cityam 2013-01-28

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BUSINESS WITH PERSONALITY

Caroline had always wanted to run her own online business. Now she has three.

To book your place and read Carolines story visit www.cassmba.com The Cass MBA. Inspiring stories.Cass MBA Evening Information Session:Wednesday 13 February 2013

www.cassmba.com

The Cass MBA.

Inspiring stories.

FTSE firms toput brakeson bonusesBLUE-CHIP companies plan to reinin bonus payouts for their execu-tive staff this year, though bossescan expect to see their pay packetsgrow in the long run, according toresearch out today.

One in five FTSE 100 firmsexpect executive bonuses to fallby at least 10 per cent this year,and 17 per cent will impose adrop of more than a quarter, aPwC survey suggests.

Around half of the FTSE 100expect bonus payments to beequal to last year, while almostfour in 10 are freezing salaries forexecutive directors in 2013 as theybow to regulatory andshareholder pressure.

And roughly half of the top-flight firms surveyed plan tomake changes to their executivepay policies this year, ahead ofnew rules on binding shareholdervotes due in 2014.

The calls from shareholders forpay and bonus restraint appear tohave hit home, said Tom Gosling,head of PwCs reward practice.

Following a number of years inwhich bonuses had crept up toaround 80 per cent of maximumpay on average; we expect them tofall back towards target levels ofaround 60 per cent of pay thisyear.

However, Gosling pointed outthat most companies think paylevels have now bottomed out,and many expect to see longer-term rises to ensure top staff staywith the firm.

Nearly two thirds of

companies said the scrutiny onexecutive pay is making the UK anunattractive location forexecutives, he said.

Todays figures make more grim reading for chancellor George Osborne following the decline in UK GDP at the end of 2012 announced last week

HOUSEHOLD consumption maytake five more years to fight its wayout of the worst consumptionslump since the great depressionand back to its pre-crisis peak,Deloitte warned this morning.

Consumer spending has improvedonly marginally since it fell off acliff during the credit crunch, andthis gloomy trend is set to continue,the accounting giant said.This came after the most recent

forecasts from the official budgetwatchdog, the Office for BudgetResponsibility (OBR), also predictedit would take until 2017 beforehouseholds were consuming asmuch as in 2007 a Japan-style lostdecade for consumption.

The consumer faces a long haul,top Deloitte economist Ian Stewartsaid in a note seen byCity A.M. It islikely to take another five years forconsumer spending just to get backto where it was in 2007.

Deloittes consumer tracker, outthis morning, did little to calm wor-ries that consumption spendingwould be held down for years.Though the headline sentiment fig-ure improved from minus 39 percent in the fourth quarter of 2011 tominus 33 per cent in the same peri-od of 2012, this still suggested con-sumption budgets were being

pushed in the wrong direction.And consumers still said they werecutting back expenditure on goingout, clothing and major consump-

www.cityam.com FREE

tion purchases though at a slowerrate than in 2011.These downbeat statistics chimed

with Fridays revelation that theeconomy had contracted faster thaneconomists expected.

GDP shrunk 0.3 per cent in thefourth quarter of last year, the

Office for National Statistics said inits first output estimate, confound-ing analysts who mostly thought itwould edge back only around 0.1

per cent, and raising the frighten-ing threat of a triple-dip recession.The data was so bad that Citis

Michael Saunders predicted realGDP per head would not reach itspre-recession peak until 2020. Andeven with continued weakness,Saunders guessed that consumer

price inflation would stay above tar-get for an extended period.Despite all this bad news,

Deloittes Stewart told City A.M.

things were getting a bit better.The outlook is hardly rosy, but

there are reasons for thinking thatthe worst has passed for the UK con-sumer, he said, pointing out thatthe coalitions main tax rises hadalready happened, inflation though still high was on its way

down, and buoyant equity marketswere raising consumer wealth.

BY MARION DAKERS

FTSE 100 6,284.45 +19.54 DOW 13,895.98 +70.65 NASDAQ 3,149.71 +19.33 /$ 1.58 unc / M1.17 -0.01 /$ 1.35 +0.01

BY BEN SOUTHWOOD

CONSUMERSLUMP

TOLAST UNTIL 2017

CROWDFUNDYOUR STARTUPEntrepreneurs, Page 22Interview, Page 16

MORE: Forum, Page 18

ALLISTER HEATH: Page 2

Certified Distribution

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

Consumption stuck well below pre-crisis highs

Q32010Q32007Q32004Q32001Q31998

220

180

150

160

170

200

240

230

210

190

bn

Real household expenditure,seasonally adjusted

Source:OfceorNationalStatistics

ISSUE 1,806 MONDAY 28 JANUARY 2013

EASTERN AMBITIONCITY AIRPORT BOSS DECLAN COLLIERS GROWTH PLANS

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[email protected]

Follow me on Twitter: @allisterheath

THE SECOND phase of the 33bnHigh Speed Two (HS2) railway willbe unveiled by the government thismorning, with communities learn-ing whether they will be affected bythe twin lines from Birmingham toLeeds and Manchester.

However plans for a direct link toHeathrow have been postponedwhile the government decides onthe future of airport expansion.

Sources with knowledge of todaysannouncement suggest one leg ofHS2 will head north ofBirmingham, passing throughchancellor George Osbornes Tattonconstituency before stopping atManchester airport and ManchesterPiccadilly station. There will also bea short branch line to Crewe and aconnection to the existing WestCoast route, cutting journey timesto cities such as Liverpool.The other leg is expected to run

north-east from Birmingham to anew station in the Nottingham sub-urbs. There will be a further stop onthe outskirts of Sheffield before theroute ends in the centre of Leeds.

Labour peer Lord (Andrew)Adonis, who commissioned the HS2project, yesterday told City A.M.whyhe believes it must be built: Thereis a very strong business case forHS2. Without a new high-speed line

Hands to move on with fundraiserGuy Hands, founder of private equity firmTerra Firma, aims to bolster his plans toraise funds this year by returning 3bn toinvestors through disposals within thenext 12 to 18 months. Mr Hands is pressingahead with a 3bn fund to buy greenenergy infrastructure assets, people withknowledge of the matter said.

Banks to test water with new CLOsBankers in Europe are testing the waterwith new variations of a type of

structured finance product that boomeduntil the subprime crisis, as they seek totake advantage of strong investordemand for high-yielding assets.Barclays and Credit Suisse are bothpreparing collateralised loan obligations which bundle corporate loans primarilyfor leveraged buyouts into a single vehicle for investment groups Pramerica andCairn Capital, said sources.

BofA shifts derivatives to UKBank of America has begun moving morethan $50bn of derivatives business out ofits Dublin-based operation and into its UKsubsidiary, according to sources.

Residency allowed for the wealthyDebt-stricken European Union memberstates are being flooded with inquiriesfrom wealthy Chinese seeking tocapitalise on increasingly generousschemes that allow them, in effect, to buypermanent residency.

De La Rue loses Chinese dealThe banknote printer De La Rue, whichcelebrates its 200th a nniversary this year,has been dealt a blow, missing a largecontract for the Chinese government.

Boeing chief under pressureBoeing chief executive Jim McNerney hasbeen warned to fix the black eyeinflicted on the companys reputation ashe prepares to face Wall Street for thefirst time since the 787 Dreamlinergrounding.

Mercedes F1 boss to keep rival sharesThe new boss of Mercedes Formula Oneteam has no plans to sell his 15.4 per centstake in its listed rival Williams despitepossible concernsof conflict of interest.

Fonterra says New Zealand milk safeFonterra Cooperative Group, the worldsbiggest exporter of dairy products,moved to reassure global customersSunday regarding the safety of NewZealands milk supply.

Truck maker Volvo to enter ChinaSwedens Volvo is betting nearly $1bnthat the struggling Chinese market for bigtrucks will rebound, a move that couldalso bolster the name of its Chinesepartner abroad.

PRINTING money to lower interestrates has blown open pensionfund deficits, making firms pilemoney in to plug the gap anddenying the taxman a majorstream of revenue, according toanalysis of new data from thePension Protection Fund (PPF).

Quantitative easing (QE) is onemajor factor in increasing thedeficits, which the PPF estimateshave increased by 135bn from thestart of QE in 2009 to March 2012.

A Pension InsuranceCorporation analysis of thenumbers suggests this has takenaway money that firms could haveinvested in productive activities orrecorded as taxable profits,potentially leaving the Treasury37bn worse off.

Pension funds have to fill thesedeficits money is coming out ofcorporate sponsors of pensionschemes into filling the deficits,and theres a tax consequence ofthat, the Pension InsuranceCorporations Mark Gull told theSunday Telegraph.

The firms instead suggest theBank of England use QE money to

buy overvalued PFI andinfrastructure assets from banksthen sell them to pension funds ata lower price, unburdening banksand giving pension funds a goodlong-term asset in one action.

HIGH SPEED TWO ROUTE REVEALED

East MidlandsAirport

Crewe

London

Meadowhall (or Shefeld)

Leeds City Centre

Manchester Airport

Manchester Piccadilly

Toton Sidings (or Nottingham)

FIRST PHASE

SECOND PHASE

Birmingham

Birmingham Airport

UK tax takes hit

as QE increasespension deficits

2 NEWS

BY TIM WALLACE

BY JAMES WATERSON

To contact the newsdesk email [email protected]

IF we want to identify a problemcorrectly, it is vital to get the factsright. The economy is doingpoorly: the official statistics

suggest it shrank by 0.3 per cent inthe last three months of last year;even when one excludes the oil andgas sector, growth was feeble in 2012.

We also know that the chancellorsbudget plans are in tatters, with thedeficit going up again.

But there are lots of less well-knownfacts that demolish the increasinglymainstream explanation of our poorperformance over the past few years,namely that austerity has gone toofar and too fast or that monetary pol-icy has been insufficiently loose andwe now need quantitative easing (QE)to be expanded even further, perhapsto include other kinds of assets.

My first fact is that public spendingas a share of GDP has gone up, not

EDITORSLETTER

ALLISTER HEATH

The state is still growing this isnt the right kind of austerity

MONDAY 28 JANUARY 2013

down, according to the OECD. Its lat-est estimate is that it increased from48.6 per cent of GDP in 2011 to 49 percent of GDP in 2012. The state is get-ting relatively bigger, not smaller, thevery reverse of what was meant tohappen. Of course, parts of the stateare shrinking infrastructure spend-ing is much lower than it was (andthe government has stupidly failed toallow the private sector to take onextra projects to compensate), coun-cils are closing libraries, and there

has been a much larger than expectedreduction in the public sector work-force, down by another 128,000between September 2011 andSeptember 2012.

But overall government spending,bolstered by higher interest pay-ments, an increase in spending on for-

eign aid and the fact that severaldepartments have seen their spend-ing protected has grown again rela-tive to the overall output of the UKeconomy and thus relative to the pri-vate sector. We are seeing the wrongkind of austerity, focused on highertaxes rather than a genuine downsiz-ing of the state, and a governmentthat has horrendously failed to gain agrip on current spending.

If you need more convincing, con-sider my second fact. As everybodyknows, there is meant to be a payfreeze in the public sector and yet

Money that should have been savedhas not been. This is symptomatic ofthe coalitions lack of control.

My third fact is that real wages arecollapsing, depressing consumerspending inflation on the retailprice index is 2.7 per cent and 3.1 percent on the consumer price index.

Private sector workers have on aver-age seen the purchasing power oftheir pay slashed by up to 1.7 per centover the past year alone. Again, this isthe wrong kind of austerity.Im allin favour of changing the Bank ofEnglands remit but more inflationand even more depressed consumersis the last thing we need.

It is high time for more facts andless propaganda in the debate onBritains economic policy.

the average total pay for state employ-ees increased by 2 per cent over the 12months to November 2012 in nomi-nal terms, which astonishingly ismore than the 1.4 per cent in the pri-vate sector. There are partial mitigat-ing factors. Perhaps the cuts to thestates payroll are primarily happen-

ing by not recruiting entry-level peo-ple, who are paid less, reducing theaverage wage (but this ought to bepartly compensated for by the retire-ment of more expensive staff). Lots ofhard-working nurses and others inthe public sector have genuinely seenno pay hikes, and are struggling.

But on average pay has gone up sub-stantially in nominal terms in thepublic sector since the coalition cameto power. People are being promotedor moved up career rungs to ensurethey get a raise, bypassing instruc-tions from the Treasury to freeze pay.

we will end up spending more moneyupgrading the existing Victorian rail-way which is nearly 200 years old andincapable of adding significant extracapacity.

HS2 will halve the journeybetween London and Manchester to1hr 8min.

But the government is braced forfurious attacks from people who feartheir homes and businesses will beblighted and by economists whobelieve the costs are greater than thebenefits and that other projects makemore economic sense. Phase one is

timetabled to open in 2026, with thesecond stage following in 2032.

The government is deluded if itthinks HS2 will regenerate the North.The regions long-term economicproblems will not be solved by fasterrail links to London, said Dr RichardWellings of the IEA think tank.

Towns such as Doncaster alreadyenjoy fast links, but remain amongthe poorest places in the country. HS2will be used as an excuse to waste bil-lions more on flawed regenerationschemes in northern cities, at furtherexpense to taxpayers.

The new jobs website or LondonproessionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

IN BRIEFIreland looks to change debt dealn Ireland will make changes to its

proposal to ease the statess bank debtburden, government ministers saidyesterday, adding that failure to reacha deal with the European Central Bankcould have catastrophicconsequences. The ECB rejectedIrelands preferred solution over howto reschedule part of its state-ownedbank debt, it was reported at theweekend, according to EU sourcesfamiliar with the discussions.

Singapore in rate rigging rown Internal reviews by banks inSingapore have found evidence thattraders colluded to manipulate rates inthe offshore foreign exchange market,according to a source with knowledgeof the inquiries. The discovery widensa global lending rate scandal into newmarkets, as fallout from the Libor case

puts banks under added scrutiny andspurs both regulators and institutionsto reconsider how certain key interestand currency rates are set.

State of emergency in EgyptnEgyptian President Mohamed Mursideclared a month-long state ofemergency last night in Port Said,Ismailia and Suez along the Suez Canal,which have been the focus of anti-government violence that has killeddozens of people over the past four days.Seven people were shot dead andhundreds were injured in Port Saidduring the funerals of 33 protesters killedat the weekend. A total of 49 peoplehave been killed in demos around thecountry since Thursday.

High Speed Two railwayto North unveiled today

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UK FIRMS paid out a record 4.9bn inredundancy payments in the year to31 March 2012, a nine per cent riseon the previous 12 months as publicsector job cuts offset a fall in privatesector layoffs.

According to new research bycommercial law firm EMW, since thebeginning of the recession inSeptember 2008 UK employers haveshelled out a total of 18.4bn inredundancy payments, with lastyears figure up by almost half amillion pounds from the 4.5bnrecorded in 2010-11.

The recent rise in redundancypayouts has been driven inparticular by increasing numbers ofredundancies in the publicsector,said Louise Holder, principalat EMW. The strong unionisation ofthe public sector also means publicsector redundancy payouts tend tobe higher than those available inequivalent private sector jobs.

In 2011-12, 410,000 redundancypayments were made by UKemployers, with an averagesettlement of 11,951 or around sixmonths pay for workers on themedian UK salary of 26,200.

UK firms shellout record 5bn

on redundancyBY ELIZABETH FOURNIER

ECONOMISTS and campaigners hitout at the incoming Bank of Englandgovernors plans for the British econo-my yesterday, arguing that higherinflation would damage the economyrather than promote a recovery.

Mark Carney told the WorldEconomic Forum that the immedi-ate priority is to ensure economiesreach escape velocity, and that thereshould be tolerances around theinflation target in a downturn.

But he raised fears that the longsqueeze on incomes will continueunder the new governor.

High inflation could makegrowth worse by undermining con-sumer confidence, governmentpensions adviser Ros Altmann toldCity A.M. Inflation makes thosewith money spend less as they worryabout the future, particularly with

City fears over

Carneys planfor high prices

BY TIM WALLACE an ageing population.RBS economist Ross Walker said he

fears higher inflation will not help.The objective is to nurture a recov-

ery in real output, he said in aresearch note. Simply fuelling infla-tion would be macroeconomicallydestabilising and result in an unjustredistribution amounting to a breachof the states existing contract tolimit the erosion in the value ofmoney to two per cent a year.

Last week outgoing governor SirMervyn King warned that scrappingthe inflation target risks pushinginflation expectations higher, itselfcreating more inflation.And former policymaker Adam

Posen said extra volatility in inflationwould hurt the economy.

FSA head Lord Turner is set to makea speech on the future of the inflationtarget next month, and it is anticipat-ed he will favour a change of target.

M&A deals in emerging marketssurge in 2012 following slumpGLOBAL spending on mergers and

acquisitions (M&A) in emerginghigh-growth markets rose by fiveper cent last year, following a 25per cent slump in 2011.

However, spending by Britishfirms more than halved, accordingto figures released today.

Research by law firm FreshfieldsBruckhaus Deringer puts globalinvestment in the worlds 24fastest-growing economies in 2012at $162.4bn (102.8bn), as sluggishgrowth in domestic marketsencouraged more foreign

BY JAMES TITCOMB investment in countries such asChina, Mexico and Russia.

US firms were the biggest

investors, with acquisition spendingrising 70 per cent to over $22bn.Belgium was the next biggestspender at $20.5bn, although thiswas almost entirely down to brewerAnheuser-Busch Inbevs $20bn dealfor Mexicos Modelo. UK firms werethe fifth-highest spenders, with$10.7bn worth of deals in high-growth countries.

China came out as the mostpopular destination for investment,with $35bn spent on acquisitions byforeign companies.

The food and beverage, insurance,metals and mining, and bankingsectors accounted for almost half of

foreign investments.After a period where manyinvestors have been concentratingon matters closer to home and haveheld off investing in higher growthmarkets, we are seeing a gradualreturn of corporate appetite formore sizeable investments in theseeconomies, Freshfields global headof corporate, Edward Braham said.

2011 proved slow, 2012 was moreactive and the early signs for 2013point to deal flow in higher growthmarkets picking up further.

COMPANIES killed off pensionschemes at a record rate last yearas mounting costs led to a slew offresh closures, figures out todayshow.

A survey by the NationalAssociation of Pension Funds(NAPF) found that open defined

benefit schemes plunged by athird in the private sector last

Pension schemes are closing at

the fastest rate ever as costs hitBY MICHAEL BOW year, down to just 13 per cent the fastest closure rate ever.

Closures fell by nearly 10 percent between 2010 and 2011.

The pressures on final salarypensions have proven too great formany businesses, NAPF boss

Joanne Segars said.The poll also found just 10p out

of every 1 of pension fund cashwas invested in listed UKcompanies last year.

MONDAY 28 JANUARY 20133NEWScityam.com

NAPF chief executive Joanne Segars said businesses were under cost pressures

Source:Freshfields

SINGAPORE

15.9

HONG KONG

17

CHINA

34.9

RUSSIA

18.6

MEXICO

25.6 INDONESIA13.8

BRAZIL

18.2

BELGIUM

20.5

UNITED STATES

22

UNITED KINGDOM

10.7

M&A DEALS BOOM IN EMERGING MARKETS

Value of Transactions ($bn)

MOST TARGETED HIGH-GROWTH MARKETSBIGGEST SPENDING COUNTRIES

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COFFEE chain Starbucks yesterdayinsisted it is absolutely committedto a massive expansion in the UK,despite reports its chief executiveraised doubts about the investmentwith Downing Street following recentallegations of tax avoidance.A Starbucks spokesman confirmed

toCity A.M. that last Friday UK manag-ing director Kris Engskov met withNumber 10 officials and the topics dis-cussed included negative commentsmade by both David Cameron andTreasury minister Danny Alexanderabout the companys tax affairs.

But Starbucks insists the issue willnot delay its plans to open 300 newstores and create 5,000 new jobs by2016.

We had a very constructive meet-ing which was long-scheduled, thespokesman said yesterday.

Last week the Prime Minister usedhis speech to the World EconomicForum at Davos to take a standagainst companies who use aggressive

Starbucks plays

down claimsof tax threats

BY JAMES WATERSON tactics to minimise their tax bills, say-ing they should wake up and smellthe coffee.This was widely interpreted as a ref-

erence to Starbucks tax arrange-ments, which saw it pay just 8.5m inUK corporation tax since launching inthe country 15 years ago.

Following a public outcry at the endof last year the company has voluntar-ily agreed to forgo legal tax deduc-tions, guaranteeing the Treasury anadditional 20m in revenue over thenext two years.The company is keen to make it clear

that it is paying the full amount of cor-poration tax that is due after droppingthe controversial arrangements, asopposed to simply making a donationto fend off criticism.

Meanwhile criticism of tax avoid-ance schemes will continue onThursday when the Big Four account-ancy firms appear in front of theHouse of Commons public accountscommittee. MPs are expected todemand details of which large compa-nies they advised on tax planning.

Kris Engskovs company claims to contribute 300m a year to the UK economy

MONDAY 28 JANUARY 20134 NEWS cityam.com

Bumi board to unveil radicalshakeup ahead of crunch voteTHE MANAGEMENT of troubledIndonesian miner Bumi is set to

unveil a drastic overhaul of itssenior leadership today in a bid toshore up support ahead of a keyshareholder vote on the future ofthe business next month.

Bumi, led by chief executive Nickvon Schirnding, will proposedownsizing the current board from14 members to eight and ditchingthe Bumi name to distance thefirm from the wranglings of thepast, a person familiar with the

BY MICHAEL BOW matter said.The new listed entity, which has a

working title Asia Coal PLC, will stillcontrol 85 per cent of Berau Coal,

the operational arm of the venture.A new chief executive will beappointed at Berau. Von Schirndingwill also unveil plans to ramp upproduction of coal from 22m tonnesa year to 30m tonnes, as part of theorganisations development.

Bumi shareholders are set to voteon rival plans put forward by majorshareholder Nat Rothschild, whowants to replace 12 of the 14 currentmembers of the board, when the

owners of the company meet at anemergency meeting, scheduled for21 February.

Rothschilds vehicle NRI said on

Saturday it had reported two hedgefund investors in Bumi, Route Oneand Orchard Capital, to the UKsTakeover Panel for allegedlybreaching concert party rules.

Both Orchard Capital and RouteOne are invested in or affiliatedwith companies that have exposureto the Bakries margin loans, theNRI statement said.

Neither firm could be reached forcomment yesterday.

OVER TWO thirds of directors andsenior managers at UK firms saidthe government should slash VATin 2013, according to a survey outthis morning.

Sixty-seven per cent of seniormanagers surveyed by InterimPartners called on the governmentto cut VAT back down to size in thecoming year, up on last yearsslimmer majority of 56 per cent

who backed slashing theconsumption tax.

Managers also called for a steadymonetary policy, Interim Partnerssaid, with a large majority 88 per

cent opposing increased interestrates and more than half 57 per

More and more firms want VATcut to help businesses recover

BY BEN SOUTHWOOD cent coming out against morequantitative easing (QE).

Both majorities had increasedsince managers were asked thesame questions last year, as the UKhas continued to find itself unableto fight its way out of the clutchesof economic slump.

The support for continued lowinterest rates has increased as theeconomy has continued tostruggle, said Interim Partnersmanaging director Doug Baird.

However, there appears to begrowing concern about the impactof QE many senior managers donot see QE as a long-term solutionto the UK economys problems. He

said they thought QE had come upagainst diminishing returns.

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THE number of new corporate

manslaughter cases opened by theCrown Prosecution Service (CPS) rose40 per cent from 2011 to last year asmore companies face accusationsover work-related deaths.

Law firm Pinsent Masons, whichcompiled the figures, said there were63 cases opened last year, comparedto 45 in 2011.

Records only date from 2009 twoyears after the introduction of theCorporate Manslaughter andCorporate Homicide Act, which allowsthe convictions of companies fordeaths from management failureswhich constitute a gross breach of aduty of care.There have only been three convic-

tions since the law was put in place,but Pinsent Masons said this figure isthe tip of the iceberg as cases take solong to prepare and take throughcourt.

Specialist health and safety lawyerSimon Joyston-Bechal said: High-riskindustries and companies cannot bereassured by the current lack of con-victions for corporate manslaughter.

He added that companies shouldthink twice about excessive cost-cut-ting that could affect employeeshealth and safety.

Companies that do this could findtheir cost-cutting decisions leave themliable for prosecution if there is anaccident.

More firms inthe dock overdeaths at work

BY JENNY FORSYTH

EASYJET chairman Sir Mike Rakeplans to step down from the boardthis summer, after three years oflocking horns with the budget air-lines founder and biggest share-holder.

Sir Mike faced down calls for hisresignation last year from Sir SteliosHaji-Ioannou, whose family holds a37 per cent stake in EasyJet. SirStelios dubbed the chairman MrConflict of Interest over his non-executive roles at Barclays and BT.

Sir Mike said the timing was rightfor his resignation, as EasyJet standson the threshold of entry to the

FTSE 100.Sir Mike is the chairman of BT,

another FTSE 100 component,meaning he would fall foul of corpo-rate governance guidelines ifEasyJet was promoted to the bluechip index during the next reshuf-fle in March.

Sir Mike will still stand for re-elec-tion at the firms annual meetingon 21 February to ensure a smoothhandover to his as-yet-unnamed suc-cessor by the summer.

EasyJet chair toquit after three

turbulent yearsBY MARION DAKERS Charles Gurassa, deputy chairmansince September 2011, has beennamed as a contender to take overthe chairmanship.

Sir Mike was often the target of SirStelios ire over EasyJets plans toreplace some of its fleet.

It is thought that Sir Stelios wasready to voice fresh criticism of thechairman as the shareholder meet-ing drew near.

In advance of the forthcomingAGM I wanted to make my positionclear, said Sir Mike in a statementover the weekend.

EasyJet has by any definitionenjoyed a period of success and prof-itable growth in the last three years.

Airlines ambitions to join theFTSE 100 sped Rakes departure

AT first sight, the departure ofSir Michael Rake as EasyJetchairman is a victory for SirStelios Haji-Ioannou, the

companys founder turned thorn-in-its-side. Sir Stelios sought SirMichaels removal last summer,following the BT chairmans

appointment to deputy chairman atBarclays, arguing overcommitment.

However, despite public criticismby EasyJets largest shareholder, SirMichael held onto his role whenshareholders voted 53.3 per cent inhis favour in August.

Perhaps Rake has had enough. Butif so, it is only after surviving threeyears of infighting. More likely, eventhe multi-tasking knight, who is alsoa director at McGraw-Hill, may haveseen that his EasyJet chairmanship

would be impractical to retain ifEasyJet entered the FTSE 100.

The rule that used to explicitlyforbid holding two FTSE 100chairmanships was changed in 2010.However, the rule does still providethat individuals must have thenecessary time and resources beforetaking on multiple blue chipchairmanships. There are only somany hours, even in Mike Rakes day.

BOTTOMLINE

MARC SIDWELL

Sir Michael Rake is also chairman of BT and deputy chairman of Barclays

EasyJet plc

25 Jan21 Jan 22 Jan 23 Jan 24 Jan

925

875

900

950 p945.00

25 Jan


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US private equity giant Blackstone isset to reap a multi-million poundwindfall after pushing forward plansto sell its stake in the Broadgateestate, home to some 30,000 Cityworkers in London.

The New York based business, thebiggest real estate manager in theworld, is in line for an eightfoldincrease on its investment inBroadgate if it sells its equity stake at aprice in line with the areas currentvaluation of 3.1bn. A deal at thisvalue would make Blackstones stakeworth around 600m, delivering astellar return for the firm, whichbought the stake from British Landfor a snip at 77m in 2009 at theheight of the financial crisis.The future of the estate and

Blackstones plans is likely to crop upwhen British Land reports its thirdquarter management statementtomorrow. The estate is home to someof finances biggest names includingUBS, Deutsche Bank, Icap and a host

Blackstone set

to cash in onBroadgate sale

BY MICHAEL BOW of money managers, and around30,000 employees work out of 16 build-ings throughout the district.

City A.M. ran a campaign backing suc-cessful plans to stop part of the areabeing listed by English Heritage in2011, in order to promote develop-ment.As part of the deal, Blackstone

through its Real Estate PartnersEurope III and Real Estate Partners VIfunds took on 987m of third partydebt but it is still not clear who wouldtake on the debt when the group cash-es in its equity stake. Blackstonedeclined to comment.A sale would be the latest in a string

of crisis-era London property coups forBlackstone. It is currently mullingplans to sell its investment in ChiswickPark. With a price tag of 800m, a salewould be at around a 65 per cent pre-mium on the 480m Blackstone paidfor it. Blackstone is also understood tohave snapped up the campus atDevonshire Square for 340m back inMay, continuing its deal making pres-ence in Londons financial district.

GORDON RAMSAY has turned hisrestaurant empire around after a

turbulent few years, including acostly feud with his father-in-law,to report a return to profitability.

Kavalake which includesrestaurants such as the Savoy Grilland Gordon Ramsay atClaridges delivered pre-taxprofits of 2m in the year toAugust 2012 after suffering a4.4m loss in 2011.

Ramsay, who runs the businesswith managing director Stuart

BY KASMIRA JEFFORD Gillies, said this weekend hewas proud of the groupdelivering its best year to date.

We have negotiated a

difficult path over recent yearsand Im delighted all our hardwork has paid off in what isstill a challengingclimate, he said.

Total sales fell sixper cent to 43.1m inthe period but UKturnover increased 13per cent thanks tonew openings suchas Bread Street

Kitchen in the City.The group has pressed

ahead with expansion plans,particularly in the US where

it has launched threerestaurants in Las Vegas andone in Los Angeles. It also

opened two sites inDoha and plans toopen more sites in theUK and abroad thisyear.

The Broadgate complex houses tens of thousands of City workers close to Liverpool St


Gordon Ramsaysrestaurants includePetrus and Maze grill

GERMAN Chancellor AngelaMerkels centre-right coalition willtoday decide on changes to a draftlaw to clamp down on ultra-fasttrading on stock exchanges, whichit sees as stoking excessive marketturbulence.

High-frequency traders usecomputer algorithms to generatenumerous, lightning-speedautomatic trades that make moneyfrom tiny price differences in themarket. These trades holdinvestments for short periods onlyand have been blamed for causingmarket volatility, such as the so-called flash crash in the US in May

2010, when the stock market fellmore than 1,000 points, or nearly

German government to agree

a law on high-speed tradingBY CITY A.M. REPORTER 10 per cent, within minutes.

Keen to avoid similar crashes onGerman exchanges, Merkels

government wants to implementregulation requiring traders toregister with stock exchangeregulators and disclose theiralgorithms. It also wants to limitthe number of decimal points givenin market prices and to preventtraders from requesting pricinginformation without intending totrade. Other practices like scalping,

which involves using misleadingmarket signals to influence prices,

will be classed as misuse.Once the coalition has agreed on

amendments to the draft law withthe Bundestags finance

committee, it will need to beapproved by the parliament.

Gordon Ramsay back on formas his empire returns to profit

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PROFIT WARNINGS

PROFIT WARNINGS IN THE FOURTH QUARTER

up 26% on the third quarter86

287

70

Equal to 15% of quoted companies

warnings during 2012

26 companies cited delayed or cancelled contracts, a new record

PROFIT WARNINGS IN 2012HIGHEST SINCE 2008

BUSINESS SERVICE FIRMS

WERE HARDEST HIT

Profit warnings rise to highestrate since during credit crunchLISTED UK firms issued more profitwarnings in 2012 than at any point

since the height of the financialcrisis, according to data outyesterday.

Firms listed on the main andjunior markets issued 86 profitwarnings between them in thefinal three months of the year,Ernst & Young said, up 26 per centcompared to the third quarter.

This brought the 2012 total to287 the highest figure since 2008saw the world economy hit by the

BY BEN SOUTHWOOD worst crunch for decades.In total, some 15 per cent of UK

firms quoted on one of the main oralternative exchanges issued profit

warnings last year, again thehighest since 2008, when 18 percent of firms were forced to issuewarnings.

Profit expectations droppedsharply in 2012 as economicforecasts fell and escalating risks inkey global economies unnervedbusinesses, leading to delayedinvestment and purchasingdecisions, explained Ernst &Youngs Keith McGregor.

The UK economy lacked thestrength to gather momentumagainst this difficult globalbackdrop and finished 2012 with

nothing more than a low growthlandscape on the horizon.Business services firms issued the

most warnings FTSE supportservices companies issued 46warnings between them over theyear, while FTSE software &computer services issued 24. Butindustry was also hit close to two-fifths of FTSE-listed industrialtransport firms had to issue awarning in 2012.

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THE FINANCE watchdog will thisweek lay out the process for firms toapply for compensation if they thinkthey were mis-sold interest rate swapproducts, opening the door for poten-tially billions of pounds of claims.

Small firms argue they have lostout, sometimes to the tune of mil-lions of pounds, by splitting a fixedrate loan into a variable rate loan anda swap product to fix the rate.That meant they missed out on the

chance to save interest paymentswhen rates fell and they blame thebanks for selling them swap productswhich turned out to be expensive.

The Financial Services Authority(FSA) is designing a redress process toavoid lengthy court battles.

It may try to dif ferentiate betweensophisticated firms who have onlythemselves to blame and unsophisti-cated small firms who were misled bythe banks who were supposed to behelping.

But business lobby groups fear thata crude guide based on business sizeis a poor way to estimate sophistica-tion and will leave business owners

BY TIM WALLACE with little financial knowledge out ofpocket. It is thought the FSA coulddraw the boundary based on head-count or the capital stock of a f irm.

We have always looked at thisdebate with a degree of scepticismand think it should be revised,Graeme Fisher from the Federation ofSmall Businesses told City A.M. Thiscould class ordinary farmers assophisticated just because they have alot of seasonal labour and a lot of cap-ital value in terms of land.

Instead he favours looking at theway a loan and swap are structured todetermine whether misselling tookplace for example, covering anyswap for a period longer than the

underlying loan.Meanwhile reports suggest the chief

executives of the UKs biggest bankshave met over their joint concern thatthe new Financial ConductAuthoritys (FCA) is taking an overlyaggressive approach to the mis-sellingof interest rate-hedging. Sky News saidlast night the bank bosses were con-cerned that FCA chief MartinWheatley was pursuing a compensa-tion scheme over misselling thatcould cost them a total of up to 10bn.

ITALIAN bank Monte dei Paschi diSiena is seeking a f inancial investorto help revive the ailing lender and

will remove a current cap on votingrights to help raise 1bn (822.5m),its chairman has said.

I would like to have a long-termfinancial investor, AlessandroProfumo told Italian business dailyIl Sole 24 Ore in an interviewpublished yesterday.

Nationality is not a problem.The important thing is that it

believes in our project.Late on Saturday the Bank of

Italy gave its approval to Monte

Italys Monte dei Paschi seeksnew investor to revive lender

BY CITY A.M. REPORTER Paschis request for 3.9bn of stateloans, which Profumo said would

be issued by February. The centralbanks backing was the final stagerequired to free up the financial

help for Italys third-biggest lender,which this week revealed loss-making derivatives trades thatcould cost it about 720m.

Profumo said he was confidentthe bank would generate enoughcash to pay back the state bailoutover the next five years and maynot need to turn to investors toraise the 6.5bn. We believe inthis. The objective is to return toprofits already during the course ofthis year, he said.


Alessandro Profumo said the banks state aid funds would be issued by next month

Barclays is expected to launch anew bond in the coming months inresponse to the Bank of Englandsdemands that the UKs biggest

banks shore up their finances.

The Bank believes theinstitutions are underestimatingthe amount of capital they need bytens of billions of pounds.

Barclays issued a contingentconvertible (coco) bond late last

year that was lapped up byenthusiastic investors, putting it ona strong footing for more issuance.The bank declined to comment.

Barclays mullsbond issuance

BY TIM WALLACE

FIVE foreign banks are now allowedto trade Chinas stock index futures,

it emerged over the weekend, as thecountry takes another step inopening up to internationalinvestors.

The Qualified ForeignInstitutional Investors programmeis being run by the China FinancialFuture Exchange and allowsforeigners to trade shares andbonds in the country.

Morgan Stanley, UBS and BNPParibas are among the five, the WallStreet Journal reported.

China open tomore trading

BY CITY A.M. REPORTER

Banks brace fornew wave of

swaps claims

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When the Sage of Omaha WarrenBuffett has a wager with a friend

he doesnt do things by half. A $1m 10-year bet struck with a NewYork hedge of hedgefunds in 2008 seems to

finally be paying off.Buffet bet the S&P500 would outperformhedge of hedge fundsover a 10 year stretch.Buffett tookthe lead onFriday for thefirst time:Omaha 1 WallStreet 0.

The Capitalistspent the weekendjuggling the two greatest pleasuresthis world has to offer: watchinghigh quality tennis and reading thelatest report from the Office of

Budget Responsibility (OBR).So while most of the world was

wowed by Novak Djokovicsperformance in the Australian Openfinal, we had other things on our

mind. Namely, the uncannyresemblance between sports mostfamous Serb and Robert Chote, theclose-cropped boss of the OBR.

Unfortunately for Chote, the UKs

economic umpires last week said theeconomy shrank in the fourthquarter leaving the OBRs growthforecast looking optimistic. Time fora Plan B? Or at least new balls?

Left: Robert Chote, head of the UK budget watchdog. Right: tennis ace Novak Djokovic

Budget watchdog chief cannotmatch doppelgngers accuracy

10 cityam.com

cityam.com/the-capitalistTHECAPITALISTGot A Story? Email

[email protected]

IT is more subtle than BenBernankes and, according toChristine Harper ofBloomberg, less darkthan its owner wouldlike. But LloydBlankfeins beardmanaged to catcheveryones attentionin Davos, even againstthe wintry backdrop.Blankfein told

CNBC he was extending his holidaylook, a laidback sentiment for thehead of an investment bank. Welike to think Blankfein could alsobe tipping his hat to some earlyCity bankers: the Lombards, orLango Bardi, named for their longbeards. If so, Blankfein wont bereaching for his razor just yet.

Blankfeins beard has alreadyhad its first TV interview

Blankfeins snowy beard is astandout success at Davos

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BOARD members of online bookieSportingbet are set to cash in almost

10m between them when thecompany completes its 485m sale toWilliam Hill and GVC Holdings.

The seven board members are dueto receive exit payments, bonusesand share options valued at around9.6m when the deal completes inmid-March.

Chief executive Andy McIver willreceive a 2m payout when heleaves after six-and-a-half years atSportingbet equivalent to twoyears salary and benefits. He alsoowns stock worth 1.7m and issitting on share options worthanother 1.7m.

Finance director Jim Wilkinsonhas a similarly structured packageof a 1.2m payout and acombination of shares and optionsworth 1.7m.

The other five board members non-executive directors including

chairman Peter Dicks will havethe remainder of their contractspaid off. Dicks, who owns nearly400,000 in shares, will receive a60,000 bonus as well as an 80,000payoff. One director, Marie Stevens,will get 187,500 having signed athree-year contract when she joinedjust four months ago.

Shareholder advocacy group Pirchas criticised Sportingbetsremuneration plan, claiming it isnot based on performance.

Sportingbetsboard set for10m payday

BY JAMES TITCOMB

LISTED private equity firm 3i hasentered the fray to snap up a minori-ty stake in the UKs air traffic controlagency amid an ownership shake upat the air controller, it emerged yes-terday.

3i, led by chief executive SimonBorrows, is understood to have regis-tered its interest in bidding for a 12per cent stake in National Air TrafficServices (Nats), which has been putup for sale by Thomas Cook Airlinesand Tui Travel.The FTSE 250-listed firm, which

makes investments through its listed3i Infrastructure fund, is in the

midst of a restructure as manage-ment seeks to make infrastruc-ture and debt management alarger part of the business.

3i, which has seen its shareprice rally close to 20 percent since December,declined to comment yester-day.

If 3i does bid, itis likely to face aflurry of rivaloffers for the

Sale of UK airtraffic attracts

interest from 3iBY MICHAEL BOW

stake, which is valued at around65m.

Serco, Lockheed Martin and GlobalInfrastructure Partners, which ownsGatwick, have all been tipped in thepast as potential investors.The Treasury, which owns a 49 per

cent stake in Nats on behalf of theCrown, reversed a plan to sell its stakelast year citing security concerns.Another 42 per cent chunk is owned

by a seven strong consortium of air-lines called The Airline Group which includes Thomas Cook Airlinesand Tui Travel as well as BritishAirways and Virgin Atlantic.

The last set of accounts filed for TheAirline Group show its 42 per cent

stake valued at 227m.The combined Thomas Cook andTui stake would be worth around

64.8m on that basis.3is infrastructure division was

uprated to a buy rating by OrielSecurities last week, with RBC

Capital also putting a sector per-formance rating on the stock late

last year.

SUTTON & East Surrey Water(SESW) has become the latest bit ofBritish infrastructure to attract

bid interest from China.Beijing Water Authority, one of

the worlds biggest watercompanies, has hired HSBC to helpit prepare a bid for the utility,according to the Sunday Times.

Current owner IconInfrastructure expects to take finaloffers for SESW this week, havingput the firm up for auction lastautumn.

If successful, Beijing WaterAuthority would join a growing list

Beijing bidder eyes up Sutton& East Surrey Water auction

BY MARION DAKERS of Chinese investors swooping onBritish infrastructure.

Chinas state-controlled CNOOCspent 9.7bn on North Sea oilproducer Nexen last summer, and

a year ago China InvestmentCorporation took a stake inThames Water.

Chancellor George Osborne, whois courting overseas investors toplough money into projects in hisnational infrastructure plan,hailed the latter deal as goodnews for both the British andChinese economies.

HSBC declined to comment,while BWA, Icon and SESW couldnot be reached.

Water companies including Sutton & East Surrey are popular with Chinese funds

Original Thinking Applied

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3i boss Simon Borrowswas appointed in May

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THE long-awaited next generation ofBlackBerry smartphones will beunveiled this week, in a make orbreak moment for manufacturerResearch in Motion (RIM).The Canadian company will unveil

two new devices running BlackBerry10, the first major overhaul to itssoftware in years. The much-neededupgrade has been beset by technicaldelays while RIM has dramaticallylost market share to Apples iPhoneand smartphones running GooglesAndroid software.

At a launch event in New York,chief executive Thorsten Heins willemphasise the multitasking and reli-ability of the new devices. One willbe a touchscreen phone, similar insize to the iPhone, while the otherwill have a physical keyboard.

The company believes that much ofits software, such as its email func-tionality and BlackBerry Messengerchat service, will still be in demand.The handsets and new operating

RIM hoping that

new BlackBerrywill bear fruit

BY JAMES TITCOMB system will be heavily marketed,including with a 30-second advert atthe Super Bowl next Sunday evening,estimated to cost around $3.7m(2.3m) for the slot alone.

Despite BlackBerrys declining mar-ket share and RIMs mounting losses,investor confidence in the companyhas improved in recent months. Itsmarket capitalisation has trebledsince Septembers lows and nowstands at $9.2bn, while Chinese com-puter giant Lenovo last week identi-fied the company as a potentialacquisition target.

Research in Motion boss Thorsten Heins will unveil new smartphones on Wednesday

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Diageo offer for United Spiritshits rocks amid Indian concernsDIAGEOS takeover of Indian drinkscompany United Spirits is set to be

pushed back this week, withregulators in the country yet toapprove the next stage of the deal.

The owner of Johnnie Walkerand Smirnoff agreed to buy a 27.4per cent stake in United Spiritsfrom its founders in November.

With that completed, it was setto launch a mandatory open offerto shareholders for another 26 percent, with the combined offerstotalling $2.1bn (1.3bn).

BY JAMES TITCOMB This offer was supposed to havebeen made by 18 January, butIndian concerns have pushed thispart of the deal back.

The acquisition, which wouldmerge Diageo with the maker ofDalmore and Whyte & Mackay inthe worlds biggest whisky marketby volume, is being scrutinised byIndias Competition Commissionand the countrys Securities andExchange Board.

It is now believed that the dealmay not go through until thesecond quarter of the year.

Shareholders are due to be

updated on the situation at Diageoshalf-year results on Thursday.

The company did not comment.

A NEW standard for companiesuse of personal data will belaunched today amid increasingfears over privacy.

Organisations will now be able tosign up for Fair Data accreditation,a standard that it is hoped will havethe same effect as the Fairtrademark applied to consumerproducts such as coffee.

The Fair Data standard, appliedby the Market Research Society(MRS), is backed by UK informationcommissioner Christopher Grahamand global firms PwC andGlaxoSmithKline. Firms that wantto sign up will be audited by the

MRS and will have to sign up to acode of conduct.

Fair Data standard to launch in

bid to combat privacy worriesBY JAMES TITCOMB The launch of the mark comes in

the wake of increasing concernabout data privacy regarding thelikes of Facebook and Google, with

web users often unsure about howmuch personal information they

give away and how it is used.Both web firms have been

scrutinised by European regulators,and a band of MEPs are looking tointroduce tougher curbs on datausage. London lawyers Olswang arerepresenting individuals launchinglegal action against Google overalleged tracking of iPhone users

web habits.If the public are to let their

personal data be used then theyneed to know which organisations

they can trust to use it properly,Graham said.

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IN BRIEFBrit agency wins Maigret booksn British talent agency The RightHouse has bought the rights to theentire catalogue of Belgian writerGeorges Simenon, the creator offictional police detective Maigret.The purchase, which saw The RightHouse fend off competition fromSimenons son John, means theMaigret books a hit in mainlandEurope will be published in Englishfor the first time. The books will bepublished by Penguin, with a new TVshow also in the pipeline.

Lords to quiz Ofcom chief execn Ofcoms plans for media regulationcould be revealed tomorrow as theregulators chief executive Ed Richardsis grilled in the House of Lords. TheCommunications Committee will quizRichards as part of an inquiry intomedia convergence, which hasbecome an increasing issue withBSkyB selling internet connectionsand BT and Virgin Media entering thepay TV markets. Firms havecomplained about Sky exploiting itsdominance of the pay-TV market.

Nokia launches Spotify rivaln Nokia yesterday launched a paid

music service in a bid to encouragemore people to buy its Lumiasmartphones. The Finnish company,which moved into profit at the end oflast year due to improving Lumiasales, announced Nokia Music+, whichcosts $3.99 (2.53) a month. Althoughthe service is cheaper than the likes ofSpotify, listeners are restricted to aselection of pre-made playlists on theservice, rather than their own choices.

THE GLOBAL technology patent warshit a new high in 2012, with a recordnumber of applications made forinternational computing patents.A flurry of costly court cases

between smartphone and tablet com-panies such as Apple, Samsung andNokia has upped the value of patentsin the last 12 months, and this wasresponsible for a 19 per cent rise inapplications last year, according tolegal information firm Sweet &Maxwell.

Some 14,205 technology-basedapplications were made under theglobal Patent Co-operation Treaty last

year, compared with 11,974 in 2011.Intellectual property lawsuits

between technology firms werethrown into the spotlight last yearwhen Samsung was order to payaround $1bn (633m) to Apple after itwas found to have used patentedApple technology in its smartphones.

The case, one of many that has beenfought between the two companiesaround the world, is being appealedby Samsung.

Meanwhile, Google spent $12.5bn

Patent wars hitrecord high as

tech firms fightBY JAMES TITCOMB on acquiring lossmaking phone man-ufacturer Motorola, with the value ofMotorolas patent arsenal believed tobe a key factor.

Virtually every major company inthe consumer electronics market isnow involved in intellectual propertylitigation with at least one of its com-petitors, said Gwilym Roberts, a part-ner at intellectual property lawyersKilburn & Strode. Everyone involvedis now arming themselves with a warchest of patents.The record figures come amid warn-

ings that patent litigation stifles inno-vation. Samsung and Apple have bothbeen warned by regulators to calmtheir legal aggression.

International patent applications for computers

2003

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FASHION chain Reiss said the Duchess of Cambridges public appearances in outfits by thebrand helped to raise its profile and boost sales last year. The family-owned retailer saidtotal sales excluding franchises rose four per cent to 91.1m in the year to 31 January 2012,up from 87.5m in 2011. Pre-tax profits were flat at 3.64m, according to accounts filed atCompanies House.

REISS SALES BENEFIT FROM ROYAL BOOST

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UK STEEL firms were only able todrag their output up slightly in2012, according to industry dataout this morning.

Firms in the steel industry pro-duced 184,264 tonnes per week onaverage during 2012, EEF subdivi-sion UK Steel said, an increase ofonly one per cent compared to2011s 182,269 tonnes per week.

This virtual standstill positionis despite the export-orientedplant in Teesside re-starting lastspring under new ownership, andleaves UK steel output still around30 per cent below 2008-9 levels,said UK Steel director Ian Rodgers.

Rodgers said that the continuingweakness in euro area car produc-tion was one major factor con-tributing to the lack of substantialrecovery in the sector, as well asreduced construction output.

He also called for more govern-ment spending on infrastructure,echoing calls from other business

Eurozone crisis

leaves UK steeloutput in a rutBY BEN SOUTHWOOD lobby groups.

Heavy industry has suffered dur-ing the recession, with steel out-put falling from its 2007 high of14.4m tonnes to 13.5m tonnes in2008, before collapsing to 10.1mtonnes in 2009.A recover y false-start in 2010 did

not help output to increase itsunk to 9.7m tonnes that yearbefore inching down to 9.5mtonnes in 2011.The 2012 improvement only

brings yearly production uparound 0.1m tonnes.

Steel production inches up as Eurozone crisis continues

20122010200820062004200220001998199619941992

141618

68

24

1012

20 million tonnes


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Winston & StrawnThe law firm has appointedCostanza Russo as a partner in itsLondon-based corporatedepartment. She joins from DLAPiper. Russo focuses on easternEurope, and specialises inadvising on cross-border projectand infrastructure finance,

particularly in the transport and renewable sectors.

PershingThe broker solutions business, part of BNY Mellon, has

appointed Kevin Bonar as its chief executive. He joinsfrom Citigroup, where he was head of investor middleoffice and wealth management in Europe, Middle Eastand Africa. Bonar also previously worked at J HenrySchroder & Co.

MSCIThe investment support service provider has appointedDeborah Yang as head of its index business across

Europe, the Middle East, Africa and India. She joinedMSCI in 2001, and was most recently managing directorand head of client coverage for MSCI Asia excludingJapan. Yang has also held roles at Donaldson Lufkin &Jenrette.

Towers WatsonThe professional services company has appointedJeremy Spira to the thinking ahead group in itsinvestment business. He joins from Mercer, where headvised clients on investment strategy. Spira has alsoheld roles at Alexander Forbes, Southern Life, and atGemini Consulting.

Trowers & HamlinsThe law firm has appointed Ned Beale as a partner in itsdispute resolution and litigation department. He joinsfrom Olswang, where he was a senior associate. Bealespecialises in complex commercial disputes.

Quilter CheviotThe asset management firm has announced twoappointments to its investment management team.Peter Butcher and Nigel Olliff join from Quartet CapitalPartners. Butcher has also held roles at Killik & Co, andOlliff has also worked for Adams & Remer.

VTB Capital

Bryan Ko has been appointed head of investment gradecredit trading in Asia at the investment bank. He joinsfrom Citibank, and has previously held a series ofpositions at Morgan Stanley, in both Hong Kong andLondon.

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

HOUSE PRICES stayed completelyflat in January, according to datareleased this morning.

After inching down a tenth of apercentage point in each of thelast two months, house pricesstayed flat in the first month of2013, Hometrack said.

But demand and supply in themarket both seemed to be falling

with Hometrack identifying a 9.9per cent dive in new buyerregistrations and a 6.8 per centslide in the volume of propertylistings, all in just one month.

This was the biggest fall insupply for 48 months since

January 2009, on a rolling six-month basis, marking an

unusually sharp fall even for atypically rough period.

House prices

flat in JanuaryBY BEN SOUTHWOODINDUSTRIAL firms in China enjoyedhealthy growth in profits inDecember, according to official data.

Profits climbed 17.3 per cent to hit895.2bn (91bn), the NationalBureau of Statistics revealed.Decembers figure meant thatChinese industry made some 5.56trillion in profit over the whole of2012, up 5.3 per cent on 2011.

These profit numbers are yetanother set of statistics suggestingthe worlds second-largest economymay have overcome its slowdown.

Growth picked up for the firsttime in eight quarters in the lastthree months of 2012. And HSBCspurchasing managers indexbusiness survey for the

manufacturing sector climbed to atwo-year high in January.

China factory

profits growBY BEN SOUTHWOOD

SOURCE:UK

STEEL

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FOR A man whose airport wasclosed by almost half a foot ofsnow just days ago, DeclanCollier was remarkably upbeat

when City A.M. met him at the

airports headquarters last week.Im satisfied that we brought as

much as we possibly could to bear tothe problem, in terms of equipmentand manpower, said Collier, who hadspent the last few days in hourly con-tact with London City Airports dozenairlines as they battled unsuccessfullyto stay airborne.

We have the right type of equip-ment, weve got the expertise, wevegot the crews, weve got the people inplace so its really just down to the cir-cumstances... That dictates how suc-cessful youre going to be, addedCollier, after his first brush with snowsince joining the Docklands airport inMarch 2012.The garrulous

Irishman is keen toemphasise the dif-ferences betweenhis firm and theother London air-ports, and says CityAirport with itsfocus on businesstravellers is com-plementary to big-ger rivals such asHeathrow or the mooted ThamesEstuary hub.

In a small way we can help con-tribute to a solution in terms of slots.But for the rest of it I dont think wewill impact on an estuarine airport ifthats what happens.

Colliers first project since takingover the top job has been to re-exam-ine City Airports own ambitiousexpansion plans, having won permis-sion in 2009 to increase traffic from60,000 flights a year to 120,000 with agoal of rising from 3.1m to 10m pas-sengers within the next 12 years.

The airport will submit fresh plansto Newham Council in a few months,which are set to include provisions fornew aircraft stands, a parallel taxiwayto make better use of the runway and,eventually, a new arrivals terminal.

Underpinning the expansion is ashift in the whole centre of gravity inLondon towards the east, says Collier,with the redevelopment of Stratfordand a burgeoning enterprise zonenear the airport drawing in millions

City Airports bosson why Londonsfuture is in the east

of potential passengers.He is speaking to firms at the

Silvertown Quays project across thedocks about direct flights to theirmain markets. Siemens has already

brokered such a deal with airlineCityJet, this week enjoying the firstservices from City Airport to its base inNuremberg, and the next generationof planes will enable links to Africa,the Middle East and eastern Europe.

I think its one of those virtuous cir-cles where the development of aninternational airport with the develop-ment of these opportunities ... ratchetsup the benefits, said Collier.The service offered to businesses is

only possible thanks to the airportsclose links with its airlines a refresh-ing change for Collier, who spentseven years on the receiving end ofRyanairs ire as boss of Dublin Airport.

CityJet chief execChristine Ourmirescheers Colliersfresh perspectiveand the speed atwhich he has gottento grips with a busi-ness-focused airport.

Collier hopes touse the growthplans to create jobs,for example at theairports unusual

retail facilities, which track customersusing facial recognition.

Were really space-constrained here.We cant build though wed love to a Bluewater type of retail offering.What that forces us to do is look atnew, innovative ways.

Collier hopes to trial virtual shop-ping experiences by the end of theyear, allowing time-pressed passengersto place orders for groceries on a pro-jected shop shelf, for delivery upontheir return to London.The airport is currently funding this

upgrade work with existing financing,

and further cash will depend onNewhams planning decision, he said.He is tight-lipped about the long-

term plans of Global InfrastructurePartners and Highstar, the airportsmain investors since 2008, though saysthey are strong and supportiveshareholders.

I would have to say that theyre veryhappy investors in the airport andwere meeting the expectations thatthey have quite rightly put on us.

Declan Collier moved from Dublin Airport Authority in March 2012

MONDAY 28 JANUARY 201316 NEWS INTERVIEW cityam.com

PROUDLY SUPPORTED BY

An epic 65 or 90 mile ride along iconic routes. Experience the highlightsof the Olympic Road Race and the Tour of Britain. Help the worlds poorest

people by supporting development charity CARE International.

Saturday 22 June 2013, London and Surrey

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Photo Julie Edwards

FOLLOW IN THE TRACKS

OF THE PROFESSIONALS

SAVE LIVES

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CV: DECLAN COLLIEREducation:MSc ineconomics from TrinityCollege, DublinLives: Moved to Londonfrom Dublin with wifeand children last year totake City Airport job

Career

1978: Joins Esso Ireland,

moved up the ranks at

parent company

ExxonMobil in Ireland

and the UK.

2005: Takes up the chief

executive role at DublinAirport Authority2009 - June 2012:

Non-executive director atAllied Irish BanksMarch 2012: chiefexecutive of City Airport

Were reallyspace-constrained

here... it forces us tolook at innovativeways to grow

The Docklands hubs chief executive Declan Collier talksto Marion Dakers about his ambitious expansion plans

7/29/2019 Cityam 2013-01-28

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LONDON REPORT

THE UKs corporate calendar ispacked this week as many ofBritains biggest companiesdeliver their results before the

months end.BothAstraZeneca and Royal Dutch

Shell are set to give full-year results onThursday, while British SkyBroadcasting, Haynes Publishing andRank Groupwill give interim reports.Trading announcements are also

expected that day from GemDiamonds, Brewin Dolphin,Enterprise Inns, BabcockInternational Group, Investec,Mitchells and Butlers and GreatPortland Estates.The busy reporting week starts today

with final figures from AminoTechnologies, Porvair, SThree andTelefonica, plus trading announce-ments fromAveva Group and MitieGroup.Tomorrows news includes an inter-

im report from consumer goods giantPZ Cussons and trading updates fromCarpetright, British Land, TheParagon Group, National Grid,

William HillandHyder Consulting.On Wednesday Safestore Holdings

will give its year-end figures whileUnited Utilities andImperial Tobaccowill make trading announcements.

On Friday telecoms group BT, ban-knote printer De La Rue and sweeten-er manufacturer Tate & Lyle areexpected to update their investors.

Ishaq Siddiqi, of ETX Capital Markets,was bullish about the expected earn-ings.

This week will be the busiest weekfor European earnings and followingon from the better-than-expected earn-ings we have seen Stateside, expecta-tions are building from a similar

showing from European blue-chips,he said.

On the economics front, the weekincludes the release of Nationwide

housing figures on Thursday.Howard Archer, of IHS Global

Insight, said: We expect house pricedata to be released during the week bythe Nationwide to show that priceswere flat month-on-month in January,which would leave them down by 0.7per cent year-on-year. Latest data fromthe Nationwide show that houseprices edged down 0.1 per cent month-on-month in December having beenflat in November.

On Wednesday, mortgage approvaland lending figures will revealwhether the sluggish house buyingmarket is coming back to life.

Friday sees the release of Markitmanufacturing figures for both theUK and Europe, giving a glimpse ofhow private sector manufacturing isfaring. Economists are hoping it willbe more good news after UK manufac-turing activity rose to a 15-month highin December. The PurchasingManagers Index (PMI) edged up to 51.4in December, up from 49.2 inNovember and above the 50 readingwhich shows growth.

UK firms set forbusy week oftrading reports

CITYYOUR ONE-STOP SHOP

BROKER VIEWS ANDMARKET REPORTS

cityam.com

FTSE


6,300

6,260

6,280

6,240

6,220

6,180

6,160

6,200

6,284.4525 Jan

DASHBOARD

US indexes areclose to highsafter stock lifts

STOCKS have been on a tear inJanuary, moving major indiceswithin striking distance of all-time highs. The bearish case is a

difficult one to make right now.Earnings have exceeded expecta-

tions, the housing and labour mar-kets have strengthened, lawmakers inWashington no longer seem to be theroadblock that they were for most of

2012, and money has returned tostock funds again.The Standard & Poors 500 Index has

gained 5.4 per cent this year andclosed above 1,500 climbing to thespot where Wall Street strategistsexpected it to be by mid-year. The DowJones industrial average is 2.2 per centaway from all-time highs reached inOctober 2007. The Dow ended Fridayssession at 13,895.98, its highest closesince 31 October, 2007.The S&P has risen for four straight

weeks and eight consecutive sessions,the longest streak of days since 2004.On Friday, the benchmark S&P 500ended at 1,502.96 its first closeabove 1,500 in more than five years.

Once we break above a resistancelevel at 1,510, we dramaticallyincrease the probability that we breakthe highs of 2007, said WalterZimmermann, technical analyst atUnited-ICAP, in New Jersey.This week will see a wide array of

economic releases which will revealwhether the current confidence iswell founded.Data out this weekincludes figures for durable goodsorders and house sales, out today, fol-lowed by news on house prices andconsumer confidence tomorrow.

On Wednesday there will beannouncements on mortgage applica-tions and purchasing prices and theFederal Reserve will give an interestrate decision and monetary policystatement. Figures for spending,unemployment, construction andvehicle sales will follow on Thursdayand Friday.

BESTof the BROKERS

BSKYBPeel Hunt rates the broadcasting group hold with a target of 845p ahead of firsthalf results due on Thursday. The broker expects BSkyB to report 3.4 per centrevenue growth to 3.45bn and flat operating profit of 577m as a result of higherprogramming costs. Longer term, Peel Hunt has concerns about growingcompetition from the likes of BT in the paid TV market.

BRITISH LANDMorgan Stanley rates the property firm overweight and has a price target of 570p.The broker expects British Land to post steady net a sset value when it updates themarket tomorrow, leaving it well placed for an expected rise in high-quality realestate prices this year. Morgan Stanley remains bullish even after a two-month spellof outperformance that has left the stock close to the brokers target.

NATIONAL GRIDLiberum has cut the power group from buy to hold, maintaining its target priceat 730p. The broker sees the stocks value as undemanding yet unexciting,expecting it to deliver nine per cent annual return over the rest of the decade. Onceregulator Ofgem reveals its latest direction within the month, National Gridshareholders will have eight years of clarity over 60 per cent o f the firms assets.

THE WEEKAHEADBritish Sky Broadcasting Group PLC

21 Jan 22 Jan 23 Jan 24 Jan 25 Jan

p805.0802.5

800.0

795.0

797.5

790.0

792.5

802.0025 Jan

British Land Company PLC


p572.5570.0

567.5

562.5

565.0

557.5

560.0

564.5025 Jan

National Grid PLC


p710705

700

695

690

700.0025 Jan

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THROUGHOUT its history theSquare Mile has always beenabout far more than justbusiness. It is also par t ofLondon, part of wider

society, and contributes to the lifeof the broader community increating an environmentconducive to serving andsupporting business.

Key to this is the City ofLondons role as a leading centrefor arts and culture. We arefortunate to have some of the mosttalented organisations andindividuals in this field right onour doorstep.

As one of the largest supportersof the arts and culture in the

country, the City of London

LAST weeks grim news that theeconomy is flatlining causes twoheadaches for the chancellor.First, his tentative deficitreduction plan is losing

credibility by the day. Already he haspostponed the date when he willbalance the budget to the middle ofthe next Parliament. But his hopes ofclosing the UKs unsustainable deficitare based on growth returning to theeconomy.

But secondly, growth is desirable on

its own terms. Even without a colossalbudget deficit, any government with ahope of survival seeks to ensure thepopulation is richer on re-election day.The coalition should have thoughtthrough a strategy for growth in its f irstweeks of office. If growth is to be a cen-trepiece of its strategy, a much bolderapproach is needed now. Here are fivesimple steps the chancellor could takewith almost immediate effect.

First, he should increase the age rangeat which the youth-rate national mini-mum wage applies. With unemploy-ment among young people hoveringaround 1m, there is a real fear of a lost

cityam.com/forum

Britain needs a

pledge for the future that proceeds of growthwill go on tax cuts

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.

18MONDAY 28 JANUARY 2013

MARK LITTLEWOOD

Dear chancellor: Five steps to injectsome life into a flatlining economy

generation which loses touch with thelabour market. Regionalising the mini-mum wage or scrapping it altogetherwould be the best option. But if this is

unpalatable for the coalition, it shouldextend the 4.98 minimum wage tocover those up to the age of 24, ratherthan allowing the higher rate of 6.19to kick in at 21. Getting people onto thefirst rung of the career ladder is anurgent priority. No-one pretends some-one in their early twenties can easilyraise a family on an income of less than5 an hour. But if the alternative is lan-guishing on welfare, then the alterna-tive is worse. Just like anything, if youdecrease prices, people will consumemore. We need people to consumemore labour from our young people.

Secondly, we should look at exempt-

ing small businesses and start-ups froma swathe of regulations. Ideally, a fullscale bonfire of red tape would beundertaken, rather than the feeblesmouldering overseen by the coalitionto date. But, at the very least, we mustensure that small business is givenroom to grow and breathe.Multinationals can cope with complexregulations with relative ease. It issmaller enterprises that feel the pain ofstate interference disproportionately.Companies with a turnover of under

5m should be able to employ up to adozen employees on a self-employedconsultancy basis, exempting themfrom the high risk and costs of stiflinglabour laws.

Rumours of the chancellors disap-pointment with some of his Cabinetcolleagues over their failure to adoptpro-growth plans could perhaps beaddressed through a third policy theintroduction of a formal growth test. Ifproposals can be shown to have even amodest likelihood of impeding eco-nomic activity, the Treasury should beable to swiftly intervene and ensuresuch proposals are shelved. Some of the

ludicrous suggestions circulatingaround Whitehall plain packaging fortobacco, a minimum price for alcoholor banning high stakes betting termi-nals, for example, are all signs of a gov-ernment fiddling while the economyburns. The proponents of such patron-ising and disruptive policies should betold to desist from their pet campaigns

at the very least until the economy isbooming again.

A fourth plank would be to make thelife of regulators harder rather thaneasier. Many small businesses complainabout the heavy-handed, officiousdemands for immediate compliancefrom a range of agencies. Tougher rulesshould be put in place to ensure that

businesses are given clear guidance,not knocked off kilter by on the spotchecks (unless there is an immediatethreat to life and limb), and are granteda generous period of time in which tocomply with any orders. The right ofbusinesses to fight back against regula-tors needs to be strengthened.

Finally, the chancellor should make apledge for the future. He should statethat as soon as his delayed plans forclosing the deficit are completed, anyfuture proceeds of growth will be

used to reduce taxes, not increasespending. This is a promise of tax cutsin five years time, but it would at leastsignal that governments intention is tounleash enterprise rather than spend-ing the practical maximum amount inthe state sector.

Of course, the UK economy is to a con-siderable degree at the mercy of theglobal economy. Nevertheless, promot-ing growth can be a choice for this gov-ernment, not merely an aspiration.Sadly, it is a choice it seems incapable ofmaking with any conviction.Mark Littlewood is director general of the

Institute of Economic Affairs.

Corporation funds facilities asdiverse as the Barbican and theMuseum of London. We do sobecause these organisations have apositive impact on our commonquality of life. And we do our bestto make as much as possibleavailable to as many as possiblethrough partnership with other

London boroughs.

As well as the social benefits o fwidening horizons and raisingaspiration, the City arts andculture cluster also deliverstangible economic output. A newreport demonstrates that it createsan impressive additional 291m tothe economy and supports 7,200jobs across London.

This underscores the economicand business case for investing inthe arts and culture. But Cityinstitutions also invest in this areabecause they recognise thepositive benefits to the widersociety of which they are part. It isinvestment and return thatcannot be simply captured on aspread sheet or an analysis of

value for money.

Far more than this, it is aboutpublic good and the good society over the long term. This takesmany forms. It might be throughpatronage: commissioningartwork, supporting artists orsponsoring major exhibitions allventures that would be impossiblewithout corporate support.

Or it might be long-termphilanthropy endowingfoundations to support the artsand artists, now and in the future.This is a tradition drawn on forthis years Lord Mayors Appeal,with the main benef iciary a newcharity, the City MusicFoundation, supporting talentedyoung musicians at the start of

their careers and helping them to

fulfil their potential. It is inharmony with the Citys culturalambitions.

In recent times, the GuildhallSchool of Music and Drama hasplayed its part in shaping thefuture careers of two great Britishcultural figures: Daniel Craig andDaniel Radcliffe, who playedJames Bond and Harry Potterrespectively.

This just goes to show the City isnot solely a place whereprofessionals come to ply theirtrade. The Square Mile has alwaysbeen home to a diverse cluster,with the arts and culturecontinuing to be a key component.

Roger Gifford i s lord mayor o f the

City of London.

CITYMATTERS

Arts and the City are bound together in the interests of our wider society

ROGER GIFFORD

In association with

RELOC

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19MONDAY 28 JANUARY 2013

Debt mechanics[Re: Economic perfect storm: The fourtrends that killed Western growth, Tuesday]An excellent summary of our economictroubles. But I have an inflation-relatedobservation. Tim Morgan refers to a shift toimmediate consumption as the cause ofdebt growth. But its wrong to blameconsumers. Our economic policy is to blame.Morgans evidence is the growth of debtrelative to GDP being inconsequential untilaround 1981, then relentlessly upward. Butthe growth of debt was essentially the sameboth before and after 1981. What changedwas inflation. Before 1981, inflation kept GDPrising rapidly, eroding the real value of debt.When inflation fell after 1981, inflation couldno longer have the same effect.Thomas Dawson

Pension reforms[Re: Incentive to work will be dampened bypension reform, Friday]Sheila Lawlor is quite wrong to say that ourreforms to the state pension will notincentivise work. We are, in fact, returning toBeveridges original vision of a single,simple, flat-rate state pension, whichrecognises contribution in the workplace.But we will also have a state pension fit forthe twenty-first century, which recognisesthe equally vital work of people bringing upchildren, carers of the disabled, and the self-employed. This builds on the existingcrediting arrangements and, along with alegal duty for employers to contribute to aworkers workplace pension, is surely ineveryones interests.

Steve Webb MP, minister for pensions

THE world may be on the brinkof a currency war, if notalready engaged in coverthostilities. Japans newgovernment has done much to

foster the idea that competitivedevaluation is the order of the day, bybullying the Bank of Japan to achieve2 per cent inflation. But even before itcame to power, there werecomplaints from emergingeconomies that policies of extreme

monetary easing, especially in the US,were destabilising foreign exchanges.

Some say a currency war cant beunderway because no major centralbank has intervened on the foreignexchanges. Yes, the Swiss NationalBank (SNB) staged an interventionafter September 2011 to restrain theSwiss francs appreciation against theeuro. But the SNB was not unilaterallyseeking a trade advantage.

But policymakers have developedmore subtle ways of influencingexchange rates. Since domesticdemand is much less responsive tomacroeconomic policies than beforethe financial crisis, monetary meas-ures may be deployed to influenceexchange rates with minimal risk ofunwanted consequences. Further, thepower of central bankers to influenceexchange rates through statementsseems to be much enhanced. Othermarket participants are now too con-strained to launch any challenge.

It might also seem that there can beno winners in a currency war. Afterall, if one central bank weakens itscurrencys exchange rate, others maytake action to reverse that gain. Butthere are dangers. When a centralbank sets its currency on a weakercourse, it is relying on retaliation toprovide a safety net. The risk is thatmarket dynamics take the exchangerate far lower than the cen

cityam 2013-01-28

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