cityam 2013-01-02

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BUSINESS WITH PERSONALITY

President Obama will have achieved his goal of raising taxes on the rich if the deal passes the House

A LATE political truce over the USbudget was thrown into doubt lastnight as Republican leaders threat-ened to quash President Obamas planto avert the so-called fiscal cliff.After warring politicians in the

Democrat-controlled Senate passed abill to avert a round of automatic taxrises and spending cuts, senior figuresin the Republican-dominated Houseof Representatives suggested thespending cut measures proposed byObama did not go far enough.

On an extraordinary New Years Dayin Washington, Republicans scram-bled to reach a consensus over theDemocrat proposals. John Boehner,the Republican leader in Congress,called representatives together yester-day evening to decide whether todemand $300bn (185bn) of extraspending cuts or simply to hold a yes-or-no vote on the Senate-approved bill.

Eric Cantor, Congresss second most-senior Republican, said he did notsupport the bill, and Boehner saidthere was universal concern fromRepublican leaders over the lack ofspending cuts.Although the bill won approval

from most Republicans in the Senate,passing by 89 votes to eight, the com-ments from Congress leaders thrustits passage into uncertainty. House

Democrats were likely to vote for thedeal, but the Republican majority wasdivided over what action to take.

Indications from Washington lastnight suggested that the House waslikely to send an amended version ofthe bill back to the Senate. However, aSenate aide said an amended dealwould not be passed.

Both sides were desperate to reach adeal before financial markets opened.A resolution is required to claw the

US back from the so-called fiscal cliff

a round of automatic tax hikes anddeep spending cuts that most econo-mists believe will plunge the US intorecession. The country technically felloff the cliff on New Years Day as thedeadline for averting the measureswas broken, although a deal wouldstop their introduction.Action is needed to address the USs

budget deficit, which is set to bearound $1 trillion.The Senate bill, if passed, would see

wealthier US taxpayers hit by thecountrys first hike in income taxesfor almost 20 years. Marginal tax rateson those couples earning over$450,000 the top one per cent ofearners would jump from 35 percent to 39.6 per cent, clawing in$600bn over 10 years.Though it only affects the top one

per cent, the income tax hike wouldbe the first since 1993, and would con-travene many Republicans promisesnever to add to their constituentsincome tax bills.Tea party Republican senator Rand

Paul, one of the eight voting againstthe deal, attacked the compromisemeasure for failing to rein in spend-ing despite hiking taxes.Although President Obama had pre-

viously called for allowing taxes to riseon any couple earning over $250,000 the top two per cent Democrats willsee the deal as an improvement overRepublican leader John Boehners

offer to let taxes rise only on thoseearning $1m or more. Obama said:While neither Democrats norRepublicans got everything theywanted, this agreement is the rightthing to do for our country and theHouse should pass it without delay.

On the spending side, the deal post-pones the automatic spending cutsknown as the sequester for twomonths. The extra two months willcost around $24bn, of which half willcome from extra tax, and the other

www.cityam.com FREE

half from reduced spending. The planwould also cancel a $900m salaryboost for members of Congress.

If the talks between the Republicansand Democrats fail to reach a deal inthe next few days then the US econo-my could bear the full brunt of the fis-cal cliff measures.These would amount to $607bn of

total fiscal consolidation, or some 4.9per cent of GDP, significantly improv-ing the US budget position by erasinga large fraction of the yearly deficit,currently around $1.1 trillion.

But the Congressional Budget Office(CBO) the official US fiscal watch-dog says such cuts would plunge theUS back into recession, echoing thejudgements of most economists.

Even if the deal passes, future budg-et wrangling is almost inevitable, asmost of the spending cuts are onlydelayed for two months, and the gov-ernment has hit its borrowing limit.

THE ECO-FRIENDLY ALFA ROMEO REVIEWED

FTSE 100 M5,897.81 -27.56 DOW n 13,104.14 +166.03 NASDAQn 3,019.51 +59.20 /$ 1.62 unc / 1.23 unc /$ 1.32 unc

BY JAMES TITCOMB

AND BEN SOUTHWOOD

ISSUE 1,788 WEDNESDAY 2 JANUARY 2013

TRADERSTIPS FOR 2013See Page 15See Motoring, Page 19

MORE: Page 2nn

Certified Distribution

01/10/12 til 28/10/12 is 129,297

LONDON WELCOMES 2013 IN STYLE

AFTER a spectacular 2012 full of celebrations fromthe Diamond Jubilee to the Olympics and Paralympics,the capital yesterday kicked off the New Year in stylewith the 27th annual New Years Day Parade. Startingat Piccadilly and making its way down Whitehall toWestminster, the parade brought together more than10,000 performers, including pupils from theGermantown High School Warhawk marching bandfrom Wisconsin, pictured by Trafalgar Square.

n The CBO calculates that the bills tax hike would rake in $620bn in 10 yearsn But the office says the bill would add $4 trillion to deficits in the next decaden The average household would pay $3,500 more, if the deal does not pass,

according to the Tax Policy Center

n The economy would shrink 0.5% in 2013, if no deal was reached on the fiscal cliff

HOW A DEAL WOULD AFFECT THE US BUDGET

NEW YEAR, NEW RIDE

OBAMAS RACE AGAINST

TIME TO SAVE TAX DEAL

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HIGH-VALUE property owners

rushed to sell US dwellings atreduced prices in the days leadingup to 1 January in a bid to avoidthe tax increases introduced by theso-called fiscal cliff.

The top rate of capital gains tax,which is included on real estatesales, was set to go up 8.8percentage points to 23.8 per centif US politicians failed to thrashout a deal to avert the cliff.

The threat of this tax increasetriggered a wave of property salesin the months leading up to thenew year, research carried out by

the Wall Street Journal shows.One apartment on New Yorks

Fifth Avenue once owned by

business mogul and former vicepresident Nelson Rockefeller soldfor $23.9m (14.7m) last Thursday.It had previously been on themarket for $27.5m, and the dealwas completed in just 30 days.

The owner agreed to the lowerprice as long as the deal closedbefore the end of the year, the NewYork brokerage that held thelisting said.

Another New York property, athree-bedroom apartment facingCentral Park, was recently sold for$26m, according to a filing lodged

last week. The propertys askingprice had been cut from $35m andthen again from $29.5m, the

research claimed.Other high-value property dealsto have been rushed throughbefore 1 January included the$50m sale of an 18-roomManhattan apartment last week.

The level of expensive propertysales and the discounts applied tothem is unusually high, but itwould work out more favourably tosell them at lower cost than to paythe higher capital gains rates after1 January.

The rush of sales did not onlyapply to the property markets,

however. Research from theInternational Business BrokersAssociation found that fears over

the tax increases set to come inmeant that business ownershurried to sell towards the end ofthe year, especially those withfirms valued at more than $5m.

The research said that the threatof the fiscal cliff was the biggestissue leading to business sales inthe second half of 2012.

This meant that manyentrepreneurs sold theirbusinesses for less than theythought they were worth, even inan unappealing economic climate,in a bid to reduce tax payments.

Fears over property tax hikes in US force awave of high-value sales in run up to 2013

BY JAMES TITCOMB

WELCOME back. January brings withit a host of New Years resolutions andhopes for the months ahead. The yearahead promises much but the capitalwill need to dig deep to surpass lastyears achievement in putting on thewonderful Olympic and Paralympicgames. Whatever lies ahead we willreport it for you, as best we can. Weare looking forward to sharing thejourney with you.

[email protected] Heath is back on Friday

The three who thoughtthey had secured a dealFRENZIED eleventh-hour talks arebelieved to have secured the pas-sage of the fiscal cliff deal throughthe Senate at 2.07am yesterdaymorning, with three figures at theforefront.The deal was worked out through

long New Years Eve negotiationsbetween Vice President Joe Bidenand Mitch McConnell, who leadsthe minority Republican faction inthe upper house.

But the compromise package which would roll back tax hikesand spending cuts that havealready officially kicked in pleased neither partys members,and Biden had to talk to senatorsfrom his own party, led in theSenate by Harry Reid, to bringabout the 89-8 victory.

He told reporters that he persuad-ed Democrats by saying: This is JoeBiden and Im your buddy.This came after comments

President Obama made at a cam-paign-style event in the WhiteHouse threatened to derail thedeal. Obama appeared to be mock-ing Republicans for going back onthe pledge many of them madenever to hike taxes.

Keep in mind that just last monthRepublicans in Congress said theywould never agree to raise tax rates

Pessimism mars growth expectationsBritons should brace themselves foranother year of weak growth as theprospects of a recovery remain gloomy,according to the Financial Times NewYear survey of 94 leading economists. Alarger number of those surveyed thoughtGeorge Osborne should rethink hisausterity drive.

Sun European set to buy ParagonSun European Partners is to purchase

Paragon Print and Packaging, whichmakes labels and packaging for foodretailers such as Tesco and Sainsbury.The deal, which takes the buyout fundclose to 30 acquisitions of packagingcompany globally, values Paragon atabout 150m, according to a person withknowledge of the sale.

Motorists face increase in premiumsYoung drivers are facing rises in insurancepremiums running into hundreds ofpounds after reinsurers this week pushedup the costs for underwriters passing onrisks to them by more than 20 per cent.

Firms pay MPs in lobby free-for-allMPs and peers have received hundreds ofthousands of pounds from arms makers,pharmaceutical companies and foreigngovernments to sponsor parliamentaryspecial interest groups.

Punishing year looms for the banksThe risks faced by British banks haveincreased in the past 12 months,underlining how the sector faces aturbulent and costly year ahead,according to a Euromoney report.

Cyprus President hits out at austerityCyprus President Demetris Christofias hashit out against the harsh austeritymeasures being meted out to strugglingEurozone members as the Mediterraneanisland faces a bleak new year.

Huawei under spotlight over IranChinese technology company Huawei isunder the spotlight again after documentswere uncovered that allegedly show itoffered to sell 1.3m (1.1m) of Hewlett-Packard equipment to Iran, in breach oftrade sanctions.

Ultra HD next step in TV revolutionManufacturers are angling to kick offanother TV buying spree. They aregearing up to promote what the industrycalls ultra high-definition televisions, orUHDTVs, which promise four times theresolution of existing TVs.

Companies prepare for health lawOne of the biggest decisions for manycompanies this year will be what to doabout their health benefits. They have just12 months before the health law overhaul.

2 NEWS

BY BEN SOUTHWOOD

To contact the newsdesk email [email protected] 2 JANUARY 2013

EDITORSNOTE

DAVID HELLIER

on the wealthiest Americans, thePresident said, even before the dealhad passed the Senate. Obviously, theagreement thats currently being dis-cussed would raise those rates andraise them permanently.

His former rival in the 2008 cam-paign for President, Senator JohnMcCain attacked the comments asnot the way presidents should lead.

But many Democrats were just as

displeased with the deal as Tea PartyRepublicans, and formed the majori-ty of the eight voting against thedeal.

Maybe now we are believers oftrickle-down economics. Not I,declared Senator Tom Harkin ofIowa, a Democrat, saying the dealshowered benefits on the best-off atthe expense of those at the bottomwho could ill-afford it.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

IN BRIEFIvory Coast stampede kills 60n At least 60 people, most of them

children, were crushed to death in anew year stampede in Abidjan, thebiggest city in the Ivory Coast,yesterday. The incident happened inthe early hours of yesterday morningafter a crowd was making its way backfrom a fireworks display, the westAfrican countrys government said.As well as the death toll, which isexpected to rise, hundreds arebelieved to have been injured.

Hillary Clinton suffers blood clotn US Secretary of State Hillary Clintonhas been admitted to a New Yorkhospital with a blood clot linked to aconcussion she suffered last month.Clinton, 65, has been out of the publicspotlight since mid-December, whenshe suffered a concussion afterfainting due to a stomach virus. A

follow-up exam revealed a blood clothad formed between her brain and herskull. Doctors said she will make a fullrecovery.

Surprise call for Korea peace pactn North Korean leader Kim Jong-uncalled for an end to confrontationbetween the two Koreas, technicallystill at war in the absence of a peacetreaty to end their 1950-53 conflict, ina surprise New Years broadcast onstate media. The address by Kim, whotook power in the reclusive state afterhis father, Kim Jong-il, died in 2011,appeared to take the place of thepolicy-setting New Years editorialpublished in newspapers in the past.

2013: Time for

new challenge

QWhat is the fiscalcliff?AThe fiscal cliff isa package ofautomatic tax hikesand spending cuts together worth$607bn (373.6bn). The UStechnically went over the cliff assoon as 2013 started.

QSince the US has a deficit totalling over$1.1 trillion, isnt this a good thing?AThough going over the fiscal cliffwould, according to theCongressional Budget Office (CBO) the official fiscal watchdog put theUS on a sounder long-term fiscalfooting, it also thinks it would pushthe US economy back into recession.

QHow much of the fiscal cliff would beavoided by the Senates proposals?

AThe CBO estimates that thepackage will take about $277.4bnoff the total deficit, or about 46 percent of the total cliff so it has beenreduced to more of a hill than a cliff.

QWhat are the key measures in thepackage agreed by the Senate?AIncome tax rates are permanentlyraised to 39.6 per cent on incomeover $400,000 per year forindividuals and $450,000 for couples.Rates for lower income earners arekept at their Bush-era levels. The dealalso delays $110bn of cuts that wouldhave started in early January, butthis means there will be a new fiscalcliff in two months.

QAand

What is the fiscalcliff row all about?

Senate majority leader Harry Reid, Vice President Joe Biden, minority leader Mitch McConnell

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TRAIN passengers will from today haveto pay an average of 3.9 per cent morefor their tickets.

Commuters on some routes will behammered by hikes of more than 10per cent, sparking anger among cam-

paigners and politicians over the gov-ernments rules on setting fares.Train operators must stick to an

inflation-linked cap on price rises forregulated fares, which make uparound half of all tickets.

However, they can raise some faresbeyond this providing the firms aver-age increase comes in under the limit.Firms can raise or lower unregulatedfares by any amount.

Season tickets, which are regulated,will rise by an average of 4.2 per cent.

Transport minister Norman Bakerhas defended this years hike, sayingusers must help pay for improvementsto the rail network, but passengergroups have been critical.

Yet again, rail fares go up with noperceptible improvement in service.Over the last 10 years, fares haveincreased by more than 50 per cent much more than peoples incomes,

said Bruce Williamson, a spokespersonfor Railfuture. The campaign group

BY MARION DAKERShas warned that some unregulatedfares will soar by up to 12 per cent.

In October, Prime Minister DavidCameron trumpeted a move to capregulated fares at one per cent abovethe retail prices index (RPI) measure ofinflation, down from the previouslyannounced three per cent rise.

But opposition politicians say thecoalition has misled passengers byreferring to a price cap when trainoperators can raise some fares farbeyond the limit.

The government should come cleanwith commuters that this is a directresult of their decision to cave in topressure from the private train compa-nies to let them hike ticket pricesbeyond the so called cap, said shadowtransport secretary Maria Eagle.

Rail firms, however, moved to dis-tance themselves from todaysincrease. We understand commutersdont like to pay more to travel to workbut it is the government, not traincompanies, that decides how muchseason tickets should rise on averageeach year, said Michael Roberts, chiefexecutive of the Association of TrainOperating Companies.Transport for London is raising its

fares by 4.2 per cent, or one per centabove RPI inflation.

WEDNESDAY 2 JANUARY 20133NEWS

cityam.com

SEASON TICKETS SOAR AGAIN

SOUTH WEST TRAINS

GUILDFORD TO LONDON TERMINALS

3,224 IN 20134.3% onlast year

21%since 2008

FIRST GREAT WESTERN

READING TO LONDON TERMINALS


19%since 2008

FIRST CAPITAL CONNECT

CAMBRIDGE TO LONDON TERMINALS


21%since 2008

CHILTERN

HIGH WYCOMBE TO LONDON TERMINALS


16%since 2009

SOUTHEASTERN

TONBRIDGE TO LONDON TERMINALS


39%since 2008

SOUTHERN

HOVE TO LONDON VICTORIA


18%since 2008

Rail users hit byabove-inflationfare increases

Cameron pledges tax crackdown while UK is host of G8

Cameron will open the G8 summit at Lough Erne, Northern Ireland on 17 June

DAVID Cameron today said he willput tax evasion at the heart of thisyears G8 summit and demand theworlds largest economies galvanisecollective international action totackle abuse of the taxation system.

In a letter sent to leaders of the G8group of wealthy countries, thePrime Minister said he would useBritains year-long presidency of theglobal economic forum to push forgreater co-operation betweengovernments and ensure those whoseek to evade tax are punished.

We can lead the way in sharingthe information to tackle abuses ofthe system, Cameron said. And we

can examine the case forstrengthening those standardsthemselves.

His stance is the latest sign that taxevasion has become a major politicalissue across the world following aspate of examples involvingmultinational companies, such as

Starbucks or Amazon in the UK,paying minimal levels of tax.The UK last hosted the summit in

2005 during Tony Blairs leadership,when discussion focused on theMake Poverty History campaign toreform aid payments.

In a dig at this event, Cameroninsisted 2013s meeting will not bethe kind of summit where we simplywhip out a chequebook at the 11th

hour, pledge some money and call ita success.

Instead he wants member nations,including the US, Germany andJapan, to spend more time helpingdeveloping countries with thebuilding blocks of economicgrowth, rather than traditional aid

projects. Cameron also wants thelarge nations to help stamp outcorruption in developing countries.

On improving trade relationships,Cameron says there is a hugeamount on the table including apossible deal between the EU andCanada, the opening of negotiationsbetween the EU and Japan, andRussia deepening its integration intothe global trading system.

BY JAMES WATERSON

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METRO Bank yesterday appointed itsbillionaire co-founder as its new chair-man, almost three years after he wasfirst mooted for the job.The firm, which launched in 2010 as

the first new high street lender formore than a century, said Vernon Hillwill take up his new post immediate-ly.

Hill, who was vice chairman,replaces co-founder AnthonyThomson after his shock resigna-tion in September.The bank is believed to

have spoken to the

Financial ServicesAuthority (FSA) onnumerous occasions

BY MARION DAKERS about the appointment. Hill gained FSAapproval for his vice chairman role in2010, but did not take the chairmanshipat the time amid concerns from the reg-ulator.

Hill was caught up in a 2007 investiga-tion into Commerce Bank, which hefounded. The firm was examined by theUS Office of the Comptroller of the

Currencies over alleged links betweenother businesses owned by Hill. Hewas cleared and Commerce Bankwas sold in 2008.

Metro Bank declined to com-ment on this yesterday. The bankhopes to float in 2014 as it expands

beyond London.

Vernon was the naturalchoice as chairman to leadMetro Banks excitinggrowth plans, said chiefexec Craig Donaldson.Co-founder Vernon Hill

WEDNESDAY 2 JANUARY 20134 NEWS

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THE United Arab Emirates willstop imprisoning expatriates for

writing cheques that bounce, AbuDhabi daily The Nationalreported yesterday, citing asenior official.

The UAEs tough penalties fordefaulting on loans, which is acriminal offence in the Gulf Arabmonarchy, were relaxed forEmirati citizens in October aftera royal decree.

BY CITY A.M. REPORTER

In line with the directives ofSheikh Khalifa... and in thespirit of fairness and equality,the courts have stopped as oflast month accepting collateralcheques presented as a criminal

tool against expatriate debtdefaulters, Ali Khalfan AlDhaheri, head of the legalaffairs department at theMinistry of Presidential Affairs

was quoted as saying.

Metro Banksfounder takes

chairman role

United ArabEmirates to stopjailing ex-patsfor bad cheques

Fleeing ex-pats have left cars behind

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UNFETTERED capitalism is a cause

of conflict that damages theworld, Pope Benedict saidyesterday in his New Year mass.

The head of t he Roman Cathol icchurch decried hotbeds oftension and conflict caused bygrowing instances of inequalitybetween rich and poor.

He also denounced theprevalence of a selfish andindividualistic mindset which alsofinds expression in anunregulated capitalism, variousforms of terrorism andcriminality.

In a separate message to markthe churchs world day of peace,the Pope called for a neweconomic model that moves onfrom the current aim of seekingmaximum profit andconsumption at the expense ofthe wider social good, coupled

with ethical regulations formarkets.The pontiff said the financial

crisis created greater inequalityand proved that capitalismfrequently fails to protect theweakest in society.

The 85-year-old Pope has longbeen a criti c of moderncapitalism, often attacking thesystem in speeches and articles forits perceived short-sighted natureand ethical shortcomings.

Pope criticisesunregulatedcapitalism

BY MARION DAKERS

FRENCH President Francois Hollandehas vowed to stick to plans to raisethe tax rate for top earners after hisscheme to set a 75 per cent tax ratefor those with 1m (812,000) a yearincomes was rejected.

In a New Years Eve nationaladdress Hollande said the law wouldbe redesigned to ask more of thosewho have the most.

But his failure to mention the 75per cent rate again has promptedspeculation the plan will be watereddown or dropped.

I suspect this tax will be shelved,

said Philippe Gudin, an economistfor Barclays and a former Frenchtreasury official.

For the [low amount of] revenue itwould raise, the outcry it has pro-voked and the damage it has done toFrances image, it would be moresensible if it were quietly buried.The Socialist presidents initial

scheme a flagship campaign prom-ise was thrown out by FrancesConstitutional Council on Saturdayon technical grounds. The council

Hollande vowsto find a way to

tax top earnersBY JENNY FORSYTH ruled it unfair because, unlike other

forms of income tax, it would applyto individuals rather than house-holds.Although the proposed tax rate

would only have applied to a fewthousand people, it caused wide-spread anger among business leadersand the right-wing opposition, andhas led to some wealthy citizens, likeactor Gerard Depardieu, to say theywould emigrate.

Meanwhile Prime Minister DavidCameron has promised to roll outthe red carpet to French businessesrelocating to the UK.

Hollande, whose approval rating

has dropped to around 35 per centsince he took office in May, alsopromised in his speech to make allefforts towards cutting unemploy-ment.The jobless tally reached 3m

around 10 per cent of the workforce for the first time last year.

Hollande said: All our powers willbe bent towards a single goal invert-ing the unemployment curve withina year from now. We must succeed atall costs.

THE OWNER of some of the USsmost historic newspapers is set torefocus on its television business

as it emerges from bankruptcyafter four years.

Tribune, the owner of the LATimes and Chicago Tribune, isexpected to sell most of itsnewspaper holdings after newloans and stock issues allowed thecompany to reorganise its debtsand exit bankruptcy on Monday.

Rupert Murdoch is rumoured tobe amongst those interested inTribunes newspapers which alsoinclude the Baltimore Sun.

LA Times owner rebuilds as TVcompany as it enters new era

BY JAMES TITCOMB Tribune, which started life in1847 as the publisher of theChicago paper, appointed a new

board this week, including formerYahoo chief executive Ross

Levinsohn and ex-News Corpexecutive Peter Liguori.

Liguori, who headed NewsCorps FX TV network, is expectedto be made Tribunes new chiefexecutive, a move that indicatesthe companys focus on television.

Tribunes assets include itsentertainment TV network WGNand stakes in websites includingCareerBuilder.com. Its ownersinclude JP Morgan Chase and anumber of hedge funds.


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The neo-Gothic headquarters of the Chicago Tribune are a landmark in the city

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THE British Retail Consortium, theretail lobby group, yesterday handedover its leadership to a new directorgeneral amid increasing turmoil onthe high street.

Helen Dickinson, a former KPMGretail consultant, officially took upthe post, replacing former directorgeneral Stephen Robertson, whostepped down last month after fiveyears at the helm.

Dickinson, who was unveiled inAugust to lead the group, has morethan two decades experience atKPMG, latterly as UK head of retailand audit.

She was also a relationship partnerat KPMG, working with many retailbusinesses who now comprise theBRC membership.The appointment comes after a

tumultuous year for the high street,which saw high profile shops like JJB

BY MICHAEL BOW Sports and Comet fall into financialtroubleDickinson told City A.M. yesterday

the her first priority would be tofocus on a planned rise in businessrates set for April 2013, which theBRC is set to lobby the Treasury onahead of this years Budget in March.

She also sounded a warning thattough trading conditions would con-tinue for the foreseeable future, plac-ing many underperformingbusinesses at risk.

This environment is always onewhere the polarisation of those thatget it right and those that get itwrong is wider, she said.

We are being much more discern-ing as shoppers and it makes it hard-er at the bottom.

Dickinson also has a key positionchairing the influential KPMG/IpsosRetail Think Tank, which monitors

high street trends and publishes regu-lar research papers.


cityam.com

issues. Low M&A volumes also hitearnings as companies werereluctant to embark on ambitiousexpansion plans and income fromdirect loans to businesses joinedthe downward trend.

In the UK, Barclays knocked

JPMorgan off the top of the feestable, with income rising from$210m to $305m. Despite this, the

bank is considering the future ofits investment banking unit amid

growing pressure to split thebusiness from its high-street arm.

Despite losing out in Britain,JPMorgan kept its position asworldwide wallet share leaderwith a 7.6 per cent share of globalfees.

INVESTMENT bank earnings fellslightly in 2012 as the bondmarkets became the main source ofincome for the industry, accordingto figures from data provider

Dealogic.Total worldwide fees dropped 3.6per cent to $67.1bn (41.3bn), still

well down on the pre-crash peak of$90bn in 2007.

A third of investment bankingrevenue now comes from sellingfixed income debt products, while

banks made just 20 per cent oftheir income from equity work,such as arranging initial publicofferings (IPOs) and new share

Investment bank earnings fallin 2012 as bond markets boom

BY JAMES WATERSON

Ex-KPMG retailhead takes upBRC leadership

UK INVESTMENT BANKS BY2012 REVENUE

(3) Barclays $305m

(1) JPMorgan $208m

(2) Goldman Sachs $194m(6) HSBC $182m

(9) Morgan Stanley $178m

(10)Bank of America Merrill Lynch $166m

(4) RBS $157m

(7) UBS $147m

(5) Deutsche Bank $143m

(8) Credit Suisse $127m

1

2

34

5

6

7

8

9

10

Ranking (last year) Bank Net revenue

WHICH COUNTRIES PAIDTHE MOST TO INVESTMENTBANKERS IN 2012?

US $31,301m

Canada $4,456m

China $3,722m

UK $3,250m

Japan $2,918m

Germany $2,431m

Australia $1,870m

France $1,775m

Italy $1,077m

Spain $1,048m

1

2

3

4

5

6

7

8

9

10

Ranking Nation Amount

Where did global investmentbanks earn theirtheir money?

2012, total income $67,128m

Debt Capital Markets (eg bonds) 32%

Equity Capital Markets (eg IPOs) 20%

Loans 20%

M&A 28%

2011, total income $69,691m

Debt Capital Markets 23%

Equity Capital Markets 23%

Loans 25%

M&A 29%

New British Retail Consortium director general Helen Dickinson took over yesterday

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German companies were the runawaysuccesses of 2012, leaving the UK standing

TRADING: Page 15nn


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GERMAN blue chip companiesroared ahead of their UK counter-parts in 2012 after the Dax marketindex posted an increase almost fivetimes the rise of the FTSE 100.The German list of premier compa-

nies reported its biggest jump inalmost a decade in 2012, up 29 percent, despite continued barteringover the Greek economy and fearsover Chinese and US growth.

But the UKs FTSE 100 failed tomatch Germanys runaway success,rising nearly six per cent following amid-year blip in June when marketsplunged following poor economicdata from China and the US.

UK financial stocks have led thecharge over the past 12 months,with state-backed Lloyds BankingGroup and Royal Bank of Scotland

rising 86 per cent and 61 per centrespectively.Money managers have also had a

good year, with new kid on the blockAberdeen Asset Management which joined the index in March jumping 73 per cent and StandardLife rising 61 per cent.

Both the FTSE and the Dax had pre-viously surged to their highest peakfor the year in mid-March, after aGreek deal on debt restructuringeffectively secured a second bail out

German Dax rally outpaces FTSE in 2012

BY MICHAEL BOW

for the country. The FTSE 100 leaptto a high of 5,965 after the deal.But hopes the Greek deal would

propel a rally were short lived as theFTSE 100 plummeted to its year-longlow just three months later, hitting5,260 after the release of poorChinese manufacturing data andsluggish US economic growthspooked the market.The dip proved a turning point for

both indices as moves by theEuropean Central Bank to assuageinvestors in July then helped fosteran unbeaten run of consecutivegains for the next seven months.This helped the 30-company Dax

index pull away from the FTSE 100 inthe final quarter of 2012 to post its 29per cent annual gain, making it thebest performing index in the devel-oped world and its best since 2003.

In contrast to the FTSEs financial

services-led surge, the Germanincrease came from its export-ledmotor sector, with BMW up 42 percent, Volkswagen up 57 per cent andContinental surging 84 per cent.

Elsewhere in Europe, Frances Cacindex increased 15.2 per cent overthe year. The US Dow Jones indexincreased 7.3 per cent while theJapanese Nikkei nearly matchedGermany, rising 22.9 per cent.

DAX vs. FTSE 2012

GERMAN STOCK MARKET SOARS AHEAD OF THE UK MARKET IN 2012

Feb

Lloyds Banking Group + 86 per cent

Aberdeen Asset Management +73 per cent

TUI Travel +70 per cent

Standard Life +61 per cent

RBS + 61 per cent

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

20.0

-20.0

0.0

%

FTSE 100 Top Five Risers

ENRC -55 per cent

Evraz -31 per cent

BG Group - 26 per cent

Anglo American - 20 per cent

Wm Morrison -19 per cent

FTSE 100 Top Five fallers

DAX

FTSE

DAX vs. FTSE 2012

GERMAN STOCK MARKET SOARS AHEAD OF THE UK MARKET IN 2012

Feb

Lloyds Banking Group + 86 per cent

Aberdeen Asset Management +73 per cent

TUI Travel +70 per cent

Standard Life +61 per cent

RBS + 61 per cent

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

20.0

-20.0

0.0

%

FTSE 100 Top Five Risers

ENRC -55 per cent

Evraz -31 per cent

BG Group - 26 per cent

Anglo American - 20 per cent

Wm Morrison -19 per cent

FTSE 100 Top Five fallers

DAX

FTSE

Jan 3: FTSE100 closed at5,572 at theend of 2011

March 16: FTSE100 soars to itspeak of 5,965after Greekdebt deal

June 1: FTSE 100plunges to itslowest level in2012 of 5,260after poor data

31 Dec: The Daxfinishes 2012 up29 per cent withthe FTSE 100 up6 per cent

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A DIFFICULT mortgage market willlead to an explosion in the use ofshort-term bridging loans, mort-gage brokers said in a survey outthis morning.Though mortgage lending is set

to expand some 8.3 per cent in2013, according to Council ofMortgage Lenders (CML) predic-tions, the market will remaintight.This tightness w ill drive a 36 per

cent surge in the bridging loanindustry, according to a survey of400 mortgage intermediaries car-ried out by West One Loans, whichco-ordinates short-term peer-to-peer lending.

The mainstream market isgoing nowhere fast, said WestOne chairman Duncan Kreeger.

Even the eight per cent forecastfrom the CML seems hugely opti-mistic.

But banks, hobbled by capitaladequacy requirements and otherregulatory constraints, will not beable to keep up for demand from amarket that is crying out forloans.

By the end of 2013, the bridgingindustry will be lending almost

400 per cent more finance than itwas in 2010, Kreeger predicted.By contrast, the high street will

BY BEN SOUTHWOOD be lending just 11 per cent morethan it was.

But this continued tightness inmortgage markets was not show-ing in the cash-driven top end ofthe London market, where houseprices were still cruising ahead, ris-ing 5.3 per cent over 2012 accord-ing to Savills.This puts prime central London

prices 23.9 per cent higher thantheir pre-recession peak, withKnightsbridge leading the waywith 41.1 per cent growth.

But absorbing new tax blows maykeep price growth completely flatin 2013, the estate agent warned.This would turn back into growthby 2014, Savills research directorYolande Barnes predicted, to addanother 1.7 percentage points togrowth above the pre-recessionpeak by 2017.

Banks already bouncing back from a disastrous year


cityam.com

THE STEAM in the jobs marketshowed no signs of dissipating bythe end of last year, according todata out this morning.

UK jobseekers faced more jobopportunities in the final threemonths of 2012 than at any pointsince records began three yearsago, recruiter Reed said, with 81per cent of sectors in better shapethan a year before.

The overall Reed Job Index wasdown from 140 in November to

134 in December, but stayed wellabove last years 121.

Employment boom steams on into 2013BY BEN SOUTHWOOD

2012 has been a year ofconsistent recovery for the jobsmarket, said Reed.co.ukmanaging director Mark Rhodes.We have seen growth across the

board in the majority of sectorsand regions and employers

become increasingly less cautiousabout their approach to taking onnew personnel.

Northern Ireland and the NorthEast posted the highest growthamong the regions, all of whichenjoyed some improvement, withalready-strong London also seeing

opportunities up 10 per cent overthe year.

BRANDINDEX

STEPHAN SHAKESPEARE

LAST year will be rememberedas a terrible one for thebanking industry. In previousarticles I have described the

wider impact scandals such asLibor-rigging had on thereputation of the industry as awhole.

However, 2013 is a new year andconsumer perception could belooking up for the likes of Barclaysand NatWest.

Looking to BrandIndex, we cansee that throughout 2012 thereputations of most banks weretarnished by the furoresurrounding Libor.

The Index score a dailymeasure that averages across arange of ratings including quality,

satisfaction and reputation forboth Lloyds and HSBC took a hitfollowing Barclays record 290mfine for attempting to manipulateLibor.

At the end of June, Lloyds TSBand HSBC had scores of -2.4 and 4.4respectively. By mid-August,Lloyds score had fallen to -9.9 andHSBCs score to -6.7.

Comparatively, NatWest havingsuffered a technical glitch shortlybefore the Libor scandal broke lost around 14 points and fell aslow as -14.4, whereas Barclaysscore fell as low as -25.1.

To put this into context, BP, atthe height of its oil spill disaster in

mid-2010, fell to -19 for its Indexreading.And Starbucks Index score,

following controversy surroundingits tax arrangements, is currentlyresting at -20. So it is clear thatboth Barclays and NatWest hadconsiderable ground to cover overthe last six months in the eyes ofconsumers.

The data illustrates that thebanking industry can afford some

optimism. HSBC and Lloyds havefinished 2012 within points oftheir January scores. Even NatWesthas recouped its former standingwithin the sector. Barclays, havingstarted 2012 with -2.1 points,fnished the year with -5.8.

Such a recovery from the depthsof August is impressive and,should it continue, could enableBarclays to see 2013 as a freshstart.Stephan Shakespeare is the chiefexecutive of YouGov

Index Chart

2 Jan 2 Apr 2 Jun 2 Aug 2 Oct 2 Dec

-25

-20

-15

-30

-10

-5

0

5

10

Barclays

Lloyds TSB

NatWestHSBC

Reputation Chart

2 Jan 2 Apr 2 Jun 2 Aug 2 Oct 2 Dec

-30

-20

-40

-10

0

10

20

Barclays

Lloyds TSB

NatWestHSBC

Growth in bridging loans set to outstrip boost to mortgages

2009 201220112010 20142013130

200

190

180

170

160

150

140

0.6

2.01.81.61.41.21.00.8

0.0

0.4

0.2

bn bn

Mortgage Lending

Bridging Loans

Lenders predict

bridging loanspree in 2013

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Zopa and Funding Circle and USinvestment site Kickstarter.

One prominent project to havebenefited from crowdfunding is thePebble a watch that connects tothe iPhone or Android smartphonesto add functionality such asanswering calls. The Pebble hasreceived more than $10m offunding from nearly 70,000 backers

on Kickstarter.Deloittes predictions oncrowdfunding, seen byCity A.M.,come as part of the firmsinfluential Technology, Media, andTelecommunications predictionsreport for the new year.

Much of crowdfundings success so far hascome from peer-to-peer lending, in whichindividuals borrow and lend from eachother over the internet, bypassing a bankand thus achieving far more favourablerates for both. Peer-to-peer lending compa-nies, including British firm Zopa, have seenvast increases in the sums lent over theirsystems in recent years.This consumer lending boom accounts foraround half of the $3bn (1.85bn) expected

to be raised from crowdfunding in 2013.The other $1.5bn will come from individualsinvesting in projects or companies in threedifferent ways.The most popular of these is reward-basedfunding, in which people back a company inexchange for a reward such as the computer

game they have invested in. The othermethods of crowdfunding are venture capi-tal in which investors receive a stake in thecompany and donations where donorsdo not receive a reward.A large proportion of the business projectsthat have seen investment from crowdfund-ing portals are in the consumer technologyand arts sectors, with people putting moneyinto new plays, video games or gadgets.The best-known crowdfunding website has

been US-based Kickstarter, which recentlylaunched in the UK. Kickstarter has raisedover $385m since its 2009 launch, withprojects raising up to $10m through tens ofthousands of backers.Crowdfunding was recently championed byBank of England director Andrew Haldane.The Pebble smartwatch has

raised $10m in crowdfunds

WHAT IS CROWDFUNDING?


cityam.com

IN BRIEFWPP moves back to UK todayn FTSE 100 advertising giant WPP willbecome tax resident in the UK aftermore than four years in Ireland today,as it sets up a holding company inJersey. The transfer, approved byshareholders last month, comes afterchanges to tax law ended the so-called double taxation on overseasprofits. The move, which sees WPP

shares transferred to the newcompany, means trading will closeuntil the firms next earnings report.

Sony stops Japan PS2 productionn Sony has ceased production of theworlds all-time bestselling videogames console, the PlayStation 2(PS2), in Japan, after almost 13 yearson sale. The move is bound toheighten speculation that theJapanese electronics giant is rampingup efforts on its next home videoconsole, which will replace thePlayStation 3, although Sony did notcomment on PS2 productionelsewhere. The PS2 has sold morethan 150m consoles worldwide.

Shell drill ship grounds off Alaskan

A large drill ship belonging to oilmajor Shell ran aground off Alaska onMonday night after drifting in stormyweather, company and governmentofficials said. The ship, the Kulluk,broke away from one of its tow lineson Monday afternoon and was drivento rocks just off Kodiak Island, whereit grounded at about 9pm Alaska time,officials said. There is no known spilland no reports of damage yet and aUS Coast Guard helicopter overflightdetected no visible sheen.

SEVERAL firms including publisherPearson and insurance group Avivaare ringing in the new year with achange of chief executive.

Mark Wilson officially took thereins at Aviva yesterday, replacingAndrew Moss, who was felled by ashareholder rebellion over bonuseslast May.

New Zealand-born Wilson, whospent four years at the top of Asianinsurer AIA, has little experience ofthe European market, but has beencheered by analysts as a break withthe past following a turbulent coupleof years for Aviva.

He joins the firm as it embarks on astring of asset disposals in an attemptto turn itself into a leaner, more agilebeast, in the words of chairman JohnMcFarlane.

Pearson also parted ways with itschief executive yesterday, losing DameMarjorie Scardino after 15 years in therole. She has been replaced by JohnFallon, the former head of the firmseducation unit.

Scardino, who was the first female

Boards ring thechanges with

new bossesBY MARION DAKERS

FTSE 100 chief executive, was fiercelyprotective of Pearsons newspaper andmagazine business.

She declared in 2002 that the firmwould get rid of the Financial Timesover my dead body, but successorFallon is seen as more amenable to asale.

Her departure means there are justthree female chief executives in theFTSE 100: Angela Ahrendts atBurberry, Alison Cooper at ImperialTobacco and Anglo AmericansCynthia Carroll, who is due to stepdown later this year.There are a number of other board-

room departures on the cards during2013. Virgin Atlantic boss SteveRidgway is expected to leave thisspring, while Rightmove founder EdWilliams is retiring at the end of April.

The Co-operatives Peter Marks isdue to depart in May, with EuanSutherland from Kingfisher replacinghim.Also leaving a top job yesterday was

Brendan Barber, who retired from theTrades Union Congress after 10 years.He is replaced by his deputy, FrancesOGrady.

PRICE comparison website GoCompare yesterday unveiledProfessor Stephen Hawking, one ofthe worlds most renownedphysicists, as the star of its new TVadvert. The coup is the latest movein an increasingly bizarremarketing war that has come tocharacterise the booming industry.

Hawking, the former Lucasianprofessor of mathematics atCambridge University, spends thefirst part of the clip explaining hehas discovered how to generate

black holes before deploying oneto destroy Gio Compario the

Stephen Hawking joins battleof price comparison websites

BY JAMES WATERSON irritating fictitious opera star whorepresents the brand.

I confess I am a fan of the GoCompare adverts, but I am also anopera fan, so I was delighted to be

given the opportunity to help savethe nation and silence Gio, he said.

Price comparison websites offerbroadly similar services so relyheavily on memorable advertisingto attract customers such asCompare the Markets meerkats.

Go Compare was only foundedin 2006 but is valued at 500m.Founder Hayley Parsons isreported to be considering a saleof her stake, with 49-per-centowner Esure a potential purchaser.

Hawking, 70, said he hopes the public find it as funny as I did

Crowdfunding set to skyrocket in new yearINVESTMENT via the growingcrowdfunding phenomenon is set todouble in just two years, experts arepredicting.

Crowdfunding portals whichsee individuals make smallinvestments in companies orprojects will raise $3bn (1.85bn)

in 2013 compared to the $1.5bnraised in 2011, according toresearch from professional servicesfirm Deloitte.

Although it accounts for just afraction of total venture capitalspending, crowdfunding is

BY JAMES TITCOMBexpected to complement traditionalinvestment vehicles by helpingcompanies in their infancy.

And Deloitte predicts the newbreed of crowdfunding portals arealso likely to become successfulcompanies in their own right, asconsumers facing low savings rates

choose to put theirmoney elsewhere.

Crowdfundingwebsites to have grownin recent years includeBritish lending firms

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THE Capitalistwonders just howmany City stockings were stuffed

on Christmas morning withcopies of financial board gameMarket Meltdown?

The new toy from ClarendonGames challenges players, intheir role as traders, to stayafloat as they move round the

board in a private jet andgenerate cash by spin of theroulette wheel. Those with ahigh risk threshold are temptedto rake in the big bucks by

goingrogue.

Oneenthusiasticplayer andpresident of St

Jamess PlaceWealthManagement, SirMark Weinberg,told The Capitalist

that he needed to gamble moreaggressively: Its not an exact

analogy to the financial crisisbut it does conjure up thefeeling of

sitting thereworryingabout where

you can betyour money.

Sure to becoming to a

dinner partytable near you soon.

TO usher in a New Year in the City,mens style bible GQ has compiled a listof 10 best-dressed businessmen for 2013.

The Capitalist reckons there will bemany City boys out there who fancythemselves as contenders for a spot onthe coveted list. But the magazinesFebruary issue, out tomorrow,has thrown a few wild-cards into the mix including winner andmanaging director ofFenwick Bond Street,David Walker-Smith.At 10 is banking heir

and eco-entrepreneur

David de Rothschild,whose bushy beard setshim apart from many City

City slicker listcheers beards

smoothies, while in seventh is trendystubble-toting Pete Cashmore, CEO oftech website Mashable, just behind KurtGeiger boss Neil Clifford. Hedgie JamieAllsopp is second, though let us not for-get he does have the help of supermodelwife Jacquetta Wheeler. Making up the

rest of the top 10 areFrieze Art Fairs

Matthew Slotover,retail entrepreneurHarold Tillman,Cartiers Francois

Le Troquer,architect DavidAdjaye and

Apples SirJona tha nIve.

New board game MarketMeltdown

WEDNESDAY 2 JANUARY 201311cityam.com

cityam.com/the-capitalistTHECAPITALIST EDITED BY CALLY SQUIRESGot A Story? Email

[email protected]

Santa fills stockings with market board game

Left to right: Jamie Allsoppand David de Rothschild

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Its a great facility. I only wish there were more things

like this available to me when I was young

Not available in Northern Ireland. Peoples Postcode Lottery manages multipl e society lotteries promoted by dierent chariti es supporting a range of good causes. For details on which

society lottery is running each week visit www.postcodelottery.co.uk/society

Peoples Postcode Trustand Peoples Postcode Lottery

Ledley King,

Footballing legend and Tottenham Hotspur Foundation Ambassador

Thanks to players 21.9 Million has been raised for good causes by players of

Peoples Postcode Lottery. By playing you support hundreds of good causes.

Visit www.postcodelottery.co.uk to find out more.

Peoples Postcode Trust has funded over 900 projects that improve local communities including the Cruyff Court Tottenham Hotspur in Haringey

7/30/2019 Cityam 2013-01-02

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WEDNESDAY 2 JANUARY 201314

LONDON REPORT

US stocks up atend of 2012 asdeal talks drag

US stocks finished 2012 withtheir strongest day in morethan a month, putting the S&P500 up 13.4 per cent for the

year, as lawmakers in Washingtoncontinued to thrash out crucialfiscal cliff negotiations.The S&P 500s gain for the year

marks its best performance since 2009,as stocks navigated through debt crises

in Europe and the United States thatdominated the headlines.Fittingly, in the last session of the

year, stocks bounced back and forth onthe headlines out of Washington, asboth President Barack Obama andRepublican Senate leader MitchMcConnell issued statements indicat-ing a deal to avert the cliff was close.

The worst news could have been thepresident coming out and saying, Wedont have a deal and weve giving up,and he didnt say that, said RonFlorance, managing director of invest-ment strategy for Wells Fargo PrivateBank, based in Scottsdale, Arizona.

My personal skepticism, I donttrust anything out of Washingtonuntil it is signed, sealed and delivered,and it is not signed, sealed and deliv-ered.

Despite the uncertainty over budgetand tax issues, the market encoun-tered only occasional bouts of volatili-ty in 2012. For the first time since2006, the CBOE Volatility Index or VIX,the markets favoured indicator of anx-iety, did not surpass the 30 level, athreshold that usually signals height-ened worry among investors.

Given all the threats in 2012, theVIX was relatively tranquil, said BillLuby, the author of the VIX and Moreblog in San Francisco, citing the crisesin Spain and Greece, along with con-stant intervention from the FederalReserve.The Dow Jones industrial average

gained 166.03 points, or 1.28 per cent,to end at 13,104.14. The Standard &Poors 500 Index gained 23.76 points,or 1.69 per cent, to finish at 1,426.19.The Nasdaq Composite Index gained59.20 points, or 2.00 per cent, to closeat 3,019.51. Markets were closed yester-

day, but Mondays gains enabled theS&P 500 to snap a five-day losingstreak, its longest since September.The S&P 500 finished 2012 with a

13.4 per cent gain for the year, whilethe Dow rose 7.3 per cent and theNasdaq climbed 15.9 per cent.

BRITAINS FTSE 100 index closeddown 27.56 points on the final day of2012 trading as investors remainedanxious over whether US lawmakers

can agree crucial budget strategy andavoid the fiscal cliff.

But despite the fall, to a close of 5,897.81,analysts predict the blue chip share indexwill rise 8 per cent by the end of 2013,accelerating on expectations the globalgrowth outlook will improve.A Reuters poll of 50 strategists forecasts

the FTSE 100 will climb a mere 150 pointsby the middle of 2013 before breaking outto 6,400 by the end of the year,

For investors looking to put their moneysomewhere, equities still present a viableoption when compared to other asset class-es, with the potential to offer capital appre-ciation as well as a decent yield, AngusCampbell, head of market analysis atCapital Spreads, said.The FTSE rose 6.4 per cent last year,

helped by gains in banking shares butunderperforming European peers asheavyweight mining shares and interna-tional conglomerates struggled in the firsthalf of the year. Miners lost 30 per centpeak to trough last year, but recovered 17per cent from June to the end of the year.

Internationally exposed stocks shouldcontinue to do well and that means theFTSE 100 ... However, severe headwindsremain in terms of the Eurozone debt cri-sis and so gains for stocks might be hard to

come by particularly if those major threatsto the global economy materialise,Campbell said.Those threats include uncertainty over

the so-called fiscal cliff a series of taxrises and spending cuts totalling $600bn

(371bn) which could throw the US econo-my into recession and pressure in thebond markets on peripheral Eurozonecountries.

Although concerns remain over Eurozone sovereign debt issues, the US fiscalcliff and the outlook for the Chinese econ-omy, we believe these headwinds will beoutweighed by positive factors such asstrong corporate balance sheets, a reason-able valuation and an attractive dividendyield, said Paul Kavanagh, partner at Killik& Co.

However, other investors saw Britishstocks underperforming European peers ifbanks continue their recent rally.Goldman Sachs chief global equity strate-gist Peter Oppenheimer told reporters at a2013 briefing that he expected BritainsFTSE 100 to rise by slightly less than theEuro STOXX 50 in 2013.

We see a rebound in financials, andthere's a greater concentration of finan-cials in the Euro STOXX 50.The poll revealed a broad range of predic-

tions, from 5,500 to 6,560 for mid-2013 and5,700 to 7,000 at the end of the year, withall but two of the 50 strategists polled see-ing the FTSE hitting at least 6,000 by theyear end.

FTSE 100 predicted to top 6,000 in2013 despite US budget hangover

BESTof the BROKERSHansteen Holdings PLC

Nov Dec

p

79

80

78

77

76

75

74

73

72

71

70

78.4031 Dec

HANSTEENHOLDINGSPeel Hunt rates the realestate investment trustbuy and has a 79ptarget. The broker seeslast weeks 60mindustrial propertyacquisition as a classicdeal for the firm, withlow capital values andhigh yields coupled withasset managementopportunities.

DASHBOARDCITYNEW YORKREPORT

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

cityam.com

Tom & Isabella15.11.12 a t 1.55pm

Lovestruckhere

Now its your turn tomeet someone amazing

Volvo AB

Nov Dec

SEK

92.5

95.0

90.0

87.5

85.0

88.8028 Dec

VOLVOMorgan Stanley rates

the carmakeroverweight with atarget of SKr105. Thebroker cheers theSwedish firm as a playon self-help potentialand a cyclical reboundover the medium term,despite production cutsand disappointingprofits expected in thecoming quarter.

Aviva PLC

Nov Dec

p

380

360

340

320

372.8731 Dec

AVIVAPanmure Gordon thinksthe insurer is wellpositioned for 2013following the 1.1bn saleof its US business lastmonth, which hasstrengthened the

balance sheet and willhelp maintain thedividend. The brokeralso believes the firmwill benefit from havinga narrower focus.

Randall & QuilterNeil Tuvey has been appointed as

a marine underwriter at theunderwriting agency. He joinsfrom Aviva, where he was its UKmarine trading manager. Tuveyhas over 24 years experience inthe marine insurance industry.

Deutsche BankSir Richard Lambert has been appointed senior independentadviser to Deutsche Bank. He was director general of theConfederation of British Industry between 2006 and 2011,spent 35 years at the Financial Times, and sat on the

Monetary Policy Committee of the Bank of England.

London Pensions Fund AuthorityEdmund Truell has been appointed chairman of the localgovernment pensions scheme provider. He is the founder ofthe Pension Insurance Corporation, a risk managementcompany, and a former chief executive of Duke StreetCapital. Truell also previously worked at Hambros andBankers Trust.

Alvarez & MarsalThe professional services firm has appointed GabrielleReijnen as a managing director in its corporate restructuringteam. She was previously head of corporate coverage at RBS

in the Netherlands. Reijnen has also worked at ABN AMRO.

BarclaysLincoln Fritz has been appointed head of cash managementfor the US in Barclayss corporate banking team. He joinsfrom HSBC Bermuda, where he was head of payments andcash management. Fritz has also held roles at JP Morgan andChemical Bank.

NationwideThe building society has appointed Dean Taylor ascommercial deposits manager. He joins from Bank of Ireland,where he was a relationships director. Taylor has also workedat Barclays and Investec.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

CITY MOVES

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

in association with

FTSE

31 Dec21 Dec 24 Dec 27 Dec 28 Dec

6,000

5,980

5,960

5,940

5,900

5,880

5,920

5,897.8131 Dec

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Time to make a change

help you to understand what factors willmove the share prices of companies thatyou follow.

THE TREND IS STILL YOUR FRIENDAt times, the performance of equitiescan be detached from economic reality.But hedge fund manager Lex van Dam ofHampstead Capital says that you shouldstill keep an eye on the real economy.

Given that the FTSE 100 is internation-ally focused, you could look to the FTSE250 which comfortably outperformedthe FTSE 100 in 2012 to find companiesthat are more in tune with the UKs eco-nomic fundamentals.

However, the last couple of years havebeen characterised by risk-on/risk-offtrading conditions, and you should keep

an eye on where the money is actuallyflowing. Monitoring momentum indica-tors can help you to gauge this. As vanDam reminds us, remember, the trendis your friend, and that wont be any dif-ferent in 2013.

My pick: Short Aussie dollar-dollar against December highExpertise: System tradingAverage time frame of trades: 2 days to 10 weeks

Important evidence of a sentiment extreme suggests that theAustralian dollar could continue lower in the foreseeable future. TheCommodity Futures Trading Commissions commitment of tradersreport recently showed that speculative futures traders were themost net-long on Aussie-dollar on record. Sentiment extremes areonly clear in hindsight, but weve most recently seen a large reversalin retail trader sentiment. Id like to get short Aussie-dollar againstthe December high at $1.0585, with initial targets at $1.0300.

ANALYST PICKS

Three trading resolutions for 2013S

UCCESSFUL traders constantlylearn and try to improve. TheNew Year is a great time toreflect on how you could erase

some of your bad trading habits,and here are some pearls of wisdomfrom three respected traders.

RESEARCH DEEPLYThere were periods of low volatilityin 2012, making opportunities hardto find. As a result, many traderswith itchy fingers panicked, andpounced on apparent opportunitiesthat didnt really exist. To avoid this,IG sales trader Will Hedden says thatyou should take a step back. Themarket will still be there tomorrow.

Hedden is resolved to read more

regulatory news service (RNS) releas-es in 2013. The London StockExchange processed over 200,000RNS announcements last year, andabout 70 per cent of them were pricesensitive. Reading RNS releases can

STRATEGISTILYA SPIVAK

My pick: Hold short euro-Swedish kronaExpertise: Global macroAverage time frame of trades: 1 week to 6 months

I sold euro-Swedish krona at SEK 8.7315 on 19 December, afterprices completed a bearish evening star candlestick pattern atchannel and 61.8 per cent Fibonacci retracement resistance. I amexpecting the Risksbank to switch to a neutral policy stance afterDecembers rate cut, while the European Central Bank beginseasing in 2013. A break below support at SEK 8.5511 exposesdownside targets at SEK 8.4047 and SEK 8.1682. A stop-loss willbe triggered on a daily close above SEK 8.7941.

CHIEF STRATEGISTJOHN KICKLIGHTER

My pick: Long dollar-yen, euro-sterling, and short euro-KiwiExpertise: Fundamental and technical analysisAverage time frame of trades: 1 day to 1 week

The short risk I took previously started to work out, butliquidity and carry would not offer strong incentive to hold.Through the warped trading conditions moving forward, I amturning away from overt risk. I like the long-term dollar-yenlong theme from back at 82.50 and 80.50. A long-term 50per cent Fibonacci b reak on euro-sterling above 0.8165doesnt need risk trends. And a euro-Kiwi dollar range playbelow NZ$1.5800 is a passive set-up with carry.

FORTUNE FAVOURS THE BRAVEEven veterans need to evolve andadapt to changing conditions. Citystalwart David Buik of Cantor, whohas been in the markets for over fivedecades, laments that he missed mostof the rally in bank stocks last year.Although banks have been consid-

ered risky in recent times, someenjoyed a stellar 2012: Lloyds rocketedby over 90 per cent, and both Barclaysand RBS rose by over 50 per cent. Buiksays that he missed the rally becauseof his misgivings about the extent ofEuropes brittle confidence. The les-son is that you shouldnt be overlysucked in by pessimism.

Buik agrees that momentum will beimportant in 2013. The performance

of equities will be based on tradingmomentum and improved confi-dence in the recovery process. Heasserts that, although markets willstill be challenging this year, therewill be plenty of opportunities.

WEDNESDAY 2 JANUARY 201315cityam.com

TRADING

QUANTITATIVE STRATEGISTDAVID RODRIGUEZ

Yogesh Chandarana asks traders how they will improve this year

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NOW the curtain has closedon a glorious 2012 forLondon and Britain, thestage is already beingprepared for a very

different year ahead. Well need tobuild on recent achievements todeliver a tangible legacy for futuregenerations.

We must up our game, ratherthan lower our expectations for2013. This means focusing more onthe future, with the benefit oflessons learnt. That is, of course,easier said than done in this age ofausterity, so our crucial challengefor the new year is to foster a freshage of enterprise the same spiritshown by our great Victorian

forbears, whose visionary legacy

IN MARKETS, a trading session canseem like a lifetime. This puts incontext the old adage, attributedto Harold Wilson, that a week is along time in politics. In truth,

both activities have become even morefrenetic, as events in distant corners ofthe globe hit trading screens and TVswith sometimes devastating velocity.

A New Year is not a bad moment tostep back and ask whether, in the mid-dle of accelerating news cycles anddeepening integration of global mar-

kets, there are big trends out there. Oris it all sound and fury a sandstormof events that only need daily han-dling, and not long-term vision?

Strangely, the two things that mayloom largest in many peoples minds terrorism and the euro crisis areprobably less significant trends for2013 than you might think. On terror-ism, the Harvard academic StevenPinker has charted the decline of vio-lence throughout history. Since thepeak of the cold war in 1970, organisedconflicts of all kinds have fallenthroughout the world, and their deathtolls have declined precipitously.

cityam.com/forum

Terrorism and the

euro will probably proveless significant in 2013than many imagine

THEFORUM

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

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

16WEDNESDAY 2 JANUARY 2013

MARK MALLOCH BROWN

2013 will prove the power of globalevents to shape our economic lives

Terrorism is horribly visible and chal-lenging to our sense of security, but itclaims relatively few lives. The euro cri-sis is likely to stumble on, but markets

have already discounted it. Europe isgoing to be a low-growth backwaterfor a while, whatever happens to theeuro.

Less noticed trends include risingtensions in Asia-Pacific. This should beof particular concern. Territorial dis-putes, like the conflict between Japanand China over the Senkaku/DiaoyuIslands, show how China is gettingready to flex its muscles. Five othersoutheast Asian countries have claimsthat brush up against those of Beijingin the South China Sea. And yet Chinais also still afflicted by internal pres-sures in Xinjiang and Tibet. Asia is

arming itself arms deliveries toSouth-East Asia rose 185 per cent from2002-2006 to 2007-2011. And there area handful of other potential nastyAsian conflict hot-spots such asKashmir and the Korean Peninsula.Asias environmental problems can

only exacerbate these tensions. 85 percent of deaths from natural disastersbetween 1980 and 2009 were in theAsia-Pacific. Many of these were causedby overpopulation too many peopleliving in too little space. In Dhaka,

Bangladesh almost 30 per cent of thecitys 14m live in slums along thewaters edge, in a city that reallyshouldnt exist where it does. Its notalone. In Jakarta, for example, 40 percent of the land area is below sea level.The potential problems of overpopu-

lated, under-infrastructured cities isnot exclusive to Asia. Africas cities aregrowing fast. In 2013, Lagos will over-take Cairo as Africas largest city, witha forecast 11.7m people. The combinedGDP of Lagos, Cairo and Johannesburgis greater than that of all of centraland eastern Africa. Dealing with vastinfluxes of people, in terms of improv-

ing transport, power and sanitation isone of the great challenges ahead forAfrica. For politicians it may becomecritical. According to the Economist,over half of all Africas city dwellerswill be under 18 and every Africanelection in 2013 will be decided, statis-tically at least, by first-time voters. Afailure to promote inclusive growth in

Africa could be just as damaging interms of internal disorder as Asiasinter-state problems.The likely focus of western diploma-

cy in the Middle East will be the unfin-ished business of Iraq, Libya andAfghanistan. This is more likely thanevents in Europe to trip up BarackObamas much-vaunted pivot to the

Asia-Pacific region. But it may alsoallow the Israeli-Palestinian conflictand the Iran nuclear dispute to run onunchecked. The Assad regime in Syriaseems to be slipping towards its end,but that is likely to lead to more chaosbecause a military resolution, asopposed to a diplomatic one, willmean a violent power struggle andsubsequent period of sectarian retribu-tion.After the fall of the Berlin Wall, it

was fashionable to declare the role of

politics in international affairs dead. Itwould be all about economics and con-sumers in the future. Unsurprisingly,the world has proved a more compli-cated place. We can safely predict thattrading screens and TVs will light upwith news of political conflicts. Someof these markets will be ready, otherswont. Victory on the trading desk maygo to those who have stopped for longenough to consider, and plan for, theselonger-term trends.Lord Malloch Brown is chairman for

Europe, Middle East and Africa at FTIConsulting, and a former Foreign Office min-ister.

we still enjoy.We remain particularly indebted

to one man from this era CharlesPearson, solicitor to the CityCorporation. He played an integralrole during the nineteenth centuryin delivering the worlds firstunderground line from Farringdonto Paddington, which celebrates the

150th anniversary of its opening

next week.It cannot be overstated how

vitally important this ground-breaking idea has been to thecapital. In spite of cynicism,Pearson recognised that theMetropolitan Railway wouldrelieve over-crowding, lead tobetter housing, improved socialconditions, and a more conduciveenvironment for a global centre ofcommerce, finance and trade. Inother words, he understood thefundamental truth that, ifbusiness in the City is to do well,the whole of London-town mustalso prosper and vice versa.

Key to getting this idea off theground was Pearsons dogged

efforts to convince leading City

figures of the time to invest in it.There are obvious parallels withmore recent Londoninfrastructure projects, includingCrossrail and the Tube upgradeprogramme.

So as the Tube celebrates thissignificant anniversary, it isimportant to remember the vitalrole that the City continues to playin financing good ideas. Whetherit is infrastructure, manufacturingor the creative industries, we havea huge range of expertise andfinancing models available.

Of course, such projects bringwith them risk, even if thebusiness model is carefullythought through. But as the

success of Pearson demonstrates,

risk cannot be measured by amathematical model or an Excelspreadsheet alone. Relationshipsand trust are key commodities inall markets.

The lesson we should take fromour forbears into 2013 is that, ifyou have a good idea and thevision and drive to deliver it, theCity stands ready with thenecessary finance. This is becausethe successes of the City, Londonand the UK remain inextricablylinked just as during theVictorian age of industry,invention and growth, and just asin our new era of enterprise,opportunity and innovation.

Roger Gifford is lord mayor of the

City of London.

CITYMATTERS

London must regain its Victorian spirit to capitalise on the triumph of 2012

MORNING UPDATEA.M.

ROGER GIFFORD

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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

No green shoots[Re: Looking ahead to the 2013 markets]The UK economy will continue to under-perform in this new year, skirting anunprecedented triple dip recession.Indeed, the Bank of England predicts thatit will take until 2015 for UK GDP to returnto its level prior to the 2008 credit crunch representing the best part of a lost decade.Recoveries from financial crises are alwaysslow, but the fact that most leadingeconomies are undertaking austerity at thesame time is, in an economic sense,depressing. It is easier to replay debt witha growing income. My New Years wish isthat British policymakers discover theirimagination and dont continue to sit ontheir hands.

Professor Philip Whyman

Promising trends[Re: Thank you for reading us in evergreater numbers in 2012]Im sure many of us will look back over2012 with extremely fond memories theOlympics, the Jubilee, a renewed sense ofnational purpose and pride. And Im gladthat so many are thinking deeply abouthow we can build on those achievements.The key will be ensuring that positivity, nota negative outlook, stays at the forefront ofour minds. In a difficult economic environ-ment, it would be all too easy for Britain todescend into a grim, depressed, reac-tionary misery. But that isnt the solution.Hopefully 2012 will teach us much aboutwhat it means to be successful. And hope-fully those lessons wont be forgotten.

Marion Jackson

CREATING a New Yearsresolution is as much atradition at this time of yearas Auld Lang Syne orfireworks. Whether done in

jest, or with serious commitment,setting resolutions can inspire us tobe and do better in the year ahead.Unfortunately, waning willpowerand seemingly insurmountableambitions will likely conspire againstour best intentions. According to aUniversity of Hertfordshire study, 78

per cent will drop their resolution byValentines Day.But success in business as with res-

olutions relies on considered objec-tives and strategic execution. Itsabout setting small, specific andachievable goals, rather than holdinglofty ambitions. And January is theperfect chance to plan for the future,by examining the past and takingstock of the present. 2012 was domi-nated by good sports, bad financialsand questionable behaviour. 2013stretches before us filled with prom-ise, opportunity and potential.

Getting control over your personalfinances is an aspiration for many.Taking control, however, is tricky stumbling blocks exist within andwithout. So just as losing weightinvolves the whole family makingslight adjustments, saving money ismore effective if the family worktogether. Make it a family resolution.

Being money smarter is not intu-itive and the school of life is an expen-sive way to learn so its important toget your kids involved now. Saving apenny here and a few pounds there iswelcome in austere times, with aseemingly never ending haemorrhag-ing of money. But becoming finan-cially confident involves developinggood habits over time as well as thrift.We speak a lot about formalising

financial education, but we seldomdiscuss the role parents can play increating a money smarter Britain.

TOP TWEETSSimon Ward of Henderson thinks 2013 willbe the best year for the UK economy since2006, with 2 per cent growth.@Shireblogger

Some signs in the economy and marketindicate that 2013 might be the first post-crisis year.@AlannaPetroff

Just paid for the bus with my debit card,and for a coffee with my phone. Perhaps in2013 I wont have to carry money anymore.@LauraGarnham

Saxo Banks outrageous prediction is thatgold will drop $500 to reach $1,200 pertroy ounce in 2013.@RustyTug

Are there reasons to be optimistic aboutthe British economy over the year ahead?

YESLast year was a difficult one, but the labour market proved

remarkably resilient. Employment levels are back above pre-crisislevels and unemployment has fallen although considerable slackremains, with wage growth remaining weak. Nonetheless,combined with a relatively stable outlook for inflation and thesupportive stance of monetary policy, this should provide someuplift to consumer confidence and incomes. The UK recoveryshould gradually strengthen during 2013, as the global economycontinues to stabilise and domestic demand improves. We expectgrowth of around 1.4 per cent in 2013 and 2 per cent in 2014 although the UK remains dependent on developments in theEurozone and long-term growth is unlikely to accelerate markedly,as the effects of the financial crisis will take many years to unwind.Anna Leach is head of economic analysis at the Confederation ofBritish Industry.

Anna Leach

NOIain Stealey

Stop and think have you had a pay rise recently? This is the

major problem that the UK is facing. The largest component of theUK economy, the consumer, has had its hands tied. Averageweekly earnings over the past three months have been 1.8 percent, while consumer price inflation is 2.7 per cent. Until thischanges and we see earnings growth greater than inflation, givingthe consumer the confidence to spend, the UK economy willcontinue to struggle. Add onto this a government that is cuttingcosts, and it becomes hard to see where the growth will comefrom. With lower projected growth and debt levels that will not falluntil later than was hoped, 2013 will be the year that the ratingagencies take a long hard look at whether the UK continues towarrant a AAA rating. Our sense is their conclusion will be no.Iain Stealey is a fund manager at the JP Morgan Strategic BondFund.

RAPIDresponses

Financial capability is about attitudeand habits, not maths, and attitudesare first formed in the home. So par-ents can, and must, be partners in the

process.Parents should consider settingtasks so their kids earn their pocketmoney, rather than relying on hand-outs. By paying a bonus for a jobdone especially well, and deductingfrom a job done poorly, we caningrain an early work ethic and aspi-ration.Also consider taking kids shopping.

By exposing kids to the reality of agrocery shop, they can better under-stand the value of money and howexpensive it is to keep a household.This can prompt conversations aboutthe price differential of brandedgoods, the fact that not all deals aregenuine bargains, and that waste iscostly to the tune of 600 eachhousehold per year. Discouragingtakeaways and ready-meals can alsopromote a greater understanding ofvalue and also nutrition.

Finally, set a family saving goal andencourage the kids to think of cre-ative ways to achieve the target bythe end of the year. Maybe match anysaving they identify, and emphasisethe need for delayed gratification.

By understanding that decisionsmade today impact the future forbetter or worse our children willgain the most important lesson ofall.

Vivi Friedgut is author of MoneySmarter: A Family guide and director ofBlackbullion, an independent financialeducation firm. www.blackbullion.co.uk

VIVI FREIDGUT

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Make 2013 the year

for educating yourchildren financially

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ALFA ROMEO is a brandbased in sports cars andmotor racing heritage. ItsMito has always been a

looker since its introduction in2008 and the new model is noexception. Its styling was inspiredby the design of the 8CCompetizione supercar, and itstill looks fresh and uniquelycharacterful in a sporty,muscular, even elegant way.

But the most interestingchange to the new Mito goes onunder the hood, in the shape ofFiats award-winning TwinAirtwo-cylinder engine, which madea splash when it went on sale in

the Fiat 500 (largely because theoriginal Nuova 500 so loved inthe fifties and sixties had atwo-cylinder engine as well). Nowthe 85bhp, 875cc turbochargedtwo-pot engine is being offeredin the new Mito Alfas rival tothe Audi A1 and BMW Mini sothe sporty little compact can alsobenef it from the enginesunusual character. But is thislittle engine sporty enough forthe Mito?

Well, yes it is something of amarvel. Fiat claims its TwinAirengine is the cleanest andgreenest petrol engine in theworld. If you are careful abouthow you drive it, it should sipfuel, but that is to tell only partof the story. Switch it on and itmakes a quite discordantclattering sound like a vintagemotorbike thats about to stall,which i s actually quite charming.Best of all, under heavyacceleration it sounds absolutelygreat, which is one reason whyso many people love it. The otheris that the engine comes in witha CO2 emission figure of just98g/km under the magical taxand London Congestion Charge-beating sub-100g/km thre shold.So the new Mito promises to bean economical City commutercar; clean and green but peppyenough to be fun too.

Inside the Mito is genuinelystylish, with tasteful red interiorillumination and comfortableseats. Theres room in the back

for a child seat, though rear accessis tricky, but then its a three-doorhatch so this isnt a car targeted atyoung families.

But we found the TwinAirengine suits the car very well.Despite not being particularlyfast, 0-100km/h is reached in 12.5seconds, it often feels like youretravelling faster than you are. Itcorners well enough too, thoughthe ride can be bumpy, dependingon the roads you drive on. Itseemed to particularly dislikesome of north Londons speedbumps. But travelling morequickly, once youre out on the

A406, that lovely engine noisetakes over and driving this littleAlfa becomes a good deal morefun. Theres a switch to changethe cars setup, depending on yourmood or the weather youredriving in. Three different DNAdriving modes Dynamic, Naturaland All-weather change thesteering response and poweroutput to allow more spirited,comfortable or safe driving.Unsurprisingly I liked Dynamicbest: the steering weights up, theengine noise gets even louder andits full 85hp power and torque ismade available.

The laws of psychics means fueleconomy and heavy accelerationdont mix. So if you want to hearthat engine note in all its glory,youll need to forgo that absolutebest-case 67.3mpg fuel economy.

Of course, if you have the monk-like discipline to go easy on thethrottle and drive everywhere inNatural mode, you might just getclose to those official economyfigures. But I say to hell with it,this is an Alfa Romeo and it hasbeen built to be enjoyed. Drive itflat out and itll be more fun thanChristmas was. So come on feelthe noise.

Beneath the bulging Alfa eyes lies a Fiat-designed engine

A Fiat engine but still an AlfaIt looks like a sports car but it now rocks an eco engine. Thankfully, you can still have some fun driving it.


LIFE&STYLE

cityam.com

MOTORING

CAR TALKBY RYAN BORROFF

Calls for reintroduction of London Trolly BusMotoring mag Autocar is calling on Mayor Boris Johnson to re-introducethe Trolley Bus to Oxford Street. Inspired by the reinvention ofExhibition Road in west London as a shared space, Autocar's associateeditor Hilton Holloway believes that part-pedestrianisation and thereplacement of the regular buses with an electric trolley bus service

would solve the pollution and congestion problems of London's busieststreet.

BY RYAN BORROFF

THE VERDICT:DESIGN hhhhiPERFORMANCE hhhhiPRACTICALITY hhhiiVALUE FOR MONEY hhhhi

THE FACTS:Alfa Romeo Mito TwinAir

PRICE: 15,3500-62MPH: 12.5 secsTOP SPEED: 108mphCO2 G/KM: 98g/kmMPG COMBINED: 67.3mpg

Nissan brings premium car manufacturing to its UK plantNissan's premium car brand is to build its first premium compact modelat Nissans UK manufacturing plant in Sunderland. When productionbegins in 2015, Infiniti will become the first new car brand to beginmainstream production in the UK in 23 years and the 250m investmentcould account for 1,000 new jobs in Sunderland and elsewhere in the

UK.

Vauxhall Ampera offers buy before you tryVauxhall has announced a quite amazing offer for buyers of itsAmpera electric car. A new 30-day satisfaction guarantee meansyou can buy it, try it out and if you find it's not for you, return itwithin 30 days. The Love it or Return it scheme is aimed atattracting buyers who are worried about adopting the very latest

technology.

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LIFE&STYLE TRAVELWEDNESDAY 2 JANUARY 2013

20 cityam.com

IN NASSAU, a red 1970 Gold LeafLotus lan, zooms up the hill. Achequered flag waves and a yellow1957 Ferrari 500 can be spotted up

ahead, with a blue Aston Martin DB5shimmering in the tropical sun in thedistance. Someone who looks likeSean Connery is shaking hands withspectators.

It could be a dream. But this isBahamas Speed Week 2012 in theBahamian capital. The pace of life canbe slow in this part of the world, withthe fastest thing on the road the oddlizard or potcake, the local name fora mongrel dog. But for seven days inNovember the smell of burning rub-ber, the revving of engines and thepopping of champagne corks comple-ments the aroma of frying fish and therhythm of steel pan bands andthings really speed upThe original Bahamas Speed Week

ran in Nassau from 1954 to 1966, tradi-tionally in the first week of Decemberand brought together stars from theUS and Europe in a high octane end ofseason play off which has, as of lastyear, returned to take its place as anannual event in the motoring calen-dar.

In 2012 a group of dedicated classic

car owners crossed the Atlantic,bringing with them pristine AstonMartins, Ferraris, Porsches andMaseratis, which they assembled atArawak Cay against a back drop ofcolourful shacks, turquoise sea andhuge cruise ships.The opening ceremony of Speed

Week took place at the cay with a LeMans style start, but as a concession to82-year-old Sir Stirling Moss, who tookpart in the original Speed Weeks andpatronised the Revival for the secondtime in 2012, the drivers walked ratherthan ran to their cars. Sir Stirling, how-ever, showed the crowd that he is still adeft hand at the wheel of his 1950s-eraOSCA FS372 sport racer.Jay Michaels, moderator at the open-

ing ceremony, has compared SpeedWeek to other racing events such asLeMans, Grand Prix and Indianapolis500. But in Nassau things are done in a

slightly different way. Before thewheels were allowed to spin, the cars

and their drivers were blessed by theRector of the capitals St Francis XavierCatholic cathedral.This year a Bocar XP-5, a Cooper

Monaco CM/4/59 and a DeLorean DMC12, among others, sparkled in theBahamian sunshine, all brought byship from the UK, the USA, and Europe.The cars are the stars here and all

have their stories. Chief executive ofBayford Oil Group Jonathan Turnercarried off the Best Car in Show awardfor his Jaguar C Type. His is the secondname on the

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