2002.

Greggs Ken McMeikan (above) is not the only corporateexecutive to move across to private equity ownership

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EUROPEAN Union pension proposalswill hit investment, jobs and growthfor no good reason, according to anew report out today from businessgroup the CBI.The EU wants pension schemes to

hold enough funds to pay out in theevent of a once-in-200-year catastro-phe, to make sure savers are verythoroughly protected.

But critics argue that the plan isbased on similar rules for insurers,who have to pay out rapidly whendisaster strikes, which is inappropri-ate for pension funds as they arelong term investors who pay out overlong time frames.Analysis by Oxford Economics for

the CBI estimates the plans wouldcost UK firms 350bn, with the lossof 180,000 jobs and a permanent hitto GDP of 2.5 per cent.After all that, it would also hit the

value of pensions by stopping themfrom putting money into the longest-term investments, like infrastructure

CBI: EU Pension

rules threatenUKs recovery

BY TIM WALLACE projects.And by forcing the funds into low

risk investments like governmentbonds, returns would fall, forcing upcosts for employers and discouragingsaving.

We have a tough regulatory systemin this country, so these changes arecompletely unnecessary. It is alarm-ing the European Commission (EC) isstill turning a deaf ear to calls frombusinesses, trade unions and pensionfunds to bin these proposals, said theCBIs Katja Hall. The EC must leaveindividual EU members to deal withtheir own retirement saving systems,as they do now rather than impos-ing a new system from the centre.And the pensions industry agreed.Europe is pushing for a dangerous

solution when there is no problem inthe first place, said Joanne Segarsfrom the national Association ofPension Funds (NAPF).

These plans would kick our econo-my when it is down, and the damageto jobs, growth and living standardswould be felt for decades.


MONEY manager Henderson is onthe verge of cutting a number staffroles in some parts of its business,as asset managers continue to faceincreased cost pressures.

It is thought up to nine per centof roles could be cut at the

business but that it would look toinvest in more jobs in the future,according to client demands.

Asset managers are increasinglycoming under pressure fromshareholders to trim margins.

In its last interim results,Henderson posted a 79munderlying pre-tax profit and anoperating margin of 36.8 per cent.

The firm was up nearly one percent in trading yesterday.

Job reductions

at HendersonBY MICHAEL BOW

SKANDIA, the financial servicesfirm, yesterday announced plans tocut 20 jobs from its 100-strong salesteam as part of a broader cost-cutting programme which willeventually see it shed 200 jobs.

Steve Powell, sales director, said:The new 80 strong sales team willbe nimbler and more effective,with a strong leadership team.

The company, owned by Anglo-African money manager OldMutual Wealth, has created twonew roles as part of the overhaul, awealth management consultantrole and a development consultant.

Skandia said it hoped to provide

a better service to financialadvisers.

Skandia cuts

20 sales rolesBY MICHAEL BOW

Cowderys insurance vehicleresolves its boardroom tangleINSURANCE vehicle Resolution haspaid 7.5m to axe its external

management deal and simplify itsboard structure.The firm, which specialises in

overhauling underperforminginsurers, said it was bringingmanagement in-house from March2013 as it moves from anacquisitions vehicle to a moretraditional company.

Founder Clive Cowdery hasjoined the board for the first time,having headed up the separate

BY MARION DAKERSfirm Resolution Operations (RO),and the company has added moreindependent non-executives.

The firm said in August that it

would jettison its complex boardstructure to ensure the group keepsits premium listing on the LondonStock Exchange and the fundinvestment that comes with it.

The firms deal to end themanagement arrangement is cheapcompared to a 14.6m severance feeset out in the contract, Resolutionsaid. ROs 24 employees will move tothe listed firm.

The company, which has spent

4.7bn buying three insurers since itwas set up in 2008, called a halt toacquisitions in August.

Resolution Ltd


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INFLUENTIAL backbench MP Andrew Tyrie yesterday warned the Financial Services Bill isbeing rushed, with the Commons being asked to pass reforms before the banking andtreasury committees have studied it. This is an object lesson in how not to do it, he said.

TOP MP FEARS FINANCE REFORMS ARE RUSHED

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E.ON followsrival utilitiesto hike prices


Savills fund focusing on primeLondon with first investmentESTATE agent Savills has made thefirst two purchases through its

prime London residential fund,betting on adjacent Chelseaproperties as demand for high-endliving space in the capitalcontinues to grow.

Cordea Savills, the internationalproperty fund manager owned bySavills, has paid around 40m for aformer chapel and a former collegebuilding between the Kings Roadand the Fulham Road.

Ever since the banks made it

BY ELIZABETH FOURNIER clear that they were not prepared tolend on property development, atleast on workable terms, there hasbeen a dearth of development, said

Cordea Savills head of residentialdevelopment Brian DArcy Clark.This has led to a shortage of

newly-built units in prime Londonlocations despite ever increasingdemand.

Cordea Savills closed its firstdevelopment fund in June with a25m equity injection from aprivate bank. It targets an internalrate of return of 18-20 per cent eachyear through financing prime

London residential developments.In addition to yesterdays

purchases, Cordea Savills alsoannounced a tie-up with high-

profile revival developer JohnHunter, the founding partner ofTenhurst.

Hunters past projects include theredevelopment of a portfolio ofdesirable London addressesincluding The Bromptons, EarlsTerrace, and a six-storey Victorianterrace on Tregunter Road inChelsea, which was sold in 1993 for7.7m to be the Ambassadorsresidence of the Royal Thai Embassy.

HALF-TERM getaways helpedGatwick Airport post a 4.2 percent rise in traffic duringNovember, Britains second-

busiest a irport said yesterday.Gatwick credited the earlier

autumn half-term break thisyear for some of the uptick,which took its passengers forthe month to 2.23m.

In the year to the end ofNovember, traffic has risen 2.8per cent on a year ago to 34.2m.

Domestic traffic was up 7.5per cent to 324,10, and

scheduled flights to Europe saw2.8 per cent more traffic than

Half-term holidays give a boostto Gatwicks passenger figuresBY MARION DAKERS last year at 1.14m, though this

was below the year-to-datetrend of 6.7 per cent growth.

Long-haul flights excludingthe US jumped 11 per cent to406,800 passengers, aided bynew routes to China, Russia andKorea introduced during the

year.As the winter season is often

a challenging time of year forairports, it is positive that ourtraffic figures are showing

growth and we continue tofocus on delivering the bestexperience to these additionalpassengers, said chief financial

officer Nick Dunn in astatement yesterday.

ENERGY provider E.ON has becomethe last of the big six energy firmsto raise its prices, announcing yester-day that tariffs will increase from 18January.

E.ON, which is writing to eachaffected customer, said that the aver-age dual fuel bill will increase by 8.7per cent, while the average electricity-only and gas-only bill will jump by 7.7per cent and 9.4 per cent respectively.It pledged to customers in May that itwould not increase bills this year.

Chief executive Tony Cocker saidE.ON had held back on price hikesfor as long as we possibly could,and that the decision had beendifficult.

Rising wholesale prices, networkcosts and the increasing cost associat-ed with social schemes have weighedon the energy firm. The cost of usingmore renewable energy has alsorisen, the utility firm said.

I understand the reasons behindthese increases as Britain seeks toreduce energy waste, and invest in

BY CATHY ADAMS both new lower carbon electricitysources and in new or improved gasand electricity networks, Cocker said.

It is vital that everyone who takes ashare of energy bills explains whatthat money is for and justifies thoserising costs to customers.

Experts at comparison websiteuSwitch.com said that the averagedual fuel bill with E.ON would rise to1,370 a year from 1,260.The consumer group added that the

average household energy bill willreach an all-time high of 1,352 a year a 23 per increase since January 2011.

PROPERTY developer Great Portland Estates (GPE) yesterday spent 60m to snap up officeand residential building Minerva House, on the South Bank. The acquisition is the first since itraised 140.6m in a share placing last month. The six-storey block is leased to Ipsos Mori andWinkworth Sherwood. Rent totals 3.4m a year, with contracts due to run out in 2021 and 2022.

GREAT PORTLAND STREET LOOKS SOUTH

E.ON AG


13.80

13.70

13.90

14.00

14.10

14.20 13.8410 Dec

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TIS the season for the annual officeChristmas party. Never an event tomiss, and especially so for theemployees of oneparticular Cityhedge fund,who will bepleasantly sur-prised whenthey sit down

to theirC h r i s t m a slunch thisyear.

The founderof online bulliondelivery company BullionBy Post, Rob Halliday Stein, tells TheCapitalist that he recently received avery unusual gift request: A man-ager of a well known hedge fundrequested something special toput in the crackers for his banks

annual Christmas bash this week.The answer? I suggested 1g gold

bars as they are about the size of athumbnail, said Halliday Stein.

Our generous hedge fund manag-er agreed to the golden gift

suggestion, andp r o m p t l y ordered 50 gold

bars, at a cost of

50 per bar.The Capitalist

wonders whatthe rest of thelunch will be likeif they are hand-ing out gold barsin the crackers.

Turkey covered ingold leaf? Twenty-four carat cake?

Lets just hope there is no scram-bling under the table when thosebars go flying.

The Old Lady of Threadneedle Street, a 1797 print by James Gillray, and (right) House of Cards, a sculpture by artist Justine Smith

12 cityam.com

cityam.com/the-capitalistTHECAPITALIST

Come all ye tuneful to CanaryWharf today for a jolly good

afternoon, or evening, of carolling.Canary Wharfs chaplaincy is invitingwannabe warblers to take part intwo carol services, at 5.30pm and7.30pm in the East Wintergarden onBank Street. With choir membersfrom KPMG, Barclays Capital, HSBCand the Financial Services Authority,The Capitalistexpects there will beno shortage of City voices to beheard competing for solo glory. Boththe concerts are free but booking isrequired. To reserve a place send anemail [email protected]

With all the recent seasonalactivity in the City, office party

goers may do well to consider theresearch offered by dating websiteAshleyMadison.com. The firmsuggests that 10 per cent of us arelikely to wake up after the annualoffice Christmas party to findourselves disciplined for inappropriatebehaviour, of which 46 per cent willbe classified as an awkward amorousencounter. However The Capitalistsown festive career advice would be toavoid what one young male graduatedid last week, knocking back so manymulled wines that he promptlyvomited upon a female colleague.

An aspiring cabbie might wantto consider another career

change after winning 100,000 inthe City Index Trading Academycompetition. Client servicesexecutive John Walsh beat sevenother competitors, while alsostudying to become a black cabdriver. The six-week contest sawentrants trade from desks at CityHall. They were judged on theirnotional profits and losses on a livetest account, as well as theirdeployment of new principles. CityIndex says it just goes to show thatanyone can learn to trade thefinancial markets.


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MINI has launched a car hire service in Mayfair (above) offering rental of the vehicles forjust 26p an hour. Inspired by the Boris Bike scheme, the docking station is positioned inBerkeley Square, a convenient location for City hedgies wanting to take a lunchtime spin.

Bubbles and bankruptcy at the British MuseumTHE LATEST offering from themoney team at the BritishMuseum, Bubbles andBankruptcy, is a exhibitional

journey through f inancial crisesin Britain since the first stock

bubbles of 1700 to the fiscalwoes of present.

The exhibition aims to explorethe fertile history of satire andprotest about financial crises,

represented by historic prints,contemporary cartoons andmodern works of art.

The centrepiece is a sculptureby Justine Smith aptly namedHouse of Cards a stack ofplaying cards that have beenreplaced by bank notes. Curatorssay: The artwork neatlysymbolises the sometimesprecarious nature of financial

speculation.Also on display is a bottle of

champagne given by NorthernRock to its employees in 1997, incelebration of thedemutualisation of the buildingsociety to become a bank. Nowquite the vintage item.

The exhibition runs until 5May 2013. For more information,

visit www.britishmuseum.org

Gold surpriseat hedge fundChristmas bash

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UK COAL is giving its miningbusiness, once the bedrock ofBritish industry, a final chance ofsurvival, after completing a radicalrestructure of the company yester-day saving it from imminentbankruptcy.

The former state-owned behe-moth yesterday completed plans tosplit into a privately owned proper-ty company called Harworth EstatesProperty Group Ltd and a new listedentity, Coalfield Resources.

UK Coal chairman Jonson Cox toldCity A.M.yesterday its mining busi-ness, formed of three deep opera-tional mines in Daw Mill, Kellingleyand Thoresby, is being given onelast chance to improve or faceextinction. Its Daw Mill mine is onthe cusp of being mothballed in2014, unless management and theworkforce make changes, he said.

There needs to be a radicalchange in the cost structure andworking efficiency practices, Coxsaid. The surface mines could golonger but we dont know if therewill be sufficient demand for coal

UK Coal split intwo as minesface reckoning

BY MICHAEL BOW in the next ten years.The newly minted property group

is to sell UK Coals vast tracts ofland, worth around 280m, over thenext ten years having already soldaround 100m worth.

Under the restructure, the compa-nys pension fund now owns 75 percent of the property side, withshareholders holding the other 25per cent, diluting their ownership.

Cox said shareholders, includingInvesco and Henderson, had beenincredibly supportive.

Of course theyre disappointed,he said. But they recognise thatthey could have got wiped outcompletely.

Ian Green led the innovative deal for UKCoal. Green joined PwC 25 years ago, hasbeen a partner for over ten years, and is nowthe regional chairman for PwCs operationsin Yorkshire and the North East.This includes overseeing more than 1 ,000members of staff at key offices, includingLeeds, Newcastle, Sheffield and Hull.Green also leads the firm's Northern restruc-turing practice, providing advice to failingbusinesses and their stakeholders on turn-around and recovery strategies and, ifappropriate, taking insolvency appoint-

ments.

Green has said that he is committed togrowing our presence in the market andoffering our breadth of expertise to clientsin every part of the region.His expertise lies in corporate reconstruc-tions, restructuring and accelerated mergersand acquisitions.As well as the UK Coal split, his recentassignments included a 500m food pro-cessing business, and a 600m retailer.Ian has spent his entire career at PwC, andhas worked in Leeds, Newcastle andLondon.He has built up a reputation as one of themost experienced business recovery andinsolvency experts in the UK and has anextensive background of carrying outstrategic and financial reviews in both thecommercial and public sectors and otheradvisory and formal insolvency appoint-ments.

By Alex Wynick

ADVISERS PWC

IAN GREENPWC

Waste manager Shanks has won a contract with Heineken to recycle about 9m brown beerbottles, some 15,000 tons of glass, for an undisclosed sum. The brewer has traditionallysold its beers in both green and brown bottles, but the latter will now be phased out.

SHANKS INKS SMASHING DEAL WITH HEINEKEN

UK Coal PLC


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10 Dec


Regulators delay Glenstratamerger until the new yearLENGTHY antitrust regulatoryprocesses in China and South

Africa have forcedcommodities trader Glencoreto delay the date for

completion of its tie-up withminer Xstrata until the end ofJanuary.

Glencore was expected todefend its case for the tie-upthis week after South Africanpower utility Eskom raisedconcerns the deal could affectits coal supplies, but thehearing was postponed until 18

January after the parties askedfor more time to prepare.

BY CITY A.M. REPORTER Glencore said yesterday itslong stop date was now 31

January, a month later thanpreviously planned.

Glencore is still awaiting agreen li ght from antitrus tauthorities in China and South

Africa , having already receiveda conditional approval fromEuropean regulators.

Xstrata is one of SouthAfrica s biggest coal producersand a key supplier to Eskom.

The utility said the mergedentity would be supplying 15per cent of Eskoms coal and

would be also among thelargest traders in the coalmarket.

REAL estate agency Winkworthwarned yesterday that rising stampduty on the priciest homes hasquelled demand for properties worthmore than 2m.

The firm said in a trading updatethat it will meet forecasts, in spiteof a sales drought at the very top ofthe market. The rest of London isdoing well, Winkworth said.

The Aim-listed firm also said ithas cut exposure to Europe byclosing its office in France.

It expects the London rental andbuying sectors to continueoutperforming the subdued UKmarket next year.

London helpsWinkworth

BY MARION DAKERS

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NEW York City Mayor MichaelBloomberg is weighing up whetherto make a bid for The FinancialTimes Group, which includes thenamesake paper and a half interestin The Economist magazine, theNew York Times reported, citingthree people close to the mayor.

Pearson, the publisher of FT, isabout to lose two of its top execu-tives, raising speculation the papercould be up for sale.Analysts value The

Financial TimesGroup at about$1.2bn, wellwithin the reachof Bloomberg LP,which in 2011had revenue of$7.6bn, thepaper said.

One mediabanker with knowl-edge of the com-p a n y

Financial Times

bid weighed upby BloombergBY HARRY BANKS expects the paper to be sold around

early next year, the New York Timessaid.

Factions within Bloomberg LPhave argued that it would besmarter to buy a digital property,pointing to the website LinkedIn asan example.

Daniel Doctoroff, a confidant ofBloomberg and the chief executiveof the company, is said to be partic-ularly skeptical about the value ofbuying a newspaper, the paper said.

A spokesman for the mayordeclined to comment to the NewYork Times on his conversationsabout the Financial Times paper.The chief executive of the

Financial Times Group steppeddown at the end of last month,fuelling speculation of a sell-off.

Rona Fairhead who spent 12years at Pearson, and six as head ofthe FT Group departs after miss-ing out on the CEO position at thepublisher following the appoint-

ment of John Fallon as MarjorieScardinos successor.

BRITISH microprocessing firmImagination Technologies hasincreased its offer to acquire theoperating business of MIPSTechnologies to $80m (50m) aftera rival firm topped its bid.

Mobile chip designer CEVAmade a $75m bid for MIPS inNovember, outweighingImaginations $60m original offerin November.

Imagination said yesterday ithad signed a higher revisedagreement in response.

Imagination, which is looking to

buy the MIPS business to gainpatents and step up its challenge

Imagination increases offer fortech firm to top a rival buyerBY CITY A.M. REPORTER to an increasingly dominant ARM

Holdings, said that it still expectsthe transaction to complete in thefirst three months of 2013.

It said that all other terms andconditions of the acquisitionremain as stated in the originalannouncement on 6 November,

which means it will seek toacquire the operating business,some patent properties andlicence rights to other patents.

US-listed MIPS technology is inblu-ray players, digital televisionsand video games consoles such asthe Sony PlayStation 2.

Imagination believes the

acquisition will add to earnings inthe 2014 fiscal year.


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Michael Bloomberg isalso Mayor of New York

MIKE Lynch, theBritish founder ofAutonomy, saidyesterday that hehad not heardfrom Hewlett-Packard (HP),almost a monthafter HP accusedformer Autonomybosses of account

irregularities. HPwrote off over$5bn (3.1bn)over the purchaseof Autonomy, butLynch, whodenies the claims,said he believes ininnovation in allareas exceptaccounting.

LYNCH IN NEW CHALLENGE TO HP

TWITTER will be slapped with anautomatic fine for failing to file

its UK accounts on time,Companies House said yesterday.The social network, whose

Twitter UK Limited andTweetDeck Limited subsidiariesare registered in the UK, hadbeen due to post its 2011accounts by the end ofSeptember.

But the internet giant isracking up automatic penaltiesafter missing the deadline by

BY MARION DAKERS more than a month.Twitter will not be asked to pay

the fine or know the total amountof the penalty until it files the

accounts.The company did not respond toa request for comment yesterday.

Around four per cent, or 21,600,of the 531,500 firms due to file inDecember last year were hit withautomatic fines for not deliveringtheir accounts on time, accordingto Companies House data releasedunder the Freedom ofInformation Act.

The penalties imposed totalled

around 4m.Companies House regulations

state that a private firm can befined 150 if the accounts are

delivered less than a month late,rising in stages up to 1,500 if thecompany goes six months withoutputting out its figures.

The charges can be doubled if afirm files late two years in a row.

TweetDeck became part ofTwitter in May 2011, when the USfirm bought the t hree-year-oldbrowsing application from itsBritish founder Iain Dodsworthfor 25m.

Twitter faces Companies Housepenalty for missing deadlines

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IN BRIEFChinese export growth disappointsnChinese export growth disappointedall expectations in November, throwingcold water on the chance it was on the

way out of its slowdown. Chineseexports grew by only 2.9 per cent year-on-year in November, againstexpectations of nine per cent, and downfrom 11.6 per cent growth in October. Itrepresents the worst performance sinceAugust. This cast a shadow over strongdata out on Sunday, which had inspiredhopes of a return to rapid growth.

CFOs confident over next yearn Economic conditions will getbetter in the new year, according to amajority of UK chief financial officers.In a poll from American Express, 81per cent out of 200 respondents fromlarge British companies anticipate anincrease in their turnover in 2013. Yetthe same poll suggests that theiroptimism about British economy isnot wholehearted, with less than a

third expecting consumer spendingin the UK to grow.

Families get support for Christmasn Nearly half of Britons will receivefinancial support as a Christmaspresents this year, according to a pollfrom Scottish Widows. Forty-four percent of the population will get somekind of financial support from theirfamily, the survey said, while one out10 will need financial support just toget through the holiday period. Twiceas many will need to borrow moneyto buy Christmas presents, theinsurer said.

THE LABOUR market continued itsboom into November, with privatesector demand more than offsettingpublic sector slack.

Placements and vacancies rose ataccelerated rates in the second to lastmonth of the year, according to a sur-vey by KPMG and the Recruitmentand Employment Confederationreleased yesterday. The bullish datacame despite many analysts believ-ing the economy has sunk back intocontraction in the fourth quarter.The index for permanent employ-

ment climbed to 56, from 55 inOctober, a 19-month high, and fur-ther above the 50 mark suggestingfaster improvement in the perma-nent sector of the labour market. Thepicture for temporary jobs was evenmore cheery, with the index hitting57.4, a 20-month high, up from 54.5in October.And all this improvement hap-

pened even while firms were rapidlylisting more vacancies. The index for

No end to jobs

boom in finalmonths of 2012

BY BEN SOUTHWOOD permanent vacancies hit 57, whilethe figure for temporary places was56.4, leading to an overall figure of56.9 another 19-month high.

Twelve months ago employmentprospects were bleak, said BernardBrown at KPMG. Today, however, thenegative outlook has been replacedby cautious optimism as employersgain confidence to make decisionsabout the vacancies they want to fill.These upbeat conditions will con-

tinue into 2013, according to theemployment outlook survey fromManpowerGroup. Six percentagepoints more employers surveyed bythe human resources firm said theyplanned to boost employment in thefirst three months of next year, thansaid they would reduce their staff.And engineering contractors sur-

veyed by Giant said they thought thisboost could involve the resurgent carmarket. Twenty three per centthought job opportunities in theautomotive sector would be growingover the coming 12 months, versusjust 10 per cent this time last year.

After-tax profits dive across USbusiness in weak third quarterUS MANUFACTURERS, miners andwholesale traders all saw t heirprofitability drop off in the thirdquarter, though professionalservices firms enjoyed improvedearnings.

After-tax profits across big USmanufacturers dipped from$146.1bn (88.1bn) to hit $132.5bnin the third quarter, according todata released yesterday by the USCensus Bureau.

Miners saw profits sag from$16.4bn in the second quarter to

$1.1bn, while wholesalers saw a$0.3bn, not statistically

BY BEN SOUTHWOODsignificant fall in their ownincomes after tax. Firms workingin the information industries alsosaw their profits decline, from$26.7bn to $25bn.

Only the professional andtechnical services corporations ofAmerica saw their profit figuresimprove in the third quarter, andeven then by only a marginalamount. Firms in the sector withover $50m in assets each amassed$6.3bn after-tax profits betweenthem, up $0.3bn on the secondquarter of the year.

But employment data for

November gave a much cheerierpicture of the business situation

in the economy. The ConferenceBoards employment index edgeddown from 107.84 in October to107.82 in November, but this tinydrop still left the index 3.3 percent higher than a year ago, andin the posit ive, above-100 range.

Yet Gad Levanon, director ofmacroeconomic research at theConference Board, said the datasuggested the US labour marketwas still fairly weak.

And Levanon warned that aslowdown in the fourth quarter,continuing into 2013 which isexpected by many analysts

would impact on the labourmarket and hit US job growth.

Surveyors point to broadly flathousing market in NovemberTHE HOUSING market muddledalong in November, with mild falls

in house prices, but improvementson other market measures.Prices slid at a slightly faster rate

than in October, according to dataout today from the Royal Institutionof Chartered Surveyors, as indicatedby a score of minus nine on theirheadline price index down fromminus seven.

But new buyer inquiriescontinued to rise, according to theirindex level of plus 11, though thissuggested a slower rate of increasein November than October, when

BY BEN SOUTHWOODthe index was at plus 17.

A similar picture came from thenew instructions index. Moresurveys were demanded during the

month the index stood at plus four but this represented a slowdownon Octobers plus 11.

This broadly flat picture looks setto continue: The November surveysuggests that prices at a headlinelevel remain broadly flat whiletransaction levels continued to edgeupwards, the report said.

And though price expectations forthree and 12 months ahead turned alittle more negative, these were onlyslightly below flat, highlighting thestagnant trend in the market.

However, 39 per cent of landlordssurveyed by LSL Property Servicesexpected rents would rise over thecoming year, with just one per cent

predicting they would decline.

Sentiment broadly flat in plateauing housing market

J an 200 8 J an 200 9 Ja n2010 Ja n2011 Ja n2012

-80.0

-60.0

-100.0

-40.0

-20.0

0.0

20.0

40.0 Net balance of responses

Price expectations, net balance

Price, net balance


Source:KPMG/REC/Markit

VACANCIES SOAR EVEN AS PLACEMENTS ALSO JUMP

PERMANENT JOB PLACEMENTS UP AT FATEST RATE FOR 19 MONTHS

TEMPORARYPLACEMENTS

UP FROM 54.5IN OCTOBER

57.4

INDEX AT

THE HIGHEST LEVELIN 20 MONTHS

PERMANENTPLACEMENTS

UP FROM 55IN OCTOBER

56

INDEX AT


JOB VACANCY

INDEX AT

UP FROM 55.4IN OCTOBER

56.9


*all figures above 50 indicate growth, figures below indicate decline / main figures are from November

25

1998 1999 200 0 20 01 20 02 20 03 2 00 4 200 5 20 06 20 07 2 00 8 20 09 20 10 20 11 20 12

30

35

40

45

50

55

60

65

70

75 50 = no change on previous month

Temp/Contract Billings

Permanent Placements

Increasing rateof growth

Increasing rateof decline

GOVERNMENT policy on green taxshould be centred around the mostefficient means to reducepollution, not around essentiallyarbitrary targets, a prominentfiscal think tank said yesterday.

In the Autumn Statement thechancellor announced plans toincrease the total share of revenuecoming from taxes whose primarypurpose is to achieve greenoutcomes, between 2010-11 and2015-16.

But the Institute for FiscalStudies (IFS) yesterday said a totaltax share goal is not based onachieving environmental outcomes

in the most efficient way whichthey say should be the goal of green

Spending watchdog hits out at

the governments green targetsBY BEN SOUTHWOOD policy. Taxes should be raised in

the most effective way, the reportreads, rather than to hit someessentially arbitrary target forreceipts from one party of thesystem. Whether environmmentaltaxes make up a bit more or less oftotal revenues in 2015-16 than theydid in 2010-11 is not of much realconsequence.

And the respected think tanknoted that the governmentsofficial definition of what count as

green taxes differs both with thedefinition used by the Office forNational Statistics andinternational convention. These

bodies include taxes with big greenimpacts like fuel duties even

where they are primarily levied forrevenue.

UK GROWTH is set to be firmer,if not rapid, in 2013, according todata out yesterday.

The UKs composite leadingindicator, which is supposed to

signpost turning points ineconomic cycles, saw anothermonth of slight improvement,increasing from 100.3 inSeptember to 100.5 in October.

This 0.23 per cent increasefollows on the heels of acumulative 0.69 per cent increasespread over the past four months,and a total 1.14 per cent increaseover the year, bringing theindicator further above its longrun average of 100.

The Organisation of Economic

OECD economists predict UKto show firmer growth in 2013

BY BEN SOUTHWOOD Co-operation and Development(OECD), which prepares the data,said these movements amount toa firming of UK economic

growth.Howard Archer at IHS Global

Insight said the data supports

hopes that the UK can achievegradually improving growth in2013, but warned that other datapainted a more gloomy picture ofthe UKs economic prospects.

And he said the fourth quarterof 2012 was more than likely tosee a return to declining GDP.

The organisation said that 0.14per cent growth in the index forthe whole OECD area, over the

year, represented stabilisinggrowth across the wealthycountries of the world.

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IN BRIEFJubilant Energy revenue stable

n India and Myanmar-focusedJubilant Energy yesterday reportedstable revenues of $8.6m (5.4m)

over the first half of the financial year,despite a five per cent fall in oil prices.The oil and gas explorer posted profitfrom operating activities of $2.2m, upsharply from a loss of $49,000 overthe same period of last year. Averagegross production at its Kharsang fieldin India reached record levels, jumpingto 1,857 barrels of oil a day during thesix months to September, up from1,757 barrels over the same period lastyear.

Coal of Africasharesdrop 10pc

n Coal of Africa shares sank yesterdayas it said that an environmentalcoalition had withdrawn from aMemorandum of Understanding withthe company, signed last year toprotect the Mapungubwe CulturalLandscape in South Africa. The newssent its shares down 10 per centyesterday to close a t 11.25p. Lastweek, the green coalition said thatthere was more information thatshowed non-compliance with waterlegislation at its Vele mine. Coal ofAfrica said that the basis on which itwas withdrawing was inaccurate.

Faroe Petroleum drills Rodriguez

n Oil and gas company FaroePetroleum has started drilling at theRodriguez exploration well in theNorwegian Sea, in which it has a 30per cent interest. The well, which is onthe Halten Terrace, is planned to bedrilled about 4,040 metres and thedrilling operations will last around 75days. Chief executive Graham Stewartsaid Faroe was looking forward to anexciting 2013, with four importantexploration wells scheduled to be

drilled in Norwegian waters.

AMERICAN International Group willsell nearly all of aircraft leasing busi-ness ILFC to a Chinese consortiumfor up to $4.8bn (2.9bn), in a dealthat gives the fastest growing avia-tion market easier and cheaperaccess to planes.

But the sale is at a far cheaper pricethan AIG sought and will lead to a

substantial loss, the insurers pricefor getting out of its last major non-core asset following the US govern-ment bailout of the company in thefinancial crisis.

Chinese firms have previouslyshown interest in aircraft leasing,and the deal would give China accessto a global network of about 200 air-lines in 80 countries. China is alreadyILFCs largest market with 180 planesoperating there, giving it 35 per centmarket share.

Its the biggest deal we have in theaircraft leasing world and its veryambitious, said Paul Sheridan, headof Asia at aviation consultancy firmAscend Advisor. We believe thereare not enough aircraft on order inChina at the moment. It will helpChinese airlines get more aircraft.The worlds two largest plane mak-

ers Airbus, owned by aerospace

group EADS, and US rival Boeing have predicted demand for $4.5 tril-

AIG to sell lease

firm to Chinesegroup at a loss

BY HARRY BANKS lion worth of passenger jets over thenext two decades, with about two-thirds of new planes sold in the Asia-Pacific region, and China as thebiggest single market in value terms.

Analysts say China tends to balanceits orders between Airbus and Boeing,partly for political reasons. Thismeans China pays an effective premi-um for planes as the two manufactur-ers dont have to compete as heavily

for orders. ILFCs order books couldmean cheaper planes for China,industry experts say.The Chinese consortium is made up

of New China Trust, which is one-fifth owned by Barclays; ChinaAviation Industrial Fund; and P3Investments Ltd; with outside adviceprovided by Credit Suisse.

It will buy 80.1 per cent of ILFC for$4.23bn, with the option to buyanother 9.9 per cent. An arm ofIndustrial and Commercial Bank ofChina, Chinas biggest bank, will joinonce the deal has regulatoryapproval.AIG will submit the offer for review

by the Committee on ForeignInvestment in the United States, orCFIUS, which vets foreign deals forsecurity concerns.

In September, the US Treasury cutits stake in AIG to below 16 per cent of

outstanding shares from 53.4 percent.

MINER Eurasian NaturalResources was the second-biggest

blue-chip faller yesterday, falling2.62 per cent, as it paid $550m(343m) to tighten its control overits unit in the Congo.

Kazakh ENRC said its subsidiaryENRC Congo had agreed to buy the49.5 per cent of holding companyCamrose Resources that it did notalready own, plus outstandingminority shareholdings in someCamrose subsidiaries.

Camrose holds interests incopper and cobalt exploitationlicences in the central Africannation, including a 70 per cent

indirect interest in Metalkol.The deal to buy out Camrose

ENRC plummets as itbuys out

Camrose from its Congo unitBY CATHY ADAMS will spell the end for ENRCs

relationship with controversialIsraeli businessman Dan Gertler.

Felix J Vulis, chief executive ofthe FTSE 100-listed miner, said

yesterday that consolidatingownership of Camrose is animportant step forward forENRC, enabling us to gainmaximum benefit from thedevelopment of these assets and tocontinue to support our strategyand ambition of becoming amaterial African copperproducer.

The transaction is expected tocomplete by 28 December,although it needs shareholderapproval first.

ENRC closed down at 275.6pyesterday.


Israeli businessman Dan Gertler is an influential figure in the Congos mining sector

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US markets upon McDonaldsand tech stock

US stocks edged higher yesterdayMonday, helped by gains inMcDonalds after the fast-foodgiant posted strong sales

results, and a move up in technologyshares.Technology stocks were the S&P

500s best-performing sector asHewlett-Packard climbed 2.9 per centto $14.20 on rumours that activist

investor Carl Icahn is building a stakein the PC maker. The stock is down44.5 per cent for the year and ranks asthe Dows worst performer.Tech was also supported byCisco

Systems, which gained 2.4 per cent to$19.79 after the company presentedits midterm growth strategy onFriday. Yesterdays rally put the stockon track for its fifth advance in thepast six sessions.

US President Barack Obama metwith Republican House Speaker JohnBoehner on Sunday to negotiate abudget deal. A Boehner aide said yes-terday that talks are continuing.

Persistent worries about the negotia-tions over the fiscal cliff, a series ofautomatic tax hikes and spendingcuts that could hurt economicgrowth next year, have kept marketmoves small of late.

There is a general sense that if adeal is struck, that we could have afurther advance in the market at theend of this year as well as the firstpart of next year, said MichaelSheldon, of RDM Financial inWestport, Connecticut.

The Dow Jones industrial averagewas up 23.03 points, or 0.18 per cent,at 13,178.16. The Standard & Poors500 Index was up 0.71 of a point, or0.05 per cent, at 1,418.78. The NasdaqComposite Index was up 7.35 points,or 0.25 per cent, at 2,985.39.

BRITAINS benchmark share indexrose to its highest closing level innearly nine months yesterday, withmany traders betting that worries

over Italy would fail to halt a traditionalyear-end equities rally.

The FTSE 100 closed up 0.1 per cent, or7.23 points higher, at 5,921.63 points itshighest close since finishing at 5,961.11points on 19 March.The FTSE initially fell after Italian Prime

Minister Mario Monti said over the week-end that he planned to resign, increasingpolitical uncertainty in the heavilyindebted country and probably bringingforward elections to February.

However, it then pared those losses andgained ground after breaking throughand holding above the technically impor-tant level of 5,910 points a level where ithad previously tended to fall back.Traders said fund managers would still

look to put money in equities before theyear-end, with stocks offering betterreturns via dividends than cash or sover-eign bonds, where returns have sufferedwith interest rates at historic lows.

Healthcare companySmith & Nephewtopped the FTSE 100 leaderboard with a1.9 per cent gain, after Investec raised itsrating to buy from hold.

Major mining stocks such as Rio Tintoalso contributed to much of the FTSEsgains, with the FTSE 350 mining indexgaining 0.3 per cent. Rio was up 0.66 percent at 3,277.50p.

Oriel Securities strategist DarrenWinder said UK miners could be on trackfor a strong 2013, and traders added thateconomic growth in China the worldstop metals consumer would boostminers prospects.

BESTof the BROKERSAZ Electronic Materials SA

4 Dec 5 Dec 6 Dec 7 Dec 10 Dec

p385

380

370

375

360

365

363.7010 Dec

AZ ELECTRONICMATERIALSUBS has cut its rating frombuy to neutral for thechemicals producer. Thestock is up around 50 percent this year, and thevaluation gap to its rivalsis now closed, UBS thinks.

DASHBOARDCITY YOUR ONE-STOP SHOP FOR JOB MOVES,BROKER VIEWS AND MARKET REPORTScityam.com

FTSE


5,930

5,920

5,910

5,900

5,880

5,870

5,860

5,890

5,921.6310 Dec

Enterprise Inns PLC


p102100

96

98

90

92

94

98.2510 Dec

ENTERPRISE INNSMorgan Stanley rates thepub owner overweightand has set a price targetof 140p. The broker thinksthat income is stabilising,and that the debt level is

now manageable andcould be paid off by 2015.

Deutsche Telekom AG


8.70

8.60

8.40

8.50

8.30

8.4010 Dec

DEUTSCHETELEKOMEspirito Santo has giventhe owner of T-Mobile asell rating with a fairvalue of 7.60 after a USconsumer survey foundthat opinion of the firmsnetworks is weak.

Legal & General PropertyRob Codling has been appointed

senior asset manager within theproperty investment firmsmanaged fund. He joins fromJones Lang LaSalle, where he wasmost recently an asset managerand transactions surveyor.

BNY MellonEdith Rigler has been appointed business strategy andmarket solutions manager for treasury services in Europe,Middle East and Africa at BNY Mellon. She joins fromTreasury Strategies, the consulting firm. Rigler has over 25

years experience in the sector and has held senior roles atHSBC, Deutsche Bank and Citibank.

Simmons & SimmonsAndrew Petry has been appointed projects partner in thelaw firms London office. He joins from Addleshaw Goddard,where he was also a partner. Petry is an energy andinfrastructure finance specialist, and has particular expertisein bond and capital markets financing.

Rule FinancialDerek Parry has been appointed as a managementconsultant and clearing specialist at the investment bankingconsultancy. He joins from RBS, where he was global head

of treasury operations and IT change management.

Squire SandersStuart McInnes has been appointed to the position ofconsultant in the law firms sports law group. He joins fromPritchard Englefield, where he was managing partner andhead of its dispute resolution team. McInnes is also anarbitrator on the Court of Arbitration for Sport.

DentonsThe pension management firm has appointed Tom Lyon asbusiness development manager. He joins from Pershing,where he was a transition account manager. Lyon has alsopreviously held roles at James Hay Partnership.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

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Investors expect end-of-year rallyfor FTSE despite Eurozone worries

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21TUESDAY 11 DECEMBER 2012

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

Classroom politics[Re: Lessons from Finland: How we canreform maths teaching in schools,yesterday]While I respect professor Burghess work, Idisagree with his opinion. The greatestthreat to maths education in Britain is notpoor teachers or a rigid curriculum. It is thehuge scale of recent political involvement inhow children are taught. Standardsframeworks for teachers have changed threeor four times in the last 12 years. There is nostability for the profession to develop itsapproaches, and ever-changing politicalagendas are deemed more important thanlong-term educational professionalism.Teachers have become guinea pigs in onebig political experiment.

Nick Athinodorou

London travel[Re: How Londoners are driving away fromthe rest of Britain, yesterday]If Londoners are disproportionate users of(expensive) commuters trains, doesnt thismean that investment in commuter lines inand out of London (or other cities) might befar better value for money than a high speedrail line between London and Birmingham?

John Moss

Londons singularity leaves it at risk. Firstly,we gain far less from popular policies likelimiting fuel tax increases. Secondly, we losefar more from above-inflation rail ticketprice increases. And thirdly, we suffer morefrom under-investment in public transport.Thank goodness we have a mayor.

Erica Burt

MARIO Montisannouncement that he willstep down as Italian PrimeMinister, as soon as thebudget law for 2013-15 is

adopted, caught many off guard. Butthings had got to a point whereMonti had little choice he hadeffectively lost his majority inparliament after Silvio Berlusconisparty withdrew its support.What lies ahead for Italy? Montis

resignation makes early electionsinevitable. The parliamentary calen-dar may be tweaked to speed up theadoption of the budget law. But it isreasonable to assume that parlia-ment will be dissolved beforeChristmas or immediately after, atthe latest.We are therefore looking at elec-

tions at some point in the second halfof February. This is not a hugechange, given that Italians were dueto vote in early April anyway. But itwas still sufficient to trigger a newround of market instability, as eventssuggest that Italy could go back topre-Monti squabbling between par-ties putting the countrys reformagenda at risk.

Early elections also mean that therewill be no time to pass a new electorallaw. The existing rules guarantee asolid majority in the lower chamberof parliament to the winner. But theyrisk delivering an unstable majority or no clear majority at all in theSenate. This is a risk Italy should haveavoided running.

Italys Eurozone partners, theEuropean Commission and theEuropean Central Bank will be watch-ing the elections closely. And it willbe interesting to see how central theEurozone crisis (and Europe) will bein the campaign. The key will be thetone used by the parties and this isprecisely what makes Berlusconiscomeback relevant.

TOP TWEETSI was sad to hear of the death of Sir PatrickMoore a great patriot as well as a greatscientist.@DanHannanMEP

Banks are moving higher priced bankers outof central London. The value of London in thecurrent economy is deteriorating.@rsilvalondon

EU members are moving the goalposts tosave their currency. It is time to forge a newrelationship. UK trade still matters to EU.@LiamFoxMP

Montis resignation has sent the euro lower.Berlusconis antics could undo all the goodwork and send Italy back to the brink.@c_live_b

Should the news that jobs are being movedto other UK financial centres worry the City?

YESInvestment banks are planning to move 3,000 jobs from the City

of London to other regional centres, which will be mixed newsfor the City. Past success in London has sustained high salariesand property costs, making moves to other UK centreseconomically viable. This is historic property costs are likely todrop as new buildings in the City become available for rent, andas banks downsize their property requirements to fit theirsmaller labour forces. And salaries will have to fall further tomatch the new demand for City-type skills. The loss of jobs fromthe City will diminish its critical mass. But the real bad news isjobs flowing to Asian financial centres. By 2015, Hong Kong islikely to have more City-type jobs than London. Mark Carney willhave his work cut out to face this challenge.Professor Douglas McWilliams is chief executive of the Centre forEconomics and Business Research.

Douglas McWilliams

NOChris Cummings

The City of London is a unique selling point for the UK. It attracts

international business and investment. There is a strong track-record of companies arriving in London and then shiftingoperations to other parts of the UK (near-shoring). It is true that,as wage differentials between the UK and Asia reduce, areas suchas Manchester and Glasgow will provide skilled pools of flexibleworkers, and near-shoring will grow. Regulatory change will alsoput pressure on the profit margins of financial servicescompanies, and these cities will increasingly be seen asalternatives. But London will fuel these hubs. Businesses acrossthe UK are dependent on the City of Londons success, with newjobs being created because of success in London. That successtrickles down to other parts of the UK, but ultimately feeds backto London.Chris Cummings is chief executive of TheCityUK.

RAPIDresponses Monti steps aside

for Berlusconi towreak euro havoc

Over the last few months,Berlusconi has launched a series ofattacks on a hegemonic Germany

imposing austerity on the rest of theEurozone, and stressed that the dis-astrous economic policies enactedby Montis government ought to beoverturned to drag Italy out of reces-sion. Given that his party is trailing inall opinion polls, Berlusconi may optfor populist, anti-austerity (and poten-tially anti-German) rhetoric to regainground ahead of the elections. This isall the more likely if the historicalliance between Berlusconis partyand Lega Nord which has called fora referendum on Italys membershipof the euro is restored.Add comedian Beppe Grillos Five-

Star Movement another supporterof a euro referendum to the mix,and we may be looking at electionswhere, if these three parties performaccording to latest opinion polls,around 40 per cent of Italians wouldback forces that call for an end toexcessive austerity and (in the case ofLega Nord and the Five-StarMovement) are not supportive ofItalys euro membership.

Monti has done a decent job ofsteering Italy in the right direction interms of fiscal consolidation, bol-stered by a few (but not enough)structural reforms. But the latestevents confirm that political uncer-tainty remains Italys real Achillesheel and this isnt going to changeovernight.

Vincenzo Scarpetta is a researcher atOpen Europe.

VINCENZO SCARPETTA

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TUESDAY 11 DECEMBER 201222 cityam.com

THE Bank of InternationalSettlements (BIS) has warnedthat global asset prices arerising to levels not seen since

before the 2008 crisis. This isdespite the ongoing Europeansovereign debt crisis and theinability of the US to control its

government spending andaddress its deficit woes. It comesat the same time as many majorcorporates are issuing profitwarnings on both sides of theAtlantic.

In its most recent quarterlyreport, the BIS said: Some assetprices started to appear highly val-ued in historical terms relative toindicators of their riskiness. Forexample, global high-yield corpo-rate bond spreads fell to levelscomparable with those of late2007, but with the default rate onthese bonds running at around 3per cent, whereas it was closer to 1per cent in late 2007.

Corporate and sovereign debtissuers have taken advantage ofthis apparent risk pricing discon-nect to ramp up their borrowing.The BIS remarks particularly onthe disproportionate increases insub-investment grade issuance.The warning from the BIS has

particular resonance, as it is seenas one of the few institutions tohave sounded the alarm bells inthe run up to the 2008 crash. Asinvestors reaped the profits of acheap credit-fuelled boom,William White, the then chiefeconomist of the BIS, published apaper called Is Price StabilityEnough? He highlighted the risksof a focus on aggregate measuresin the economy, like the overallmeasure of inflation, and warnedthat they had historically providedan inadequate bellwether for iden-tifying emerging macroeconomicproblems.

BANKING CLUB

The BIS occupies an arguably

Central banks inflate anew asset price bubble

Central banks cannot keep pumping

Theres a new riskdisconnect brewing,writes Craig Drake

TRADINGMANAGEMENTWEALTH

THE TIPSTER CONCRETE RETURNS

CONCRETE returns are expectedfrom Tr

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