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OSBORNES ERRORISSUE 1,814 THURSDAY 7 FEBRUARY 2013

THREE LIONS,ONE UPSETEngland beat Brazil: Sport P26-27See Page 5

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RBS took a 390m fine for Libor fid-dling yesterday after watchdogs foundthat 21 staff had colluded with rivalsover four years to fix the key marketinterest rates for the benefit of theirown financial positions.Traders offered each other steaks and

sushi in exchange for entering falseinterest rates to drive the Japanese yenand Swiss franc interest rates up anddown for their own gain.

Investigators found almost 100 writ-ten requests for rates to be fixed,including instant messages boasting ofthe money made from the scheme.Yesterday RBS was fined 87.5m by

the UKs Financial Services Authority,$325m (207.6m) by the USCommodity Futures TradingCommission and $150m by the USDepartment of Justice.

Investment bank chief JohnHourican also lost his job, forfeiting4m in bonuses and shares despite notbeing involved with or aware of theLibor fiddling.The majority of the staff involved in

or aware of the scam have been firedor have resigned. A handful of

staff who were peripherallyinvolved remain. The fine isabove the 290m paid byBarclays but below UBSs$1.5bn, in part because RBS

did not push down rates tofalsely flatter the banks

position during thecredit crunch.

BY TIM WALLACE

15 September 2009Yen Trader 1: can we lower our fixings today please

[Primary Submitter]

Primary Submitter: make your mind up[,] haha, yes

no probs

Yen Trader 1: im like a whores drawers

5 December 2007Yen Trader 2: FYI libors higher again today [...]

YenTrader4: 'ucksake. keep ours low if poss. don't

understand why needs to go up in yen

Yen Trader 2: no reason dude[,] [Bank C] and [Bank

D] went high yest

Yen Trader 4: send the boys round []Yen Manager: pure manipulation going on

20 August 2007Senior Yen Trader: this libor setting is getting nutss

Bank A Trader: im puzzled as to why 3m libor fixing

not coming off after the FED action []

Bank B Trader: [UBS] is lending dolls through my

currencies in 3 month do u see him doing the same

in urs []

Senior Yen Trader: yes[,] he always led usd in my

mkt[,] the jpy libor is a cartel now [..]

Senior Yen Trader: its just amazing how libor fixing

can make you that much money []

Senior Yen Trader: its a cartel now in london[.] they

smack all the 1yr irs ..and fix it very high or low

4 December 2008Swiss Franc Trader: can u put 6m swiss libor in low

pis?

Primary Submitter: NO

Swiss Franc Trader: should have pushed the door

harder

Primary Submitter: Whats it worth

Swiss Franc Trader: ive got some sushi rolls fromyesterday? [...]

Primary Submitter: ok low 6m , just for u

Swiss Franc Trader: wooooooohooooooo[,] 0.01 %?

thatd be awesomePrimary Submitter: 1.33

Swiss Franc Trader: perfect u r a nice man

14 May 2009Swiss Franc Trader: pls can we get super high 3m

super low 6m. PRETTY PLEASE!

Primary Submitter: 41 & 51

Swiss Franc Trader: if u did that[,] i would lvoe [sic]

u forever

Primary Submitter: 41&55 then...

Swiss Franc Trader: if u did that i would come over

there and make love to you[,] your choice

Primary Submitter: 41+51 it is

22 November 2010Senior Yen Trader: hey ...you think we be able to con-

vince [Primary Submitter] to change the libor today?

Yen Trader 1: i can try

Senior Yen Trader: need to drop 3mth Libor and hike

6m Libor he dropped 6m by 2 bps last Friday

Yen Trader 1: at the moment the FED are all over us

about libors

Senior Yen Trader: thats for the USD?

Yen Trader 1: yes

Senior Yen Trader: dun think anyone cares the JPY

libor

Yen Trader 1: not yet[,] i will walk over ot [sic] them

25 November 2010 (audio recording)Primary submitter: Morning, [Senior Yen Trader]? Hi,

[Primary Submitter].

Senior Yen Trader: Yeah, how are you?

Primary submitter: I'm pretty good sir. Very Good.

We're just not, we're not allowed to have those con-

versations on [instant messages].

Senior Yen Trader: Oh, sorry about that. I didn't

know. (laughter)

Primary Submitter: (laughter)

Senior Yen Trader: Oh because of the, the BBA thing?

Primary Submitter: Yes, exactly.

Senior Yen Trader: ah, ok ok. So yeah, leave it with

me, and uh, it won't be a problem.

NOTES ON A SCANDAL

ALLISTER HEATH: Page 2; Pa ge 4n n

n The instant messages RBS traders sent as they rigged Libor

RBS boss StephenHester hasapologised

MARK KLEINMAN ON THE CHANCELLORS COSTLY MISTAKE

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[email protected]

Follow me on Twitter: @allisterheath

UK in line for fresh tax hitfollowing 2015 electionCHANCELLOR George Osborne maybe forced to hit UK citizens with yetanother swathe of taxes after thenext election, in order to fill the holein the countrys finances.

Current budget plans imply totalreal term cuts of 33.2 per cent inunprotected departmental spendingbetween the 2010-11 and 2017-18 fis-cal years, the Institute for FiscalStudies (IFS) pointed out in its greenbudget yesterday.

But since such a level of cuts couldbe extremely politically difficult, thegovernment may choose instead tocut into unprotected departments,welfare for the elderly, drop its fiscaltargets, or hike taxes.And typically new governments

have hit the populace with about7.5bn of taxes after being voted in,the IFS claimed, giving the incominggovernment in 2015 a potentiallytempting precedent.The IFS report also looked into the

taxation of higher earners, after thecoalition have called on those withthe broadest shoulders to bear thebiggest burden.

The top 20 per cent of householdsby income paid around half of alltaxes, with the top 50 per cent pay-ing close to four fifths. And lookingat net taxes taxes minus benefits the size of the burden on higher

Buyout firms seek 10bn EE bidBuyout firms have accelerated talks withlenders to secure funding for possible10bn bids for EE, the UKs largest mobilephone operator, in what would be thebiggest private equity-backed acquisitionin Europe since the financial crisis. Theefforts have picked up in intensity in thepast week amid buoyant credit marketsand in the wake of mega deals such as the$24bn buyout of Dell, raising hopes adebt package of up to 7bn could beraised to fund such an acquisition, peoplewith knowledge of the talks said.

Cantor in talks over Seymour PierceCantor Fitzgerald is in late-stage talks tobuy lossmaking Seymour Pierce, in a dealthat would secure the future of one of theCitys oldest stockbrokers. Talks on a dealwere continuing late into last night.

Commodity hedge funds lose assetsCommodities hedge funds surrendered atleast 20 per cent of their assets last yearafter investors pulled out large sumsfollowing the sectors worst annualperformance in more than a decade. Theaverage commodity hedge fund lost 3.7per cent in 2012.

Hundreds lose jobs at IT firm 2e2Administrators overseeing the sale of 2e2,the failed IT services company, yesterdaydismissed 627 staff after failing to find apurchaser for the firm. Administrators arenow seeking a deal with O2, the mobilenetwork, that could save about 100 jobs.

M&S starts selling online in ChinaMarks & Spencer is selling online in Chinafor the first time after signing a deal withTaobao, the worlds second-largest e-commerce website.

Coalition scraps plan to end GCSEsThe governments plan to scrap GCSEs andreplace them with a new baccalaureatequalification has been shelved because ofsignificant opposition from the Lib Dems.GCSEs will instead be reformed.

BT launches phone to block cold callsBT has started producing a landline phonewhich should block up to 80 per cent ofunwanted calls. Users will be able to blockall calls from international or withheldnumbers, as well 10 extra numbers.

Pinterest seeks $2.5bn valuationOnline scrapbooking site Pinterest is intalks to raise a new round of financing at a$2bn to $2.5bn valuation. Global uservisits to its website hit 48m in December,up from 9m a year earlier

Open source smartphones in OctoberSmartphones running the open sourceUbuntu operating system will be availableto customers beginning in October 2013.British firm Canonical has made a versionof the Linux-based software for mobiles.

PRINTING money should not betaboo, outgoing City watchdog bossLord Turner said last night, as itcan be beneficial in small doses.

The Bank of England currentlyboosts the money supply throughbuying gilts, with most economistsholding that printing cash insteadcould lead to hyperinflation like inZimbabwe or early-1920s Germany.

But departing Financial ServicesAuthority head Lord Turner saidthe Bank should go beyondquantitative easing (QE) gilt

buying and actually print money.

Turner calls for

money printing

Chancellor George Osborne has failed to react to a 65bn hit to borrowing forecasts

2 NEWS

BY BEN SOUTHWOOD

BY BEN SOUTHWOOD

To contact the newsdesk email [email protected]

NO wonder trust is at a low ebbin Britain today. Two majorinstitutions RBS and the NHS have been shown to have

failed. We devote much of our frontpage to some of the shameful emailssent by the traders involved in theLibor rate-rigging scandal; this has

been another disastrous day for theCitys reputation, with the hundredsof thousands of honest people whowork in financial services yet againseeing their reputation tarnished by aminority of idiots.

Meanwhile, a devastating 1,782 pageofficial report has exposed the worstever scandal in the NHS yesterday, onewhich led to a horrendous number ofunnecessary deaths. Five other hospi-tals are to be investigated. Its a hugeand deadly affair. In both cases, unfor-tunately, the coalition has mishan-dled its response.

EDITORSLETTER

ALLISTER HEATH

Coalition mishandles its response to Libor and NHS scandals

THURSDAY 7 FEBRUARY 2013

First, RBS. George Osbornes state-ment that taxpayers wont be payingthe Libor fine, bankers will is mis-leading. The nationalised banksaccounts are not consolidated withinthe governments accounts. Therewas never any chance of extra cashbeing transferred from taxpayers toRBS as a result of the Libor fines, asmuch of the discussion and languageused yesterday implied. Also, the fineswere levied by the authorities on thebank, not on staff.

The only things that should matterare punishing individuals who dowrong, discouraging others from sodoing and ensuring that all bankshave the right systems in place toreduce the chances of future deba-cles; maximising the tax receipts gen-erated from RBS and its staff; and

maximising the value of the publics82 per cent stake in RBS, which even-tually needs to be reprivatised.The first point can only happen if

the government is seen to be verytough with those who manipulatemarkets. There needs to be far morecriminal prosecutions of white collarcrimes and jail sentences. As to thesecond point, reducing bonuses ofstaff who were not involved in thescandal will prove to be a direct hit tothe taxpayer, as pay is subject to highlevels of income tax and nationalinsurance. Demoralising RBSs

excuse whatsoever for the absurdmanipulation is that the FSA madeit clear that the direct impact ofactual manipulation of the Libor fixon UK retail consumers is likely to beminimal.Tragically, the same is not true of

the NHS scandal. Banks needed to

change their practices and clearly,so does the UKs health service, whichis in desperate need of structural, cul-tural and managerial revolution. Yetit doesnt seem as if anything willreally change, for all of yesterdaysposturing. The coalition needs to beas tough on failing hospitals as it hasbeen on corrupt bankers though inboth cases it needs be objective andcool-headed, rather than endlesslyresorting to demagogy.

remaining employees will do nothingto boost the banks long-term valueand share price. Of course, retainingcash could in theory boost the banksvalue but market capitalisations andbalance sheet assets are two very dif-ferent things. The fact that key man-agement decisions such as pay

awards are now openly being takenfor political reasons will do more todepress RBSs long-term value thanany retained cash will do to bolster it.

Of course, the government, as RBSsmain shareholder, may genuinelybelieve that pay is still too high in itsbank, and that lowering it wouldboost profits sustainably and hencelong-term value. In that case, itshould order its executives to pay wellbelow market rates for all positions,permanently and test its hypothesis.It would be a disaster, but so be it.The only good news and that is no

earners is even clearer. The top 10 percent pay nearly three fifths of nettaxes, while the top 20 per cent payover four fifths.The top 30 per cent effectively pay for

all the benefits both cash and inkind afforded to their other sevendeciles, the IFS said.

But if the government did want toclaw in yet more funds from thewealthier members of society, the IFSsaid, it would be wise to step awayfrom stamp duty land tax, which thethink tank described as a bad tax,because it taxes transactions, imped-

ing economic efficiency. A betteroption would be to update council taxthrough a complete program of revalu-ation as the current system is basedon 22-year-old house prices.The IFS said property taxes were

much more difficult to avoid, and hadsignificantly less harmful distor-tionary effects on economic activity.

But a mansion tax, such as that pro-posed by the Liberal Democrats wouldnot bring in much revenue, the thinktank said, as it would focus on a tinyminority of properties in the top bandof council tax.

SELF-EMPLOYMENT has boomedthrough the slow economic recovery,driven by an influx of middle-agedmen, according to data out yesterday.

Since 2008, 367,000 more UKresidents have become self-employed, the Office for NationalStatistics (ONS) said, bringing thetotal to 4.2m, an all-time record.

The average age of this 4.2mcohort is 47, the ONS report showed,while 70 per cent of them were men.Cab drivers, builders, carpenters, andfarmers were the top four tradescited in yesterdays figures.

Brits employselves in dipBY BEN SOUTHWOOD

Find your next step at

WHAT THE OTHER PAPERS SAY THIS MORNING

CITYAMCAREERS.com

n The Institute for Fiscal Studies (IFS) hasdug into the figures and found that sincethe 2010 spending review, government

borrowing has worsened by 65bn aboveforecast but it has made only 1bn ofadjustment to counter this worsening.

n The cyclically-adjusted current budgetdeficit, which underpins chancellor GeorgeOsbornes fiscal mandate, is based on theOffice for Budget Responsibilitys (OBR)estimate of the output gap how muchspare capacity there is in the UK economy.But output gap estimates vary from 0.8 percent of GDP to six per cent of GDP if theOBR estimate were wrong, the governmentwould need either drastically more or lessconsolidation. There is huge uncertainty.

n The deficit is going up, not down. Like-for-like borrowing with one-off changesstripped out is set to rise 4bn in 2012-13,compared to 2011-12, the IFS say.

n Unprotected sectors will face cutstotalling almost a third over the wholeplanned austerity period (2010-11 to 2017-18), if the government adds in no more taxhikes, and refuses to cut into welfarespending on the elderly, or the NHS,education or foreign investment spending.

nWhatever promises they make,governments tend to hit their subjects withtax hikes worth around 7.5bn in the yearafter they are elected.

n Public sector workers of the same ageand with the same level of experience andeducation as those in the private sector arecurrently paid two to eight per cent more.

n If the Eurozone breaks up, governmentdebt could rocket above 100 per cent ofGDP very quickly, from only around 40 percent before the crisis.

n The top 20 per cent of earners alreadypay around 80 per cent of net tax.

THE IFS GREEN BUDGET

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VIRGIN Medias new owners yesterdaypledged business would continue asusual, despite the telecoms firmschief executive announcing he wouldstep down.After signing a $23.3bn (14.9bn)

agreement to buy the company, boss-es at Liberty Global played down sug-gestions of massive investments in TVrights that would heighten VirginMedias competition with RupertMurdochs BSkyB.

Liberty, which said it would becomethe worlds leading broadband com-munications company on complet-ing the deal, announced theacquisition yesterday morning.Virgin Medias chief executive Neil

Berkett, who has led the companysince 2007, shortly after its formation,announced he would step down oncethe deal is finalised. Berkett, who hasbuilt up a sizeable bundle of VirginMedia shares and options, will pocket$65m, rising to as much as $85m,when he leaves.

Im not a very good number two,Berkett said yesterday. Libertys chiefexecutive Mike Fries said he had notstarted the process of appointing asuccessor. Fries said Virgin Media

New owners of

Virgin Media toavoid TV warBY JAMES TITCOMB would keep its branding, and that he

was not planning a major change ofstrategy. Virgin Media currently paysSky to offer some of its channels onVirgin Medias own service, ratherthan competing for sports and movierights, and Fries said this relationshipwith Sky would continue.

I think Neils done a terrific jobbuilding a strong relationship withSky. We dont see any reason why thatwould change or why Virgin Medianeeds to compete with Sky for thatpremium content so I dont see anysignificant changes in strategy, Friessaid.

His comments were echoed by JohnMalone, the billionaire chairmanbehind Liberty Global. Malones entryinto the UK telecoms market created anew rivalry with Murdoch, whoseNews Corp owns 39 per cent of BSkyB,after the two had vied for control of USmedia companies in the early 2000s.But Malone pointed to a long historyof co-operative relationships with NewsCorp yesterday. The deal came asVirgin Media posted a slight annual risein customers to 4.9m, and said it hadmoved more people on to triple-playcontracts, in which they take landline,broadband and pay-TV services.

Virgin Media chief Neil Berkett will leave the company with a payout of up to 54m

BOTTOMLINE

MARC SIDWELL

THE DEBATE: Page 19nn

THURSDAY 7 FEBRUARY 20133NEWScityam.com

Results that show why Malone made his move

ANOTHER day older and deeperin debt: thats Virgin Media,with its new soon-to-be-ownerLiberty Global announcing a

plan to add $3bn (1.9bn) to itsexisting 5.723bn net debt pile.Overall, however, the deal makes agreat deal of sense for the UKsquadruple-play specialist, as Idiscussed yesterday.

An understandable interest in thenuts and bolts of the deal itselfdrowned out Virgin Medias resultsyesterday, but its numbers for thelast quarter of 2012 and the year as awhole are worth considering.

Revenue for the year was up 2.7per cent, slightly missing someanalysts forecasts. However, thecrucial consumer divisionsperformed as expected. Virginsbusiness segment was to blame,

down 4.5 per cent year-on-year lastquarter, on declining voice revenueand wholesale data revenue. Andeven here, over the whole of the yearit was up 5.2 per cent year-on-year,accounting for almost a third ofgroup revenue growth.

Free cash flow was down 4.9 percent for the year and 1.4 per cent inthe quarter. That doesnt seem to sitwith the praise for the firms abilityto generate free cash flow in the

official press release for theacquisition. However, the fall was inline or better than analystpredictions and driven by furtherinvestment in Virgin Medias coreasset: its broadband infrastructure.

Virgin Media has 1.7m contractmobile customers, versus 4.89mconsumer cable customers. Since itsbusiness model needs customers to

lock in for multiple services, that is aproblem. But consumer cablecustomers are booming: netadditions went from 5,600 in 2011 to88,700 in 2012. It is also notable that41 per cent of gross broadbandadditions are paying extra to get topspeeds. John Malone, LibertyGlobals chairman, has made anatural addition to his group. Justdont mention his rivalry with Skysowner Rupert Murdoch.

VIRGIN Medias $23.3bn (14.8bn) sale toLiberty Global saw a host of banks andlawyers poring over the books, with the dealfunded by an enormous mix of bonds andloans. The deal will see Virgin Media take2.3bn of debt the biggest junk sale inEurope since 2010 with Libertys loans onthe deal equivalent to 2.9bn. This requiredsome heavy work from the two companiesadvisers. Virgin Media was advised by itshouse broker Goldman Sachs, with manag-ing directors Peter Gross and Mike Smithworking on the deal in New York where theagreement was signed late on Tuesdaynight. Also working on the deal on Virgin

Medias behalf was JP Morgan in the UK,with the banks London co-head of technol-ogy, media and telecoms investment bank-ing David Lomer leading the team. Lomer,who has been at JP Morgan and its prede-cessors since 1997, has worked on a varietyof deals around Europe, including the initialpublic offering of Dutch cable firm Ziggo inMarch last year. Lomer has spent most of hisJP Morgan career in media M&A, and wasmade co-head of the division last year.Leading the JP Morgan team in New Yorkwas Ben Berinstein, the banks US co-headof corporate finance advisory. LibertyGlobals lead financial advisers were NewYork boutique investment bank Liontreeadvisors, while Credit Suisses Marisa Drew,co-Head of the banks global markets solu-tions group, led the team in London.New Yorks Milbank and Fried Frank werelegal advisers to Virgin Media, whileShearman & Sterling and Ropes & Grayworked for Liberty Global.

ADVISERS LIBERTYS HIGHLY LEVERAGED TAKEOVER

PETER GROSS ANDMIKE SMITHGOLDMAN SACHS

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STATE-BACKED bank RBS struck atwo-year deferred prosecution dealwith US authorities, admittingresponsibility and paying an extra$100m (63.8m) as one condition ofthe settlement agreed yesterday.The banks Japanese arm pleaded

guilty to one charge of wire fraudunder the deal with the AmericanDepartment of Justice (DoJ), while thedeferral agreement with the parentgroup covers charges of wire fraudrelating to Swiss Franc Libor and anantitrust violation on Yen Libor.Traders did not fiddle US rates but

some of the activity went through theUS, giving the authorities power tofine the bank.The wrongdoing took place from

2006 to 2010, two years after chiefexecutive Stephen Hester took con-trol. But he maintains senior man-agers and regulators were unaware atthe time as they were more focusedon preventing the giant institutionfrom collapsing.

RBS wants to

move on fromLibor scandalBY TIM WALLACE We are also determined to correct

the broad range of control and riskmanagement failures that originatedin RBS during the financial boomyears. Libor manipulation is one exam-ple, he said.

But Hester conceded it would be dif-ficult to fully stamp out the cosy rela-tionships in the sector: In tradingculture there was a mateyness, meet-ing in City bars, he said.

It is not a case of senior managersfrom different banks gatheringaround the table, but a risk of tradershaving discussions they shouldnt.

RBS, headed by Stephen Hester, expects a fine in future for anti-money laundering failures

THURSDAY 7 FEBRUARY 20134 NEWS cityam.com

Royal Bank of Scotland Group PLC

6 Feb31 Jan 1 Feb 4 Feb 5 Feb

330

335

340

345

350 p 342.106 Feb

CHANCELLOR George Osborneyesterday claimed a victory fortaxpayers as the bank said its

bonus pool would be reduced andprevious payouts to bankersclawed back in light of the fine.

Over the weekend Osbornecalled for staff to pay the fine, andRBS said yesterday roughly 300m

will be cut from pay packets.What happened at RBS and

other banks is totallyunacceptable, Osborne said. Atmy insistence, the bankers, not thetaxpayers, will pick up the bill.

But RBS chairman Sir PhilipHampton said the decision hadalready been made before thechancellor demanded it.

Meanwhile influentialbackbench MP John Mann called

Bankers lose bonuses to cover

huge interest rate-fixing fineBY TIM WALLACE for the bank to fire everyonerelated to the scandal.This fine does not go far

enough. All the staff that were incharge at the time and hadknowledge of what was going onshould be removed, said theLabour member of the treasuryselect committee.

But the bank argued not allthose involved deserve to losetheir jobs.

Of the 21, six were fired over thescandal and eight had left beforethey could be punished. Another

was fired for an unrelated matterand six have been disciplined.

RBS argues a final warning isappropriate in some cases one

graduate recruit was caught up inthe emails after two months at the

bank, leading managers to deem awarning the best solution.

RBS investment banking head haslost his job and around 4m in

bonuses and shares becausehe is the senior bankerclosest to the Libor fixing,

rather than because hewas involved.Chief executive

Stephen Hester said ahead near the top of the

bank had to roll to showbosses are accountable forthe actions of their

Hester sorry investment chiefHourican took fall for debacle

BY TIM WALLACE departments.And he said John Hourican

fitted the bill as the wrongdoinghappened in his department, but

to go any further up the bankwould take the blame too

high up and cause

unnecessary damage.It is very tough onJohn it happened a long

way down hisorganisation, said Hester.But it is right that seniormanagement

accountability has tobe accepted. It is

right for Johnto lose his

job.John Hourican first joinedthe giant bank in 1997

DEUTSCHE Bank is believed to havesuspended five traders over itsongoing internal investigation intoEuribor manipulation.

The German lender suspended

two others late last year forinvolvement in Libor rigging.Upon discovering that certain

employees acted inappropriately, wehave suspended or dismissedemployees, clawed back unvestedcompensation, and will continue todo so as we complete ourinvestigation, it said at the time.

The traders worked on DeutscheBanks money market team inFrankfurt.

Euribor probeat Deutsche

BY CITY A.M. REPORTER

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HSBC was forced into its biggestrestructuring in almost 150 yearsbecause the banks complex structuremade it attractive to criminals, itschief executive admitted yesterday.

Our structure was not fit for pur-pose for a modern world, StuartGulliver told the parliamentarycommission on banking stan-dards. Our geographic footprintbecame very attractive totransnational criminalorganisations, whetherthey are terrorist in originor criminal in origin.

HSBC was in Decemberslapped with a $1.9bn(1.2bn) fine, thelargest ever imposedon a bank, following aUS investigation intoits Mexican and USoperations.The probe made scathing

Gulliver admitsHSBC was toolarge to police

BY HARRY BANKS criticism of HSBCs anti-money-laun-dering systems and found its lax con-trols allowed two drug cartels to move$881m through the bank.

Weve crushed our reputation withthe Mexico events, Gulliver said. Thebehavioural stuff of what went on inMexico is absolutely shocking to us.After taking the banks helm at thestart of 2011, Gulliver took much ofthe control out of the hands of coun-try managers.

Its the biggest organisationalchange in this firm since 1865and we did it to deal with theweaknesses, he added.

Some senior people havebeen removed from thebank for values breachesin the last two years, butGulliver said there wererewards on offer as wellas penalties.

IN BRIEFEx-Northern Rock chair joins Lordsn The 5th Viscount Ridley, chairman ofNorthern Rock when the bank collapsedin 2007, was yesterday elected to theHouse of Lords after an unusual by-election vote. There are 92 hereditarypeers left in parliaments upperchamber and when one dies as EarlFerrers did last year a vote is held toreplace them with another hereditarypeer from the same party. Ridleytopped the poll of 26 other Tory peersand can now influence legislation.

JP Morgan pares back wagesn JP Morgan is reported to be payingits investment bankers and trading staffthree per cent less for 2012 as a lack of

large deals dented the banks fees. Thebank, which was also knocked by theLondon Whale trading loss, will imposea larger share of the bonus pain onmore senior staff, according toBloomberg.

Anglo Irish Bank to be liquidatedn The former Anglo Irish Bank isexpected to be liquidated in order toreduce the Republic of Irelands debtburden. The move, subject to ECBbacking, would mean that Ireland nolonger has to make 3.1bn annualpayments on a 28bn note used to bailout the bank in 2008. Instead the debtwill be transferred to the Central Bankof Ireland, enabling the state to make

more gradual repayments.

Stuart Gulliver said HSBCsreputation was crushed


Mark Kleinman is the City editor ofSky News @MarkKleinmanSky

DEPUTY heads must roll. Itsimpossible to decryptyesterdays Libor-riggingsettlement between Royal Bank

of Scotland (RBS) and regulators inthe UK and US without beingreminded of that immortal phrase.

John Hourican, who will step downas the boss of RBSs investment bank

at the end of April, is entitled to feelhard done by. By the admission ofregulators and RBS board membersalike, he had no case to answer overwrongdoing at the bank, much of itoutlined in luridly self-interestedmessages disclosed yesterday.

Nevertheless, those close to himsay he had accepted that hisdeparture had become necessary tosatisfy the political desire for a scalp.

It is the right thing to do, he toldstaff. The jobs that many of us doare well paid and with high rewardcomes a greater responsibility. Hehadnt anticipated the bloodthirstyway George Osborne would pursuethe 4m in deferred share awards hehad earned in previous years.

INSIDETRACK

MARK KLEINMAN

Osborne does the wrong thing while Hourican takes the fall

Hourican is not an impoverishedman, and his career is far from over:indeed, his track record at RBS,generating more than 12bn ofprofit for the investment bankduring his tenure, will leave himwell-placed to land another top jobin the industry. Yet while he willmove on, for RBS and Osborne,Houricans rather brutal treatmentaugurs badly.

The groups investment bank stillhas a balance sheet with 60bn inassets, a number not dissimilar inscale to the GDP of a small country.

Recruiting capable leadership forthe unit has just been rendered nextto impossible, particularly if as wasbeing noisily suggested at RBSs

investment bank headquarters onBishopsgate yesterday some ofHouricans closest lieutenants followhim and jump ship.

It is hard not to interpret thismeddling as creating a permanentimpairment to the value oftaxpayers stake in the bank.

Osborne walked into the Treasury

in 2010 confident that he would soonbe trumpeting the recovery oftaxpayers money from Lloyds andRBS. His politically-myopic actionsresemble those of a man repeatedlyjamming his finger on the self-destruct button.

MOSCOWS COMINGThe listing of Russias main index,which published its flotation pricerange this week, offers a clue to the

ROLLS SIMON ROBERTSON BOWS OUTFortunately for Sir Simon Robertson,he is a young 71. In recent months,he has needed to be. As deputychairman of HSBC and chairman ofRolls Royce, the former GoldmanSachs partner has had a full in-traydealing with corruption probes ofvarying existential significance.

His workload is about to lighten.Rolls May AGM will be Sir Simonslast after eight years at the helm.People close to the company say ithas used MWM Consulting, theheadhunter, to conduct a globalsearch for his successor. Expect anannouncement from the aero-enginemanufacturer in the coming weeks.

Kremlins view of those corporateemigres which have tapped capitalmarkets in London and New York.

Even at the bottom of theindicative price range, the MoscowExchange will be valued at acomparable level to its London rival.

One early candidate to list on itcould be Megapolis, a Russian

tobacco distributor which hadharboured hopes of floating inLondon last year.

I understand that the UK ListingsAuthority raised reservations aboutsome of the individuals involved inMegapolis. The companys plans werequietly dropped, according to oneinsider familiar with the deal. Itsnext move will give an indicationabout the threat posed by Londonsnewest rivalry.

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FINANCIAL adviser HargreavesLansdown was the FTSEs biggestblue chip riser yesterday after report-ing record revenue and profit for thesecond half of last year.

However it warned a new govern-ment initiative to boost lendingwould compress revenue margins forthe outfit over the rest of this year.The company, co-founded by Peter

Hargreaves and Stephen Lansdownin Bristol in 1981, leapt to a recordshare price high in trading yesterdayafter delivering a 30 per cent jump inprofits on revenues of 140.3m forthe six months ending December

2012.Hargreaves, who still sits on the

companys board as executive direc-tor, said customer trust and the com-panys cost consciousness andefficiency had helped maintain itsmomentum over the period.

However, he warned that the gov-ernments continued support for theFunding for Lending scheme (FLS)would hit short-term revenue fromcash margins at the company.

As margins decline we will need to

Markets cheerbumper profits

at HargreavesBY MICHAEL BOW accelerate our business, he told CityA.M.

The FLS was designed to give banksaccess to cheaper money to boostlending but has subsequently led tobanks cutting interest rates paid toUK savers. The firm predicts this willresult in a reduction on the revenuemargins of its cash balances into2014.

Hargreaves yesterday criticised theinterference of FLS and other mone-tary policies such as quantitative eas-ing and said the market should beleft on its own to operate.

The FLS is allowing a few people tosoldier on paying their mortgage butwhat we need are thousands of repos-

sessions to get the house prices down.The market should be allowed tocleanse itself, he said.The company, which offers a super-

market-style approach to pickinginvestments for retail investors, builtits assets under administration by 30per cent over the half year. They nowstand at just over 30bn. The compa-ny also increased its interim dividendfrom 5.1p to 6.3p on the back of thesuccess. The firm first floated on thestock exchange in May 2007.

Co-founder Peter Hargreaves said the market should be allowed to cleanse itself

SWEDISH group Handelsbankenrecorded solid growth in 2012

with international expansiondriving profits, the institutionsannual results showed yesterday.

Post-tax profits jumped 18 percent to SEK14.5bn (1.46bn) with a10 per cent rise in interest incomeproviding much of the boost.

Expenses increased five per centwith staff costs up eight per cent.

UK profit rose 56 per cent toSEK1.02bn, headcount increased25 per cent to 133 and branchnumbers rose 28 per cent to 133.

HandelsbankenUK profits leap

BY TIM WALLACE

VINCENT Tchenguiz yesterdayreleased details of his claim forover 200m of damages against theSerious Fraud Office (SFO) over its

botched investigation into him.

The court filing, which relates toa high profile raid on Tchenguizand his brother Robert in 2011 overtheir dealings with failed Icelandic

bank Kaupthing, accuses the SFO offalse imprisonment, maliciousprosecution and misfeasance inpublic office under the agencysformer director Richard Alderman.

SFO faces 200mTchenguiz claim

BY KASMIRA JEFFORD


While first half profit is very close to our forecast, revenues are 2mhigher and importantly, assets under administration are 1.5bn (i.e. four percent) above our expectations. In addition, the equity market has beenvery strong year to date. We are revising our forecasts upwards.

ANALYST VIEWS

Hargreaves continues to benefit from strong net client in-flows despitea tough consumer environment... The boost to results allows an increase ininterim dividend in-line with top-line growth which will please incomeseekers (although yield not the biggest).

Customer growth, better equity markets and increased client optimism

combined with easier customer switching bodes well for flows and profit devel-opment going forward. We upgrade our pre-tax profit forecasts four percent this year .

WHATS IN THE PIPELINEFOR HARGREAVESLANSDOWN?

ROBIN SAVAGE CANACCORD GENUITY

MIKE VAN DULKEN ACCENDO MARKETS

JAMES HAMILTON NUMIS

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THE SUCCESS of the MailOnlinewebsite has led to a boom in digitaladvertising revenues at the owner ofthe Daily Mail newspaper.

Daily Mail & General Trust (DMGT)said yesterday that advertising rev-enues at its national newspaperwebsites had grown 51 per cent year-on-year in the three months to 30December.This made up for a nine per cent

decline in advertising revenues atthe companys newspapers, whichinclude the Daily Mail, Mail onSunday and Metro.

Last year, MailOnline became theworlds most popular newspaperwebsite and reached profitabilityfor the first time since its birth in2007. The website saw 127m uniqueusers in January, the company said.The online advertising boom

meant that despite the decline inprint, like-for-like advertising rev-

Internet boomleads growth insales at DMGT

BY JAMES TITCOMB enues at DMG Media DMGTsnational newspaper division stayedrelatively steady, dipping by one percent. However, with a decline in cir-culation hitting newspaper sales,DMG Medias turnover fell seven percent to 204m. DMGTs local newspa-per arm, Northcliffe, saw revenuesdown eight per cent to 49m.The division is being spun off into

a new Local World venture, alongwith several other local newspapergroups.

IN BRIEFWeak volumes hit CME Groupn CME Group yesterday said its fourth-quarter profit fell sharply from a yearago as trading sagged, a decline WallStreet had anticipated given mutedmarket volatility and the US FederalReserves renewed commitment to lowUS interest rates. The Chicago-basedexchange operator said its net incometumbled to $167m (106m) from$745.9m a year earlier. Revenue fell to$660.9m from $736.5m. CME said itstands to win business from anexpected shift from swaps to futures.

ICE nets small rise in incomen American exchange businessIntercontinentalExchange, which is inthe process of buying NYSE Euronext

for $8.2bn, yesterday reported a two

per cent rise in quarterly profit, helpedby an increase in market data revenuesand slightly lower expenses. Net incomeattributable to the Atlanta-basedcommodities exchange was $129.5m(82.7m), up from $126.8m. Revenuesfell one per cent to $323m, as ICEsfutures business saw a one per centdecline in average daily volume.

Property giant CBRE beats forecastsn CBRE, one of the worlds largestcommercial property providers, lastnight unveiled a 22 per cent rise infourth quarter profits, far surpassingWall Streets forecast, with strong salesin all regions, particularly the Americas.Profit jumped to $181.9m (115m), upfrom $149.3m a year earlier. Revenuerose 14 per cent to $2.0bn.

CANARY Wharf Group will today put into place the final piece of steel at 25/30 ChurchillPlace, the last building in the original Canary Wharf 1988 masterplan to be completed.The 525,000 square feet property has been half pre-let to the European MedicinesAgency for 25 years at 46.50 per sq ft. The rest of the tower remains unlet.

Daily Mail and General Trust PLC


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To apply visit abercrombiekent.co.uk/events

EUROPEAN firms 1 trillion(863m) cash pile will not beinvested in a splurge on capitalexpenditure thanks to recentimprovements in confidence,

ratings agency Standard and Poorswarned yesterday.Fears of years of weak growth in

the periphery and the continuedchance of a Eurozone break up orcollapse continue to plague firmswho are still likely to sit on theircash piles, the analysts said.

And they added that the cashpiles peaked two years ago and arenot unusually high currently, againsuggesting hopes are misplaced.

Capex splurgehopes fading

BY TIM WALLACE

MEDIA giant News Corp last nightreported a jump in quarterlyprofits thanks to strong growth atits cable networks.

Total revenue at the Rupert

Murdoch-controlled business rosefive per cent to $9.43bn (6bn) forthe final three months of 2012,

while profits more than doubledto $2.4bn.

However it spent a further$56m covering costs relating tothe closure of the News of the

World following the phonehacking scandal.

The division that operates thecompanys newspapers and book

Rupert Murdochs News Corpsees quarterly profits double

BY CITY A.M. REPORTER publishing reported operatingincome rose to $234m from$218m. News Corp said the launchof The Sun on Sunday helpedoffset lower advertising revenuesat its Australian newspapers.

News Corp is preparing to

separate its faster growingentertainment assets from itsnewspapers such as The Times andThe Wall Street Journal. The movehas been greeted with enthusiasmfrom investors who have drivenup the stock almost 50 per centover the last year.

The companys global mediaempire also includes FoxBroadcasting and the film studioTwentieth Century Fox.

THE FINAL CANARY WHARF TOWER TOPS OUT

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PHARMA giant GlaxoSmithKline(GSK) said yesterday that it expectsrevenue and profit to bounce backthis year, despite a weak Europeanmarket dragging sales down one percent during 2012.

Chief executive Andrew Witty alsorevealed that the firm is weighing upthe future of its famous Lucozade andRibena brands, refusing to rule outthe possibility of divesting both.Witty said that he has a completely

open mind over the future of thedrinks, as GSK launches areview that will report bythe middle of the year.

The company could lookfor partners to help growthe brands in its key emerg-ing markets, or invest morecash or sell them off.Nothing is ruled out,Witty stressed.

Lucozade and Ribenaattract high sales in coun-tries such as Nigeria andNew Zealand as well as in

Glaxo promisesa sweeter 2013

as sales go flatBY JULIAN HARRIS the UK yet have been less successfulin places such as India and China.

It said the drinks do not naturallyfit with the firms operations as wellas other products such as Horlicks.Witty is upbeat over GSKs future in

drug sales, pointing to six new prod-ucts filed since the start of 2012, andarguing that the pipeline is packedwith promising new developments.

Core pre-tax profits were down fourper cent at 7.6bn in 2012, on a sevenper cent slump in European sales as aresult of states forcing down prices.Governments [in Europe] are sending

a very clear signal, Witty said,adding that GSK will turn itsattention to other parts of the

world. All the growth is else-where, he said.

Nonetheless, GSK expectscore earnings per share growthof three to four per cent for2013, predicting that sales will

be one per cent higher.

GERMAN media giant Bauer, whoseempire includes UK radio stationsKiss and Magic, has boughtlossmaking digital radio stationPlanet Rock for around 1m-2m.

Our brands, along with themusic industry, are seeing a realresurgence in guitar-based musicwhich makes this acquisition anexciting and timely addition to ourportfolio, Bauers UK chiefexecutive Paul Keenan said.

The station, which was previouslyowned by Planet Rock chairmanPaul Bluemel,has around900,000 weeklylisteners.

Bauer buys upPlanet Rock

BY AMY-JO CROWELY

GOOGLE has won a landmark legalcase in Australia, with a court rulingthat the search engine is notresponsible for the content ofadverts it displays.

The ruling said that internetadvertising platforms such asGoogle and Facebook do not publishadverts, but merely carryinformation. Thus they are notaccountable for potentiallymisleading adverts on theirwebsites.

Although the decision only coversAustralia, it could set a legalprecedent that may be used aroundthe world. The case follows years oflegal proceedings from theAustralian Competition andConsumer Commission which had

threatened Googles coreadvertising business.

Google winsadvert battle

BY JAMES TITCOMB

9NEWScityam.com

HEALTHCARE Locums revealedyesterday that its two biggestshareholders have issued anindicative joint proposal to buy upall of the shares that they do notalready own.

The troubled firm, whichprovides staff to the health andsocial care sectors, said thatToscafund Asset Management and

Ares Capital Europe (ACE) offeredat least 54p per share in cash matching Healthcare Locumsclosing share price on Tuesday.

Together Toscafund and ACE

Toscafund and ACE come to therescue of Healthcare Locums

BY JULIAN HARRIS currently own around 72.5 percent of Healthcare Locums.

At the end of last month thefirms chief executive StephenBurke asked Toscafund and ACEfor help, following a warning thatit might not meet its bankingcovenants in March and June.

Yesterdays statement said theshareholders have indicated their

joint intention to inject significantcapital into the business followingsuccessful completion of an offer.

Shares closed up 2.78 per centyesterday at 56p. The stock has lostover 80 per cent of its value in thepast year.

Planet Rock has900,000 listeners

GSK is looking at options forits Ribena and Lucozade drinks

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INFRASTRUCTURE fund GreencoatUK Wind is hoping to raise at least205m through a government-backed f loat that will jettison it tothe main London market.

Managed by Greencoat Capital, thefund has bought interests in six windfarms from utility firms SSE andRWE.

Closed-end investment companyGreencoat, which will be fullyinvested from launch, also has theoption to increase the size of theoffering by up to 55m.The company will be the first listed

infrastructure fund focused on

wind according to Greencoat. Itoffers a six per cent dividendwith the intention of increas-ing it in line with the RetailPrices Index (RPI).The f loat has been backed

by the Department for Business,Innovation and Skills and blue chiputility company SSE which is divest-ing four wind farms which havepledged to buy 50m and 43m sharesrespectively in a move to encourageprivate investment in the renewable

UK wind fundblows onto LSE

in 205m floatBY CATHY ADAMS energy sector.Operating wind farms should

make attractive investment assets,particularly for investors seekinglong-term, predictable returns, saidStephen Lilley, partner of GreencoatCapital and chief executive of thewind fund.

Non-executive chairman TimIngram added: With an anticipatedinitial dividend yield of six per cent,limited planned gearing, and invest-ment only in proven operating windfarms, Greencoat UK Wind offers avery attractive opportunity forinvestors seeking a sustainable and

growing return on theirinvestment.

The sale of theSSE and RWE wind farms is depend-ent on Greencoat successfully rais-ing the capital and listing on theLSE. The day to day operations of thewind farms will be maintained bytheir current owners SSE and RWE.The shares are expected to begin

trading in March.

A host of big names worked on the

Greencoat UK Wind IPO, including RBCCapital Markets, Barclays Bank andWinterflood Securities.RBC Capital Markets acted as the sole globalcoordinator, sponsor and joint bookrunner,with Dai Clement, Lorna Shearin andMatthew Coakes on the team.The investment bank has advised manyhigh-profile utility transactions in recentyears, and is an established adviser in therenewables and utilities space.In 2011, RBC advised on the 2.4bn sale of

Northumbrian Water. RBC also advised Irishenergy firm Bord Gis on its sale by thegovernment.In the past, Clement, head of European utili-ties and industrials, led the team advising aconsortium on the acquisition of Open GridEurope from E.ON.His colleague Coakes, a managing directorin European capital markets, was involved

in the flotation of Kea Petroleum in 2010.Coakes has also worked with Ithaca Energy,Bayfield Energy, Serica Energy andGulfsands Petroleum.Shearin, co-head of European utilities andrenewables at RBC, completes the trio.Iain Smedley and Adam Welham joinedfrom Barclays Bank, which acted as jointbookrunner on the offering. Darren Willisfrom Winterflood acted as the co-lead man-ager, and Tulchan Communications had arole as the public relations adviser.

ADVISERS RBC CAPITAL MARKETS

DAI CLEMENTLORNA SHEARINMATTHEW COAKESRBC CAPITALMARKETS

Non-exec chairman Tim Ingram is a former chief executive of Caledonia Investments

Greencoat UK Wind has bought sixwind farms from SSE and RWE

EDINBURGH microchip makerWolfson Microelectronics reported a52 per cent jump in revenuesyesterday following rising sales ofsmartphones such as Samsungs

Galaxy SIII.The company, which makes audiochips for processing voice input andaudio output on phones and otherelectronic devices, said revenues roseto $56.1m (35.8m) in the finalquarter of last year. Over 2012 as awhole, it saw 15 per cent revenuegrowth but a 60 per cent rise in salesrelated to smartphones and tablets.

Mobile crazeboosts Wolfson

BY JAMES TITCOMB

VISAS first-quarter profit jumped 30per cent, and the worlds largest credit-

and debit-card network authorised anew $1.75bn (1.1bn) share repurchaseprogramme, it said yesterday.The new share buyback programme

brings the total outstanding authori-sation to about $2.9bn.The companys profit rose to $1.3bn,

or $1.93 per Class A share, from $1bn,or $1.49 per Class A share, a year earli-er. Total operating revenue rose 12 percent to $2.8bn. Payment volumes grewnine per cent to $1.1 trillion, andprocessed transactions four per cent.

Visa in $1.8bnstock buyback



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12 NEWS

HOMESERVE, the FTSE 250 home repair andinsurance company, yesterday said full-year pre-tax profits are likely to be in line withexpectations as it continues to scale down its UK

business following allegations of mis-selling.The group said UK customer numbers would hit2.25m for the full financial year ending 31 March

at the lower end of its 2.2 to 2.4m target.However, the firm said its customer retention ratehad increased slightly from the 78 per cent itreported for the first half of the year.

The firm, which spooked its investors last yearby admitting it was being investigated by the FSAover allegations of potential misselling, said thisinvestigation was ongoing and would continue fora number of months.

Homeserve on track asFSA probe continues

BY KATIE HOPE

SPORTS DIRECT has hired t he Spanish investmentbank Espirito Santo as its corporate broker afterending its six-year relationship with Bank ofAmerica Merrill Lynch (BAML) earlier this month.

The sportswear retailer, controlled byNewcastle United owner Mike Ashley, said it hadappointed Espirito withimmediate effect, becomingjoint broker alongside OrielSecurities.

Ashley and BAML hadworked together since thefirm floated in 2007.

Sports Direct hiresEspirito as broker

BY KASMIRA JEFFORD

THE NUMBER of jobs available in the retail sectorslumped by a quarter in the second half of last

year according to research published yesterdayby RetailChoice.com, the specialist retailrecruitment website.

The company, which sampled 30,000 jobsadvertised through its website between July andDecember last year, said while total vacanciesdeclined, the growing importance of onlineshopping led to a 42 per cent jump in demandfor e-commerce roles.

Management roles bore the brunt of thedecline with over 3,500 fewer jobs advertised

while the fashion sector was also hit with a 21per cent fall in jobs around 3,750 fewer jobscompared to the same time last year.

Retail job vacancies

fall 25 per cent in 2012BY KASMIRA JEFFORD

AUSTRALIAN developer Lendlease was yesterdaygranted detailed planning permission by Southwarkcouncil for the first phase of its 1.5bn regenerationof the Heygate estate in Elephant & Castle afterwinning approval for the masterplan last month.

The scheme has caused an outcry from critics afterit emerged on Tuesday that Heygate was sold toLendlease for just 50m even though the councilspent 44m to move 3,000 residents from the estate.

Details of the sale were revealed after confidentialinformation was accidentally revealed in a documenton the councils website. Local groups reacted sayingthe land was sold off for peanuts. The council

rejected this, saying it will be sharing a slice of theprofits from the sale of houses on the estate.

Lendlease gets okayfor Heygate revamp

BY KASMIRA JEFFORD

Mike Ashley owns 71 percent of Sports Direct

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Left to right: Ben and Sue Bengougam with Graham Jackson

TO the Royal Automobile Clubscountry campus on Monday evening,for the launch dinner announcingthe 2013 Square Mile Salute banquet.

The Capitalist can reveal that thethird annual Square Mile Salute feastwill be held at the Guildhall on 18October, with food prepared by chefAlbert Roux, co-founder of the LeGavroche, and his son Michel Roux Jr.

The banquet, held in associationwith media partners City A.M, sup-ports military charities Help forHeroes, The Royal British Legion andThe Royal Navy and Royal Marines

Childrens Fund.Surprise guest of honour at the

launch event this week was TopGears The Stig, whose helmet pre-vented him from sampling the rockoyster beignets and foie gras ravioliprepared by the servicemen andwomen from Headley Courts reha-bilitation centre.

Previous attendees at the culinary

bash have included Mayor BorisJohnson and Jeremy Clarkson.

Tables this year start at 4,000 forten people. For more informationvisitwww.squaremilesalute.org

Headley Court chefs in the RAC kitchen

The Stig outside the Royal Automobile Club

Lance Corporal Andrew Kennedy

The Stig guestof honour atmilitary dinner

13cityam.comTHURSDAY 7 FEBRUARY 2013

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

[email protected]

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IN BRIEFGrainger posts rise in group salesnGrainger said institutional investorinterest in the residential market wasgrowing thanks to governmentmeasures such as the launch of the200m Build to Rent fund, as it postedgroup sales of 64.6m for the first four

months of the year, up 2.2m on lastyear. The listed residential landlord saidfee income rose to 4.6m from 2.9mlast year while rents fell 3.1m to 27.3mafter it sold-off German assets.

Quintain schemes make progressn Quintain Estates said yesterday itwas making good progress with itsLondon schemes and in selling-offnon-core assets, although marketsoutside London remain challenging. Inan interim statement the developersaid its near-term focus was a chievingplanning permission for its giantGreenwich Peninsula scheme and theopening of the London DesignerOutlet at its Wembley development.

Capita gets Carphone work

n Carphone Warehouse yesterdaysigned a 160m deal to outsource itscustomer services to Capita for thenext ten years. Capita will beresponsible for non-store customercontact such as helplines and techsupport. Capita boss Paul Pindar saidyesterday: Capitas significantexperience in this area is evidentthrough the work it does with thepublic sector and with clients who arehousehold names.

TRUCK maker Volvo yesterdaywarned of a rough start to 2013 afterweak demand in its main marketsleft its factories running at halfspeed and pushed it into a muchheavier than expected earnings fallin the fourth quarter.

Swedens Volvo, which only weeksago laid claim to having dethronedGerman Daimler as the worldsbiggest heavy truck maker afterforming a joint venture with Chinesegroup Dongfeng Motor Group saidweak orders at the end of 2012meant the first quarter would be dif-ficult.

Profitability will be affected by lowcapacity utilisation, high spend lev-els in research and development andcosts associated with the launch ofnew products, chief executive OlofPersson said in a statement.

However, we expect market condi-tions to gradually improve duringthe course of 2013 when economic

Volvo stalls as

demand slumpreduces outputBY HARRY BANKS growth across the world gains

momentum.Heavy-duty truck makers have run

into tougher times in recent quartersas the deep economic downturn inEurope and sluggish activity in NorthAmerica has weighed heavily on thehighly cyclical demand for commer-cial vehicles.Volvos operating earnings tumbled

to 1.12bn Swedish crowns (112.7m)from 6.96bn a year ago, well below amean forecast for 2.19bn seen in apoll of analysts.

Earnings were hit by weak capacityuse at many of its plants as well asrestructuring charges totalling 990mcrowns, compared to the 565m hitexpected by analysts.Volvo has been cutting shifts due to

weaker demand, but stood by a fore-cast for flat markets in Europe andNorth America. However, it raised itsforecast for the Brazilian market,where government incentives haveboosted demand, by 10,000 trucks toabout 105,000.


Aer Lingus insists it can fend offRyanair bid as its earnings soarIRISH flag carrier Aer Lingusyesterday insisted it could survive

as an independent company andsaid the hostile takeover bid fromrival Ryanair was unlikely to makeit past European competitionauthorities.

It seems to me so farfetched,this proposition, that we dontbother wasting our time on it, AerLingus chief executive ChristophMueller said yesterday as he

BY JAMES WATERSON unveiled a 40 per centrise in operatingprofit to69.1m

(59.7m) for2012.Ryanair

made its thirdbid for thecompany lastyear, valuingAer Lingus at694m. Butits deal

FASTJET, the African budgetairline backed by EasyJet founderStelios Haji-Ioannou, has flowninto turbulence over its use ofthe Fly540 name.

Five Forty Aviation, whichowns the brand, yesterdaywithdrew Fastjets licences to usethe name in Angola, Ghana andTanzania, claiming Fastjet owes$7.7m (4.9m) in charges.

Five Forty Aviation also saidthat Fastjet was in breach ofcommercial and safetyconditions.

Fastjet flies into dispute overbrand licencing in Tanzania

BY MARION DAKERS We have not received anysafety reports for the past threemonths from Fastjets Africaoperations, said Five Forty bossDon Smith.

The Aim-listed airline has alsobeen caught up in a row over its

planes in Tanzania, whichaircraft leasing business Avmaxclaims the firm is operating

without paying fees somethingFastjet disputes.

Fastjet yesterday released astatement saying it has thesupport of the government inTanzania, where it startedcommercial flights in November.

THEFORUM

JOIN THEDEBATE

SEE PAGES18-19

hinges on offloading some routesto British airline FlyBe to allaycompetition concerns. TheEuropean Commission will decide

on the deal by 6 March.We question very much thatFlybe will be an independentcompetitor to Ryanair and we areworking from the assumption

that we will be around nextyear, added Mueller.

Ryanairs Michael OLearyis eyeing up Aer Lingus

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THE HOUSING market has sprungback to life in recent months, Halifaxsaid yesterday, while citing the UKgovernments lending initiative.

Prices dipped 0.2 per cent inJanuary when compared toDecember, the company said.Yet a three-monthly measure of

house prices used to iron outmonth by month fluctuations roseat its sharpest rate for three years.

From November to January, priceswere 1.9 per cent higher than in theprevious three month period, and 1.3per cent above the level they were ata year earlier.

Market activity has also improvedwith sales in 2012 at their highest forfive years, said Halifax economistMartin Ellis.

Rising mortgage approval num-bers point to further increases inhome sales in the coming months.

UK house pricespropped up by

lending schemeBY JULIAN HARRIS Ellis said that the Funding forLending Scheme (FLS) was likely con-tributing to a pick-up in sales andhigher prices.The FLS which incentivises banks

to lend by providing conditionalfunding at low rates was introducedby the Bank of England and the gov-ernment with the intention of loos-ening credit and aiding growth.The average house price in the UK is

now 162,932, Halifax said.

Car sales rev up as registrationsrise for the 11th month in a rowTHE UKS resurgent car-buyingmarket shows no sign of slippingdown a gear in 2013, havingrecorded its 11th straight month ofgrowth in January.

New car registrations jumped11.5 per cent last month comparedto the same time a year earlier,with 143,643 vehicles registered.

The Society of MotorManufacturers and Traders (SMMT),which released the figuresyesterday, expects modest growththroughout the rest of the year.

British consumers continue toperplex analysts by defying theeconomic slump and heading tothe forecourts. Over 61,000 new

BY JULIAN HARRIS privately-bought cars wereregistered in January, aconsiderable 15.9 per cent morethan a year earlier.

The UKs love affair with newcars continues into 2013,commented Richard Lowe, head ofretail and wholesale at Barclays.

Despite the snowy forecourts,consumer demand ensured thatsales rose for the eleventh monthrunning, and with new modellaunchesandattractivefinancedeals, weexpect tosee at leasttwo million

cars sold this year, Lowe estimated.Registrations by businesses saw

an even steeper increase; with 7,357registrations, the number of newcompany cars spiked by over 40 percent, according to the data.

Registrations of cars bought aspart of new fleets rose six per centannualised, to 75,211.

Ford continues to produce thetwo most popular new cars, withthe Fiesta and Focus modelsremaining at the top of the best

sellers list. Vauxhalls Astra andCorse occupy third and

fourth positions.

Annual house price growth steady in January

Jan13Oct12Jul12Apr12Jan12Oct11Jul11Apr11Jan11

0

1

-4

-3

-5

-2

1

2 Growth,%

Halifaxhousepriceindex

Avgofotherindices

Source:Halifax

7,906 new Ford Fiestaswere registered in January


No change. There is no l onger any lack of money supply, and the services sector purchasing managers index business survey suggests we may justabout escape a triple-dip, if we are lucky. The real problem in the UK is that ultra-loose monetary policy is keeping zombie firms alive, slowing the read-

justment. More quantitative easing (QE) would be a big mistake.

CITY A.M. SHADOW MPC VOTES 7-2 AGAINST MORE QE

ALLISTER HEATH | CITY A.M.

I think the monetary policy committee should sit down anddo nothing this month. Theres no need to change any policy,although there probably needs to be a bias towards a smallextension in the gilt purchase programme in March or Aprillater this year.

GRAEME LEACH | INSTITUTE OF DIRECTORS

With the economy expected to gradually recover during 2013the Bank needs to be mindful of its primary responsibility price stability. We therefore argue for no further change onrates or the asset purchase programme.

GEORGE BUCKLEY | DEUTSCHE BANK

Cut rates to 0.25 per cent and restart the QE programme withanother 50bn of asset purchases. The economy is close to atriple-dip and the improvement in market sentinment proba-bly wont last. Inflation is above target, but will come downlater this year.

VICKY REDWOOD |CAPITAL ECONOMICS

More monetary medicine is needed 50bn more QE. The Bank ofEngland should announce that redemptions of gilts will be reinvest-ed. The economy is moving sideways. Uncertainty plagues invest-ment decisions and the fiscal consolidation is biting. Carneysreminder that monetary policy is not maxed out i s already helping.

ROBERT WOOD |BERENBERG BANK

Hold policy on both counts. Business surveys confirm that theeconomy is improving. Money supply growth is at a post-recession high, with corporate liquidity surging. The key risk tothe economy now is another inflation spike, not insufficientlyloose policy.

SIMON WARD | HENDERSON

Hold but keep options open for further QE despite concerns abouthigher energy and food prices. The first quarter of 2013 may showsmall growth but a still uncertain external environment, weak con-struction activity and restrained household spending will remain adrag on growth.

VICKY PRYCE |FORMER GOVT ADVISER

Keep rates on hold with a neutral policy stance, and keep QEunchanged. The UK is not performing as badly as the prelimi-nary estimate of a 0.3 per cent drop in GDP in the fourth quar-ter of 2012 suggests. Lloyds Banks monthly business surveysuggests recovery this quarter, so no triple-dip.

TREVOR WILLIAMS | LLOYDS BANK

I vote no change on either the asset purchase programme orinterest rate policy. Little has changed in recent months interms of the basic economic fundamentals the recoveryremains fragile while inflation stickiness persists.

ROSS WALKER | RBS

THE rate-setting monetarypolicy committee (MPC) will siton its hands today, according toanalysts.

Most analysts thought theoutcome of Februarys meeting

would see the committee adopta wait and see approach.

It looks highly unlikely thatthe quarter-on-quarter drop inGDP in the fourth quarter willprompt the Bank of Englandinto further stimulative actiontoday, said IHS Global InsightsHoward Archer.

This put the MPC inagreement with City A.M.sshadow MPC, which voted 7-2against a change in either ratesor quantitative easing policy.

QE expansionnot expected

BY BEN SOUTHWOOD

THE ECONOMIC climate brightenedacross the Eurozone in the firstquarter of 2013, according to dataout yesterday.

German think tank Ifoseconomic climate indicator for thebloc rocketed from 81.7 to 95.1, itsaid, reversing most of the lossesseen since the second quarter of lastyear, when it stood at 100.3.

But the improvement insentiment did not move with thecurrent economic situation, thedata suggested as the situationindicator slide from 97.9 in the finalquarter of 2012 to 95.1 this quarter.

However, firms were vastly moreoptimistic for the future, the Ifodata showed. The expectationsindicator surged from 72.1 to alsorest on 95.1.

Euro outlookmore hopeful

BY BEN SOUTHWOOD

GERMANY said yesterday thestrong euro was not a concern andsignalled opposition to a Frenchproposal for a mid-term target rate,exposing policy divisions overmainland Europes currency.

The comments from Berlin,where most politicians are firmlyopposed to currency intervention,precede talks later in the day

between Chancellor Angela Merkeland French President FrancoisHollande.

Those talks, which will take placepartly over a football match, mayset the tone for todays EU summit

which aims to secure a deal on theblocs long-term budget and a G20

summit in mid-February whereglobal leaders are expected to

Germany and France clash over

the threat posed by strong euroBY CITY A.M. REPORTER discuss currency issues.The focus of that debate is likely

to be Japan, where a new monetaryand fiscal policy drive hassignificantly weakened the yen.

If you look at the historiccontext, the German government isof the view that the euro is notovervalued at the moment,Merkels spokesman Steffen Seiberttold a regular news conference, inunusually strong comments onexchange rates.

The euro firmed to $1.3535 fromaround $1.3506 after the remarks.Last week it peaked at $1.3711, itshighest level since November 2011.

On Tuesday Hollande proposedthat the Eurozone should agree ona medium-term exchange rate

and act on global markets toprotect its interests.

THE deficits of FTSE 350 pensionschemes expanded by 13bn moreduring January, despite soaringstock markets.

Pension deficits totalled 75bnat the end of last month,according to data put out byMercer yesterday, with assetsadding up to only 88 per cent ofliabilities. This was up from 62bnat the end of December, whichrepresented a funding ratio of 89per cent.

One major contributor to thewidening gap was the Office forNational Statistics (ONS) shockdecision not to change the retailprices index (RPI) formula, which

the markets had priced in.This pushed up long-term

Main marketpensiondeficits

explode despite bull marketsBY BEN SOUTHWOOD expectations of RPI, thereforedriving implied liabilities ondefined benefit schemes whichhave to be discounted with RPI to610bn from 588bn.

Assets increased just 9bn, or 1.7per cent, from 626bn to 635bn,Mercer said, despite a 6.5 per centrise in the FTSE 100 index.

On 10 January the ONSannounced that it did notrecommend any material changeto the RPI calculation, said AliTayyebi at Mercer. Immediatelyafter this announcement wereported that pension deficitswere estimated to have increasedby 20bn.

This reflected an increase ofapproximately 0.3 percentage

points in the markets view oflong-term RPI inflation.

US MORTGAGE applicationsclimbed in the last week of

January, despite increasinginterest rates, data showed

yesterday.Seasonally-adjusted loan

application volumes increased 3.4per cent in the week ending 1February, the Mortgage Bankers

Association said.Unadjusted mortgage

applications were some 16 percent higher that week thanduring the same seven days a yearearlier, indicating the US housingrecovery may be setting in.

And this came despite theaverage 30-year fixed interest rate

edging up from 3.67 per cent theprevious week to 3.73 per cent.

US mortgage

requests jumpBY BEN SOUTHWOOD

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SHARES in Siberia-focused oil andgas explorer Ruspetro plungedyesterday as it said it wouldpostpone its senior secured noteoffering.

Ruspetro said it would considerthe bond sale at a later date. It gaveno reason for the delay.

The proceeds from the placingwere intented to replace Ruspetrosexisting debt facility with Sberbank,due to mature in April 2015.

Last month, the firm said it wouldlaunch the offering to strengthen itsbalance sheet, sending its shares ona sharp upward spiral.

We have existing debt thatdoesnt mature until 2015, so wehave time, and we are able to beopportunistic in the bond market,Dominic Manley, head of investorrelations, said yesterday.

Shares closed down 15.69 per centat 43p.

Ruspetro sinksas it postponesbond offering

BY CATHY ADAMS

EURASIAN Natural Resources (ENRC)shares soared yesterday as investorscheered the miners latest outputreport.

In its ferroalloys division, ENRC pro-duced 6.8 per cent more ferrochromein the fourth quarter of 2012 than theprevious year, and reported an 8.9 percent jump in the amount of totalsaleable ferroalloys output in whatchief executive Felix Vulis said wasthe highest annual production vol-ume since its 2007 float.

Sales of iron ore production climbed11.3 per cent in the fourth quarter.

Both divisions operated at full capac-ity over the three months to 31December, ENRC said, leading to theirincreased production.

Its aluminium division reportedfalls in output, with bauxite extrac-tion down 17.5 per cent and aluminaproduction down 12.4 per centagainst the previous years fourthquarter. The FTSE 100 miner citedtechnical issues leading to the alu-minium division operating belowcapacity for the fall in production.

ENRC soars asoutput jumpsin strong year

BY CATHY ADAMS Chief executive Felix Vulis said thatKazakhstan-focused ENRC, which hasbeen the subject of renewed specula-tion surrounding a takeover bid,would deliver strong operational per-formance across the group in 2013.

The fourth quarter productionreport, while mixed, does show goodgrowth in production of saleable fer-roalloys and ferrochrome, and cou-pled with expectations of a strong2013 should at the very least underpinthe stock at current levels, addedRichard Curr at Prime Markets.

Shares closed up 9.12 per cent, mak-ing ENRC the second biggest riser onthe FTSE 100.

Total partners with Cyprus in

oil search as it divests gas unitFRENCH oil major Total saidyesterday it had signed a deal withCyprus to search for offshore oil andgas, as the Mediterranean nationhopes to become an energy hub.

Signing a production sharingagreement yesterday with the thirdenergy major this year, Cyprushopes for a windfall fromhydrocarbons beneath the seabedin a largely untapped area of theeast Mediterranean.

Any finds are not expected tocome ashore until 2018 at the veryearliest for domestic consumption,and in 2019 for export.

Total said yesterday it had been

awarded two production blockssouth-west of Cyprus, in water

BY CATHY ADAMS depths ranging from 1,000 to 2,500metres.

This acreage acquisition isaligned with Totals ambitiousexploration strategy focused on newacreage and plays, ArnaudBreuillac, senior vice president ofthe Middle East, said yesterday.

Cyprus first struck natural gasoffshore in late 2011, when US-basedNoble reported an estimated seventrillion cubic feet natural gas find,close to a major gas discovery byneighbouring Israel.

Separately, the energy behemothsaid it was in exclusive talks with aFrench energy consortium including EDF over the sale of itsunit Transport et Infrastructures

Gaz France (TIGF) in a deal wortharound 2.4bn (2.07m).

Much like British oil major BP,Total is divesting non-core parts ofits portfolio, and the company saidyesterday that the sale was in linewith its active portfoliomanagement strategy.

The consortium selected,consisting of industry-leadingoperators and long term investors,will support TIGF in its furtherdevelopment, while meeting thecommitments made to TIGFsemployees and partners, saidChristophe de Margerie, chairmanand chief executive of Total.

TIGF supplies gas and storageservices in 15 departments in SouthWest France. The agreement willprotect TIGF jobs, benefits as well as

its headquarters in Pau, south westFrance.

Eurasian Natural Resources Corporation PLC


340

350

330

360

370

380 p 375.606 Feb

RusPetro PLC


35

40

30

45

50

55 p 43.006 Feb

ArcelorMittal built the Orbitsculpture in the Olympic Park

SHARES in explorer Victoria Oil &Gas plummeted yesterday, as itannounced that it had raised23.5m in an oversubscribed shareplacing.

Victoria Oil & Gas, which hasassets in Cameroon, will use thefunds to finance the roll-out of itsdownstream strategy at its gasproject in the central Africancountry, in which it holds a 95 percent interest.

The proceeds will help ramp upproduction and sales at theLogbaba Project, so the companycan deliver gas to more customers.

Victoria Oil & Gas raises 23.5mto fund Cameroon gas venture

BY CATHY ADAMSFollowing completion of the

placing, the firm which is in theprocess of appointing a new chiefexecutive will be fully funded tomeet development plans, it said.

The junior stockmarket-listedfirm placed nearly 1.5bn shares ata price of 1.6p each in a two-stageequity offering through Fox-DaviesCapital, where Daniel Fox-Daviesand Richard Hail led the team.Shares are expected to begintrading next week.

Simon Raggett and AngelaHallett from Strand Hanson alsohad a role in the offering.

Shares closed 20.19 per centdown at 1.64p.


The AIM-listed company placed the nearly 1.5bn shares through Fox-Davies Capital

Quilter CheviotThe asset management firmhas appointed JaneSeymour as groupmarketing director. Shejoins from RathboneBrothers, where she held asimilar position. Seymourhas over 20 years

experience working in the financial services sector,and will report to chief executive Martin Baines.

Catalyst Corporate FinanceThe advisory business has appointed two new directentry partners, Andrew Shellard and Mark Farlow.Shellard has over 20 years investment bankingexperience in the City, most recently as a managingdirector at Barclays Capital. Farlow joins from KPMG,where he was a partner for 10 years.

Allied WorldJulian James has been named president of the

insurance solutions providers European platform. Hehas over 30 years industry experience, most recentlyas chief executive of Lockton International. He has alsoheld senior positions at Lloyds insurer globally.

FTI ConsultingThe advisory firm has appointed Andreas von Keitz assenior managing director in the corporate finance andrestructuring practice in Europe, Middle East and

Africa. He joins from KPMG, where he was head of itsoperations team within transaction services.

SIX Payment ServicesPedro Deserrano has joined the payments provider asits chief marketing officer. He most recently held theposition of senior vice president, sales and marketingat Visa Europe.

KNEIPRenaud Oury has joined the services and software

provider as chief sales officer. He joins from CETRELSecurities, where he was managing director.

WHOS SWITCHING JOBS Edited by Annabel Palmer

+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

ARCELORMITTAL, the worlds largeststeelmaker, forecast improvingdemand and earnings this year, aftera wretched 2012 in which slidingEuropean consumption and aChinese slowdown drove it to a deepnet loss.

The group posted a net loss of$3.73bn (2.38bn) for the year,

mostly due to a massivewritedown on its European

business.ArcelorMittal said globalsteel consumption wouldgrow by three per cent in

2013 after a two per centincrease last year, while

Europe would start to levelout.

ArcelorMittalsuffers a loss


IN BRIEFRothschild calls for Bumi headn In the latest development in thebitter Bumi divorce, co-founder Nat

Rothschild yesterday called o n theminers chief executive Nick VonSchirnding to step down over claimsthat he misled the company andshareholders over allegedirregularities on his CV. Bumi has saidthat the accusations are false, andthat Von Schirnding was hired for hisexperience and competence.

Balfour Beatty wins Dubai dealn FTSE 250 infrastructure groupBalfour Beatty has snapped up amechanical and electrical contractworth 64m with Dubai InternationalAirport. Awarded by the DubaiAviation Engineering Projects, it willinstall the electrical, ventilation, airconditioning, plumbing and fireprotection systems in the new airportconcourse, which hosts between 60

and 75m passengers each year.

7/29/2019 Cityam 2013-02-07

17/27

THURSDAY 7 FEBRUARY 201317cityam.com

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LONDON REPORT

THE FTSE 100 nudged intopositive territory yesterday ona strong showing from assetmanagers following robust

results from Hargreaves Lansdown,which outweighed declines inenergy stocks.The FTSE 100 closed up 12.58 points,

or 0.2 per cent, at 6,295.34, havingrisen 0.6 per cent the previous ses-sion after suffering its sharpest one-day percentage drop in three monthson Monday.While choppy trade in recent days

has raised questions over the FTSE100's ability to sustain its recentstrength - with the index onWednesday having swung from 6,265through 6,321 - strategists reckonmore gains are likely.

It's likely to see near-term consoli-dation because it's a bit over-stretched, but fundamentally we'rerelatively constructive, UBS strategistNick Nelson said.

Hargreaves Lansdown jumped 11.2per cent, grabbing the top spot onthe blue-chip leaderboard after itunveiled hefty increases in first-halfprofit, sales and assets.

Major banks have been cutting trad-ing staff and, in some cases, battlingfallout from rate-rigging scandals.But while trading volumes are gener-ally in decline, co-founder PeterHargreaves said his firm was findingnew clients at an unprecedented rate,boding well for the sector.

Blue-chip peers SchrodersandAberdeen Asset Management rose2.9 per cent and 1.2 per cent respec-tively, and midcap Hendersonclimbed 2.4 per cent.

Heavyweight energy stocks fell,with traders citing profit-taking after

gains in the previous session whenbothBP andBG Group postedresults.

Barclays weighed in on both oil

majors, trimming its target price forBG to 1,420p to reflect a lower level ofLNG profitability, though reiteratedits overweight recommendation. Itsshares shed 0.6 per cent.The bank was cautious on BP, off 0.6

per cent, on which it has an under-weight rating, highlighting contin-ued risks associated with remainingclaims over the Gulf of Mexico oilspill.Among commodity stocks, Kazakh

mining group ENRC surged 9.1 percent to 372p, boosted by the compa-ny's strong quarterly output andmedia talk that it could be a takeovertarget.

The Q4 production report, whilemixed does show good growth in pro-duction of saleable ferroalloys andferrochrome, and this coupled withexpectations of a strong 2013 as stat-ed by chief Felix Vulis should at thevery least underpin the stock at cur-rent levels, Richard Curr, head ofdealing at Prime Markets, said in anote.

Fund managershelp FTSE 100edge up again

CITYYOUR ONE-STOP SHOP

BROKER VIEWS ANDMARKET REPORTS

FTSE


6,250

6,300

6,350

6,200

6,150

6,400

6,450

6,500 6,295.346 Feb

DASHBOARD

Transportationstocks weighon Wall Street

US stocks ended mostly flatyesterday, taking anotherpause in the recent rally thathas driven the S&P 500 to five-

year highs, as transportation andtechnology shares lost ground.Transportation stocks were among

the worst performers. Shares ofCHRobinson Worldwide fell 9.7 per centto $60.50 and the stock was the

biggest percentage loser on theNasdaq 100 after the freight transportcompany posted a lower-than-expect-ed adjusted quarterly profit.Without a strong catalyst, the mar-

ket could struggle to continue itsrally, analysts said. The benchmarkS&P 500 index has advanced 6 percent this year, reaching its highestsince December 2007, while the DowJones industrial average has risenabove 14,000 recently.

Bank of America-Merrill Lynch ana-lysts see a near-term pullback likely,based on strong equity inflows at thestart of the year, said Dan Suzuki, thebanks equity strategist in New York.

The fact that weve gone sinceNovember without seeing one, from atiming perspective, it wouldnt be asurprise to see one now.With fourth-quarter earnings near-

ing an end, the market will be losingone of its big supports, said FrankLesh, a futures analyst and broker atFuturePath Trading LLC in Chicago.Thats one thing thats been holdingthe market up, he said.

Shares ofTime Warnerjumped 4.1per cent to $52.01 after reporting higher fourth-quarter profit that beat WallStreet estimates, as growth in its cablenetworks offset declines in film, TVentertainment and publishing units.The Dow Jones industrial average

was up 7.22 points, or 0.05 per cent, at13,986.52. The Standard & Poors 500Index was up 0.83 points, or 0.05 percent, at 1,512.12. The NasdaqComposite Index was down 3.10points, or 0.10 per cent, at 3,168.48.

BESTof the BROKERS

BREWIN DOLPHINShore Capital has a sell rating on the investment manager. In spite of a 50 per centrise in the firms share price since the summer, the broker still believes the firm hasoverstretched on its new strategy, yet the share price already assumes the plan willsucceed. Shore Capital expects cost forecasts to rise, and Brewin looks expensivecompared to peers such as Rathbones.

SCHRODERSMorgan Stanley has upgraded the asset manager to overweight and changed itstarget price from 16.65 to 22.50. The broker sees Schroders as the best relativeplay on European risk recovery in a sector already lifted by improved markets, andhas raised its earnings estimates to around 10 per cent ahead of consensus. MorganStanley has also cut rival Ashmore to an equalweight rating.

MAN GROUPUBS has added Man Group to its most preferred list following a change ofleadership at the asset manager at the end of last year. The broker thinks the firmcould reveal a change in direction alongside its full-year results on 28 February thatcould give the share price a bump. Long term, we believe a sale of the company is apossibility, UBS adds.

NEW YORKREPORTBrewin Dolphin Holdings PLC

31 Jan 1 Feb 4 Feb 5 Feb

cityam 2013-02-07

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