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BUSINESS WITH PERSONALITY

In the wake of the financial crisis, the global fund industry finds itself in achanged environment. Is it time for a new portfolio investment rulebook?

Stephen Schaefer, Professor of Finance

Investment Management Evening Programmes

Derivatives: Markets and Models programme starts 23 April 2013

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

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ged environment.e wa e o e n

Finance

Is it time for a nenc a cr s s, e g

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WALL STREET IS BACK

HIGH STREET IN CRISIS

ISSUE 1,799 THURSDAY 17 JANUARY 2013

MORE: Page 2 & Bottom Line, Page 5LL

Certified Distribution

from 26/11/12 to 30/12/12 is 127,678

BY TIM WALLACE

BY KASMIRA JEFFORD

AND JAMES TITCOMB

THE TOP US investment banks defiedgloomy market conditions to rack upbig jumps in profits last year, fourthquarter results showed yesterday, ascentral bank support and a renewedfocus on cost control breathed new life

into the troubled sector.A boom in debt underwriting along-side strong fixed income, currencyand commodities client execution per-formance helped Goldman Sachs onthe way to a 19 per cent rise in totalnet revenues in 2012.Tight cost controls the ratio of com-

pensation to revenue fell to 37.9 percent, its second lowest level ever con-tributed to a 68 per cent leap in prof-its, which hit $7.48bn (4.68bn).

While economic conditionsremained challenging for much of lastyear, the strengths of our businessmodel and client franchise, coupledwith our focus on disciplined manage-

ment, delivered solid performance forour shareholders, said chief executiveLloyd Blankfein.JP Morgan also recorded record debt

underwriting fees, as well as recordassets under custody and a boom incommercial loans which expanded forthe 10th consecutive quarter.

An improvement in consumer creditconditions pushed down lossallowances by $700m and gave thebanks mortgage arm a boost it origi-nated 920,000 loans in the year.Those successes propelled profits up

12 per cent to $31.28bn, its third con-secutive year of record profits.That comes despite the $6.2bn lost

on bad derivatives trades made by theso-called London Whale.

Meanwhile custodian bank BNYMellon saw profits slip on weak trad-ing numbers, although it still rackedup a strong rise in fee revenues asinvestors piled into the institution.

BLOCKBUSTER, the DVD, videoand games rental chain, yesterdaycollapsed into administrationsending Britains high street intofurther turmoil.

Deloitte, which has been hiredas administrators, saidBlockbuster would continue totrade as it seeks a buyer for all orparts of the business.

However, it is inevitable thatsome of Blockbusters vast 528-store estate will close. The chain,

which is based in Uxbridge,

employs 4,190 staff.Lee Manning, Deloitte jointadministrator said: We are

working closely with suppliers and

employees to ensure the businesshas the best possible platform tosecure a sale, preserve jobs and

generate as much value as possiblefor all creditors.

The beleaguered chainwas forced tocall inadministratorsafter losses

widened from8.5m in 2011 to11.2m last year.

Blockbuster had

anticipated lastquarter earningsbefore interest, tax, depreciationand amortisation to be about

4.5m. However, it made a 30,000loss.

Manning said Blockbuster hasfaced increased competition from

internet basedrental companiesalong with theshift to digitalstreaming ofmovies andgames.

He saidtrading had

further deteriorated

during the crucial Christmasquarter, in part due to peopleopting to watch major releases likeSkyfall at the cinema rather than

renting films.Unlike HMV, Blockbuster said it

will honour all outstanding giftcards and credit, which amount toaround 400,000. Manning saidthe company had chosen to do this

because unlike other retailersBlockbuster has account holdersand therefore has a distinctrelationship with its customers.

A spokesperson for Deloitte saidBlockbusters core business some 200 stores remainprofitable. These are mostly in

rural areas where there is aslightly older population andinternet connections are slower.

Blockbuster is owned by its US

parent company, which in turnwas bought out of bankruptcy in2011 by US satellite televisioncompany, Dish Network.

The chain is the latest in a spateof casualties on the high streetover the last two months, withComet, Jessops and HMV all goinginto administration, puttingnearly 15,000 jobs at risk.

HMV, which called in Deloitte asadministrators on Tuesday, closedits 16 Irish stores yesterday, whichtogether employ around 300 staff.

Mobile phone operator EE alsosaid it would close 78 stores. TheOrange and T-Mobile owner told

staff last years rebrandingresulted in duplicate EE shops,and that all front line employees

would be retained.

A HELICOPTERcrashed into a craneon top of one ofEuropes tallestresidential blocksyesterday, killingtwo people as it

burst into flamesand spiralled downinto rush-hour trafficin central London.The pilot was namedas 50-year-oldCaptain Pete Barnes,a veteran aviator.Late last night thepolice confirmed thesecond victim waspedestrian MatthewWood, 39, fromSutton.

TWO KILLED IN TRAGIC RUSH-HOUR HELICOPTER CRASH IN VAUXHALLn Profits soar at JP Morgan and Goldman

n Blockbuster is latest retail casualty as it calls in administrators

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TUI TRAVELPLOTS 3BN

MEGA-MERGERSee Page 3

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[email protected]

Follow me on Twitter: @allisterheath

Dimons bonus slashedon London Whale lossesJP MORGAN chief Jamie Dimons payhas been halved this year after thebank lost $6.2bn (3.9bn) on badderivatives positions built up by theso-called London Whale, the bankrevealed yesterday.

Last night the bank came to an outof court settlement with the Whalesformer boss Javier Martin-Artajo.The bank declined to comment,

but the proceedings began shortlyafter JP Morgan announced it wasplanning to claw back bonuses fromthose involved in the trades.Jamie Dimons pay has been

slashed from $23m in 2011 to $11.5min 2012, made up of $1.5m in salaryplus bonus payments made up ofrestricted stock. He can access half ofthose stock awards after two yearsand the other half after a third year.JP Morgan yesterday released a

major internal report into the chiefinvestment offices (CIO) losses,which found Dimon should bearsome responsibility for the blunder.

More should have been doneregarding the risks, risk controls andpersonnel associated with CIOsactivities, and Mr Dimon bears someresponsibility for that, said thereport, which was written by a task-force appointed by the board.

Dimon could have better testedhis reliance on what he was told by

Apple rolls out China credit facilityApple is to allow Chinese consumers tobuy its gadgets on credit a move thatcould help boost sales in the worldslargest smartphone market by unitshipments, where it has lost share tocheaper brands.

HP arms become focus of M&A talkReports that Dell could be the subject of aleveraged buyout have spiked acquisitioninterest in its main rival Hewlett-Packard.

Investment bankers representing techcompanies are understood to haveexpressed interest in HPs Autonomy unitand its Services division, which largelyconsists of its 2008 $14bn EDS acquisition.

Doughnut chains set to expandUS consumers will be tempted by a bulgeof new doughnut-buying opportunities asleading chains both plot to open stores.Dunkin said it would open 330-360stores in the US in 2013. It already hasmore than 7,200 stores. Krispy Kreme saidthat by 2017 it would increase its USstores to more than 400 from 240.

Clouds gather over QHotelsThe future of the Manchester hotel whereMr Rolls met Mr Royce is under a cloudafter its parent company called inadministrators. The Midland, a Grade IIlisted Victorian building, is part of the 21-strong QHotels Group.

E-Lites cleared for TV campaignElectronic cigarette company E-lites willtest the 50-year ban on promotingsmoking on television, as the advertisingwatchdog moved yesterday to stop a rivalcampaign.

Living wage pension will cost 270kWorkers need to save up hundreds ofthousands of pounds even if they qualifyfor the new state pension. To achieve anliving wage of 16,400 a year requiredfor a minimum standard of life you wouldneed 270,000 in savings as well as thenew 144 a week state pension.

Lidl to create 1,000 UK jobsLidl supermarket is set to create 1,000jobs in the UK as it continues its multi-million pound expansion in 2013.

Obama unveils gun-control pushPresident Barack Obama yesterdayunveiled an aggressive set of gun-controlmeasures as he launched a push for themost sweeping changes to firearms lawsin nearly two decades and called on theAmerican public to join his fight.

Wendy's upbeat as profit soarsUS burger chain Wendys said strongermarketing and promotions this year willhelp it return to same-store sale growtha key metric that slipped in the fourthquarter despite stronger overall earnings.

CUSTODIAN bank BNY Mellon sawprofits rise strongly in the finalthree months of 2012, but not byenough to outweigh the effects of

weak market conditions whichpulled down full year income, the

bank revealed yesterday.Profits came in at $2.43bn

(1.52bn) for 2012, down 3.5 percent on the year.

Investment management and feerevenues increased strongly, rising17 per cent on the year to $853m.

Assets under management rosenine per cent on the year to $26.7trillion, with $100bn of thatincrease coming in the fourthquarter.

In part that is down to the fiscalcliff which encouraged majorinflows in December.

But low interest rates squeezedthe banks margins, weighing onprofits its net interest margin was

just 1.09 per cent in the final threemonths of the year, down from 1.27per cent in the same period of 2011.

Falling volatility and decliningvolumes hit foreign exchange andother trading revenues, whichcame in at $692m, down 18.4 percent from $848m a year earlier.

Meanwhile costs includingsoftware and staff edged up,denting profits further.

The banks shares dipped 2.67per cent on the results.

BNY assets hit

fresh record at$26.7 trillion

Jamie Dimon was the highest paid bank boss last year, but has been hit by the trading losses

2 NEWS

BY TIM WALLACE

BY TIM WALLACE

To contact the newsdesk email [email protected]

IN the grand scheme of things, thenews that JP Morgans profits hit arecord high, while Goldman Sachsmassively smashed expectations,

was the most significant businessstory of the week. Wall Street is back;the US financial system is in muchbetter shape than Britains. At the

same time, the fact that JamieDimon, JP Morgans boss, had his payhalved, while Goldman paid its staffthe lowest share of revenues since2009 also shows a rebalancingtowards long-suffering investors andaway from staff. On balance, this isgood news for London, even thoughstaffing levels are still falling.

But yesterday was also the day itbecame clear that the UK high streetis genuinely going through the equiv-alent of a wholesale, epoch-definingevolutionary shock moment similarto the extinction of the dinosaurs. The

EDITORSLETTER

ALLISTER HEATH

Internet is the new meteorite that extinguished the dinosaurs

THURSDAY 17 JANUARY 2013

internet was the meteorite and theretailers that specialise in goods thatcan be sold online and content thatcan be digitised the plodding, former-ly all-powerful but now obsoletebeasts. It is a tragedy for thousands ofstaff but another important momentfor the reallocation of capital.Blockbusters collapse into adminis-tration, just days after HMVs demise,Jessops liquidation and the death ofComet, is a shocking sign of the scaleof what is happening. Some say that

capitalism is conservative. That isnttrue. It is the most radical, revolution-ary system we have ever known.

THE IMPOSSIBILITY OF CREDIT RATINGSPERHAPS surprisingly, the new rulesfor credit rating agencies outlined bythe European Parliament werent all

bad. The best news is that ratings willno longer have official status and willno longer be embedded into thefinancial system via regulation. By2020, no EU legislation should direct-ly refer to external ratings, and finan-cial institutions will no longer beforced to automatically sell assets inthe event of a downgrade.The rest, unfortunately, will be

either useless or dangerous. I say thatas critic of this industry, which failedappallingly during the crisis.

Unsolicited sovereign ratings will beallowed to be published no more than

is the credit rating agencies pretence(implicit or explicit) to knowledgethat they cannot possibly have. To betruly useful, a credit rating agencywould need the same skills as WarrenBuffett, the greatest investor of alltimes. That is of course epistemologi-cally impossible, a fatal conceit. Non-

superhuman investors mostly get itwrong; rating agencies are no differ-ent. So rather than be granted God-like status via regulations that basekey investment decisions on their rat-ings or as evil, Anglo-Saxon conspir-ators, they need to be seen as whatthey really are: generally well-inten-tioned scribblers with spreadsheets.They should have the right to saywhat they want but not to be takentoo seriously.

three times a year, on datesannounced ages in advance. This willput agencies even further behind thecurve than they already are: if a coun-try goes through a crisis, the agencywill not be able to publish an updateto its position and will presumablyend up misleading investors, poten-

tially for months. Issuing a rating out-side the calendar would be groundsfor allowing investors to sue theagency for negligence. This is a count-er-productive, stupid move and makesa mockery of free speech. Credit rat-ing agencies will also be banned fromcalling for policy changes. And thecall to consider developing aEuropean creditworthiness assess-ment will rightly be seen as anattempt at propaganda.The key problem at the heart of

credit rating is not even the wrongincentives, though they play a role. It

his juniors, it added.But a wide range of other staff were

blamed too, beginning with thetraders and managers responsible,who have resigned or been fired andhad their bonuses clawed back.

Further up the bank, chief invest-ment officer Ina Drew failed to ensuremanagers understood the flawed trad-ing strategy or that controls wereworking properly, and underestimatedthe scale of the losses early in 2012, thereport found. She has retired andgiven back recent bonuses.

Barry Zubrow, head of the firm-wide

risk organisation until January 2012,was also blamed for the inadequaciesof [his departments] limits and con-trols on the Synthetic Credit Portfolio.And chief finance officer Douglas

Braunstein was also allocated blamefor the CIO Finance organizationsfailure to have asked more questionsor to have sought additional informa-tion about the evolution of the portfo-lio during the first quarter of 2012.The report also found Dimon acted

rapidly once the crisis was uncovered,changing the personnel in affecteddepartments and shaking up controls.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

GOLDMAN SACHS 2012 YOY

Profits $7.4 8bn up 6 8%

Staff 32,400 down 3%

Total pay $12.94bn up 6%

Average pay $399,500 up 8.8%

Compensation ratio 37.9 0% down 4.5 pp

Tier 1 common ratio 14.50% up 1.4pp

Return on equity 10.70% 3.7%*

JP MORGAN 2012

Profits $31.28bn up 12%

Staff 258,965 down 0.46%

Total pay $30 .59bn up 5%

Average pay $118,104 up 5.8%

Compensation ratio 34% down 1pp

Tier 1 common ratio 11% up 0.6pp

Return on equity11% unchanged

BNY MELLON 2012

Profits $2.43bn down 3.5%

Staff 49,500 up 1.64%

Total pay $5.761bn up 0.61%

Average pay $116,384 down 1.01%

Compensation ratio 50.60% up 1pp

Tier 1 common ratio 13.60% up 0.2pp

Return on equity 7.10% down 0.4pp

NOTE: Basel 1 common ratio

*5.9% excluding Berkshire Hathawaydividend

YOY

YOY

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PETER Cruddas, the majority share-

holder in CMC Markets, was lastnight said to have seized the chiefexecutives reins at the spread bettinggroup after a difference of opinionwith Doug Richards, who has heldthe job for the past couple of years.

Industry sources said Richards hadrelinquished the role of chief execu-tive, although a CMC spokespersonsaid he remained employed by thefirm.

We cant comment on any specula-tion that he is no longer chief execu-tive, the spokesperson said.

Richards, contacted by City A.M. saidhe could not discuss his situationbecause he was in a meeting. Heasked for questions to be emailed tohim, which he has not yet replied to.

CMC, along with the industry as awhole, has had a difficult trading his-tory over the past two to three years,making just a small profit of 2.5m in

the last financial year from revenuesof 164m.There were redundancies before

Christmas and Goldman Sachs, whichinvested 140m in a 10 per cent share-holding in 2007, has written the valueof its stake down to zero.

Cruddas has often referred to thelikelihood of floating the firm on thestock market but there are notbelieved to be any imminent plans todo so.

Cruddas takesthe reins atCMC Markets

BY DAVID HELLIER

TUI TRAVEL is in talks to merge withits German parent Tui AG, itannounced yesterday, sending itsshares up four per cent.

However, analysts have raised con-cerns that the nil-premium mergerwill not be enough to entice Tuis UKshareholders.

FTSE 100-listed Tui Travel, the groupbehind holiday companies Thomsonand First Choice, said it was in veryearly stage talks with its formerowner, which still owns a 56 per centstake, about a possible tie-up.

It said that a nil premium all-share

merger was the offer on the table,quashing rumours that the firmswere planning a reverse takeover.

Tui AGs major shareholders,including Russian billionaire AlexeiMordashov and Norwegian shippingmagnate John Fredriksen, have beenpushing the companies to save oncosts by sharing resources.

But analysts following Tui Travelhave noted that the firms sharehold-ers would be diluted in a nil-premi-um deal, while joining forces with a

Tui Travel andGerman parent

in merger talksBY MARION DAKERS company trading at a discount to its

peers.More than three-quarters of Tui AG

profits last year came from its stake inTui Travel.

The nil premium element meansthe deal relies on finding big syner-gies like duplicated head office costs,but the firms already work togetheron a lot of things, said Investec ana-lyst James Hollins. Theres clearlysome merit to a deal but I think share-holders might hold out for a premi-um.The Takeover Panel has given the

firms until 13 February to announce aformal offer.

LAZARD has had its fair share of thorny M&Awork in the past few months, an experiencethat Tui Travel will hope gives the advisoryfirm the edge in its merger talks.The firm was one of TNTs bankers during itstie-up with UPS, which collapsed last week,and spent close to a year grappling withGlencore and Xstratas controversial merger.Lazards Nicholas Shott worked with theQatar sovereign wealth fund when it dramat-ically pushed Glencore and Xstrata into

improving the terms of their partnership.He is also known for his work in the mediaindustry, featuring in the sale of theTelegraph to the Barclay brothers in 2004,and the Lebedevs 2009 purchase of theEvening Standard.He became sole head of UK investmentbanking at Lazard after Alexis de Rosnayquit the firm to head up Canaccord Genuity.Joining him on the Tui talks is Cyrus Kapadia,a managing director at Lazard. Kapadia hasbeen at the firm for 15 years, and recentlyworked on Ladbrokes bid for Sportingbet,which stumbled on regulatory grounds, andTemonos failed pursuit of Misys.Also on the deal is managing director VascoLitchfield, who can count advising BSS dur-ing its 558m takeover by Travis Perkinsamong his notable deals.

ADVISERS TUI TRAVELS TALKS WITH TUI AG

NICHOLAS SHOTTLAZARD

TUI Travel PLC

16 Jan10 Jan 11 Jan 14 Jan 15 Jan

285

290

275

280

295

300

305 p290.98

16 Jan

THURSDAY 17 JANUARY 20133NEWScityam.com

Tui become one: Major investor Alexei Mordashov wants Tui Travel and Tui AG to merge

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THURSDAY 17 JANUARY 20134 NEWS cityam.com

SAINSBURYS, the Co-op and ASDAyesterday cleared their shelves ofburgers supplied by companies atthe centre of a horse meat scandal.

There is no evidence the threesupermarkets sold contaminatedproducts but they have taken theprecautionary measure followingTuesdays revelation that the meatcontent in a sample of TescosEveryday Beef Burgers was 29 percent horse.

The Food Standards Agency haspromised a full investigation.

Horse burgerfears spread

BY JAMES WATERSON

LEADING City figures will todaylaunch their campaign for a referen-dum on Britains continued member-ship of the EU, arguing action isneeded to ensure Londons financialsector is not undermined by Brussels.As City A.M. revealed on Monday,

leading businessmen who wantBritain to repatriate powers fromEurope have set up their own cam-paign after becoming exasperatedwith the pro-EU stance adopted byindustry trade bodies such as the CBI.

The pro-European lobby, apparentlyspeaking on behalf of British business

as a whole, has argued in gen-eralities, eleven of themwrite in a letter publishedtoday.

We believe that membersof the public should be givenspecific figures, not plati-tudes, so that they canmake an informeddecision aboutwhether Britainshould remain inthe EU.

City grandeeslaunch push for

EU referendumBY JAMES WATERSON Signatories include turnaround spe-

cialist Jon Moulton, founder of BetterCapital; Lord Flight, the chairman ofMetrobank; and Robert Hiscox, whobuilt up the eponymous insurer.

Other City grandees who back the let-ter include Lord Vinson, JohnBarkshire, Adam Fleming, DanielHodson, David Reid Scott, John Robinsand Stanislas Yassukovich.The campaign is being co-ordinated

by the pro-referendum organisationthe Peoples Pledge.Tomorrow morning David Cameron

will deliver a long-awaited speech set-ting out his vision for Britains relation-ship with the EU. The Prime Minister is

expected to reject complete withdraw-al from the organisation in favour of arenegotiated relationship, with thefinal package put to the UK electoratein a referendum.

Other EU leaders Britain stays.Finlands Prime Minister yesterday said

that the EU without Britain wouldbe like fish without chips

TWO men who posed as wealthyMayfair property buyers to securealmost 800m in loans have been

found guilty of conspiracy todefraud, in a long-awaitedsuccessful prosecution for theSerious Fraud Office (SFO).

Achilleas Michaelis Kallakis andhis associate Alexander Martin

Williams used fake guaranteesclaiming to be from Hong Kongproperty firm SHKP to persuade

Allied Irish Banks to provide loansto buy real estate valued at 740m.

The headquarters of the DailyTelegraph and several properties in

Mayfair property tycoon foundguilty of massive loans fraud

BY MARION DAKERSSt Jamess Square, Mayfair wereamong the properties Kallakis

bought between 2003 and 2008.He also used the cash to pay for a

fleet of chauffer-driven Bentleys, aprivate plane and an art collection.

The pair also conned Bank ofScotland into agreeing a 29m(24m) loan to convert a passengerferry into a superyacht, the SFOsaid yesterday. The ferry on whichthe loan was secured turned out to

be a wreck, riddled with asbestosand leaking water. The bank raisedconcerns after it had advanced5.7m. The SFO worked with theCity of London Police to bringcharges in February 2010. The pair

will be sentenced today.

Achilleas Kallakis will be sentenced at Southwark Crown Court today

Robert Hiscox wants an in-outvote on EU membership

HM REVENUE & CUSTOMS yesterdayannounced it will hire 100

additional inspectors to investigatethe tax affairs of high earners.They will work alongside the 200

existing members of the AffluentCompliance Team to ensure peoplewith an annual income of morethan 150,000 or wealth of morethan 2.5m pay their tax in full.

HMRC claim the unit has alreadyraised an additional 75m in taxthat would otherwise not have beencollected and hopes to raise 586mby the end of 2015.

HMRC beefs upwealth team

BY JAMES WATERSON

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MONEY manager Jupiter FundManagement beat analysts expecta-tions yesterday to deliver its bestquarterly inflows for two years, send-ing its assets under management toa record high, figures showed yester-day.The FTSE 250 listed manager

breached the 26.3bn asset barrierafter attracting 688m more cashfrom punters in the last threemonths of 2012. This is the highestquarterly inflow since the end of2010.The increase will underscore the

recent surge in demand for equitiesfrom investors in the so called greatrotation awayfrom lowy i e l d i n gb o n d st o w a r d sstocks.

Inflowsinto equi-ty fundshit a five-year highd u r i n g

Jupiter reaches

for the starswith record rise

BY MICHAEL BOWthe first week of January, accordingto figures, continuing a trend seen inthe last months of 2012.

But Jupiters stellar performancefailed to quell a sell off in its sharesyesterday, as they tumbled nearly 3.5per cent in London.This corrected a short spike of near-

ly four per cent on Tuesday in antici-pation of the results.

Chief executive Edward BonhamCarter said: While we have seenstrong mutual funds flows in the sec-ond half of 2012, we remain cautiouson the short-term outlook due to con-tinued market uncertainties.

The long-term growth prospectsfor the savings market remain prom-ising and we will continue to focus ondelivering outperformance for ourclients and investing in our distribu-tion capabilities.Jupiter, which went public in 2010,

is primarily an equities house, withclose to 80 per cent of the money itruns invested in the asset.

Its most popular funds last quarterwere its flagship mutual funds, but asurprise leap in segregated mandateshelped outpace analysts consensusestimates of 25.9bn of assets man-aged.

BOTTOMLINE

MARC SIDWELL

Chief executive Edward Bonham

Carter has overseen an asset surge

THE INTERNATIONAL MonetaryFund (IMF) has agreed to unfreezethe next tranche of bailout aid tothe Greek government, the globallender announced last night.

The 3.24bn (2.69bn) instalmentof cash had been frozen as the IMFmulled over two reviews ofGreeces economic performance,including judgements over the

governments reforms andpromises of further reforms.

IMF waves through 3.2bn inaid for debt-stricken Greece

BY JULIAN HARRIS Under the IMFs Extended FundFacility, it has now pledged a totalof 4.86bn to help Greece escapeits mammoth debt crisis.

Greece avoided financialcollapse last month after itsEuropean backers agreed to doleout more financial support andthe IMF said it would continue to

back the Greek government aslong as it implemented promisesunder a joint IMF-EU financing

package.MORE EUROZONE: Page 17

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Wall Streets big banks roar again while cutting costsE

VEN the most committedbanker-basher should findsomething to like in the latestresults from Wall Street. Huge

rises in profits at JP Morgan andGoldman Sachs from a year ago camealongside reductions in staff andsalaries and a boost in lending to

small businesses and homebuyers.JP Morgan announced it wascutting chief executive JamieDimons compensation in halfcompared to the year before, from$23m (14.3m) to $11.5m, in thewake of the so-called London Whaletrading fiasco, which lost the firm$6bn. Meanwhile Goldman Sachsreported that by the end of 2012 ithad decreased its total staff by threeper cent year-on-year and that 2012s

non-compensation expenses weredown four per cent on 2011.

While compensation and benefitswere up six per cent year-on-year atGoldman Sachs in 2012, it got morebang for its buck. Their ratio to netrevenues fell from 42.4 per cent allthe way to 37.9 per cent the second-lowest level since going public, andthe lowest ratio since 2009. The

banks average ratio has been northof 44 per cent. Also, in contrast withrecent headlines about its now-shelved plans for the tax-efficientpayment of some bonuses in the UK,Goldman Sachss effective tax rate in2012 was up on 2011, from 28 percent to 33.3 per cent.

JP Morgan announced $20bn inloans to small US businesses, up 18per cent. Its mortgage business alsodid well, defying the post-crisisslump: mortgage banking recordedoriginations of $51.2bn, up 33 percent, and the bank originated morethan 920,000 consumer mortgages.

All this alongside showstoppingyear-on-year increases in profits.Profit in the fourth quarter of 2012was up $2bn or 53 per cent at JP

Morgan year-on-year to $5.7bn.Goldman Sachs made $2.89bn profitin the last quarter of 2012, up from$1.01bn a year before, a colossal 186per cent increase. BNY Mellon, alsoreporting, did provide a note ofcaution, but even here profit in thefourth quarter was up by 23 per cent.

Those who think Washington andWall Street are too cosy could tosome extent see these figures as areflection of that relationship.Quantitative easing by the FederalReserve has helped stock prices andso boosted banks management feesand portfolios. Goldman Sachs, forinstance, saw net revenues from itsown investments in equities for thelast quarter of 2012 reach $789m(excluding its holding in the

Industrial and Commercial Bank ofChina) up 105 per cent year-on-year.The bank made another $2.304bnfrom client services in relation toequities, up 36 per cent year-on-year.

Yet the achievement was broaderthan that explanation suggests.Goldmans net revenue from fixed

income, currency and commoditiesclient services was up 50 per centyear-on-year, at $2.038bn. And whilegrowth of its debt underwriting wasboosted by the Feds artificially-lowinterest rates driving growth incorporate bonds, this brought inonly $593m in the quarter, arelatively small proportion of theoverall figure of $9.236bn. WallStreet deserves credit for doing morewith less in a still-tough market.

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FINANCE firms must change theirsales practices immediately to makesure they no longer incentivise staff tomis-sell retail products, the FinancialServices Authority (FSA) said yesterday.

Any who have not already mustundertake an extensive review ofincentive schemes, review theircontrols and change bad practices.

If they discover more consumerswho have been missold products, theymust be compensated.

An FSA report in September 2011found most incentive schemes werelikely to drive people to missell.

FSA clampsdown harder

BY TIM WALLACE

ARBUTHNOT Banking Grouptraded well during the fourth

quarter and expects to report pre-tax profits in line with marketforecasts.

In a trading update yesterday, itsaid Secure Trust Bank P continuedto see strong demand for lendingacross all of its portfolios andfollowing the successfulcompletion of its equity placing,the business remains wellpositioned to execute on itsstrategy of building a diversifiedlending business.

Arbuthnot saysresults on track

BY CITY A.M. REPORTER

FIVE struggling sectors of the econo-my could face more woe in 2013, saysa report released yesterday.Aviation, care homes, farming, local

authorities and NHS trusts are thefive most likely sectors to come in forfinancial distress over the comingyear, according to forecasts fromBegbies Traynor, due to funding anddemand squeezes.Airlines face a devastating

increase to the Air Passenger Duty inApril, adding 188 to average air faresfrom the UK, only one plank of atriple whammy together with reces-

sion-hit demand, and still-high fuelprices. Thirty-two per cent of firms inthe aviation sector are facing signifi-cant or critical distress already, evenbefore the tax rise, the business recov-ery firm says.

Nearly as hit is the care home sector,where some 29 per cent of firms arealready in distress, according toBegbies figures. This vice is only set totighten as the 600m eight percent wiped off local governmentsocial care budgets is not set to return.

Aviation one offive sectors set

to suffer in 2013BY BEN SOUTHWOOD Farming is being clobbered by poor

weather and resulting high feedprices, cutting deep into margins onlivestock, and pushing farms intoalternative sources of revenue likewindfarms.

Two other challenged areas are inthe public sector. Local authorities aregaining spending autonomy but los-ing income with a continued freeze incouncil tax. And 34 NHS trusts haverun up a 356m deficit betweenthem though the sector as a whole isin surplus.

RING-FENCING retail bankingoperations to separate them frominvestment banking are the best

way to reform the sector and will infact increase Londonscompetitiveness in the long run,the author of the plans insisted

yesterday.Sir John Vickers even argued that

MPs and peers proposals toelectrify the ring fence with thethreat of full separation against

banks who tried to undermine thesystem were barely needed, as hissystem is so strong already.

Vickers attacked the idea of

Vickers claims tough ring fencewill boost City competitiveness

BY TIM WALLACE combining his plans with a US-styleban on proprietary trading underthe Volcker rule.

The risk if one added a Volckerrule is that a large portion of

regulatory energy would be forcedto be directed to those issues, whenregulatory capacity is finite, hetold the Parliamentary Commissionon Banking Standards.

And even though the new rulesare likely to be disruptive andcostly, he insisted London will

become more, not less, competitive.In the long run, competitiveness

is going to be favoured by safer,sounder, more stable banking,

Vickers said.

AVIATION: being squeezed by fuel prices,huge levies and ongoing slump.

CARE HOMES: suffering from localauthority budget cuts.

FARMING: faces high input costs and poorweather.

LOCAL AUTHORITIES: being hit bycontinued freezes in council tax.

NHS TRUSTS: coming up against a rapidlyrising healthcare burden.

THE FIVE SECTORS


The government plans to adopt the vast majority of Sir John Vickers banking proposals

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eBay chief John Donahoeis cautious for 2013


THE US will become 99 per centself-sufficient in its energy needs

by 2030, with the shale gasrevolution set to reinvigorate itseconomy, according to oil giant BP.

According to its Energy Outlook2030 report yesterday, growingproduction and moderatingdemand will result in the USbecoming almost completely self-sufficient in 17 years time.

BPs prediction marks a steepuptick from 2005, when the nationwas only 70 per cent self-reliant interms of its energy production.

Major emerging economies suchas China and India will becomeincreasingly reliant on importedenergy, a shift that will havemajor impacts on trade balances,it said.

By 2030, BP predicts, energy usein non-OECD countries will be 61per cent higher than in 2011,compared to only a six per cent

jump for OECD countries.Meanwhile, increasedproduction from unconventionalsources of oil tight oil, oil sandsand biofuels is expected toprovide all of the net growth inglobal oil supply to 2020.

The London-listed oil behemothyesterday predicted an almost 36per cent increase in energy usebetween 2011 and 2030, faroutstripping forecast populationgrowth of 18.5 per cent to 8.3bn.

US to becomeself-reliant forenergy needs

BY CATHY ADAMS

EBAY yesterday reported quarterlyresults that just beat Wall Streetexpectations, but the e-commercegiant also gave a cautious forecast forthe year ahead.

Fourth-quarter revenue jumped 18per cent to $3.99bn (2.49bn). Profitcame in at $927m, or 70 cents a sharein the period.That compares with profit of

$789m, or 60 cents a share, in thesame quarter last year.

EBay was expected to earn 69 cents ashare on revenue of $3.98bn.

Shares in the company climbed 1.7

per cent to $53.80 last night followingthe announcement.These are great numbers, Bill

Smead of Smead CapitalManagement, which owns eBayshares, said.

The marketplace businessused to be a noose aroundtheir neck, but now its akey destination for peoplewanting to buy new goodsas well as existing goods.

EBay forecast 2013 rev-

eBay beats thestreet as sales

jump upwardsBY CITY A.M. REPORTER enue of $16bn to $16.5bn and profit of

$2.70 to $2.75 a share.Expectations were high ahead of the

results because sales data from outsidesources suggested strong sales growthfrom eBays online marketplace and asolid increase in transactionsprocessed by the companys PayPalpayments business.

EBays online marketplace, one ofthe largest in the world, has laggedbehind the growth of e-commerce andrival Amazon for several years.

But under chief executive JohnDonahoe (pictured below), eBay hasinvested to improve the buying experi-ence by upgrading search capabilities

and prodding sellers to provide moreservices such as free shipping andeasier returns.

The explosive growth ofmobile shopping and popularmobile shopping applicationshave also attracted hundreds of

thousands of new con-sumers to eBays market-place in the past year.

A FORMER trader at Legal &General Investment Managementcharged under the Financial

Service Authoritys (FSA) highprofile Operation Tabernulainvestigation yesterday toldmagistrates he intended to plead

guilty to one count of insidertrading.

Paul Milsom, who tradedequities at the investment arm ofthe insurer, told WestminsterMagistrates Court that he wouldenter the plea on one count ofpassing inside information to anindependent stockbroker, who is

Ex-Legal & General worker toplead guilty on insider trading

BY MICHAEL BOW also accused of insider trading andhas not entered a plea.

L&G said at the time the allegedwrongdoing did not affect itscustomers or its financial position.

The plea would give the FSA itsfirst conviction under theOperation Tabernula investigation.

The joint probe by the FSA andthe Serious Organised Crime

Agency led to 16 addresses inLondon, the south east andOxfordshire being raided in March2010. Five additional men, who donot work for L&G, weresubsequently charged. They havenot yet entered a plea and theircases will be not heard until 2014.

ECONOMIC activity across the USexpanded at either a moderate ormodest pace in recent weeks withconsumer spending picking up, the

Federal Reserve said last night,suggesting little change in terms ofthe recoverys strength.

The US central bank painted acautiously positive picture of aneconomy gathering steam across its12 districts, although businesses andconsumers were wary due touncertainty over fiscal policy and

Feds Beige Book says economyis improving at moderate pace

BY CITY A.M. REPORTER conditions on the other side of theAtlantic. Hiring plans were morecautious for firms doing business inEurope or in the defense sector, theFed noted in its Beige Book report. Itwas compiled by the Federal Reserve

Bank of Philadelphia based on datacollected before 4 January 2012.Reports from the twelve Federal

Reserve Districts indicated thateconomic activity has expanded sincethe previous Beige Book report, withall twelve Districts characterising thepace of growth as either modest ormoderate, the Fed said.

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IN BRIEFFenner bullish on second halfn Reinforced polymer manufacturerFenner yesterday said trading wouldbe more heavily weighted towards thesecond half of the year, and that itexpected trading volumes for the firsthalf to be lower year on year. Overall,trading has been in line withexpectations over the three months to16 January, it said yesterday.

Faroe wins eight new licencesn North Sea explorer Faroe Petroleumhas netted eight new prospectivelicences on the Norwegian ContinentalShelf. In an operational update, theexplorer said it had drilled 7,200barrels of oil equivalent a day during2012, and reiterated its target for 2013in the range of 7,000 to 9,000 barrelsof oil equivalent a day.

THE parent company of mobile net-work O2 has ruled out the possibility offloating the company in the UK.

Spanish telecoms giant Telefonica,which recently took its O2 Germanyunit public, has been tipped to launcha UK initial public offering (IPO) inorder to pay down its 56bn (46.5bn)of debt. However, the firms chief oper-ating officer, Jos Mara lvarez-Pallete,shot down the idea yesterday.

We feel no need to IPO the UK busi-ness, lvarez-Pallete said. We do notneed to IPO any business, our f inancialsituation is pretty solid.

Telefonica Deutschland went publiclast October in a 1.5bn offering, thebiggest in Europe in more than a year,with the placing five times oversub-scribed. However, lvarez-Pallete said

Telefonica says ithas no plans for

a UK float of O2BY JAMES TITCOMB the German and British businesses were

very different. We had invested a lot ofmoney in the [German] business in thepast five years but that was not recog-nised...it was a question of crystalisingthe value, he said. I dont think the UKbusiness is undervalued.

Telefonica took O2 private in a dealvalued at 17.7bn in 2005.

Telefonica SA


10.90

10.95

10.80

10.85

11.00

11.05

11.10 10.9016 Jan


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SADIQ KHAN TO LEAD LABOUR IN LONDON

SADIQ Khan has been appointed Labours shadow minister for London, leavinghim well placed to seek the partys nomination for the 2016 mayoral election. TheTooting MP replaces Tessa Jowell, who stepped down following the Olympics.

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MARKETING spending hasrecently seen its highest increasesfor over a year, research releasedtoday reveals.

However, this rise was modest,and most business leaders are

gloomy about industry prospectsover the coming months,according to research from trade

body the Institute of Practitionersin Advertising (IPA).

The IPAs Bellwether report,seen as an indication of the widereconomy, said the balance of firmsincreasing spending the numberof companies with bigger budgetsminus those with smaller ones

was at its highest level in thefourth quarter of last year sincethe third quarter of 2011. This

balance was miniscule, however,

with 17 per cent of companiesreporting rises to 16 per cent

Marketing spend boosted butindustry expectations still low

BY JAMES TITCOMBsaying they had seen cuts. And this

was the second-smallest riseduring the Christmas quarter inthe last 12 years, with only 2011seeing a more dismalperformance.

The research also reveals thatexecutives continue to bepessimistic about the industrythey work in. An overwhelmingnumber said the financialprospects for their industry were

worse than three months ago.

BARRATT Developments yesterdayrevealed plans to build 1,000 homes inLondon after acquiring two sites inSouthwark and Surrey Quays worth atotal of 400m.The UKs largest housebuilder

announced the two projects as itdelivered an upbeat forecast for 2013with operating profit expected to rise31 per cent to 80m.

In a trading statement ahead of itsinterim results on 27 February,Barratt said its profits before taxwould hit 45m, more than doublethose of the previous year. But group

revenues would remain flat at 950m,with completions of 5,085 units, it

Barratt to build1,000 homes as

profits increaseBY KASMIRA JEFFORD said. Chief executive Mark Clare said:

We have been investing for the future,successfully securing higher marginland both in the South-East and acrossthe rest of the country that will drivefurther profit growth.

Barratt Developments PLC


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Marketing executives' confidence for their industry

2005 2007 2010 2012

-60

-40

-80

-20

0

20

40

60 % Net balance

JD WETHERSPOON outpaced rivaloperators during Christmas, the pubchain reported yesterday, with like-for-like sales rising eight per centover the festive period.

However, a surprising hit to profitmargins spooked City investors. Thecompany, which runs over 800 pubs,said margins were around 8.2 percent, which is 1.1 percentage pointslower than last year, due toincreasing labour, tax and supplycosts. This news sent shares in thecompany down almost three percent yesterday.

The sales rise was more thandouble that of Spirit Pubs andGreene King, which announcedtrading figures earlier this week,and was an even bigger rise thanthat during the previous period,which saw a boost from the

Olympics. The company expects toopen 25 pubs this financial year.

Wetherspooncosts increase

BY JAMES TITCOMB

THURSDAY 17 JANUARY 2013 cityam.com10 NEWS

LOVEFILM BRINGS STATESIDE SHOWS TO UK

LOVEFILM has inked a deal with US network NBCUniversal that will bring shows such as30 Rock (pictured), the US version of sitcom The Office, and 1980s cult classic Knight

Rider to its streaming service. Amazon-owned Lovefilm is aiming to boost its cataloguein the wake of competition from Netflix, which has invested in exclusive content.

AUSTRALIAN property giant Lend

Lease has won planning consent fora 1.5bn regeneration scheme inLondons Elephant & Castle area.

Southwark Council yesterdayapproved the scheme, which aimsto create 2,500 new homes, shops,restaurants and communityfacilities by 2025.

Lend Lease said the developmentwill create over 5,000 new jobs andthe largest new park in centralLondon in over 70 years.

The news also comes threemonths after Lend Lease was giventhe go-ahead for a 37 storeyresidential tower, One TheElephant, in Elephant & Castle.

Meanwhile Legal & General alsoannounced it had been grantedplanning consent by Westminstercouncil for its West End office andresidential developments atHanover Square in Mayfair and

Wardour Street in Soho.

Three Londonschemes giventhe go-ahead

BY KASMIRA JEFFORD

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THE RISE of ebooks has led toincreasing profits at Harry Potterpublisher Bloomsbury, despiteshoppers spending less on books.

The company said that a 58 percent rise in sales of ebooks meantlower printing and distributioncosts, and fewer customersreturning books. Ebook salesexploded over Christmas asrecord numbers of ereaders wereunwrapped.

This means that operatingprofits since September haverisen year-on-year, despite a fall insales the company estimated

would amount to two per cent.The company said cookery

books had been some of its bestsellers in the build-up toChristmas. Paul Hollywoods How

To Bake and Hugh Fearnley-Whittingstalls Three Good

The popularity of ebooks helpsto boost profits at Bloomsbury

BY JAMES TITCOMBThings were among Bloomsburys

most-popular titles, whileHogwarts Library additionalHarry Potter titles was anothersuccess.

We are making good progresson many fronts during thetransition of the market towardsmore digital sales. Ebook sales areshowing strong momentum,Bloomsbury chief executive NigelNewton said.

The company also announced atie-up with BBC cookingprogramme MasterChef, which

will see a range of MasterChef-themed books go on sale.

Newton said Bloomsbury waswell positioned for furthersuccesses in the new year, asdigital book sales continue tosurge and new books fromElizabeth Gilbert, author of Eat,Pray, Love and Khaled Hosseini,

author of The Kite Runner,emerge.

SHARES in fashion retailer FrenchConnection were hit yesterday afterit warned of a larger-than-expectedloss as Christmas sales were hurt bylower demand and a decision todelay discounting.

French Connection said it expectedan adjusted pre-tax loss of 7.5m to8m for the year to 31 January, muchlarger than the 5.47m analysts wereexpecting.The retailer, which outlined a strat-

egy in September to boost sales thatincluded selling loss-making stores,had previously forecast a loss for the

year against a pre-tax profit of 5mlast year.

Poor Christmastrade at French

Connection UKBY CITY A.M REPORTER The group said it delayed discount-

ing over the Christmas period by aweek in a bid to build brand equity.

As a result, like-for-like sales in theUK and Europe fell about 2.9 per centin the 24 weeks to 12 January.

French Connection Group PLC


28

29

26

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27

30

31

32 p 27.2516 Jan

SALES of Kobo ereaders have grownmuch faster than expected in thelast six months, the companyrevealed yesterday, with theWHSmith partner saying that salesof its devices have doubled in thepast year.

The firm said sales in Decemberwere up nearly 150 per cent on theprevious year, and that it hadgained 4m new customers in thelast six months.

It now claims a 20 per cent shareof the global market.

Kobo, which sellsits ereader andtablet devices inWHSmith stores inthe UK, hasexpanded into newterritories in 2012.

Kobo ereadersales double

BY JAMES TITCOMB


Sales of key title sales were down two per cent (we had hoped for flat),but better margin dynamics in a digital world meant profits have still

risen, implying a better than expected margin. Earnings uncertainty leaves uscomfortable with our Hold rating and 138p target at this stage.

ANALYST VIEWS

Income from selling rights is a worry. The company continues to have abudgeted but uncontracted rights profit to deliver between now and

the year-end, and sales have been modest recently. We are not changing ourBuy guidance and 150p target, although we are mindful of this risk.

Todays statement suggests robust trading and momentum boosted bytrade cookery segment strength and ebook/digital. Outlook looks very

strong in Trade next year and digital momentum continues. We are not changing

our price target of 183p or our Buy recommendation.

WHAT EFFECT DOESBLOOMSBURYS UPDATEHAVE ON YOUR RATING?

Interviews by James Titcomb

GARETH DAVIES NUMIS

MALCOLM MORGAN PEEL HUNT

STEVE LIECHTI INVESTEC

N BROWN, the catalogue and online

retailer posted a strong rise in salesyesterday, after it revamped productranges, sharpened prices andinvested in a bigger marketing push.

The company said sales rose 8.5per cent in the 19 weeks to 12January while sales at stores openmore than a year rose 7.9 per cent.

Online sales grew 17 per cent, andnow account for almost 54 per centof the total sales.

We had the strongest gain inhome and gift sales where we hadgone for sharper prices, chiefexecutive Alan White said.

Jacamo and Simply Be, N Brownsbrands aimed at people over fifty,enjoyed the fastest growth, up by 35per cent and 18 per cent respectively.

At a time when other retailers aremoving online, N Brown has movedonto the high street and has openedseven Simply Be stores since 2011.

The group said yesterday it may roll-out more stores in the future.

N Brown saysrevamp hasdriven growth

BY KASMIRA JEFFORDSHARES in Thorntons fell sevenper cent yesterday after thechocolatier posted a slump insales at stores open more than a

year, despite enjoying a lift intotal revenue.Total sales for the 14 weeks to

12 January increased by 5.4 percent to 4.5m, boosted bycommercial sales which rose by26.4 per cent to 34.7m.

Thorntons said its totalshare of the chocolate boxmarket increased from11.7 to 12.1 per cent.

But own store salesdeclined by nine per cent,primarily due to storeclosures, withlike-for-like salesfalling by 1.3per cent.

The retailer,which has 317own-storesand 189franchise

outlets,

Investors abandon Thorntonsdespite lift in overall revenue

BY KASMIRA JEFFORD closed 27 under-performingstores in the last year as part ofits turnaround plan after issuinga profit warning in 2011.

Jonathan Hart, chief executivesaid: We enter the second half of

our financial year with profits inline with our expectations andahead of last year....We areconfident in our strategy and theactions we are taking but remaincautious given the continuing

challenge of the economicclimate.

Panmure Gordon analystPhilip Dorgan said this is aclear sign that its strategicplan to rebalance its salestowards commercial and

thereby restore itsprofitability to

industrycompetitivereturns is

beginning towork.

Jonathan Hartchief executive ofThorntons

The Canadian firm

claims 20 per cent ofereader sales

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THREE suitors have made final bids

for Stansted, valuing the north eastLondon airport at around 1bn, twosources said yesterday.

Macquarie, Malaysia AirportHoldings and Manchester AirportsGroup with its partner IFM are thethree bidders left in the contest forthe airport.

A deal to buy the leisure travel-focused airport from HeathrowAirport Holdings, previously knownas BAA, could be announced nextweek.

HAH was ordered to sell Stanstedafter it lost a final appeal against aCompetition Commission decisionlast August.

The case wound its way throughthe appeals system for three years,after the Competition Commissionruled that the airport and others inScotland must be sold off.

The sale initially attracted a

string of private equity bidders andinfrastructure funds including TPGand 3i Infrastructure.

Ryanair, which operates 70 percent of Stansteds flights, alsoexpressed an interest in making ajoint bid, but pulled out in Octoberblaming parent firm Ferrovialsreluctance to engage.

HAH, which declined to commentyesterday, is being advised by INGand Deutsche Bank during the saleprocess.

Deal due nextweek for threeStansted suitors

BY MARION DAKERS

THE FEDERAL Aviation Authoritylast night ordered all US-basedBoeing 787 Dreamliner planes to begrounded until a string of safetyissues are addressed.

Earlier in the day two Japanese air-lines grounded their fleets after anemergency landing added to a grow-ing list of safety worries.

In the latest mishap on aDreamliner plane, All NipponAirways said yesterday instrumentsaboard a domestic flight had indicat-ed a battery error and smoke,prompting an emergency landing.

Passengers were evacuated from the

plane using inf latable slides.All Nippon and Japan Airways,which together operate around halfof the 50 Dreamliners in use world-wide, said they would decide todaywhether to resume Dreamliner

flights tomorrow.I think youre nearing the

Nightmare forBoeing as firms

ground planesBY MARION DAKERS tipping point where they need toregard this as a serious crisis, saidRichard Aboulafia, a senior analystwith the Teal Group. This is going tochange peoples perception of the air-craft if they dont act quickly.The US National Transportation

Safety Board is sending a team toJapan to assist the authorities with aninvestigation.

Boeing said yesterday it will beworking with our customer and theappropriate regulatory agencies.The 787, which has a list price of

$207m (129.4m), represents a leap inthe way planes are designed and built,but the project has been plagued bycost overruns and three years of

delays.A fire in a lithium ion battery on a787 caused alarm at Boston Airportlast week, while other aircraft havesuffered cracked windscreens, brakeproblems and fuel leaks.

Shares in Boeing fell 3.4 per cent yes-terday.

CAN FACEBOOKS GRAPH SEARCHTAKE ON GOOGLE? Interviews by James Titcomb

I think it looks interesting but its not going totake on Google any time soon, Google is a

powerhouse. Therell be a few teething problems andsecurity issues are bound to crop up.

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

BILAL AHMEDBANK OF ENGLAND

I dont think people are going to switch yet,people find Google so simple and easy and

this is going to feel like an invasion of privacy. I thinkFacebook might be in a bit of a downward spiral.

JONATHAN HORWELLINSURANCE TRAINEE

I dont have any objections to it, its a goodidea but people have got to be savvy. It will

definitely be useful on a personal basis to have recom-mendations using Facebook data, it will be handy.

SIMON CUTNERLMA RECRUITMENT

CITYVIEWS


Boeings 787 Dreamlinerlaunched in October 2011

THE COST of a National Lotteryticket will double to 2 in the

Autumn, the first price changesince the game launched in 1994.

Lottery operator Camelot saidthe decision to refresh the gamewas in response to feedback fromcustomers and promised toincrease the size of the prize pot.

However the Watford-basedcompany, which was bought bythe Ontario Teachers PensionPlan for 389m in 2010, is alsolikely to profit from the price rise.

Under the terms of its ten-yearlicence to administer the game,Camelots income is connected to

Cost of National Lottery ticketsdoubles as Camelot ups jackpot

BY JAMES WATERSON how much money the operatorraises for good causes currently28p for every 1 ticket sold.

A further 50p is allocated to theprize fund, retailers earn 5p andCamelot takes around 4p. If total

revenue rises, Camelot shouldbenefit.The companys most recent

accounts reveal a pre-tax profit of45.7m for the twelve months toMarch 2012, up from 40.1m inthe previous year.

Yesterdays changes will causethe average Saturday jackpot toincrease from around 4.1m to5m, while players matching threenumbers will win 25 rather thanthe existing 10.

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ANGLO American, the parent compa-ny of Anglo American Platinum,ended up at the bottom of the FTSE100 yesterday as workers at three ofAmplats mines temporarily downedtools.Amplats said yesterday that a group

of its employees at the Khomanani,Thembelani and Tumela mines inthe heart of South Africas platinumbelt refused to go underground forwork yesterday.

The action follows an overhaul ofAmplats South African operations,which could lead to the loss of 14,000jobs.

However, Amplats labour leaderEvans Ramokga said last night thatthe illegal walkout had now endedand that it was in talks to preventfurther action. The strike was onlyfor last night, Amplats labour leaderEvans Ramokga told Reuters. Headded workers would press manage-ment to find a way to head off jobcuts, which were equal to aboutthree per cent of South Africas over-all workforce in the mining sector.Amplats officials were not immedi-ately available to comment.

On Tuesday Amplats outlined its

Brief staff strike

in South Africahits Anglo stockBY CATHY ADAMS

plans for its South African opera-tions to address profitability withinthe platinum business which pro-posed selling off the Union minecomplex and mothballing four mineshafts. Amplats chief executive ChrisGriffith conceded earlier this weekthat industrial action was possible,although he stressed that all affectedemployees would go through a con-sultation process.The mining community across

South Africas platinum belt, on theoutskirts of Johannesburg, was lastsummer the backdrop for a wave ofviolent wildcat strikes.

Anglo American closed down 3.06per cent at 1,901p, making it thefourth-biggest faller on the blue chipindex.

Anglo American PLC


2,100

2,050

2,000

1,950

1,900

p 1,901.0016 Jan


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2012 A RECORD-BREAKING YEAR FOR UK CINEMA

TOP-GROSSING FILMS IN THE UK

#1 SKYFALL 101.0m

#2 THE DARK KNIGHT RISES 56.3m

MORE THAN 1,000 SUBTITLED FILMS

WERE SCREENED A WEEK

NOVEMBER

WAS THE

BIGGEST

MONTH WITH

TICKETS SOLD17.6m

#3 AVENGERS ASSEMBLE 51.9m

#4 THE HOBBIT 40.8m

#5 TWILIGHT: BREAKING DAWN PT 2 35.5m

#6 TED 30.3m

#7 ICE AGE: CONTINENTAL DRIFT 30.1m

#8 THE AMAZING SPIDER-MAN 25.9m

#9 PROMETHEUS 24.7m

#10 THE HUNGER GAMES 23.8m

173m

up from171.5m in 2011

BOX OFFICE REVENUES

ON LAST YEAR

TO 1.17bn

cinema ticketswere sold last year

43%

4%

IN BRIEFRolls-Royce nets two contractsn Rolls-Royce has netted a $75m(47m) contract to supply PetroChinawith equipment to power gas in a largeChinese pipeline project. It has alsosnapped up a four-year contract toprovide engines to the Royal Saudi AirForce.

Talvivaara lays off 230 workersn Beleaguered Finnish miner Talvivaarasaid yesterday it could lay off up to 230employees for up to 90 days from asearly as today in the wake of a waterleakage at one of its mines last year.Full year nickel production came in at12,916 tonnes, a shade under guidanceof 13,000 tonnes, and fourth quarteroutput was 2,317 tonnes, the miner said.

G4S to read British Gas metersn Security firm G4S has won a meterreading contract with British Gas, wortharound 150m. The seven-year contractwith the energy supplier will begin inApril. It will involve reading and datamanagement of around 17m metersaround the country.

Meggitt wins engine part dealn Aircraft parts supplier Meggitt hassnapped up a contract with Snecma toprovide sensor products for enginesused in Boeing 737 aircraft. The FTSE100 firm estimated that the agreementwould generate revenue of more than$300m (188m) over the life of theengine. Meggitts shares closed 1.1 percent higher yesterday at 430.3p.

Record-breaking Skyfall liftscinema attendance in 2012

UK CINEMAS enjoyed a bumper yearin 2012, as customers bought 173mfilm tickets and splashed out1.17bn on admissions, figures fromtrade group the Cinema Exhibitors

Association (CEA) have shown.The record ticket revenuesrepresented an annual four percent rise, during a year that wasexpected to be subdued by theimpact of the summers sport.

Although admissions declined by17 per cent in the third quarter ofthe year, as a weak film schedulecoincided with Londons Olympicand Paralympic Games, the successof late films such as Skyfall and The

BY JAMES TITCOMB Hobbit revived the industry.Ticket admissions were up 24 per

cent in October, and 36 per cent inNovember, as Bond film Skyfallbecame the first film to rake inmore than 100m at Britishcinemas.

The rise in admissions was slight,but better than many expected, andcinemas profited from rises inticket prices. The average price of acinema ticket increased around 70pto 6.75, the figures show.

The CEA said that cinemasinvestments in digital screens,which will allow greater flexibilityover what films to show, will boostthe industry this year. All screensare expected to be digital this year.

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LAURALEAN/CITYA.M.

READERS of this page will remem-ber last year that The Capitalistspotted ex-corporate financierand author Tony Drury f loggingcopies of his second novel TheDeal in Leadenhall Market.The book tells the story of a

financier falling in lovewith a woman who wontgo to bed with him unless

he raises 2m for herbrothers publishingcompany.

However it seems it isDrurys debut novel Megans Game that hascaught the attention offilm producers.

His first romantic City

thriller is being made into a featurefilm, produced by Paul Tucker,who boasts credits in Braveheart

and four of the Bond movies.This tale tells the story of a

Welsh primary school teacherwho falls for an unscrupu-

lous stockbroker wholives in a Docklandspenthouse.

And who would hisideal leading man be?Daniel Craig, but wecant afford him con-fessed Drury.

In case it all goeswrong, at least he stillhas a hand in the City,

The Capitalist noticesDrury is still chairmanof Axiom Capital. Nicework if you can get it.Ex-corporate financier

turned novelist Tony Drury

The winners of the InternationalFinancing Review Awards 2012

have already been announced ratheranticlimactically weeks in advance ofthe actual ceremony so there will belittle suspense when the trophies are

handed out at Grosvenor House inMayfair next week. However it appearsthat this years host, actor StephenMangan (pictured) could provide somemuch needed surprises on the big day.The compere has appeared in GreenWing, Im Alan Partridge, Episodes anda series of television adverts forBarclaycard. TheCapitalistwonderswhether the actorwill be braveenough to go for theobvious investmentbanking jokes, giventhat his Barclaysbosses will be inthe audience.

To roundoff the

City literary

news for theday, the Square Mile is due to get abrand new library on Artizan Street,which will replace the one on CamomileStreet when it opens next Thursday. TheCapitalistasked librarians whether therewould be any financial literature on theshelves, perhaps a copy of ex-Goldmanemployee Greg Smiths tell-all tome?But lo and behold which City book cameup trumps? None other than Credit Cardsby, youve guessed it, Tony Drury.

TRACTORS, combine harvesters,chicken, sheep and other furryanimals took up residence outsideSt. Pauls yesterday. City workersflocked to the cathedral atlunchtime, sandwiches in hand, to

get a closer look at the animals,who seemed to be munching theirway through a fair few Pret scrapsthemselves.

Plough Wednesday takes placeto remind Londoners about the

relationship between what theyeat and the farming community something that consumers ofcertain supermarkets burgersmay well be thinking aboutanyway. And indeed Ladbrokes the bookies are offering odds thathorse burgers will be introducedas an official Tesco product, and, alonger shot, that it will sign upsuperstar racehorse Frankel toappear in its next advert.

City workers feed the animals at St. Pauls cathedral yesterday lunchtime

A feathered and furry flock at

St. Pauls cathedral yesterday

City financierssaucy thriller ismade into film

15cityam.comTHURSDAY 17 JANUARY 2013

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CENTRAL bankers should shockmarkets more with monetarypolicy decisions, M&G fundmanager Jim Leaviss argued in anote yesterday.

Central banks sometimesannounce their policy too far inadvance, Leaviss said, meaningthey may be forced to commit totheir policy even if economiccircumstances change, orpotentially leading to a loss ofcredibility.

What are central bankers leftwith, without the ability tosurprise and shock? Leaviss asked.Perhaps central bankers shouldrealise that keeping us guessing is[among] their most powerful tools.

But prominent economist ScottSumner said that the argumentcentral banks could achieve betterresults with surprise policy reliedon assuming that central bankbureaucrats could outsmart themarkets and therefore seemed tobe ignoring the insights of rationalexpectations. However he said heagreed with Leaviss that unlimitedpromises of loose policy weremisguided and instead suggestedthat policymakers should makelow rates conditional on economicconditions.

Fund managercalls on central

banks to shockBY BEN SOUTHWOOD

MORTGAGE loans ticked up inNovember, an influential group oflenders said yesterday, with a rise inthe number of first-time buyers pro-viding a welcome boost to the figures.

The number of loans for house pur-chases grew by six per cent in thepenultimate month of 2012, theCouncil of Mortgage Lenders (CML)found.

Mortgages to people taking theirfirst steps onto the property ladder hitthe highest monthly total since theend of 2009, excluding March 2012when the end of a stamp duty holidaywarped the figures.

First-time buyers were advanced21,700 loans in November, with avalue of 2.7bn. The total number ofthese loans was eight per cent up onthe previous month, and a stagger-ing 24 per cent higher than inNovember 2011.

Including remortgages and newmortgages to people moving house,there were 52,700 loans in November,

Lenders report

rise in numberof home loans

BY JULIAN HARRIS the CML said up 6.3 per cent onOctober, and 12.6 per cent higher thana year earlier.The CMLs data follows on from the

latest Bank of Englands credit condi-tions survey reporting that lendersmade significantly more capital avail-able for mortgages in the fourth quar-ter of 2012 and expect a furthermarked increase in the first quarter of2013, commented Howard Archer,economist at IHS Global Insight.

Overseas buyers purchased an eye-watering 2.2bn worth of new-buildproperty in central London last year,according to high-end estate agentKnight Frank.The figure was up from 1.8bn in

2011, it said.The report, released yesterday, also

revealed that people from the Far Eastare the most likely to snap up new-build properties in central London.

Over a fifth (22 per cent) of transac-tions were made by people fromSingapore, while buyers from HongKong made up 16 per cent, with thosefrom mainland China at five per cent.

Britain facing a struggle withJapanese style lost half-decadeTHE UK is well on its way tosuffering a Japanese-style losthalf-decade of flat or worseeconomic growth, according toresearch released yesterday.

Though the service sector isback above its pre -recession highin output, catastrophic industrialand construction output meanthe economy as a whole isroughly in the same place as itwas four years ago, just a fter thesharpest dip in the recession,Moodys Analytics said.

And this gloomy picture couldgo on for yet another year, it

BY BEN SOUTHWOOD forecasts, given fiscalconsolidation and monetaryintervention that seems to bepetering out.

Though the authors say theonus is on the Bank of England tobolster the economy, they pointout that the traditional policylevel the Bank rate has beenstuck at an all-time low for almostfour years. And the moreunconventional policies they havetried have been called intoquestion, the consultancy says.

And this will not be helped,according to the authors, by a

shift in consumer habits awayfrom spending and toward saving.

All this together means therewill be another year of weaknessbefore a true return to a robustpace of growth, the authors say.

The fourth quar ter of 2012 willshow at best minimal growththey say. And unemployment sofar a nugget of optimism amidst agloomy economic picture willturn around to peak at 8.4 percent towards the middle of 2013.

Neither the constructionmarket nor the closely-linkedhousing market will improve in2013 either, the authors predict,with UK house prices taking

potentially until 2020 to get backto their pre-recession highs.

Steady inflation and positiveeconomic data boosts US hopesAMERICAN investors were given abrief respite from the US debt

ceiling row yesterday, as fresh datarevealed steady inflation, highhome-builder morale and a rise inindustrial output.

US consumer prices stayed flat inDecember, the Labor Departmentsaid, potentially giving the FederalReserve scope to continue its ultra-loose monetary policies.

The consumer price index wasunchanged in December. Over theprevious year, prices were up just 1.7per cent compared to 1.8 per centin the 12 months to November.

BY JULIAN HARRIS The Fed announced towards theend of last year that it would keepinterest rates at historically lowlevels until the jobless rate falls to

6.5 per cent so long as it foreseesinflation staying below 2.5 percent.

Separate data also revealedyesterday that US industrialoutput rose 0.3 per cent lastmonth. In November output wasalso up, by one per cent.

The fourth quarterboost to US industrysupports hopes thatit is not beingaffected tooseverely by the

slowdown in global demand.Meanwhile, a widely-regarded

survey of sentiment among home-builders showed that confidence has

held at a near seven year high.The National Association ofHome Builders (NAHB) said thatits index remained at 47 thismonth the same level that itended 2012. The index climbed

for eight consecutive months toDecember, suggesting some

recovery in Americashousing market.

THE UK has one of the highest ratesof so-called low work intensityhouseholds out of the 27 membersin the EU, data revealed yesterday.

In 2011, some 11.5 per cent ofpeople under the age of 60 lived inhouseholds where the adults wereemployed at only 20 per cent or lessof their capacity. This means they

were either unemployed orworking few hours f igures fromthe Office for National Statistics(ONS) showed. This was down from13.1 per cent in 2010 but stillrepresented one of the highest

UKs households some of theleast work intensive in the EU

BY BEN SOUTHWOOD rates in the EU, where the averageis 10 per cent.

The finding came in a reportcomparing poverty and socialexclusion levels across the UK andthe rest of the EU. Those in the UKconsidered at risk of poverty andsocial exclusion fell to 22.7 percent in 2011, beneath the EUaverage this year 24.2 per cent for the first time ever.

However, the UK still placed only14th best out of the blocsmembers. And those saying they

were unable to afford a holidayrose from 21.4 per cent in 2007 to29.7 per cent in 2011.


Chancellor Osborne has made much of the recent surprising boom in employment

THE PUZZLING weakness inproductivity since the onset ofthe recession is down in part tozombie firms, the officialstatistics body suggested

yesterday.Despite a boom in employmentpast pre-recession highs, GDPremains several percentage points

below its peak level. This meansoutput per worker, orproductivity, has fallen

This has defied usual trends,since productivity usually goes upduring recessions, as firms lay offthe least effective staff but holdonto their best performers.

But the Office for NationalStatistics (ONS) yesterday

ONS says productivity mysteryis down to zombie businesses

BY BEN SOUTHWOOD suggested this anomaly might bedown to so-called zombie firms

businesses that can generate justenough cash to afford the interestpayments on their loans, but notenough to invest or grow.

The ONS found that bigger,

more domestically-orientatedfirms who were more invested inIT had a better productivityperformance in 2009, the year for

which the data is available, whilesmaller, export-orientated andtechnologically less developedfirms did worse.

And there was divergencebetween the more and lesseffective firms more productivefirms got even more productive,

while less productive firms gotless productive, the ONS said.

n y serv ces s ac a ove pre-recess on eve s

2012 Q12011 Q12010 Q12009 Q12008 Q180

85

90

95

100

105 Sectoral output since onset of recession, 100 = 2008 average

Services

GDP

Industry

Construction

S O U R C E : O F F I C E F O R

N A T I O N A L S T A T I S T I C S / M O O D Y S A N A L Y T I C S

President Obama will bebuoyed by the data

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GERMANYS central bank, the

Bundesbank, yesterday bowed topublic pressure by agreeing towithdraw 674 tonnes of gold reservesstored at foreign banks by 2020.

It will bring back 300 tonnes heldin New York, and 374 tonnescurrently stored in Paris, to leaveroughly half of its total stock of 3,396tonnes in Frankfurt. Currently itholds just 31 per cent of its reservesthere. The bank said it no longerneeded to hold reserves at theBanque du France, since they areboth members of the euro.

But it will still keep significantportions at the Federal Reserve andBank of England for trading andliquidity purposes.

At current prices, this is a transferof gold worth about 27.4bn(22.8bn), from total holdings worthroughly 115bn holdings whichplace Germany second only to the US

by the size of its gold pile.The Bundesbank last year cameunder public pressure to inspect orrepatriate reserves after the FederalCourt of Auditors revealed that theyhad never fully been checked.Germany started building up itshoard of the yellow metal in 1951,but held 98 per cent of its giant stockabroad during the Cold War, forsecurity reasons. But these reasonsno longer held, Bundesbank boardmembers said yesterday.

Bundesbank torepatriate 19pcof gold reserve

BY BEN SOUTHWOOD

SOURCE:ACEA

DEMAND for new cars in recession-struck Europe fell to a 17-year low in2012, according to industry figuresreleased yesterday.Yet motorists in the UK are bucking

the downward trend seen elsewhereon the continent.

Passenger car registrations acrossthe European Union plummeted by8.2 per cent last year the sharpestdecline since 1993.And the year ended on a particularly

harsh note for the car industry, withregistrations down 16.3 per cent inDecember compared to the samemonth a year earlier.

Over the whole year [2012], demandfor new cars reached the lowest levelrecorded since 1995, totalling12,053,904 units, the report by theEuropean Automobile ManufacturersAssociation (ACEA) said.

However, the figures showed regis-trations in the UK growing by 5.3 percent last year, in contrast to the gloomin most other peer countries.

In Germany registrations weredown 2.9 per cent, yet in neighbour-ing France they plunged 13.9 per cent.

Purchases ofnew cars in EU

at 17-year lowBY HARRY BANKS In Spain and Italy car registrations in2012 were down 13.4 per cent and 19.9per cent respectively.

The actual decline is much worsethan the statistics would have usbelieve as sales figures for the yearwere artificially inflated as a result ofself-registrations by dealers andautomakers, especially in the regionsbiggest market, Germany, said Ernst& Young partner Peter Fuss.

Even Germanys mighty Volkswagensuffered a drop in sales, according tothe ACEA. Yet South Korean brandsHyundai and Kia, which are makingan aggressive push in Europe, provedit is possible to expand sales evenduring a grim economic downturn.

Car registrations falling in the EU

Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12

-15

-20

-10

5

0

-5

15

10

20 % change year-on-year

FORMER Morgan Stanleyinvestment banker Simon Robeyis teaming up with senior City

figure Sir Simon Robertson toform a joint advisory boutique,the latest in a line of veterandealmakers to quit a largeinvestment bank for pasturesnew.

Robey, whose 25-year career atMorgan Stanley saw him latterlyas head of the UK and co-chairman of Global Mergers and

Acquisitions, will joinRobertsons firm which will berenamed Robertson Robey

BY CITY A.M. REPORTER Associates, it said yesterday.Robertson, himself a former

banker at Goldman Sachs, set uphis own advisory firm in 2005 tooffer companies financial advice

on transactions and strategy.He also holds a number of

senior positions in some ofBritains largest companies,including chairman at Rolls-RoyceGroup and deputy chairman andsenior independent non-executivedirector at HSBC.

A number of top dealmakersare leaving investment banks topursue their future at smallerindependent firms as deal activityin recent years has stagnated.


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Simon Robey, 52, announced his decision to leave Morgan Stanley in September 2012

Top investment bankers join upto form boutique advisory firm

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THURSDAY 17 JANUARY 201318 cityam.com

LONDON REPORT

Lloyds BankThe banks commercial banking

division has appointed KarinCook chief operating officer. Shejoins from HSBC, where she wasmost recently global chiefoperating officer for its privatebank. Cook has over 20 yearsexperience in the industry, andhas also held roles at GoldmanSachs and Morgan Stanley.

Saffrey ChampnessThe accountancy firm has appointed Mick Downs as aconsultant in its London-based landed estates and ruralbusiness group. He was most recently a technicalspecialist at HMRC, with responsibility for inheritance taxreliefs for National Heritage property. Downs retired fromHMRC last year, after almost 20 years working there.

BTIGThe financial services firm has appointed two sales traders

to its London office. Margie Sadleir joins as a senioremerging markets sales trader from CA Cheuvreux, whereshe helped launch its emerging markets business. DanielMuller joins as a pan European sales trader from RBS,where he was an equity sales trader for 16 years. Mullerhas also held roles at BNP Paribas and SG Warburg.

AshurstThe law firm has appointed Denis Fosselard as a partner inits European competition team. He joins from LeganceStudio Legale Associato, where he was head of itsantitrust practice. Fosselard was also previously a partnerat Gianni, Origoni, Grippo & Partners.

BNP Paribas Real EstateSteven Skinner has been appointed as a director in thereal estate investment firms central London investment

team. He joins from Savills, where he primarily acted onbehalf of institutional clients in London propertytransactions.

Carmignac GestionThe asset management firm has appointed Nick Cassey asa credit analyst in its British sales team. He joins fromAviva, where he has worked for the last 22 years. Casseymost recently worked for Aviva Investors in London,where he specialised in independent financial adviserdistribution.

Milbank, Tweed, Hadley & McCloyThe law firm has appointed Chris Evans as a partner in itsLondon-based global litigaiton and arbitration group. Hejoins from Norton Rose, where he was a financial servicesregulatory litigation lawyer. Evans specialises inrepresenting financial institutions in contentiousregulatory proceedings.

WHOS SWITCHING JOBS Edited by Annabel Palmer

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

Goldman andJP Morgan helpboost Wall St

THE S&P 500 ended nearly flatyesterday as solid earnings fromtwo major banks and abounceback in Apple shares

offset concerns about a lowerforecast for global growth in 2013(see UK report).

Shares ofGoldman Sachs hit theirhighest since May 2011 as earningsnearly tripled on increased revenue

from dealmaking and lower compen-sation expenses.JPMorgan Chasesaidfourth-quarter net income jumped 53per cent and earnings for 2012 set arecord. JPMorgan shares rose 1 percent to $46.82, while Goldmanclimbed 4.1 per cent to $141.09.They were among the first big banks

to report results and helped to lift esti-mates for S&P 500 corporate earningsslightly, to a 2.2 percent gain,Thomson Reuters data sho wed.

Pretty solid numbers from bothJPMorgan and Goldman Sachs are put-ting a lot of momentum behind thefinancials, with a lot more names toreport this week. But I think that'shelping to put a better bid to the mar-ket overall, said Michael James, seniortrader at Wedbush Morgan.Apple rebounded after three days of

losses, helping the Nasdaq outperformthe S&P 500 and Dow. Apple rose 4.2percent to $506.09. It closed below$500 on Tuesday for the first timesince February.The Dow Jones industrial average

was down 23.66 points, or 0.17 percent, at 13,511.23. The Standard &Poors 500 Index was up 0.29 points, or0.02 per cent, at 1,472.63. The NasdaqComposite Index was up 6.77 points,or 0.22 per cent, at 3,117.54.The biggest drag on the Dow was

Boeing, whose shares fell 3.4 per centto $74.34 on concerns about its newDreamliner passenger jets. Japan's twoleading airlines grounded their fleetsof 787s after an emergency landing,adding to safety concerns triggered bya series of recent incidents.After the bell, shares of eBay were

trading up 0.7 at $53.28, reversing aninitial decline following the release ofits results. Also after the close, shares

of CBS rose 8.3 percent to $41.10 after itsaid it will convert its OutdoorAmericas division into a real estateinvestment trust.

Earlier in the day, US economic datashowed consumer prices were flat inDecember, p

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