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FTSE 100 ▲5,399.00 +95.60 DOW ▲11,433.18 +330.06 NASDAQ ▲2,566.05 +86.70 £/$ 1.57▲+0.01 £/¤ 1.15t-0.01 ¤/$ 1.36▲+0.02

BlackBerry

server failhits millions

MILLIONS of BlackBerry users acrossEurope, Africa and the Middle Eastlost access to data services yesterday,in what one industry insiderdescribed as one of the biggest out-ages he has ever seen.

Customers across all major networks were unable to access emails,Messenger or internet services from11am yesterday morning. Email serv-ices were restored by 10pm but othertechnical problems continued.

City A.M. understands Canadianphonemaker Research In Motion(RIM) could now be liable to pay com-pensation to the networks, which willhave lost out on valuable data traffic.

It is understood the problem has been traced to a server in Slough,although RIM would not confirm thislast night. The company said it wasaware of the problem and that it isinvestigating, without going into any detail.

Complaints flooded in from as farafield as Egypt and Bahrain.

Sources at the major UK networkssaid they were as in the dark as theircustomers and were battling to keepusers up to date. It appears that somecorporate customers were unaffected.

RIM’s shares, which have lost twothirds of their value since February,fell 0.56 per cent to $23.23 yesterday.

The long-term decline, sparked by

a perceived inability to keep pace with rivals Apple and Google, hasgiven birth to rumours RIM could

be a takeover target.

BY STEVE DINNEEN

TELECOMS▲

George Osborne called on Eurozone countries to accelerate the pace of bailouts Picture: REX

EUROZONE leaders scrambled to bailout another two banks yesterday afterunveiling a €4bn (£3.5bn) rescue of Dexia, the bankrupt Belgian lender.

The EU was also forced to postpone asummit scheduled for next Monday inorder to give politicians more time to“allow [us] to finalise our comprehen-sive strategy” to bail out banks,Brussels said.

But the failure of two more banks yesterday showed that time is runningout: Denmark’s Max Bank andGreece’s Proton Bank both sought gov-ernment aid to avoid collapse, follow-ing the bailout for Dexia agreed onSunday that will see Belgium,Luxembourg and France guarantee upto €90bn in losses.

Max Bank, which was felled by prop-erty loan write-downs, will see its toxicassets taken over and guaranteed by the Danish government, whileSparekassen Sjaelland snaps up itsgood assets. Proton Bank was also splitin two, with its losses underwritten by Greece’s new €30bn bank bailout fund.

Chancellor George Osborne calledon Eurozone countries to acceleratethe pace of bailouts and to “set out the

backstops they have in place to raise

capital… or provide public capital if they cannot”.Despite arguing that Europe should

pursue a mass rescue, he boasted the

BAILOUT FRENZYFOR EURO BANKSBY JULIET SAMUEL

BANKING▲

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coalition had reduced the bailoutguarantee enjoyed by British banks.“This is the direction policy should bemoving in,” he claimed. And he repeat-ed his call for the Eurozone to “movetowards greater fiscal integration to

underpin the single currency”.In a sign that the debt crisis is tak-ing its toll, Eastern Europe’s second

biggest lender, Austria’s Erste Group,

was forced to postpone paying back a bailout loan early due to the uncer-tainty. It was also hit by €1.5bn in

write-downs, triggering a 9.2 per centplunge in its stock despite overall equi-ty gains yesterday.

China also joined the bailout frenzy,grabbing equity in four of its majorlenders to shore them up against aslowing property market. It was not

clear how much its sovereign fund hadspent on the shares.

The growing enthusiasm for pour-ing money into bank rescues comesdespite suggestions that it will have alimited impact on the fundamentals

of the euro crisis. Moody’s said yester-day that even if Europe agrees on aregional bailout scheme, “any relief...

would be brief”. MORE: P4-5

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01/08/11 till 28/08/11 is 92,745

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News2 CITYA.M. 11 OCTOBER 2011

Vickers: UKbanks to stayNO BANK will leave the UK as a resultof the Independent Commission onBanking’s (ICB) proposals, its chair Sir John Vickers claimed yesterday.

But his fellow ICB members brokeranks to suggest that other measuressuch as the UK’s balance sheet levy for banks could make lenders reconsidertheir domicile.

During the hearing of four ICBmembers before the influential Treasury select committee of MPs yes-terday, a clear division arose betweenICB members who believe that thetreasury should repeal the levy andthose who support keeping it in place.

Bill Winters said the government“should reconsider everything” it hasput in place since the financial crisisin light of the ICB report.

“If [the levy] was intended to removethe implicit subsidy from the bankingsector… then we’re dealing with thatelsewhere and the levy should beremoved,” he said, referring to the“implicit subsidy” banks get from aperceived government guarantee to bail them out.

However, Vickers and ICB memberMartin Wolf suggested the levy hadother benefits, such as raising cash forthe government and, according to Wolf, making up for financial services“being under-taxed”. The Treasury hadoriginally suggested that the levy wasto make up for the “implicit subsidy”.

BY JULIET SAMUEL

BANKING▲

Anti-Keynesians win the Nobel prize

THERE are two kinds of non-Keynesianeconomists these days. The first catego-ry includes those such as Thomas JSargent, a member of the new classicalschool of economics, who yesterday was awarded the Nobel Prize in eco-nomics, jointly with Christopher Sims,a econometrics guru who amongother achievements demolished thetraditional graphical Keynesian con-struct taught to all economics, financeand MBA students.

Their mathematical models took the economic profession by storm, with a renewed focus on expectations

and the microeconomic foundationsof economic fluctuations and growth.I still remember studying Sargent’stextbook – you needed years of advanced mathematics to be able to

get to grips with it.Both economists warned that profli-gate governments usually cause infla-tion; when budget deficits are massive,there is no difference between fiscaland monetary policy as governmentssimply print money to pay for spend-ing. Sargent (together with others) also brilliantly helped to show that policy-makers cannot fool everybody all of the time by increasing inflation (andtricking people into thinking thatdemand has genuinely increased). Those findings have been forgotten by many governments and central bankers.

Nobody listened to Sims when healmost exactly predicted the Eurozonecrisis: in 1999, he argued the euro’s fis-cal foundations were “precarious” andthat a problem in one member state“would likely breed contagion effects

in other countries”. A few years later,he warned the ECB would have prob-lems with its balance sheet, anotherforecast which has come to pass.

Fiscal stimulus advocates keep cit-

ing left-wing Nobel laureates such asPaul Krugman or Joseph Stiglitz – butthey won’t find much that pleasesthem in Sargent’s work. He has sav-aged Barack Obama’s stimulus pack-ages, warned that his social policies would actually increase unemploy-ment and has explained why depositinsurance and other forms of govern-ment guarantees made it rational for bank shareholders (and depositors) tocondone excessive risk-taking.

Yet while many of Sargent and Sims’contributions were fascinating, themethods they pioneered took thinkingdown a dangerous blind alley andtowards ever more extreme mathe-matical approaches to economics. Partof the problem was that it was the wrong kind of maths: the system por-trayed was too deterministic and insuf-ficiently chaotic. It was also easy to

disastrously misuse their models, which is what many banks and regula-tors ended up doing during the crisis.

While a lot of the new classical econ-omists’ conclusions were right, and

they did actually warn about bubbles,the way they reached them and theirmethodology and philosophicalunderstanding of the limitations toknowledge were flawed. People aren’tas rational as they assumed. They also wrongly downplayed the role of themoney supply in causing cycles.

Hence why I find the second catego-ry of non-Keynesian economics moreinteresting: the latest incarnation of the more traditional classical school,including the better Austrian thinkers, whose conclusions are similar but whose approach is much more realis-tic. Keynes was wrong, as yesterday’sNobel prize winners rightly point out,a lesson many need to rediscover. Buthe wasn’t always wrong for the rea-sons Sargent and Sims thought.

[email protected] Follow me on Twitter: @allisterheath

PRIME MINISTER David Cameron said yesterday that Liam Fox made “seriousmistakes” in his dealings with Adam Werritty but backed his embattleddefence secretary pending a fullreport into his conduct.

Cameron’s comments came after aninterim report on Fox’s ties with Werritty – a close friend who has noofficial post within the government –found that the two men had met 40

times over the past 18 months, which was more than previously acknowl-edged. At least one meeting involvinga foreign official was “inappropriate”.

A spokesperson for the PrimeMinister said: “It is clear ... that seriousmistakes were made in allowing thedistinction between professionalresponsibilities and personal loyaltiesto be blurred”, raising concerns of con-flicts of interest.

Cameron’s office said his “supportstill stands” at least until the fullreport is published later this month.

BYKASMIRA JEFFORD

POLITICS▲

Cameron backs Liam Fox

US STOCKS soared yesterday asinvestors bet on a pledge by Germany and France to unveil new measures tosolve the European debt crisis by theend of the month.

Following weeks of intense swingsin the stock markets, the Dow Jonesindustrial average closed up by 330.06points, or 2.97 per cent, to end at11,433.18.

The Standard & Poor’s 500 Indexclimbed 3.41 per cent, while theNasdaq Composite Index leaped by 3.5 per cent to close at 2,566.05.

Financials stocks led the rally, with JP Morgan Chase & Co up four percent to $31.94 and Bank of Americagaining 4.9 per cent to $6.20.

Meanwhile the euro had its biggestrise against the US dollar in 15months.

US stocks rallyon Eurozone’srescue pledge

Defence secretary Dr Liam Fox apologised to parliament yesterday

MARKETS▲

EDITOR’S LETTER

ALLISTER HEATH

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the Editor’sCode of Practice, a copy of which can be found at www.pcc.org.uk

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

Asked if banks couldleave due to the ICB’ssuggested policies, SirJohn Vickers said: “Theshort answer is no.”

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7283 5334Email: [email protected] www.cityam.com

EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowActing Night Editor Marion DakersBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Jo SimpsonPictures Alice Hepple

CommercialSales Director Jeremy SlatteryCommercial Director Harry OwenHead of Distribution Nick Owen

TOUGH CARE HOME REGULATIONSPROPOSED The government is considering aseries of tough regulations for resi-dential care homes following the col-lapse this year of Southern Cross, theUK’s biggest home operator. Themeasures, outlined yesterday for con-sultation, include requiring compa-nies to post capital upfront as acondition of their licence, and givingcouncils and regulators the power tointervene in the management of homes if they come under the threatof closure.

AVERAGE HOUSEHOLD FACES FUELPOVERTY BY 2015 The average household will be in“fuel poverty” by the next election in2015 if energy bills, which havealmost doubled as a share of median

income since 2004, stay on their cur-rent path.

STANDARD CHARTERED BANKERATTACKS WESTERN REGULATORS

One of Standard Chartered’s mostsenior executives has sharply criti-cised western regulators for using the wrong mechanisms to deal with thefinancial crisis, granting free rein to Asian markets where there has been a bias towards growth-focused regula-tion. “In the west, everything seemsto create more uncertainty,” saidSteve Bertamini, head of retail andSME banking at Standard Chartered, which generates the bulk of its busi-ness in Asia. “In many cases, you seeregulators trying to outdo each other. Where is it going to stop?”

CHINA DETAINS WALMART STOREMANAGERS Walmart, the US retailing giant, has been ordered to close seven stores insouth-western China after policedetained a number of store managersfollowing allegations that employees

labelled the firm’s ordinary pork asorganic.

WHO NEEDS SILICON VALLEY WHENYOU’VE GOT THE V&A?California may be the throbbingheart of the global technology indus-try but Silicon Valley’s stultifying cul-tural attractions mean that London isa better home for creative types,according to one of the industry’smost influential players. Jimmy Wales, who founded Wikipedia adecade ago, now spends half the yearin London.

JONGLEURS HEADS FOR CITY ANDNEXT STAGE OF COMEDY REVIVALHave you heard the one about thepsychotherapist daughter of Polishrefugees who wants to float her com-edy club business on the stock mar-ket? Maria Kempinska, the founder of Jongleurs, will today unveil plans toraise at least £500,000 through a pri-

vate placing before an expected AIMlisting in the next 12 to 18 months.

DOCUMENTS FROM RUSSIAN BP OFFICERAID CANNOT BE USED IN TNK-BPLAWSUIT, RULES COURTDocuments seized from BP’s officesduring a series of raids by masked bailiffs cannot be used as evidence, aRussian court has decided. The rulingis a rare victory for BP in Russia, aftera tumultuous year that has seen thecollapse of its £10bn deal with state oilcompany Rosneft.

INVESTORS UNAWARE THAT MANYCAUTIOUS BRANDED FUNDS ARERISKY, SAY NINE IN 10 FINANCIALADVISERSMany so-called cautious managedfunds do not live up to their name.Research by Skandia revealed thatmost investors would score “cautious”funds as a two or a three out of 10 forrisk. But most cautious funds actually

carry a risk score of five or six, withsome scoring even higher.

TATA COFFEE AND STARBUCKS NEARDEAL FOR STORESIndians could soon be sipping cups of coffee and chatting at Starbucks out-lets, as the US chain sets out to perk up global sales by making a long-awaited entry into one of the world'sfastest-growing economies. Starbuckscould over the next three weeksannounce an alliance with TataCoffee to open stores in India, a per-son familiar with the matter said yes-terday.

CHRYSLER AND UAW RESUME TALKSContract negotiations betweenChrysler Group and the United Auto Workers union will resume today after a short break Monday followinglate night bargaining sessions overthe past three days. Negotiators forthe auto maker and the union are

scheduled to resume their talks inMichigan today.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/3/2019 Cityam 2011-10-11


THE NEW generation of “baby busters” faces an uphill struggle tomatch the housing and pension wealth accrued by their “baby boomer” generation parents.

“This is the legacy handed down by the early 1960s ‘baby boomers’ to thegeneration of students just starting atuniversity,” according to the reportpublished today by PwC.

People born in the early 1990s willfail to get onto the property ladder

until their 35th birthdays and be lum- bered with around £90,000 in studentdebt, on average, the report said.

The “baby busters” are also set forsignificantly less generous pensionsthan their parents enjoyed.

To make up for the harmful legacy,many parents are set to provide gener-ous levels of inheritance to their off-spring – “assuming this excess wealthdoes not get eaten up by long termcare costs”, PwC warned.

A higher state pension age for the

remainder of the baby boomer gener-ation could help redress the cross-gen-erational imbalance, the reportsuggests. Taxes on housing wealth would also reduce the burden of taxa-tion on the new generation, PwC said.

However, economic growth andtechnological progress mean that thelatest generation will be better off than their parents in terms of absolute wealth.

They will enjoy a greater “volumeand variety of goods and services”, thestudy said.

Britons born in the early 1990s are

likely to live around five years longer,on average, than people born in the1960s, the report noted.

“At age 65, the baby buster’s total wealth is projected to be higher, inabsolute terms, at around £1.9m, com-pared with the baby boomer’s ataround £1.6m,” the report said.

“Yet relative to average earnings insociety at those two dates, the baby buster’s comparative wealth is project-ed to be around 25 per cent lowerthan that of the baby boomer.”

Baby boomersmake way forbaby busters THE BENEFITS for taxpayers of a safer

financial system will far outweigh thetemporary hit to economic growth of imposing tough new capital rules ontop banks, a committee of internation-al regulators concluded yesterday.

The report, published yesterday by the Bank for International Settlementsin Basel, claimed that increasing theextra capital banks are required tohold by one percentage point overeight years would cut economicgrowth by less than 0.01 per cent per year during the phase-in period.

Extra capital buffers are “likely tohave at most a modest impact onaggregate output, while the benefitsfrom reducing the risk of damagingfinancial crises will be substantial”,the Basel Committee and the FinancialStability Board said in a statement.

Both bodies have approved the bank capital surcharge plan that leaders of the world’s top 20 economies (G20) areset to endorse in November.

Banking industry bodies, however, warn that piling capital requirementson lenders will cut their ability to aideconomic growth.

Under new rules, a surcharge of oneto 2.5 per cent -- the amount depend-ing on five factors like complexity andinternational reach -- will be intro-duced from 2016 over three years.

BIS says bankbuffer wortheconomic hit

Lastminute.com sells tickets for West End shows including WickedBY JULIAN HARRIS

ECONOMY▲

REGULATION▲

News 3CITYA.M. 11 OCTOBER 2011

ONLINE travel firm lastminute.comhas cut its losses despite suffering agrim year caused by the volcanic ash

cloud and strikes by airline crews. The private equity-owned firm

increased turnover by 6.45 per centto £49.14m and cut costs as it tackledthe consumer spending slump.

Operating losses narrowed 77 percent to £10.26m, according to the2010 accounts of Last MinuteNetwork, which did not return calls.

The directors’ report states:“Trading was put under pressure by a number of external factors duringthe year, including the Icelandic vol-

canic ash cloud, strike action by air-line personnel, severe winter weath-er and the disruption and consumeruncertainty that these events result-ed in.”

The firm, which sells tickets for

events such as West End shows as well as holidays, was set up by BrentHoberman and Martha Lane Fox in1998.

It floated in 2000 and survived thedotcom industry collapse before being taken private by travel compa-ny Sabre in a £577m deal in 2005.

Fox, who was nearly killed in a carcrash in 2004, is now the govern-ment’s digital champion and a non-executive director of Marks &Spencer and Channel 4.

BY PETER EDWARDS

LEISURE▲

Lastminute trims losses

8/3/2019 Cityam 2011-10-11


A FIRE SALE of Dexia assets wasunderway last night after France,Belgium and Luxembourg agreed tospend €90bn (£78.45bn) on a bailoutfor the crippled bank’s ailing bondsunit.

The break-up of the group will seeDexia Bank Belgium, the largely retaildivision, sold to Belgium for €4bn.

Dexia is also seeking backing fromthe banking arm of France’s postoffice and its sovereign wealth fundCaisse des Depots and is in negotia-tions to sell BIL, the Luxembourg divi-sion, to a minority-majority partnership of the Grand Duchy and

the Qatari royal family. Yesterday theQataris also bought the private bank-ing arm of Belgium’s KBC.

The future of Dexia’s other unitsremains uncertain, with its stake in Turkish lender Denizbank and RBCDexia Investor Services, its global joint venture with Royal Bank of Canada, likely to be subject to bids. It

was on Denizbank in particular thatDexia chief executive Pierre Marianihad pinned his hopes for growth.

The initial sales were agreed yester-day after a 14-hour board meeting.

The capital injection will be used toprovide support for 10 years to the“bad bank”– the business that con-tains €95.3bn of poorly performing bonds – which is being retained by Dexia. Its portfolio includes €7.7bn in junk bonds and €7.4bn in mortgage- backed securities tied to the US.Belgium is contributing €54.45bn,France €32.85bn and Luxembourg €2.7bn.

Dexia needed help after being shutout of the wholesale funding market,upon which it relied to finance its

long-term loans to local authorities inFrance and Belgium, and because of its €3.5bn of exposure to Greece.

It comes only three years after itreceived a €6.4bn bailout fromBelgium, France and Luxembourg.

Shares in Dexia resumed trading yesterday and closed down 4.7 percent at €0.81.

Dexia savedas fire sale of

assets beginsBY PETER EDWARDS

BANKING▲

THE BAILOUT of Dexia has further weakened Belgium’s chances of avoid-ing a downgrade of its governmentdebt, ratings agencies warned.

The central European nation hasspent nearly €60bn on shoring upDexia and buying its Belgian retailarm, just three days after Moody’s warned of a possible downgrade.

After the Dexia bailout was

finalised yesterday Belgian PrimeMinister Yves Leterme hailed the dealfor the “fair division of the costs”.

That sentiment has not reassuredratings agencies, however. DouglasRenwick from Fitch said: “The cost tothe Belgian government of supportingDexia is not insignificant and high-lights one of Belgium’s rating weak-nesses, namely its large banking sectorand the contingent liability this posesto the state.”

Fitch and Standard & Poor’s both

currently have AA+ ratings onBelgium and on Friday Moody’s said ithad placed the nation’s Aa1 govern-ment bond ratings on review.

Belgium’s debt-to-GDP ratio was96.2 per cent last, which was worsethan all Eurozone members apartfrom Greece, Italy and Ireland.

Moody’s has also placed numerousBelgian firms, including SNCB andInfrabel, as well as some of the coun-try’s regions, on review for possibleratings downgrades.

BY PETER EDWARDSSOVEREIGN DEBT▲


ANALYSIS l Dexia SA

€

Aug Sep

2.00

1.50

1.00

0.10

€96 billionShort-term funding atthe end of June 2011

€3.46 billionGreek sovereign debt

exposure at the end of 2010

€15 billionItalian debt exposure at the end of 2010

€3.6 billionExpected loss on future asset sales

€6.4 billionDexia bailout from Belgium, France

and Luxembourg in 2008

$26.5 billionDexia borrowed from theFederal Reserve’s discount window

on 29 October 2008

ANALYSIS l State guarantees f

France: €32.85bn

Belgium: €54.45bn

Luxembourg

€

€54.4554.45

€32.85bn32.85bn

€2.7bn

TIME LINE | DEXIA SEES PAST FINANCIAL WOES RESURFACE

September 30 2008Belgium, France and Luxembourg agree toinject €6.4bn to rescue the bank.November 2008Dexia obtains €150bn worth of state guar-antees from Belgium and France.September 18 2009Belgium, France and Luxembourg renewtheir state guarantees for Dexia but lowerthe overall amount down from €150bn to€100bn.

August 4 2011Dexia reports its worst-ever loss, hit by itsexposure to Greece.October 3 2011Moody's puts Dexia on review for a down-grade. Shares close 10.16 per cent lower.October 4 2011France and Belgium say they will take neces-sary measures to guarantee Dexia’s financingOctober 6 2011Dexia shares suspended.

DEXIA BY NUMBERS

€60bn bailout bill heapspressure on Belgian state

8/3/2019 Cityam 2011-10-11


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MORE NEWSONLINE

www.cityam.com

Grand rescue plan is certain to failMarkets are on tenterhooks to seehow the Eurozone’s new merry-go-round of money, known as its bank recapitalisation scheme, is going to

work. And following yet another delay

in the unveiling of the plan – withMonday’s summit pushed back a week and few details likely untilNovember – they will be waiting alittle longer.

The IMF has put the cost of agrand rescue at €200bn. CreditSuisse says it could cost up to doublethat, which would make Dexia’s €4bn rescue a one per cent tip of theiceberg.

And that doesn’t include thepotential cost of underwriting

banks’ dodgy assets, which Belgiumand France have guaranteed to thetune of €90bn for Dexia alone.

So what are those dodgy assets? In

large part, they are government bank bonds. And therein lies the problem. The

only way for indebted governmentsto bail out banks is for them to issuemore debt, further boosting the risk that they will default on the bonds

banks already hold.No wonder analysts are conclud-

ing that a mass bailout will, at best, buy time to deal with a liquidity cri-

sis.But the underlying problem,

according to both Moody’s and UBS banks analyst Alistair Ryan, is sover-eign solvency. Ryan wrote on Friday:“What banks collectively need, in

our opinion, is the return of Italianand French default risk to theremote possibility they were consid-ered before Greek [private-sector

burden-sharing]… Capital is not, ingeneral, the core of the issue.”

Hardly music to Merkozy’s ears.

BOTTOMLINEAnalysis byJuliet Samuel

NALYSIS l Dexia’s sovereign exposures (as at March 2011)

€m

€ 3 , 4 7 0 m

€ 3 , 4 6 9 m

€ 1 m

0

€ 1 5 , 5

9 9 m

€ 1 4 , 8

7 4 m

€ 1 , 8 3 0 m

€ 1 , 4 5 0 m

€ 1 , 4 3 8 m

€ 1 3 m

€ 1 , 5 0 3 m

€ 1 , 8 3 0 m

00 0

Greece Ireland Italy Portugal Spain Total

Total sovereign exposure includes countries not listed here

Total Banking book Trading book € 4 9 , 7 1 1 m

€ 4 8 , 2 0 8 m

€ 7 2 5 m

WHO IS STEPPING IN TO HELP DEXIA?

Belgium- paying €4bn to buy Dexia Bank Belgium, thelargely retail Belgian division

Luxembourg

- in talks to buy minority stake in Luxembourg unit,

with Qatari royal family set to take majority stake

France- Dexia seeking backing from state-owned Caisse

des Depots and La Banque Postale

Dexia retains:

- €95.3bn bonds (including €7.7bn junk bonds and

€7.4bn mortgage-backed securities)

- asset management business

- no sale planned: Dexia Sabadell (Spanish), Dexia

Crediop (Italian), DKD (Germany)

Fate unknown

- Dexia's stake in Turkish Denizbank- Dexia's stake in RBC Dexia Investor Services(global joint-venture with Royal Bank of Canada)

8/3/2019 Cityam 2011-10-11


EMERGENCY overnight lending fromthe European Central Bank remainedin demand, while overnight depositshit a new 15-month high, figuresshowed yesterday, a sign of strains in bank funding markets.

Banks took €2.8bn (£2.4bn) fromthe 17-country bloc central bank’sexpensive overnight lending facility, where they have to pay 2.25 per centinterest, compared with Friday’s 0.919per cent at the interbank markets.

Overnight borrowing topped €1bnfor the sixth day in the row and is like-ly to stay high until at least tomorrow, when banks get funds in the ECB’s weekly refinancing operation.

At the same time, overnightdeposits jumped to their highest levelsince late June of last year, topping €255bn.

Banks are increasingly concernedabout lending funds to each other asthe European sovereign debt crisis worsens.

The implosion of Belgian lenderDexia, the first bank to fall victim tothe two-year-old Eurozone debt crisis,has added a sense of urgency to thetalks.

Also putting pressure on the banksis Greece’s ongoing negotiations withthe troika – its lenders at the EU, theIMF and the ECB – which are expect-ed to end today.

“After a long series of talks andmeetings with representatives of thetroika, we have concluded the circleof scheduled meetings and the mis-sion is expected to be concluded by

[Tuesday],” Greek finance minsterEvangelos Venizelos said yesterday.

The EU, IMF and ECB missionchiefs, are likely to conclude their visit by issuing a joint statementtoday. Back in Brussels and Washington, they will prepare reportsfor Eurozone finance ministers andthe IMF’s board, who will decide onthe aid tranche.

Without the next €8bn aid install-ment Athens could run out of cash assoon as mid-November.

ECB is seeingits overnightlending soar THE FOUR parties of Slovakia’s ruling

coalition ended talks on trying to solvea dispute over expanding theEurozone’s European FinancialStability Facility (EFSF) safety net with-out a deal yesterday but will continuediscussions from 7am this morning,the Slovakian prime minister said.

Government sources said PrimeMinister Iveta Radicova had threat-ened to resign earlier if a deal was notreached over ratifying an expansionthe EFSF agreed by Eurozone leadersin July. The junior ruling SaS party has vowed to block the measure.

The senior party in Slovakia’s centre-right coalition is believed to haveoffered a new compromise proposal toa junior partner its support forexpanding the size and powers of theEurozone’s bailout fund.

Under the proposal, all future fund-ing for Eurozone bailouts disbursed by the EFSF would be subject to approval by the Slovak government and parlia-ment’s budget and finance committee.

But no veto rights would be given toindividual parties, a stipulation thedissenting liberal SaS party hasdemanded.

The proposal also offers that a spe-cial committee of party experts would be created to assess Slovakia’s positionon the disbursement of EFSF loans.

Slovakia delayskey decision onexpanding EFSF

BYHARRY BANKS

EUROZONE▲

EUROZONE▲


A MAJOR US investor advisory firmrecommended yesterday that share-

holders of the News Corporation voteagainst the re-election of 13 of themedia conglomerate’s 15 directors,including chairman and chief execu-tive Rupert Murdoch, who controlsthe company.

The Institutional ShareholderServices (ISS), said the phone hackingscandal at the News of the World “laid bare a striking lack of stewardship andfailure of independence”.

The firm also criticised the board’sdecision to approve a 180 per cent

increase in Mr Murdoch’s cash bonusto $12.5m (£8.5m) in the year to June2011, soon after the phone hackingfallout began.

ISS recommended that sharehold-

ers vote against re-electing MrMurdoch, his sons James and Lachlanas well as chief operating officer ChaseCarey. Only veteran lawyer Joel Kleinand venture capitalist Jim Breyer were backed by the ISS.

News Corp said it “strongly dis-agrees” with the analysis, adding thatthe “ISS’s disproportionate focus onthese issues is misguided and a dis-service to our stockholders”.

The annual general meeting is inLos Angeles on 21 October.

BYKASMIRA JEFFORD

MEDIA▲

New call to oust MurdochThe ISS is calling for Rupert Murdoch to be kicked off News Corp’s board.

8/3/2019 Cityam 2011-10-11



Hendry fund

grows amidEuro turmoil

CREDIT SUISSE PREDICTS GOLDMAN LOSSES

Goldman Sachs is expected to reveal its secondever quarterly loss whenit reports next week,according to Credit Suisse analysts. They forecast the Wall Street giant will report a lossof $392m (£250m) for the

three months to the endof September. Barclays predicts losses in theregion of £180m. A quarterly loss for GoldmanSachs, led by Lloyd Blankfein (pictured),would be the first since 2008.

Picture: REUTERS

EUROPE’S competition regulator will exclude a critical derivativesmarket from their investigationinto the $10.2bn (£6.6bn) merger of Deutsche Boerse and NYSEEuronext, sources said yesterday.

The European Commission willnot examine the market for over-the-counter (OTC) derivatives, which are traded through a dealerinstead of publicly on an electronicplatform such as an exchange, inits review of the merger.

Deutsche Boerse and NYSEEuronext both have large deriva-tives trading arms, Eurex and Lifferespectively, and a merged group would control about 90 per cent of the market for exchange-tradedderivatives. But while the OTC mar-ket in Europe is huge, City A.M.understands the two exchangegroups would control only about afifth of the market.

The decision to look only at listedderivatives shows the EC’s focus oncompetition in Europe, but deriva-tives traders view their market asglobal and compete with the US.

The focus on listed derivativesmakes the EC more likely to rulethat the deal hurts competition.

EC leaves outOTC derivativesin deal probe

CAPITAL MARKETS▲

THE HEDGE fund run by outspo-ken investor Hugh Hendry achieved stellar returns of nearly five per cent this summer despitethe turmoil gripping markets.

Hendry’s CF Eclectica AbsoluteMacro fund returned 4.76 per centin August and September at a time when the hedge fund industry wasstruggling to make any gains.

Eclectica has gained 13 per centsince May after Hendry took adownbeat view of European eco-nomic prospects.

Yesterday Hendry was flying toNew York but told City A.M. thatEclectica now has $700m (£446.8m)under management.

Hendry, a charismaticGlaswegian who is known for hisappearances on programmes suchas Question Time, set up his fundafter leaving his job as a trader at

Odey Asset Management. He oftentakes contrary positions and has been betting against China.

His success comes against a grimperiod for the hedge fund industry, which is struggling to emerge fromits worst period since the height of the financial crisis. The averagefund fell by 2.8 per cent inSeptember and 5.5 per cent overthe quarter, according to HedgeFund Research.

It also emerged at the weekendthat the Advantage Plus fund, run by John Paulson tumbled 19.35per cent last month.

As well as Eclectica, a handful of other funds have bucked the trend.GLG, part of Man Group, saw its$2bn Atlas Macro fund gain an esti-mated six per cent in September.Last week City A.M. revealed that Winton Capital, run in London by David Harding, is up around 6.3per cent so far this year.

HEDGE FUNDS▲

8/3/2019 Cityam 2011-10-11


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RECRUITER Michael Page yesterday revealed that the jobs market wasstalling in the UK, with the firmdepending on growth in other mar-kets to lift profits.

The company said gross profits inthe UK rose just 0.3 per cent to £33.1min its third quarter, against growth of 48 per cent in the Americas and 44per cent in Asia-Pacific – thogugheven these regions grew more slowly

than a year ago.Michael Page said government

spending cuts, which had triggeredstate hiring freezes, had put the

brakes on its progress in the UK, whileemerging markets were thriving.

Market turbulence has also hit City jobs, compared with a financial servic-es sector in Asia that has seen jobsrise. The group, which operates in 32countries, said total group gross prof-its rose 22 per cent to £142.7m.

Page’s banking business, which

focuses on London, New York, Tokyoand Hong Kong and accounts for 10per cent of the group’s gross profit,grew ten per cent in the third quarter,compared to 28 per cent growth theprevious year.

The firm’s headcount rose by 229to 5,350, with the additions mainly made in China.

Michael Page also announced thatSir Adrian Montague will retire aschairman on 31 December after 10

years on the board and RobinBuchanan, an independent non-exec-utive director, will succeed him.

Michael Pagehit by hiringfreeze in UK

ALMOST half of city workers areexpecting bonuses to fall over thenext three years, citing uncertain

market conditions, according to asurvey by careers websiteeFinancialCareers.com.

Just 15 per cent of 533 profession-als interviewed by the jobs websitepredicted bonuses will get biggerover the next three years, while 29per cent expect them to stay thesame. However 89 per cent of City

workers are still confident that they will receive a bonus this year.

City expects acut in bonuses

Chief executive Steve Ingham said that the group remains strong despite UK turbulence

BY JOHN DUNNE

RECRUITMENT▲

FINANCIAL SERVICES▲


ANALYST VIEWS: HOW DAMAGING IS THE UKJOBS CLIMATE FOR RECRUITERS? Interviews by John Dunne

“

GRAHAM BROWN | EVOLUTION

The increasingly concerning macroeconomic outlook has placed esti-mates on a sharp downgrade cycle. Unlike other staffers, though, the sharesremain above their 10-year average, in part owing to their faster growth tra- jectory.

”

“

ANDY MURPHY | SINGER CAPITAL MARKETS

Michael Page has performed weakly. It now trades on an enterprisevalue/sales ratio of 1x (Hays is on 0.3x) down from a peak of 2.2x in 2007 and arecent high of 1.6x.... However, they are continuing to invest in people and newoffices as evidenced by new operations in Brazil, India and the US.

”

“

RICHARD CURR | PRIME MARKETS

Michael Page results provide arguably the most telling glimpse into thestate of the global economy. The profits story and growing cash pile should seethe shares well supported within the current trading range established in August,and as such Prime Markets reiterates its view of a a buy.

”

ANALYSIS l Michael Page International

p

7 Oct 10 Oct4 Oct 5 Oct 6 Oct

380

360

340

358.0010 Oct

BANKS including Nomura and Royal

Bank of Scotland have cut pay ratesfor IT contractors and other tempo-rary workers by 10 per cent andmore as they take an increasingly hard line on costs.

In a manoeuvre rarely seen sincethe height of the financial crisis,Nomura, Japan’s biggest investment

bank, cut wages for some contrac-tors by 10 per cent in September,sources familiar with the mattersaid. Nomura and RBS declined tocomment.

Banks trim payfor contractors

BANKING▲

8/3/2019 Cityam 2011-10-11


8/3/2019 Cityam 2011-10-11


SPANISH infrastructure firmFerrovial has cut its stake in UK air-port operator BAA to just below 50per cent after selling a six per centshare, removing BAA’s debts from its

balance sheet.Ferrovial said yesterday that it had

agreed to sell 5.88 per cent of its BAA investment vehicle, FGP Topco, to USinfrastructure investment group

Alinda Capital Partners for €325m(£283.7m), valuing BAA at €5.52bn.

“It’s been a good sale at a greatprice but we don’t plan to sell any more [of BAA] at the moment,” aspokesman for Ferrovial said.

The sale means Ferrovial’s stake inBAA will drop to 49.99 per cent from55.87 per cent, the Spanish company said, allowing it to deconsolidateBAA’s debt from its balance sheet.

Following the sale, expected toclose by the end of this month,Ferrovial’s accounts will show about €5.19bn of debt against the current €19.75bn, the spokesman said.

“This deal should be positive forthe share price as it unlocks hidden

value, gives Ferrovial greater flexibili-ty and may make it easier to captureother investment opportunities,” saidSociete Generale analyst Victor

Acitores.Ferrovial has been considering sell-

ing a stake of up to 10 per cent in BAA for around a year. It put the stake upfor sale last October in a move to trimits debt.

BAA owns London Heathrow --Europe’s busiest airport -- as well asSouthampton and Stansted inEngland and Glasgow, Edinburgh and

Aberdeen airports in Scotland. The Competition Commission (CC)

last week told BAA that it must sellone of its Scottish airports before itdisposes of London Stansted airport.

The CC’s decision followed a two- year battle between BAA and the CCafter the CC ruled in 2009 that BAA exerted a dominant hold on Britishairports and told it to sell Gatwick and Stansted airports and one of itsScottish airports.

BAA last month said it would seek a judicial review of the UK competi-tion watchdog’s ruling requiring it tosell off Stansted and either Glasgow or Edinburgh airport in Scotland.

Ferrovial cuts

stake in BAAto lower debtBYHARRY BANKS

INFRASTRUCTURE▲


ANALYSIS l Ferrovial SA

€

7 Oct 10 Oct4 Oct 5 Oct 6 Oct

9.20

8.80

8.40

8.00

9.0810 Oct

Bristol Airport - 2006

World Duty Free - 2008

Belfast City Airport - 2008

Gatwick Airport - 2009

Edinburgh or Glasgow Airport - TBC

Stansted Airport - TBC

GIC

Britannia Airport Partners

Ferrovial

Alinda Capital Partners

%

26.48%

49.99%

5.88%

17.65%

ANALYSIS l BAA Ownership

THE Treasury select committee hascalled for an explanation from banksplanning to restrict which cashmachines basic bank account hold-ers have access to.

Committee chairman Andrew Tyrie wrote to RBS and Lloyds abouttheir schemes after consumer groupssaid the they could affect some of the

most vulnerable in society.

A million RBS customers with basic bank accounts have been told they will only be able to withdraw money only from RBS, NatWest, Tesco orMorrisons cash machines. The bank

blamed costs for the move. Tyrie wrote: “We are concerned

about the restrictions Lloyds and RBSare placing on basic account holdersaccess to other banks’ cash

machines.”

RBS and Lloyds asked to explaincash machine restriction plansBANKING

▲

Ferrovial chief exec Inigo Meiras saidthe sale was in linewith strategy.

8/3/2019 Cityam 2011-10-11


8/3/2019 Cityam 2011-10-11


YAHOO started life as Jerry and Dave’sGuide to the World Wide Web, a direc-tory of websites named after founders Jerry Yang and David Filo.

In 2008, when Yang recommendedshareholders reject Microsoft’s$44.6bn (£28.5bn) bid for the firm,many investors were wishing he hadstudied the guide a little more closely.

Now sources say Yang is interestedin a $20bn deal that would see a private equity group take the reins at thestruggling internet giant.

It is understood Yang would retainhis 3.63 per cent stake as part of any deal, with Filo also expected to main-tain his 5.9 per cent interest.

Silver Lake Partners, ProvidenceEquity Partners, Hellman & Friedman

and Bain Capital have all been linkedto Yahoo. The speculation comes afterreports that Microsoft is also mulling a

second attempt at taking control of the company, albeit at a steep discountto the sum it was willing to pay justover three years ago.

Yahoo and its longtime advisers Allen & Co and Goldman Sachs began work on a strategic review after chief executive Carol Bartz was axed lastmonth. The advisers are expected tosend financial information to interest-ed parties this week.

Yahoo’s share of the US search mar-ket stood at 16 per cent in August,compared with 19 per cent two yearsago, despite a deal to outsource searchtechnology to Microsoft. Google’ssearch share has been steady at 65 percent, while a resurgent Microsoft hasseen its share rise to 15 per cent fromnine per cent two years ago.

Since 2008, jokes have circulatedthat Yang has the best tan in Silicon

Valley from all the time he spent onthe golf course. He will certainly havehis work cut out now.

Yahoo mulls$20bn sale toprivate equity

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BY STEVE DINNEEN

TECHNOLOGY▲

CHINA’S Alibaba Group has held talks with state-owned investment compa-ny Temasek over buying back the 40per cent stake in itself held by Yahoo.

Alibaba – a huge success story inChina – could even bid for the wholeof Yahoo, allowing it to push into theUS.

Jack Ma, the chief executive of Alibaba, said last month he would be

“very interested” in such a deal,although Temasek is understood to be less keen. Singapore’s Temasek may help fund an offer in return for a bigger share of privately-owned Alibaba Group.

The relationship between Alibabaand Yahoo has become increasingly strained, with the US firm claiming it was kept in the dark over the spin-

ning-off of Alipay, the company’sonline payment service.

... while China’s Alibaba plans tobuy back its 40 per cent stakeTECHNOLOGY

▲


Co-founder Jerry Yang is interested in taking the business private Picture: REUTERS

ANALYSIS l

Apr Jul Oct 2009 Apr Jul Oct 2010 Apr Jul Oct 2011 Apr Jul Oct2008

25

30

20

15

10

$YAHOO ADVISES AGAINST OFFER

Board recommends Yahoo investors reject the bid

MICROSOFT

BID

Yahoo sharesrocket asMicrosoftannounces abid valuing thecompany at$44.6bn

PROFITS TUMBLE

Yahoo reports direresults, sending

shares plummeting

JERRY YANG TO

STEP DOWN

The chief executivesays he will quitthe post

MICROSOFT AD DEAL

The firms finally agree towork together to battleGoogle

ALIBABA CONFLICT

Yahoo claims its ChineseJV partner kept it in the

dark over the sell off of its Alipay unit

BARTZ FIRED

The colourful chief executive is given thechop after failing to turn the company

around

Yahoo’s ups and downs since Microsoft’s bid

8/3/2019 Cityam 2011-10-11


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the U.S. and other countries. App Store is a service mark of Apple Inc.

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THE WIND-DOWN of troubled private equity fund LMS Capital couldtake more than three years after thefailure of efforts to resolve a dispute between chairman Robert Rayne anda group of independent directors.

The group of non-execs, led by John Barnsley, yesterday called onLord Max Rayne’s son to resign, just weeks after he and his allies formeda “concert party”, representingabout 35 per cent of the shares, in an

attempt to trigger a break-up.“The Independent Committee has

sought to structure an exit for theConcert Party, but it has not beenpossible to establish a price at whichthe Concert Party would be willingto sell its holding and at which a buyer or buyers for those sharescould be found in current marketconditions.”

Now the fund will write to share-holders asking for an “orderly wind-down”, which will take more than

three years, according to sources.City A.M. understands some infor-

mal discussions were held over a saleof the Rayne group’s stake but aspokesman denied seeking to agree asale price. The concert party said it“has never sought to have its share-holding bought by the company, norhas it sought any different treat-ment for its shareholding from thatof other shareholders.”

Rayne’s group has been concerned by the price LMS shares, which havetraded at a 30 to 35 per cent discountto their net asset value since 2006.

Chaos at LMSas closure of fund agreed UK investment banks saw their fees

from arranging private equity buyoutsshrink dramatically in the past threemonths to the lowest level since 1997,data yesterday showed.

The UK slipped to fourth place inEurope for buyout-related fees in thethird quarter from first place a yearago, claiming only a 9.6 per cent shareof the region’s market.

The UK’s banks made net revenuesof $81m (£52m) in the quarter, datafrom Dealogic showed – a 62.5 percent slump on the same period in2010, when banks made $216m fromprivate equity deals. The UK held thetop spot in Europe for nine monthsfrom September last year, command-ing more than a fifth of the market.

French banks took the top spot forfees from private equity deals in the

third quarter, banking $241m in rev-enues and taking a 28.4 per cent mar-ket share. Italy and Germany saw thesecond and third-highest fee levels.

European private equity houseshave had an increasingly difficult yearas the Eurozone sovereign debt crisishas forced them to either postpone orabandon transactions.

Banks in Europe’s ten biggest mar-kets for fees made a total $847m inthe third quarter, lower than the priorquarter but higher than a year ago.

Bank fees fromprivate equityat 14-year low

Robert Rayne faces calls for him to step down as chairman

LMS boss Glenn Payne, left, and John Barnsley, chair of the non-execs

BY PETER EDWARDS

FUND MANAGEMENT▲

PRIVATE EQUITY▲


ANALYSIS l LMS Capital

p

7 Oct 10 Oct5 Oct 6 Oct

62

58

61.9410 Oct

8/3/2019 Cityam 2011-10-11


A TALE OF TWO PAPERS: HOW TO FIXTHE EURO AND ERASE THE FIXINGS

DRAWING A BLANK

ON EURO SOLUTION All hail a new experiment in open-sourced journalism, kicked off yes-terday by the Guardian. Thepaper, edited by Alan Rusbridger(pictured) has generously opened up its daily news list forfeedback from readersthroughout the day,detailing the gist of most of the stories vying for space in itspages. The Capitalist naturally scrolledspeedily to the busi-ness section to pick the great brains of her rivals.Everything seemed to

be proceeding swim-mingly – stories allassigned, boxes filledin, from Dexia’s bailout to the award

for the Nobel prize for economics. With one rather crucial exception:“What is the plan to save the euro?”ran the summary for one of theevening stories under considera-

tion. The column next to it?Blank.

ASSET STRIPPERSIT IS three months now since

Rupert Murdoch closedthe News of the World, but the tabloid has

already been erasedfrom newspaper histo-ry. Any NoTW refugees

wanting to collecttheir belongings fromtheir old newsroom

were told they had tomake an appointment,

then collect their posses-sions from tables withina ghostly hangar in theold News Internationalsite. “The entire news-

room was stripped bare almostimmediately after the paper closed,”said The Capitalist ’s man in Wapping.“All that remained were the four walls – there was no sign that theNews of the World ever existed.”Some of the keenest trophy huntersunscrewed framed stories from the walls. No doubt some will turn up oneBay soon, along with the swathe of final editions on offer.

15EDITED BY

HARRIET DENNYSGot A Story? [email protected] The Capitaliston Twitter: @citycapitalist

The CapitalistCITYA.M. 11 OCTOBER 2011

Scores of final editions of News Of The World are listed, with prices up to a hopeful £1m

8/3/2019 Cityam 2011-10-11



ENGINEERING group CharterInternational had to delay givingshareholders the full details of theoffer from US buyer Colfax for anoth-er week, it said yesterday.

Charter’s board was due to publishthe full scheme of arrangement forthe takeover yesterday but it askedthe Takeover Panel to grant it another

week’s grace as it finalises the struc-ture of the offer it recommended inSeptember.

Colfax offered Charter sharehold-ers 910p per share in cash and sharesto be disbursed through a mix andmatch facility that would allow eachinvestor to elect to take up their pre-ferred combination of the two.

The extension to the TakeoverPanel deadline for Colfax’s offer sug-gests details of the mix and matchfacility are still being worked out.

“The Takeover Panel has agreed with Charter and Colfax to extendthe date by which the circular toshareholders in connection with theScheme must be posted, from

Monday 10 October 2011 untilMonday 17 October 2011,” Chartersaid in a statement.

Charter’s board backed the £1.5bnoffer from Colfax, a smaller company,after UK-based rival Melrose indicatedit wanted to buy Charter for up to850p, or a total £1.4bn.

Colfax trumped Melrose’s two bids with its higher offer, but saw a back-lash from Charter’s long-terminvestors Schroders and AvivaInvestors, which said they had beendisappointed with the outcome.

Charter shares closed up 0.2 percent at 872p while Colfax was 2.4 percent higher in afternoon trading.

Colfax stalls

Charter offerfor one weekBYALISON LOCK

INDUSTRY▲

Urenco might best be privatised through an IPO

WITH the transactional mar-kets still deathly quiet, it’stempting to think of invest-ment bankers sitting

around twiddling their thumbs orfrequenting their gyms rather more

than usual.But there’s still plenty of specula-

tive work going on, and some lessspeculative work, as well as the oddIPO being planned, such as that of

Polymetal I wrote about last week.One of the more interesting proj-ects being looked at is the possibleprivatisation of Urenco, a worldleader in concentrating uranium,

which is currently owned by the UK government, the Dutch governmentand German utilities E.ON and RWE.

Last month, RWE and E.ONappointed Bank of America MerrillLynch to conduct a strategic review of their joint stake and since then, therehave been many meetings to discuss

the options.Urenco’s order book stretches

beyond 2025, giving it very reliableearnings. It would be tempting to sellthe company to the highest bidder in

a sealed bid contest, but this would beunlikely to happen because of thestrategic importance of the company.

Bankers think the process would be better managed if they sold shares inthe company in an IPO, where they

would have more control over those who bought in (at least in the initialallocation).

But Fukushima is still fresh in themind and the IPO markets need tothaw first, before Urenco can make

best use of them.

THE CADBURY RULESDeutsche Bank advisers led by Richard Sheppard will be preparingdocuments in connection with theirclient Colfax’s takeover of the UK

group Charter.Colfax beat off a competing bidfrom Melrose and is now in a positionto fulfil rule number 24.2 of the City’s

Takeover Code, which compels it toset out its intentions for the company it has just bought, in terms of whichemployees it wants to get rid of,

which businesses and which factoriesand so on.

Both Kraft and Lazard, its adviser,ran into trouble with the Panel dur-ing last year’s bid for Cadbury, when

it turned out that a factory they said was going to be kept open was closed.

As a consequence of this affair andthe later thoughts of Cadbury chair-man Sir Roger Carr, who is now CBI

president, the disclosure rules have been enhanced and now Colfax needsto state clearly its intentions forCharter and its employees for a full 12month period from the time the dealcloses.

“We will adhere closely to the Panelrequirements,” said a source close toColfax. It’s unlikely that the firm will

want to follow Kraft in upsetting thePanel and ending up in front of aSelect Committee.

[email protected]

INSIDE TRACK

DAVID HELLIER

ANALYSIS l Charter International

p

4 Oct 5 Oct 6 Oct 7 Oct 10 Oct

890

870

850

872.0010 Oct

Jardine Lloyd Thompsonsnaps up Chilean broker

INSURANCE broker Jardine Lloyd Thompson paid £10m in cash for acontrolling stake in Chile’s numberfour broker yesterday as it completedthe deal announced in June.

JLT said it had gained control of broker Orbital Corredores de Segurosafter completing the purchase of a50.1 per cent stake in Alta, its parentcompany. Alta also runs Alta Re, areinsurance unit.

Under the deal’s terms, JLT also has

an option to increase its stake in Altato 75.1 per cent in 2020, depending

on the profitability of the business atthat time. Alta made a £2.1m profiton net revenues of about £5.1m in2010.

JLT’s Latin America chief executive Vyvienne Wade said the acquisition would “add significantly to our capa- bilities in the region” as both Orbitaland Alta Re are “leading firms inChile’s well established market”.

Lloyd’s broker JLT has shrugged off the turbulent environment to con-tinue its growth strategy this year. Itsfounder and lead investor, Jardine

Matheson, paid £166m to raise itsstake to 40.4 per cent last month.

INSURANCE▲

8/3/2019 Cityam 2011-10-11


YOUGOVsaw its full year profits soaras key acquisitions hit the groundrunning.

The online market research compa-ny saw its adjusted pre-tax profit rise43 per cent to £5.8m, boosted by astrong performance in the US, whichnow represents its largest market.Revenue there rose 230 per cent afterthe integration of Harrison Groupand Definitive Insights.

Overall revenues rose 27 per cent tohit £56.1m, while organic growth hitnine per cent. It now expects goodgrowth, despite the end of a contractin Iraq and persistant fears over mar-ket volatility.

Chief executive StephanShakespeare said: “This performancereflects organic growth in the busi-ness as we develop new products and

serve new clients as well as our suc-cessful acquisitions in the US, whichare delivering ahead of expectations.

“The core model is working wellacross both the existing and acquired

businesses. The current year will seefurther benefits from our US acquisi-tions and continued gains in othermarkets.”

He added that new management inGermany are expected to deliverimproved profitability.

Investec analyst Steve Liechti said:“The figures highlight very strong USgrowth which is more than offsettingGermany and Middle East issues,

while the UK is also performing well.”

YouGov profitsurges as itsUS unit growsBY STEVE DINNEEN

MEDIA▲

NETWORK operator Three has saidOfcom’s decision to delay the mobilespectrum auction, which will eventu-ally allow faster mobile data use, willhit its customers and give its largerrivals an unfair advantage.

The network said the delay untilthe end of next year widens the “mas-

sive competitive and commercialimbalance” it suffers from. It is angry

that, until after the auction, rivals areable to use their existing low frequen-cy spectrum for 3G data services with-out paying a premium.

Ofcom said the decision to delay the auction gives it time to addressthe concerns of the major UK net-

works, all of which have complainedabout the terms set out.

The last spectrum auction raised

£22.5bn, although analysts expect the4G auction to pull in closer to £4bn.

Three says it will be hit hard byOfcom’s delay of mobile auctionTELECOMS

▲

THE iPhone 4S has broken Apple’sprevious records for pre-orders, clock-ing up more than 1m in a single day.

The handset, which received amuted reaction on its launch last

week, surpassed its previous one-day record of 600,000 sales for last year’siPhone 4.

One company alone – AT&T – sold200,000 contracts for the device in

just 12 hours.However, Colin Gillis of BGCPartners said it is too early to break out the champagne just yet. He said:“It’s not the first million. We know there’s a large, loyal base of users.

They need to sell more than 20m of these in this quarter to hit estimates.

Apple needs to break records to hitexpectations.”

Apple shares rose four per cent inearly trading yesterday. The iPhone4S will be available in US stores on

Friday. Meanwhile,Google andSamsung havedelayed the releaseof their NexusPrime phone in the

wake of Steve Jobs’death, saying it nolonger felt like theright time.

The launch has been placed onindefinite hold.

iPhone 4S breaks pre-orderrecords with 1m on first dayBY STEVE DINNEENTELECOMS▲


Stephan Shakespeare said he is optimistic about good growth

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44.00

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BRITISH shops have unexpectedly recorded growing sales in the threemonths to September, defying the

wider economic turmoil.Like-for-like retail sales were 0.3

per cent up last month, comparedto the same time in 2010, datarevealed this morning.

And the three-month weightedaverage – designed to iron outmonthly volatility – showed like-for-like sales up 0.1 per cent comparedto last year, the British RetailConsortium (BRC) said.

Total sales, which include shops’expansions, were up 2.5 per cent inSeptember, and 2.2 per cent from

July through to September.

However, the BRC’s director gen-eral, Stephen Robertson, remaineddownbeat.

“In these harsh times, we have to be thankful for this minor improve-ment in growth compared with

August but underlying conditionsremain weak,” Robertson warned.

“Spending growth is below infla-tion meaning customers are buyingless than this time last year. Andthere’s no guarantee next month’sfigure will be better.”

Food sales are propping up thefigures. Like-for-like food sales wereup 2.1 per cent from July toSeptember, while total food salesspiked 5.1 per cent.

“Hot weather at the end of September boosted spending onfood and drink, but clothing sales

slumped as the sun underminedinterest in winter ranges,”Robertson explained.

“Short-lived factors such as the weather and discounting are influ-encing sales not any fundamentalchange in how customers are feel-ing.”

Consumers are responding to theeconomic squeeze by looking forhigh value purchases, according to aseparate report released yesterday

by consumer researchers Nielsen. Thirty-six per cent of shoppers

surveyed across 51 countries saidthey favoured larger, economy-sizedpackages.

“As commodity and raw materialcosts continue to rise, this is theclear preference among con-sumers,” the report said.

Sales rise for UK’sresilient retailersBY JULIAN HARRIS

RETAIL▲

QVC, one of the world’s biggestshopping channels, will launchits first pop-up shop on theBritish high street today.

The temporary Diamoniquestore – selling QVC’s own range of imitation diamonds – is openingin Hatton Garden today withprices ranging from £21 to £743.

The new retail offering comesas the company announced its

viewing figures had risen by 10

per cent over the last year, to7.6m a month, with sales up five

per cent to £387.2m. The firm hopes to piggyback on

the soaring value of gold and dia-monds, which have caused theprice of jewellery to shootupwards over the last year.Diamonds have seen their valuerise 27 per cent since last year, areport by Cap Gemini said in July,and London-listed commoditiesfirms such as Petra Diamondsand Gem Diamonds have report-ed surging profits for the latestquarter.

Emily Gilkes, jewellery buyer atQVC said: “Beautiful jewellery

should be attainable for every-one. Our Diamonique offering isexpertly cut by hand in the same

way that natural diamonds are toenhance the clarity, colour, cutand brilliance of every piece.”

QVC was founded in the US in1986 and now broadcasts in theUK, Italy, Germany and Japan toclose to 200m households.

The company is owned by USconglomerate Liberty Media, andemploys 2,000 people in the UK.

QVC recently released a jew-

ellery line designed by modelHeidi Klum.

Shopping channel QVC unveils firsthigh street shop as turnover shinesRETAIL▲

Annie Lennox’s daughter Tali models for Julien MacDonald at Debenhams

PETS at Home boss Matt Davies willstep down next year after almost two

years after presiding over the sale of the firm for almost £1bn.

The outgoing chief executive has been at the helm for eight years andoversaw two private equity takeovers,the most recent a £955m acquisition

by KKR. The firm has grown exponentially

under his leadership, reporting profitgrowth of more than 10 per cent last

year to hit £93m, on sales of £518m.Davies says he told the board at the

start of the year that he would leave to

seek new challenges.Davies said: “My time at Pets at

Home has been hugely rewarding andenjoyable and it has been a great pleas-ure to manage such a special business

and work with such talented and pas-sionate people.

“The calibre of the team leaves mein no doubt that the business will con-tinue to go from strength to strengththrough its next phase of growth.”

Tony DeNunzio, chairman of Petsat Home, said: “KKR and I would liketo thank Matt for his contribution tothe company over the past ten years.He has helped build an excellent

business, with a very strong manage-ment team and an exciting growthstrategy. He has been a pleasure to

work with.”Pets at Home was bought by

Bridgepoint from its founder Anthony Preston for £230m in 2004.

DeNunzio says the company is inthe process of looking for a replace-ment. Pets at Home employs morethan 5,000 people across its retail out-lets and veterinary clinics.

Pets at Home bossto step down after

eight years at helmBY STEVE DINNEEN

RETAIL▲

DEBENHAMS is to hire an extra 6,500seasonal staff to cope with theChristmas rush, it said yesterday.

The temporary workers will beemployed in mid-November and coverthe period to the end of the January sales.

Retail is the biggest private sectoremployer in the UK, with around 3mpeople working in the industry.

Debenhams chief executive MichaelSharp said: “These jobs are sure to be

welcomed by local economies duringthe most financially challenging partof the year.

“Approximately a quarter of staff that work with us over the festive sea-son will stay on in permanent roles,making this a crucial period in ouremployment calendar.”

The jobs will be split between every

department at the retailer’s 163nationwide stores, but this latest boostin temporary positions is lower thanlast year when the retailer created9,000 extra festive roles.

Debenhams tocreate 6,500Christmas jobs

RETAIL▲

8/3/2019 Cityam 2011-10-11


KALAHARI Minerals confirmed yes-terday that offer talks had resumed with state-owned China GuangdongNuclear Power Corp.

CGNPC is expected to relaunch its270p a share offer, valuing the ura-nium miner at about $1bn (£638m),following a temporary ban imposed by UK regulators.

CGNPC was in talks in March to buy Kalahari for 290p a share. In thedays following the earthquake andnuclear disaster in Japan, the com-panies agreed CGNPC could cut theprice to 270p, but they failed to per-suade UK regulators and CGNPC wasforced to withdraw its informal bid.

Since more than three monthshave elapsed since CGNPCannounced the withdrawal of itspossible offer, it is no longer restrict-ed into making an offer on the sameor better terms than those in itsoriginal potential offer, Kalaharisaid yesterday.

Kalahari also said it had waivedanother UK Takeover Panel codethat had restricted the Chinesegroup from announcing an offer before 11 November.

Kalahari holds a 43 per cent stakein Extract Resources, owner of theHusab project in Namibia, which ispotentially the second-largest urani-um mine in the world.

Shares in Extract Resourcessurged more than 10 per cent in Australia yesterday on expectationsit may also get a takeover offer fromCGNPC.

Kalahari back

in talks withGuangdong

Ladbrokes ends bid discussions

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BRITAIN’S biggest betting firmLadbrokes and online gaming firm

Sportingbet have called off bid talks,scuppered by regulatory worries overSportingbet’s Turkish business.

Ladbrokes had been in talks withSportingbet since June, butSportingbet’s online gambling busi-ness in the tough regulatory regimeof Turkey was seen by analysts as astumbling block to a successfultakeover.

“The potential benefits and risksassociated with a combination withSportingbet were clear to us from theoutset and have been well covered by the market,” said Ladbrokes chief

executive Richard Glynn in a state-ment yesterday.“Having completed our analysis we

have been unable to agree a structure which delivers increased shareholder value within an acceptable regulatory environment. We have thereforeagreed to end our discussions.”

Sportingbet has no assets in Turkey but operates a website offering bets to

Turkish residents. Ladbrokes haspulled out of previous deals becauseof its aversion to operating in unregu-lated territories.

Glynn said on a call with reporters

he did not believe Ladbrokes was arisk averse company but saw too many hurdles to a Sportingbet deal. “There’s just not a structure we can agree onthat gives our shareholders an accept-able level of ... regulatory risk,” he said.

Sportingbet shares tumbled 19.1per cent to 37p on the news, whileLadbrokes shares ended the day down0.75 per cent at 119.7p.

BY ELIZABETH FOURNIER

MINING▲

BYHARRY BANKS

M&A▲

ASTRAZENECA, Britain’s second-largest drugmaker, has cemented itsplans to shift investment into emerg-ing markets, saying yesterday it willinvest $200m (£128m) in a new facto-ry in China.

The pharmaceutical giant’sinvestment will be its largest everspend on a single manufacturing

facility globally.

The unit will produce both intra- venous and oral solid medicines forthe company’s growing business inChina, AstraZeneca said yesterday.Construction is scheduled to be com-pleted at the end of 2013.

AstraZeneca’s turnover in China was more than $1bn in 2010 and thegroup has made emerging markets atop priority for future growth.

Astra plans $200minvestment in ChinaPHARMA

▲


NEWS | IN BRIEF

Earnings take a hit at CargillUS agribusiness and trading firm Cargillposted a steep drop in quarterly earningsyesterday, citing economic uncertaintyand volatile commodity markets.Minneapolis-based Cargill, one of theworld's largest privately held corpora-

tions, reported $236m (£150.5m) inearnings from continuing operations forthe quarter ended on 31 August, down66 per cent from $693m a year earlier.

Superior Energy buys CompleteSuperior Energy Services is to buy small-er rival Complete Production Services ina cash-and-stock deal for about $2.6bn,its largest ever takeover, as the oilfieldservices company looks to bulk up itspressure pumping business.

Adidas eyes growth in RussiaGerman sporting goods company Adidasexpects investment in its own stores andrising consumer spending in Russia topropel the region to becoming one of itstop three global markets behind the USand China, it said yesterday. Adidasexpects its sales in the Russia/CIS regionto surpass €1bn by 2013, up from€786m last year, chief executive HerbertHainer said at an investor day inMoscow.

Netflix bins DVD spin-off planNetflix chief executive Reed Hastingsyesterday performed a U-turn on a three-week old plan to separate his company’sDVD rental business and online videostreaming service, sending the firm’sstock up seven per cent in early trading.Hastings’ reversal of a decision to moveits DVD rentals to a separate businesscalled Qwikster was announced via theUS company’s blog.

ANALYSIS l Kalahari Minerals PLC

p


240

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220

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MEDIA company Bertelsmann, ownerof the production company thatmakes The X Factor, said yesterday itschief executive Hartmut Ostrowski will stand down.

Ostrowski, who took the helm in2008, will take a seat onBertelsmann’s supervisory board, theGerman company said, adding thathe was making the switch for person-al reasons.

The move comes as a surprise asOstrowski’s term runs untilDecember 2012, althoughBertelsmann has traditionally decidedto extend contracts for top jobs a year

before they end.Finance chief Thomas Rabe will

take over as chief executive at thestart of next year. It was an opensecret that Rabe had been vying forthe CEO position, but whenever he was in talks to leave had been per-suaded to stick it out at Bertelsmann.

Rabe and Ostrowski were known to be at odds partly due to their differentstyles and personalities, but company sources have said the two had puttheir differences to rest.

Ostrowski had spent his wholecareer bar two years working forBertelsmann at the group’s headquar-ters in the small town of Guetersloh,less than 20km where he was born.

BYHARRY BANKS

MEDIA▲

Bertlesmann boss to leave Bertelsmann owns the production company that makes The X Factor Picture: REX

8/3/2019 Cityam 2011-10-11


AMERICAN economists ChristopherSims and Thomas Sargent were

jointly awarded this year’s Nobelprize for economics, it wasannounced yesterday.

The two have been praised fortheir work on cause and effectanalysis. In awarding the 2011Sveriges Riksbank Prize in EconomicSciences in Memory of Alfred Nobel,as the prize is formally known, thedecision-making committee said “it

would be nearly impossible to imag-ine the field without them”.

Sims (pictured right) and Sargent(top right), professors at Princetonand New York universities respec-tively, carried out their work inde-pendently of one another. However,their “contributions are comple-mentary in many ways”, the com-mittee said.

Cause and effect in economics can be difficult to establish and measure because of the two-way relation-ships between factors studied. Inparticular, the pair looked at thetwo-way relationships between mon-etary policy and the broader macro-economy.

Sims’ work in the 1970s measuredthe impact of temporary changes in

variables such as interest rates onthe wider economy.

As a result, vector autoregressionsare “an indispensable tool forapplied researchers”, the committeesaid.

Sargent, on the other hand, con-sidered longer-term changes. Forexample, he measured households’inflation expectations rising as aresult of policies implemented inthe post-second world war era.

He made “substantive contribu-tions to the study of monetary poli-cy in his analyses of historicalinflation episodes throughout the

world”.“The methods developed by

Sargent and Sims are essential toolsin macroeconomic analysis,” thecommittee explained.

The 10m Swedish krona(£960,000) prize will be split evenly

between them.“We’re just bookish types that

look at numbers and try to figureout what's going on,” Sargent said inan interview posted on the NobelPrize website. “We try to experimentin our models before we wreck the

world.”

FRENCH and Italian industrial output was surprisingly strong in August, boosting prospects for third-quartergrowth in the Eurozone’s second- andthird-largest economies, although ana-lysts warned that this may be maskingunderlying stagnation.

French output posted a 0.5 per centmonthly increase compared with fore-

casts of a one per cent decline, whileoutput in Italy leapt 4.3 per cent com-

pared with expectations of a modest0.2 per cent increase, data showed yes-terday.

German industrial output droppedone per cent on the month in August,data showed last week, but the fall wassmaller than expected. Data yesterday showed German exports hit an all-time high in the same month.

The latest stats run against businesssurveys that have pointed to a signifi-cant slowdown in industrial activity in

the Eurozone since the beginning of the third quarter.

The output data from Germany,France and Italy, which make up atleast two-thirds of the Eurozone econ-omy, suggests aggregate output fig-ures for the 17-nation bloc may bestronger than expected when they areissued by Eurostat tomorrow.

“The numbers clearly show a differ-ent picture than the scary drop in sen-timent indicators,” said ING economistCarsten Brzeski after Germany'sexport figures. “For the time being the

current situation remains good butexpectations have weakened.”

Eurozone countries deliver a surprise jump in industrial production growth

ECONOMIC concerns are causinghouse-owners to hold back from plac-ing their properties on the market, anew survey reports today.

Supply to the housing market felllast month, the Royal Institution of Chartered Surveyors (RICS) said. Fiveper cent more surveyors reported thatsupply of property fell rather thanrose, in September.

Yet despite a slight pick-up indemand, house prices remained

unchanged in September, while surveyors still expect prices to be

weighed down in the near future.“Every part of the UK, includingLondon, recorded some degree of neg-ative price expectations,” the survey said.

“Falling supply of fresh stock isindicative of general fears overhang-ing the economy, with many poten-tial sellers preferring to stay put fornow,” said RICS’s Michael Newey. Thehousing market “remains pretty flat”, Newey added.

Economic worries preventhouses coming to market

HOUSING▲

THE CHANCE that inflation will fall below the two per cent target in themedium term is rising, monetary pol-icy committee (MPC) member DavidMiles told the Royal Economics Society last night.

Since the Bank of England’s infla-tion report was published in August,“news on the economy has been over-

whelmingly negative”, Miles said.

He fears that weak growth, com- bined with falling commodities

prices, will lead to a dangerously large fall in inflation.

Miles believes the new round of quantitative easing (QE) will boost theeconomy despite low gilt yields.Pointing to higher bank fundingcosts, he said QE2 could generatemore deposits.

He also defended the policy of buy-ing gilts rather than corporate bonds,saying “the MPC is not well placed tomake credit allocation decisions

between issuers and deciding whichfirms get funding and which do not”.

Miles: QE2 could relievebanks’ funding problems

UK ECONOMY▲

FEARS of economic stagnation in theUK were heightened today, after a

leading survey of businesses report-ed an increasingly gloomy outlook. The third quarter results “point to

a deterioration in the economic situ-ation, with concerning signs of stag-nation in the domestic economy”,the British Chambers of Commerce(BCC) said.

And the planned “rebalancing” of the economy towards exports andnon-financial products – a target of the government and the Bank of

England – is failing to materialise,the survey suggests.

Exports from both manufacturingand service sectors fell to their low-est levels since 2009, the BCC

revealed. The UK’s largest sector – services –expects future export orders to con-tract, the sub-index reporting a neg-ative balance of minus two per cent.

“The survey shows the real risksfacing the economy and the need forthe government to act now in put-ting business growth at the heart of all its policies,” said John Longworth,the BCC’s new director general.

“Government must recognise that

business is good for Britain, and putin place measures to bolster confi-dence and support those companiesthat have the potential to grow.”

Domestic demand showed mini-

mal growth or stagnation across the board. Domestic factory ordersstayed in positive territory yet plum-meted to a net balance of three percent, from plus 18 per cent the previ-ous quarter.

UK-based demand for servicesdropped to parity (indicating stagna-tion), a 10 per cent drop from thesecond quarter of the year.

Employment expectations stayednarrowly positive in both sectors.

Gloomy outlook for UK firmsBY JULIAN HARRIS

UK ECONOMY▲

US economists

awarded jointNobel prizeBY TIMWALLACE

ECONOMY▲

BYHARRY BANKS

EUROZONE ECONOMY▲

NEWS | IN BRIEF

Eurozone investor morale sinksInvestor confidence in the Eurozone hasdipped to more than a two-year low thismonth, according to the latest Sentixindex, released yesterday. The Germany-

based Sentix said that the index sank to-18.5 from -15.4 last month. Some econ-omists, however, had expected an evensteeper drop.

Downturn expected in the OECDWealthy states remain on course for aneconomic downturn, the Organisationfor Co-operation and EconomicDevelopment said yesterday. The OECD’sleading indicators, which attempt toforecast changes in the economy sixmonths ahead, decline for the fifthstraight month in August. The indicatorfell 0.5 points for the OECD as a whole.The UK’s indicator sank below the 100point line, which marks its long-termaverage.

Prices pressures rise in NorwayNorway’s energy-adjusted consumerprices rose 1.3 per cent year-on-year inSeptember, up from 0.8 per cent inAugust, the central bank said yesterday.August was originally reported up 0.9per cent year-on-year. Core inflation alsorebounded, rising by 1.2 per cent year onyear from 0.8 per cent in August, officialdata showed.

UK set to miss poverty targetsPegging state benefits to a lower meas-ure of inflation will contribute to a risein poverty, the Institute for FiscalStudies (IFS) is expected to argue today.The IFS forecasts absolute child povertyto reach 23 per cent by 2020-21, drasti-cally missing the state’s “supposedlylegally binding target” of five per cent.The UK’s dire fiscal situation means thegovernment is almost certain to miss itschild poverty targets, despite childpoverty falling by nearly a quarterbetween 1998 and 2009, the IFS says.


Princeton professor Christopher Sims was also given the Nobel in economics

Tom Sargent, a professor at New York University, was jointly awarded the Nobel

8/3/2019 Cityam 2011-10-11


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LinklatersThe global law firm has appointedGraham Rowlands-Hempel asa consultant in its employment and

incentives practice in London.Rowlands-Hempel is a senior incen-tives lawyer and was previously apartner at Linklaters. He joined the

firm in 1994 and was elected partnerin 1998, before retiring in 2008 to joinPwC.

Jones Lang LaSalleThe financial and professional servicesfirm specialising in real estate has

announced that Tom Bayne-Jardine isto succeed Bill Monk as lead director of the firm’s corporate solutions UK busi-ness group. Monk will assume the roleof chairman, supporting Bayne-Jardine.

iSharesiShares, the exchange traded fundsplatform of BlackRock, has announcedthe appointments of Matt Mack ashead of strategic accounts and

Stephen Cohen as head of investmentstrategies in EMEA. Mack washead of UK & Nordic third party distri-bution at Goldman Sachs AssetManagement. Cohen joins fromNomura where he was globalhead of equity linked strategy.

MercerThe global provider of consulting, out-sourcing and investment services hasappointed Phil Howard as a seniorassociate in its governance and trusteeservices group. Howard will consult onoperational effectiveness, operationalrisk and evaluation of sourcing options.Before joining Mercer Howard was theoperational information manager at

the National Employment Savings.

DeloitteThe business adviser has created adedicated infrastructure and capitalprogrammes industry team. Nick Prior,head of infrastructure and capital pro-

grammes, will lead a team of 11 part-ners.

Hausfield & CoThe boutique litigation law firm hasstrengthened its European team by hir-ing assistant solicitors David Lawneand Tom Bolster. Lawne joins from pro-bono non-governmental organisationthe Legal Response Initiative andBolster joins from Baker & McKenzie.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys

+44 (0)20 7092 0053morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

BEST OF THE BROKERS To appear in Best of the Brokers email your research to [email protected]

ANALYSIS l Mitchells and Butlers PLC

300

280

260

240

220

12 July 1 Aug 1 Sept 3 Oct

p 247.0010 Oct

MITCHELLS & BUTLERSNumis rates the pub group “hold” with a 250p target price due to M&B’suncertain future with just a week to go before Joe Lewis’ investment vehiclePiedmont must submit a formal offer. Management has rejected his 230p pershare bid, but it could be accepted if major investors Elpida and Smoothfieldsupport that price. Numis says the low price could disappoint minorityinvestors but the sector as a whole could benefit from a smaller M&B.

ANALYSIS l Informa Plc

420

400

380

360

340

320


p350.10

10 Oct

INFORMA GROUPCollins Stewart rates Informa a “buy” with a 507p target price ahead of itstrading statement in two weeks. The broker believes the events and publish-ing group shows defensive characteristics that make it a good investment inthe current volatile environment. Informa delivered earnings growth through-out 2008 and 2009, and the broker expects 12 per cent earnings growth inthis financial year. Debt has also almost halved since 2008.

ANALYSIS l Lonmin PLC

1,300

1,200

1,100

1,000


p

1,103.00

10 Oct

LONMINUBS advises investors to sell the platinum miner with a 1,110p target priceafter its markets day seminar. The $1,500/oz spot price for platinum is wellbelow the minimum level of about $1,900/oz needed to incentivise new pro-duction. UBS warns that large parts of the primary industry do not generatecash, and although long-term demand will be supported by vehicle fuel cellapplications, that technology is currently very expensive to install.

Man GroupMan Group, Europe’s largest hedge-fund, hasappointed Nina Shapiro as non-executive direc-tor. Shapiro previously held senior roles withinthe World Bank and was Vice President, Financeand Treasurer of the International Finance

Corporate from 2000 to 2011. After joining theWorld Bank in 1978, Shapiro held posts includ-ing director of project finance and also managedthe IFC’s funding, liquid asset investments andasset liability management. Shapiro holds anMBA from Harvard Business School.

B ANK and commodity stockshoisted Britain’s top sharesto a five-week closing high

yesterday, on mounting opti-mism over the prospects for a solu-tion to Europe’s debt crisis after a

weekend meeting of French andGerman leaders.

The FTSE 100 ended up 95.60points, or 1.8 per cent, at 5,399.00,after Nicolas Sarkozy and AngelaMerkel pledged to unveil new

measures to solve the Eurozonedebt crisis by the end of October.

Volumes were thin at 64 per centof the index’s 90-day daily average,an indication investors were notfully convinced by the news, withtraders saying markets were likely to be jittery until the leaders deliv-er on their promise.

“Three weeks is a long time in

the markets, and (they) couldremain volatile,” Manoj Ladwa,senior trader at ETX Capital, said.

A small increase in “put” pro-tection – options to hedge againstdownside risk – was seen,although notably less than overthe last week, according to Atif Latif, director of equities and

derivatives at GuardianStockbrokers.

Mining and energy stocksadded most points to the index asthe nervousness subsided over theEurozone debt situation, at leastfor now.

FTSE hits a five-week highon optimism over debt talksTHELONDONREPORT

11 Jul 29 Jul 18 Aug 28 Sep8 Sep

6,000

5,200

5,600

ANALYSIS l FTSE5399.00

10 Oct

Banks lead US stock hikeU

S stocks jumped per cent yesterday, extending gainsinto a second week as apledge by German and

French leaders boosted hopesthat the Eurozone debt crisis may

be resolved.Financials led the rally. The

KBW bank index jumped 5.3 percent, with JPMorgan Chase & Coup 5.2 per cent and Bank ofAmerica up 6.4 per cent.

The Dow Jones climbed to11,433.18. The Standard & Poor’s

500 rose to 1,194.89. The Nasdaqlifted to 2,566.05.

THENEW YORKREPORT

8/3/2019 Cityam 2011-10-11


23CITYA.M. 11 OCTOBER 2011In association with

Zurich Insurance plc Business Features

PROFESSIONAL

SERVICES NEED

AN EYE ON RISKDAVE CAREYHEAD OF CORPORATE,ZURICH INSURANCE

THE UK is a world leader in professional servic-es and the sector has grown rapidly on theback of corporate and property deals as wellas private and public sector businesses out-

sourcing work. According to the Professional andBusiness Services Group, professional service firmssuch as accountants, actuaries, engineers, survey-ors, market researchers, lawyers, management con-sultants and architects make up 8 per cent of theUK’s total output. However, the downturn in the UKand world economies has hit this sector very hard,very quickly, making it even more important to helpcustomers guide their way through the turmoil.

Defined as any office-based organisation thatgives advice, the Professional and BusinessServices (PBS) sector is a major UK employer,accounting for around 11 per cent of total employ-ment, representing a significant part of the UKeconomy. With such a changing industry, it’simportant to be aware of the changing associatedrisks. And what are those risks? Professionalindemnity, property, casualty, fraud, environmental,disaster recovery, risk management; they are allfactors PBS companies need to be able to copewith to address existing and emerging risks.

But it’s not just protection PBS businesses need.It’s also the support they need to identify and capi-talise on the opportunities that do exist out there.

Naturally you’d expect a company of the calibreof Zurich to have expertise in this area, and natu-rally we always look to pass on the best value andour expertise across the risk spectrum to our bro-kers and professional and business services cus-tomers. If a business has a broader understandingof its own risk profile, then it’s easier for us all towork together to help create a sustainable busi-ness for the future. Can you, hand-on-heart, saythat you’ve looked at that in the last 12 months? If not, we’d suggest a day spent doing so now couldhelp you get through the next 12 months.

For more visit: www.zurich.co.uk/expertise or speak to your insurance broker.

Barnier leak may hangthe Big Four out to dryIn a continuing series that investigates key sectors of the UK economy,Philip Salter looks at a regulatory risk to professional business services

R

ECENTLY a leaked documentfrom the EuropeanCommission’s (EC) MichelBarnier made front pages,

including that of City A.M.. Thedetails of what could come to beconcrete proposals threaten the BigFour accountancy firms – PwC,KPMG, Deloitte and Ernst & Young.

The stakes are high: one of London’s, and the UK’s, most suc-cessful industries is under attack.

SLEDGEHAMMER TO CRACK A NUT The most radical proposal inBarnier’s leak is the suggestion of audit-only firms. This would prohib-it the Big Four from offering bothaudit and professional services.

James Chalmers, who is the UK head of assurance at PwC, describesit as “an extraordinary interven-tion”, which “could severely disruptservices available to companies.” Headds: “There are many situations

where the knowledge and insight we gain through our role as auditormake us best-placed to assist organ-isations with a range of issues andchallenges impacting their busi-nesses.” Chalmers also says: “Wealso use the skills and capabilitiesfrom people right across the firm toensure that we are able to deliverthe highest quality audits. Theseinclude tax, actuarial and technolo-gy skills.”

Oliver Tant, head of audit atKPMG, describes the proposals as“clearly pretty radical,” saying theidea of audit-only firms is “ill-con-ceived.” Tant likes the idea, toutedin the leak, of attempting to createEU-wide market standards, but he is

very concerned that audit-only rules would diminish the quality of the service.

Chief executive of the Institute of

Chartered Accountants in Englandand Wales (ICAEW) Michael Izza

points out that accountancy is the“biggest single recruiter of gradu-ates.” He posits that audit-only firms wouldn’t be such an attrac-tive destination. Similarly,Chalmers says “accountancy firmsin the UK attract highly-talentedpeople because of the variation of

work they offer and the ability tomove easily around different partsof the firm and expand their knowl-edge-base.” He says that because “welive in a global workplace with ahighly mobile workforce, if theseproposals are carried through, peo-ple may simply choose to work else-

where in the world.”

FRENCH REFLECTIONSOne of the proposals from theleaked document is to force jointaudits, in which an audit is under-taken by two or more auditors toproduce a single audit report.Unsurprisingly, the Big Four are not

keen on the idea. A spokesman atDeloitte responded: “We do not sup-port certain matters that have beendiscussed such as joint audits.”Equally unsurprisingly, a few audi-tors that would pick up business arein favour. However, even companiesthat could potentially gain fromforcing businesses to take on twoaudits were largely against the plan.PwC notes: “Based on an analysis of responses to this consultation, overtwo thirds of respondents wereopposed to joint audits.”

Joint audits are already mandato-ry in France. Contrary to its aims,the Big Four still dominate – jointauditing has failed to break theirdominance. Meanwhile French

banks don’t look to have benefitedgreatly from the practice. Firms out-side the big four aren’t employed by

businesses because they aren’t con-

sidered – rightly or wrongly – to beup to the task. Also, the smaller

Drowning out goodauditors

Picture: GETTY

auditing firms aren’t ready to stepup to the plate by merging to com-pete.

MERRY-GO-ROUND Another requirement in Barnier’sleak is for mandatory rotation of accountancy firms. The idea is for afresh pair of eyes to take a look atthe accounts. The managing direc-tor of specialist recruiters MarksSattin points out that in 2003 theUS General Accounting Officelooked at this issue in its RequiredStudy on the Potential Effects of Mandatory Audit Firm Rotation.

This report found that “nearly all of the Fortune 1,000 public companies

believed the costs of mandatory audit firm rotation would exceedthe benefits,” and that “80 per centof the Fortune 1,000 public compa-nies and largest 90 accountancy firms operating in the US said they

believed changing audit firms

increased the risk of an audit fail-ure.” Also, the financial costs andloss of knowledge of rotation are ahigh price to pay.

The failure of the bureaucraticmind is its inability to understandthe benefits of failure and the dan-ger of moral hazard. Auditorsshould thrive and perish by theirreputations and the 2007/8 finan-cial crisis has certainly thrown upmany challenges. These tests canonly be met from those within theindustry itself – whether from with-in or outside the Big Four – not by the regulators. Although still in itsearly stages, if this leaked docu-ment manifests itself into policy, itcould turn out to be a dangerous

bargaining chip in the UK’s almostinevitable renegotiations with itsEuropean partners, as they movetowards closer fiscal integration to

try to smother their sovereign debtand banking crises. Strong foundations require planning for all the dangers Picture: REX:

8/3/2019 Cityam 2011-10-11


24 The ForumCITYA.M. 11 OCTOBER 2011

O VER the weekend, the nationalisationof Dexia Belgium was announced, with other parts of Dexia being bro-ken up. On Monday, the nationalisa-

tions of a Greek bank (Proton) and a Danish bank (Max) followed. Full-blown Greek default is now imminent, the US andEurozone economies appear to be in a softpatch, if not yet a double dip, and bankinglosses (or expected losses) are mounting.

Perhaps it will all blow over. Even if itescalates into a wider crisis, perhaps UK banks will not collapse. But suppose they do– what then? It is surely not politically plau-sible that the government, having imposedlarge tax rises and spending cuts, could

announce a third major recapitalisationof British banks (following those of

late 2008 and early 2009).I opposed even the first two

recapitalisations, believing themimmoral and economically destructive. But if the banks go bust again, recapitalisation willalso be a failed strategy even inits own misguided terms. Surely after four years of banking crisisit’s time to try something else?

But what? An alternative strat-egy should aim to mimic what would happen in a well-function-ing market. Those that lent theirmoney to failed banks should bethe ones that make the losses. Therest of society should not be

responsible for the losses of the wealthy. “Losses for lenders!” – thatshould be our motto. Two key groups of people lend

money to banks. First, depositors; sec-ond, bondholders. Bondholders should

rank below depositors as claimants on afailed bank. In other words, when a bank goes bust, the bondholders should lose theirmoney before depositors do. A slight variant

on this would be for bondholders and largedepositors to rank below smaller depositors(say, those below the government’s £85,000deposit insurance threshold) – this is actual-ly strictly what the Vickers Report recom-mends.

In a normal business, if it goes bust, itfalls into the hands of its creditors – thosethat have lent it money come to own itsassets. That is what should happen to a bank as well. If it goes bust, its b ondholders(and perhaps its large depositors) shouldown it. In practical terms, that means thattheir loans are converted into shares in the bank.

In this way, the bank gets new capital –new shares – out of its bondholders, insteadof the government injecting taxpayer funds(“recapitalisation” – or, not to mince words,partial nationalisation). So the bank isn’tshut down. The depositors can still with-draw their money. The bank carries on mak-ing loans. But it has new owners – theformer bondholders – and it has fewer debts(because some of its bonds have gone, converted into equity).

Such a debt-equity conversion can bedone very quickly – over a weekend, say, orcertainly in no more than a fortnight. If itends up taking any time, then there is thequestion of how to maintain service todepositors. That can be done by taking a dis-tressed bank into special administration. When a normal company goes bust, it istaken over by administrators. The adminis-trators in the case of banks would be theBank of England or the Treasury.

When a bank is in special administration,depositors should be able to make with-drawals as usual, if the bank is solvent andhas only been placed in administration because it is a bit low on capital. If the bank might be insolvent, then depositors should be able to withdraw 80 per cent of theirfunds (above the £85,000 deposit insurance

threshold). Either way, deposit withdrawals would technically count as borrowings fromthe government (the government should setup a special deposit access fund – say a tril-lion pounds in size, funded by newly print-ed money or quantitative easing bonds – tofund this). If the bank is ultimately liquidat-ed and its assets aren’t sufficient to pay back the government for all deposits with-drawn, then those depositors owe the gov-ernment a tax liability for the difference.

If, on the other hand, banks are solventand well-managed but simply have liquidity problems, then the Bank of England shouldprovide unlimited lending to them. This isnot a form of bailout. Lending to banks withliquidity problems in a crisis is fundamen-tally what a central bank is for.

So, if banks are solvent, they should belent money. If they are insolvent but still viable institutions (they still add value –their operating returns are greater thantheir costs, before financing costs), they should be recapitalised from their bond-holders. If they are unviable, value-destroy-ing entities, then they should be broken up,liquidated. That’s what the market woulddo. That’s what the government should donow.

No more tax-payer bailouts of the rich by the poor. “Losses for lenders!” – that must be our motto this time.

Andrew Lilico is an economist with Europe Economics and a member of the Shadow Monetary Policy Committee.

Those that lent their moneyto failed banks should be theones that end up losing out.

This economist believes weshouldn’t bail out the banks:Let their lenders pay instead

cityam.com/forum

ANDREW LILICO

8/3/2019 Cityam 2011-10-11


8/3/2019 Cityam 2011-10-11


BRITAIN’S Office of NationalStatistics (ONS) will tomorrow release its UK employment statisticsfor September. There are some who

forecast an improvement, but a surpriseisn’t altogether out of the question. After

all, trading wouldn’t be any fun if you did-n’t get the occasional shock result.

While the UK labour statistics do notcarry with them the same level of marketanticipation as the US non-farm payroll sta-tistics, which have the potential to createlarge market movements, they do act as aperceived litmus test for the health of theUK economy.

“UK employment has been strugglingsomewhat in the last few months as theoverall economy has been flatlining for thepast year,” says Angus Campbell, head of sales for Capital CFDs. “Although recentdata from the PMI services and manufac-turing surprised to the upside last week,and a small bounce in service sectoremployment is expected, the trend foremployment is very much downwards atthe moment.”

According to Will Hedden, sales traderfor IG Markets, industry rumblings alsopoint to disappointing figures: “It isn’t asurprise to see such a negative view when

you also see the cautious rhetoric that wehave been hearing from the majorrecruiters.” Hedden adds: “Wednesday’sdata is currently being forecast as animprovement, but if you consider that weare hearing much more about job lossesthan job creation in the news, the possibili-ty of disappointment in the headline rateof unemployment is high.”

TROUBLE ACROSS CHANNELIt would not be an article in a financialnewspaper without a warning of the effects

The ONS statisticsdue this week couldbe a disappointment,writes Craig Drake

Any cuts to job centre queues are likely to be small Picture: REX

UK labouring over any

growth in employmentA

T the beginning of last week, equities were head-ing lower. On Tuesday, major US stock indicessuch as the Dow 30, Russell 2000, and S&P 500traded below levels last seen at the beginning of

August, although all three subsequently snapped higheron the same day. The S&P is now up over 8 per centfrom last week’s intra-day low. The trigger for this sharpreversal was a story that European finance ministerswere close to agreement on action to shore up their frag-ile banking system. After this, short-covering did the restas the bears were squeezed hard with many capitulating.Stocks, precious metals and copper were among themain markets to benefit from the turnaround, and allwere lifted further following a better-than-expectedreading on US non-farm payrolls. Friday’s release showed

a gain of 103,000 with sharp upward revisions to Julyand Augusts’ numbers. But investors appear wary of reading too much into this latest print, aware that the USneeds to add around 130,000 jobs each and every month

just to accommodate fresh entrants into the labour mar-ket. This takes no account of the estimated 7m-plus jobslost since the start of the financial crisis.

In any case, despite the abundance of political rheto-ric, the European debt crisis continues to weigh.Policymakers have failed to back up their vague promis-es with any firm action. Sunday’s meeting betweenGerman Chancellor Merkel and French PresidentSarkozy produced more of the same. For now, theirpromise to deliver a solution before the start of the G20summit on 3 November is viewed as a sign that the twocore countries will patch up their differences. Yet thereis a wide gap between the two. France favours tappingthe European Financial Stability Facility to shore up itsbanks, while Germany believes that France should dealwith its banking problems on its own.

Later this evening, Alcoa unofficially kicks off thethird quarter US earnings season. Investors will be pay-ing more attention than ever to forward guidance. If the recent rash of downgrades to global growth nowfeeds through to the corporate sector, analysts willhave to lower their earnings estimates. If so, thenexpect the current stock market rally to come to a sud-den halt.

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of the Eurozone’s economic troubles. According to Jordan Lambert, a trader withSpreadex: “Both Germany’s and France’srecent stagnant growth could be puttingmore strain on the UK unemployment situ-ation as they are two of its biggest trading

partners.” And despite Merkozy’s publicrhetoric that all is well, there seems to belittle sign of any upturn in Europeandemand. Traders should keep a close eye onthe ONS figures and look to jump on any shock figures.

Wealth Management | CFDs

26 CITYA.M. 11 OCTOBER 2011

DESPITE THERHETORIC, EU

DEBT WEIGHSDAVID MORRISONCFD MARKET STRATEGIST, GFT

ANALYSIS l Historical UK unemployment figures (m)

1992 2000 Sept 2011

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0Source: Office of National Statistics

8/3/2019 Cityam 2011-10-11


A week full of

stock results:what to watchDonata Huggins asks the expert traderswhat they think retail stock prices willdo this week in tricky economic times

TO say we live in interesting

economic times would be anunderstatement. Confidenceis low and money is tight. And

retail stocks often show investornerves more prominently thanother markets. But it isn’t all badnews: volatility in the market canserve to make the life of the spread

better more exciting. So with the week ahead laden with data, weasked the trading experts what toexpect.

TOMORROW: BURBERRY Jamieson Blake of London CapitalGroup says: “Investors may havelooked at Burberry’s share prices asrelentless earlier this year, but aftera peak in late July, the company took a turn for the worse. With a tradingupdate tomorrow, hopefully thehigh end retailer can brush off reports from the Paris fashion show that luxury brands could be hit by the global slowdown fears and rein-state optimism that looking goodisn’t going out of fashion.”

TOMORROW: MARKS & SPENCERMichael Hewson of CMC Marketssays: “Marks and Spencer, like a lotof other retailers, has felt the pres-sure of the consumer slowdown inrecent months, especially on theclothing side from cheaper brandslike Primark. Despite this, theshares have remained remarkably resilient in the face of higher costsand price-sensitive consumers.”

THURSDAY: WH SMITH Angus Campbell of London CapitalGroup says: “Like many high streetretailers, WH Smith is facing tough

times during this consumer down-

turn. Not only are fewer peoplegoing to the shops, but fewer peopleare going through the UK’s airports,so WH Smith is feeling the pinch.Nonetheless, one of the UK’s oldestretail and news shops has continuedto fend off stiff competition fromsupermarkets and other outlets fol-lowing the demerger of its distribu-tion arm in 2006 and theintroduction of new concept stores.Its share price has been remarkably resilient to the recent sell off andremains firmly above the £5 mark.”

THURSDAY: MOTHERCAREIan O’Sullivan of Spread Co says:“High-street retailer Mothercare saw its share-price get hammered afterannouncing a pretty awful tradingstatement last week. The outlook for

Thursday’s numbers therefore lookspretty bleak. Despite the shares

being 41 per cent cheaper than a week ago, there is still too muchuncertainty to be buying them.”

FRIDAY: ASOS Will Heddon of IG Markets says:“Asos is a great company. It is wellrun and has delivered fantasticreturns since its flotation. The mar-ket slide it experienced this summerhas only served to place it in great

value territory. Investors will belooking for good numbers to returnthe share to the levels seen earlierthis year. Its low-overhead, off-highstreet nature may shelter it from theharsh winter facing the more tradi-tional retailers. The lack of a divi-dend, however, may deter the morecautious investors not willing totake purely capital exposure.”

GOOGLE has been under some pres-sure recently from two other USpowerhouses in the shape of Facebook and Apple. Facebook is

becoming ever more competitive in theadvertising sector, while Apple is stillleading the way with its tablet and phonedevices. However, the launch of its newsocial media venture, Google Plus, will beat the forefront of investors’ minds whenGoogle reports quarterly earnings onThursday. Capital CFDs quotes 513.59-

516.14.

Gold has been strong over the lastweek on the back of a falling dollar.Normally, given the return of risk-appetite we have seen since the lows inthe markets a week ago, you wouldexpect gold to suffer. But generalstrength in commodities, together withthe tumbling dollar has helped it higher.Spread Co offers a spread on spot goldof $1,666.1-$1,666.5.

Telco giant AT&T has been strugglingto regain ground lost since the earlysummer after news that its plannedacquisition of the US division of T-Mobilehad been given a less than welcomereception from regulators. However,Deutsche Telecom – who is trying to sellthe unit – is once again stressing thatsuccess here shouldn’t be seen as unob-tainable. Current IG Markets price onAT&T is $28.87-$28.88.

Craig Drake

THE TIPSTER

INVESTORS

LOGGING INTO

GOOGLE PLUS

There could be profits on the horizon Picture: GETTY

CITYA.M. 11 OCTOBER 2011 27

8/3/2019 Cityam 2011-10-11


8/3/2019 Cityam 2011-10-11


Lifestyle29

Sketch and the art of the restaurantLegendary restaurantman Mourad Mazouztalks to Zoe Strimpelas Sketch’s VIP roomreturns to Frieze

Q.WHAT IS SKETCH'S RELATIONSHIPWITH ART?

A.Sketch wants to live with its timeand this means engaging with art as a

part of society today. Even if you don’tappreciate contemporary art – youneed to have an eye on it and have acertain interest. Compared to someother restaurants we have relatively few pieces here at any time, because

our idea for our installations is to bealways in movement.

Q.WHAT ROLE DO YOU THINK ARTPLAYS IN CREATING A GLAMOROUS

RESTAURANT?

A. You can have a glamorous restau-rant without art. But it won’t be

anything special – it will be just aplace. These days art is part of thedaily life of people – it used to be for asmall circle of people only; now it’severyone. Even my mother is interest-ed. But Sketch is not just about visualart. Food is art for me, too.

Q.HOW DO FOOD AND ART GOTOGETHER, THEN?

A. The association with [Sketch chef]Pierre Gagnaire means Sketch

needs to renew itself constantly – andthe art and video installations need to be part of that. Because with food weare creating every day. Sketch is dif-ferent from many places – we’ve done1,100 recipes in nine years. We cre-ate dishes and change them amonth after – then they’regone. We don’t keep therecipes. This is not very good business-wise – when youdon’t have fixed dishes youcan lose customers. But when you are with some-one like Pierre Gagnaire you have to keepchanging. He is aguy who alwayscreates. Show

Left: the Parlour atSketch. The design of the VIP room atFrieze has beeninspired by theParlour and theConduit Street's otherspaces.

During the daytime, “the Gallery” is a tempo-rary exhibitions space that specializes in multi-channel video installations, presenting up toseven shows per year with emerging andestablished international artists and filmmak-ers. Alongside recent solo exhibitions byAndrew Kötting, Carsten Nicolai, Paper Rad,Iain Sinclair & Chris Petit, Noam Gonick andAmy Granat, the gallery has also producedshows with John Baldessari, Isaac Julien,Tracey Emin and Jonas Mekas among manyothers. Every evening the Gallery is trans-formed from art gallery to restaurant with aseparate programme of specially commissionedtemporary exhibitions by emerging designers,filmmakers and artists.

Sketch also produces and presents touringprojects and cinema screenings such as CIN-ACT: Serpentine Cinema in collaboration withthe Serpentine Gallery and PicturehouseCinemas. www.sketch.uk.com

SKETCH | ART MEETS RESTAURANThim an empty plate and it can givehim an idea for a dish you’d neverhave imagined.

Q.WHY DOES SKETCH PARTNER WITHFRIEZE?

A.Because we have been involved inart pop-ups before, they asked if

we wanted to do it. We started withthe Royal Academy, then CarstenHöller’s The Double Club near Angel, which was a crazy place – half club,half restaurant; half European, half Congolese. Given my relationship with art institutions, it’s normal forFrieze to come to us, for us to say yes,for us to prove that we can do some-thing nice and neat for Frieze art

fair.

Q.SKETCH HASREMAINED UNIQUEDESPITE A DECADE OF

NEW OPENINGS INLONDON. HOW?

A.Sketch isnot a

restaurant,it’s a

place. Inthe

beginning even I didn’t know exactly what Sketch was – there was nothingsimilar. It’s a place and inside theplace there is fine dining, tea room, brasserie and bars – under the sameroof, lots of types of people. That gen-eral mix didn’t work at first– sotoday, everyone has their own room. There are some people just there forfine dining; there are kids in the par-lour. To mix people is what I love themost. This is art: the big mix!

Q.ARE POP-UPS THE FUTURE OFRESTAURANTS?

A.No. You can never make money with pop-ups. The purpose is to do

something else, to learn, to have fun.Pop-ups are very intense, though:Frieze is five days; on the first day wehave 1,600 people coming. I’m havingnightmares about it!

Q.DO YOU THINK LONDON IS A SPECIALPLACE FOR ART AND FOOD?

A. Absolutely, because London is amachine, it needs to clean itself all the

time: there are so many people trying tolive life in a better way. London is hungry and exciting. For info on Sketch at Frieze go tovip.friezeartfair.com

Deep Frieze: our pick of art fair highlights

Kiki Smith in the Sculpture ParkKiki Smith’s sculptures are metaphoricaland visceral. Recent work has particularemphasis on creating images using tech-niques associated with women’s work,such as 19th-century needlework. She’salso exhibited in the Solomon R Guggenheim museum and theMetropolitan museum of art.

Thomas HouseagoHouseago’s sculptures are a must-see.

The sheer presence of his work is impres-sive and imposing. Houseago has also

An Articulated LorryAdorned WithArtwork By BanksyArrives Ahead Of TheStart Of Frieze ArtFair

Picture: GETTY

exhibited at the Saatchi Gallery.

Pierre HuygheFrench artist Pierre Huyghe has createdan aquarium featuring a hermit crab for

a Frieze project commissioned by direc-tor Sarah McCrory.

Cara TolmieCara Tolmie will be exhibiting a perform-

ance every day just outside the fair. TheLondon-based Scottish artist who works with the medium of video, sound andtext, is one to watch.

Frieze filmFrieze Film commissions, which will also be shown on Channel 4, will be runningduring the show until Friday 14 October. Artists commissioned include Ed Atkins,Lutz Bacher, Anthea Hamilton, JudithHopf and Katarina Zdjelar.

LecturesIf you can’t make it down, download aseries of podcast lectures from www.friezeartfair.com. You can learnabout everything from cultural cartogra-phy to criticising the critics with artist Adrian Piper and Jorg Heiser, co-editor of

Frieze magazine.www.friezeartfair.com

Helena Lee choosesthe fair’s six mostinteresting works

Below: MouradMamouz, the manbehind Momo andSketch.

8/3/2019 Cityam 2011-10-11


WITH the weather swinging as

wildly as Dita von Teese’stassles, the chances are themild weather of the last few

days will be replaced by dead-of-wintertemperatures any minute now. Such sud-den changes are a nightmare for the

immune system – and there’s not much worse than a Mexican wave of snifflingand spluttering making its way throughthe office towards you. Well, the goodnews is you can start priming yourdefences now, and preserve your well- being by taking some precautions. With acombination of the right exercise and eat-ing certain foods you will feel noticeably better and will prepare your body againstthe nasty colds and flus that come withthe inevitable shock of wintry weather.

FOODIn colder weather, it’s natural for us tostart craving fats and sugar. “We must becareful not to plough sugar into our bod-ies as it dampens immunity by loweringthe body’s white blood cell count, whichreduces ability to fight infection,” saysnutritional therapist and yoga teacherCharlotte Watts (www.de-stressyourlife.com). Good foods to eat areavocados, oily fish, free range meats,olive oil, and eggs, which also helpour livers deal with fat. The body relies on antioxidantsto support immunity soCharlotte recommendseating healthy cur-ries with spicessuch as turmericand chilli. Greenand spicy teashave good antioxi-dants, increase circula-tion and your metabolism.

With fruit and veg, it’s best to eat asmuch as you can. “People are often mis-led about fruit juice, and fool themselvesinto thinking they get their hit of fruit.Fruit juice is packed with sugar. It’s betterto eat an actual orange instead of drink-ing the juice, and there’s the added bene-fit that are lots of antioxidants to be

found in the pith.”Charlotte also suggests eating seasonal

dark rich greens, such as broccoli,sprouts and kale, and cavolo nero, whichis rich in carotenoids – a fat solubleantioxidant.

EXERCISE According to personal trainer MattRoberts (www.mattroberts.co.uk), if you’re already an exercising gym bunny,

the key to keeping healthy is to main-tain your normal routine. If you’re

feeling slightly lethargic or the acold coming, tone down your rou-

tine a little, and keep the sus-tained pace of cardio work to a

low level. “What you don’t want to do is exhaust your-

self and leave yourimmune system exposedto illnesses by overdoingit,” says Matt.If you actually get a cold,

Matt recommends waitinga day or two for it to go away.

However, if you just get a passing sniffle,reduce the intensity of your exercise by 15-20 per cent, and keep it at a moderateand controlled level. The important thingis that you are able to breathe comfort-ably.

Drink plenty of water, and eat withinhalf an hour of exercising. If you carry out more intensive exercise there will be

more phlegm build up and you will findit hard to breathe.

Want to avoid gettingthat winter cold?Helena Lee has somesimple advice to keepyou feeling tip top

Stay healthy andward off colds with adose of nutrition andexercise. ONIONS AND GARLIC

Onions and garlic are part of theallium family. Coming into win-ter, they are good for helpingthe body make vitamin D.

CAVOLO NERONutritional therapist Charlotte Watts recom-mends eating as much colour as possible. Theseasonal dark green vegetables; cavolo nero,broccoli and cauliflower are great for detoxify-ing the body.

BLUEBERRIESThese fruits are packed with vitamin C andantioxidants. Personal trainer Matt Roberts is

packing a lot of these at the moment.

CURRIES AND SPICESCurries contain good antioxi-

dant spices such as turmericand chilli. Spicy tea with

ingredients such as ginger are

great for improving circulation.

THE POWER FOODS

Lifestyle30 CITYA.M. 11 OCTOBER 2011

Spice up your diet to ward

off nasty winter viruses

FIT INTHE CITY

BY LAURA WILLIAMSFITNESS & DIET EXPERT

Hot topicsthis weekBAREFOOT running, toning shoes, greentea... there’s a lot that’s being debated at themoment. In this week’s column, I’m separat-ing the truth from the false on some currenthot topics.

BAREFOOT RUNNING IS BETTER FOR YOUTHAN RUNNING IN TRAINERS: FALSE

This is probably the most hotly debatedexercise topic right now. Experts seem to besplit 50/50 as to whether barefoot runningor running in minimal footwear is good orbad for you. If you’re undecided, take thisadvice from the ACE (American Council onExercise): Try lower impact training such asresistance training first if you’re new tobarefoot training and if you progress tobarefoot running or running in minimalistshoes, start by doing just 25 per cent of your mileage in this way initially.

TONING SHOES TONE: FALSEToning shoes hit the headlines again recentlyafter a well-known brand was forced to payout millions in refunds after claiming itsshoes improved bottom muscle tone by 28per cent. Research undertaken by the ACEfound that the shoes did no more for muscletone than regular running shoes. The solu-tion? Save your money and get squatting.

GREEN TEA HELPS YOU TO LOSE WEIGHT:TRUENot many people dispute this anymore – theevidence continues to stack up. Even moreso with The Mouse Study! According to lat-est research from Penn State food scientists,obese mice that were fed a green compoundtea along with a high-fat diet gained weightsignificantly more slowly than anothergroup that didn’t take the supplement.

GETTING AN EARLY NIGHT KEEPS YOUSLIM: TRUEBack in 2008, Harvard University researchfound that toddlers who had less sleep weremore likely to be overweight by the age of 3.Research just published in Australia revealedthat participants who had late nights andlate mornings were a whopping one-and-a-half times more likely to be obese than theearly risers. This is definitely a good case forcalling it a day earlier rather than later.

CABLE, BANDS AND TUBES ARE BETTERFOR MAXING OUT MUSCLE GROWTH:FALSEPut simply, your muscles either contract orthey don’t. However, mixing your workoutup with cables, kettlebells, bands and dumb-bells is good for preventing boredom settingin, if nothing else.www.laurawilliamsonline.co.uk

Episode 31: The joys of newborns: how to deal with your friendsAS Noel coos over Harry, sleeping inEmma’s arms, I take Gwenllian –yes, I got my way with their namesafter all – from Gabriella and col-lapse onto the sofa, resting my feeton the coffee table in front of me.Gwenllian snuggles into me.

I call Nick. “I’m sitting here withyour Goddaughter in my arms,” Isay.

“Oh,” he replies.“Is that ’oh, I’d be delighted to be

her Godfather’, or ‘oh, I’m horri-fied’?” I chuckle.

“Just, oh, I haven’t heard from youin a while.”

“Sorry Nick. It’s been crazy here. Iknow you called a couple of weeks

ago. I’m sorry I didn’t get back toyou. Right in the middle of a transac-tion as well.”

“Yes,” says Nick, inexpressively.“Have I caught you at a bad time?

You with someone?” I ask.“Actually Dave, I’m in a business

meeting… Looks like my business isgoing bust.”

“Oh…” I reply. I take my feet fromthe coffee table and sit up.

“Yeah. Quite. So you can see whyI'm not all 'oh, I'd be delighted.'"

“Wait. There must be somethingyou can do. You should have called.”As I say this, I realise that Nick had

called. Three times. And I hadn’tcalled him back.

Gwenllian stirs. “Shhh.” On thecoffee table I see the huge hamperfrom the bank; teas – although notNick’s – champagne, foie gras,cheeses, chocolate truffles and aheap of other luxury items we won’thave time for any time soon. Andnext to it, the handmade card fromEmma’s class of eight year olds.

“Nick?” Silence. “Can we meet?” Iopen the card. The names of all thechildren in Emma’s class.

“What’s the point?” Nick says, fullof spite. “What can you do? It’s notyour bank pulling the finance.”

City Dad will be continued next

Tuesday. For previous episodes, seewww.cityam.comCITY DAD Drinking green tea helps with weight loss.

8/3/2019 Cityam 2011-10-11


Lifestyle 31CITYA.M. 11 OCTOBER 2011

Grab an elegantsatchel or a classic

bag, says Zoe Strimpel

Bag it up baby: luxe goes practical

NOTHING makes a female mouth

water quite like a beautiful bag. And, as the City fashionista willknow, practicality must merge with

style for maximum wearability – after all, what’s the point in having a beautiful toteif you can’t show it off? With fashionschanging like gusts of wind, it’s importantto choose a bag that’s on trend but haslasting power.

Luisa De Paula, buying director of

online boutique my-wardrobe.com, says:“This season we have seen the return of sophisticated classic lines and understatedstyles with the bag collections. Bags have

become smaller in size with simplifiedstructure, moving away from the shoulderache-inducing super-size totes of a few sea-sons ago. A great example of this is theMySuelly collection, which takes inspira-tion from the iconic vintage bag styles.

Take the DVF, D&G, Anya Hindmarch,Marc by Marc Jacobs and Mulberry collec-tions – key sellers have been the Mulberry Carter and Polly Push Lock tote.”

We like the new satchels, which are both elegant and extremely practical. And – who would have thought it? – the backpack as made a re-entry into the lux-ury market with an elegant leather twist.

1Pomegranate TreeRoddy & Ginger£26, www.roddyandginger.co.uk2 RobinDonna Wilson£67.99, www.donnawilson.com3 We Had EverythingRob Ryan£47.29, www.etsy.com/shop/misterrob4 Knitted Floor Cushion, ChartreuseFerm Living

£155, www.heals.co.uk5 The Coloured-Sole Shoe“Shoes with coloured soles were as popu-lar w ggests Mark McNairy Derby shoes6 Double Decker Cushion£39, www.made.com

What and where to buy

Go softly: bestwinter cushions

4

3

7

8

9

5

2

6

1

WHAT THEY ARE AND WHERE TO BUY:1 Leather backpack, The Row, £2,635, www.netaporter.com

2 Desert shoulder bag, Barbara Wiggins. £99, www.barbarawig-

gins.co.uk

3 Stone Large Leather Romilly, Lulu Guinness, £425, in the Royal

Exchange and at www.luluguinness.com

4 Carter Double Handle Bag, Mulberry, £995, www.mulberry.com

5 Tel Aviv studded base leather satchel, Sara Berman, £354,

www.my-wardrobe.com

6 The Classic satchel, Cambridge Satchel Company, £74,

www.cambridgesatchel.co.uk

7 Louise Enna Arrow Lock bag, Mysuelly, £360, Carolina Herrera,

£404, www.my-wardrobe.com

8 Large Matroshyka, CH Carolina Herrera, 120 Mount Street,

W1K 3NN

9 Colour block tote bag, Top Shop, £34, at One New Change and

www.topshop.com

2

1

3

4

8/3/2019 Cityam 2011-10-11


T E R

R E S T R I A L

LATERLIVE– WITH JOOLS

HOLLAND BBC2,10PMPeter Gabriel performs a selection of his hits, including his 1977 debut solosingle Solsbury Hill, with the 46-pieceNew Blood Orchestra.

HIGH STAKES

ITV1, 8PMA big-money game show in which theplayers use clues to guide them across

a grid containing cash prizes rangingfrom £1,000 to £500,000.

GOK’S CLOTHESROADSHOW: GET

THELOOKFORLESS CHANNEL4,8PMThe stylist takes his fashion-consciousshow to Birmingham, where he pitssupermarkets against the high streetin an autumn-wear catwalk event.

BBC1

SKY SPORTS 16.30pm Live International

Football9pm FIFA Futbol

Mundial 9.30pm International

Football 11pm A League of Their

Own 12am Football Asia

12.30am Football’s Greatest

1am International Football

2.30am Football Asia 3am

Football’s Greatest 3.30am

International Football 5am

Football Asia 5.30am-6am

Football’s Greatest

SKY SPORTS 27pmLive International Football

9.15pmCycle Sports World

9.45pm DTM Motor Racing

10.45pm F3 Euroseries 11.45pm

Masters Tennis 1.45am DTM

Motor Racing 2.45am-3.45am

F3 Euroseries

SKY SPORTS 37pmF3 Euroseries 8pmMasters

Tennis 10pm Golfing World

11pm Golf 1.30am-3.30am

International Bowls

BRITISH EUROSPORT5pm Live Fencing 7.30pm

Eurosport Confidential 8pm

Boxing 9.45pmGT Academy:

Road to Dubai 10pm British

Superbikes 10.30pm Inside

Racing 11pmWorld Series by

Renault 11.30pm

Intercontinental Rally Challenge

12am-1am Euro 2012: AllAccess

ESPN6pm Live International Football

8pm Live International Football

10pm International Football

11.45pm ESPN Press Pass

12.15amWorld Series of Poker

2.15am International Football

4amPlanet Speed 4.30am

American Le Mans Series

5.30am-6amWorld Enduro

Championship

SKY LIVING7pmCriminal Minds 8pm Signed

By Katie Price 9pmAmerica’s

Next Top Model 10pm The

Secret Circle 11pm Bones 12am

Jerry Bruckheimer’s Chase 1am

Criminal Minds 1.50am CSI:

Crime Scene Investigation

3.30am Bones 4.20amMaury

5.10am-6am Jerry Springer

BBC THREE

7pm Total Wipeout 8pmWorld’sStrictest Parents 9pmDon’t Tell

the Bride 10pm EastEnders

10.30pmWilfred 10.55pm

Family Guy 11.40pm American

Dad! 12.25am Don’t Tell the

Bride 1.25am Snog, Marry,

Avoid? 1.55am Young Soldiers

2.55amWilfred 3.15am Jono:

Finding My Family on Facebook

4.10am-5.10am Sam & Evan

E47pmHollyoaks 7.30pm How I

Met Your Mother 8pmMade in

Chelsea 9pmSmallville 10pm

The Cleveland Show 11.05pm

Shameless 12.10am The Big

Bang Theory 1amScrubs

1.50am How I Met Your Mother

2.15am Shameless 3.10am Rules

of Engagement 3.30am Reaper

4.15am Glee 5am-6am

Switched

HISTORY

7pmThe True Story 8pmAmerican Pickers 10pm

American Restoration 11pm

Chasing Mummies 12amMud

Men 1amAmerican Restoration

2amMega Movers 3am The

True Story 4amPawn Stars

4.30am Storage Wars

5am-6am Ancient Discoveries

DISCOVERY7pmMythbusters 9pmWheeler

Dealers 10pm Deadliest Catch

11pm Ice Pilots 12am Bear

Grylls 1amBattle Machine Bros

2amDeadliest Catch 3.50am

Wildest Africa 4.40am Treasure

Quest 5.30am-6am Destroyed in

Seconds

DISCOVERY HOME &

HEALTH7pmBirth Days 8pm I Didn’t

Know I Was Pregnant 9pm Last

Chance Surgery 10pm Kids’

Hospital 11pm Hospital Sydney

12am Last Chance Surgery 1amKids’ Hospital 2amHospital

Sydney 3am I Didn’t Know I

Was Pregnant 4amA Baby

Story 5am-6am Deliver Me

SKY18pmGlee 9pm Inside Gatwick

10pmFILMMars Attacks! 1996.12.05am 35mm 12.35am

Road Wars 2amNight Cops

2.50am The Dresden Files

4.20am It’s Me or the Dog

5.10am-6am Top Design

BBC2 ITV1 CHANNEL4 CHANNEL5

S A T E L L I T E &

C A B L E

TVPICK6pm BBC News

6.30pm BBC London News

7pm The One Show

7.30pm EastEnders; BBC News

8pm Holby City

9pm The Body Farm

10pm BBC News

10.25pmRegional News;

National Lottery Update10.35pmMe, My Sex & I

11.25pm FILMCity by the Sea:

2002.

1.10amWeatherview 1.15am Sign

Zone: Village SOS 2.15am Sign

Zone: Reel History of Britain

3.15am Sign Zone: Windfarm Wars

4.15am-6amBBC News

6pm Eggheads

6.30pm Strictly Come Dancing

– It Takes Two: With Zoe Ball.

7pm Coast: The team explores

the Inner and Outer Hebrides.

7.30pmMatch of the Day Live:

Spain v Scotland (Kick-off

7.45pm).

10pmCHOICE Later Live –with Jools Holland

10.30pmNewsnight; Weather

11.20pmTwincredibles: The

stories of twins who have

different skin colours.

12.20amDamages1.20am BBC News 4am-6amBBC

Learning Zone

6pm London Tonight

6.30pm ITV News

7pm Emmerdale

7.30pm Mayday Mayday

8pmCHOICE High Stakes

9pm 71 Degrees North

10pm ITV News at Ten

10.30pm London News

10.35pmDCI Banks11.35pmBilly Connolly’s Route

66

12.30am The Zone; ITV News

Headlines2.35am FILMColumbo: A Matter

of Honour: Crime drama, starring

Peter Falk. 1976. 3.55am-5.30am

ITV Nightscreen

6pm The Simpsons

6.30pm Hollyoaks

7pm Channel 4 News

7.55pm 4thought.tv

8pmCHOICE Gok’s Clothes

Roadshow: Get the Look for

Less9pmMary Queen of Frocks 10pm

Shameless11.05pm Random Acts11.10pm True Blood 12.25amUK &

Ireland Poker Tour 1.20am Channel

4 Presents – Nathan Stephens ‘True

Grit’ 1.25am Sailing 1.50am British

GT Championship 2011 2.20am

KOTV Boxing 2.45am Beach

Volleyball 4.05am Scrapheap

Challenge5am Grudge Match

5.15am-6.10am Cookery School

6pm Home and Away

6.25pm OK! TV

7pm 5 News at 7

7.30pm Real Food Family Cook

Off; 5 News Update

8pm Superior Interiors with

Kelly Hoppen; 5 News at 9

9pm CSI: Miami

10pm Big Brother11pmFILM One Missed Call:

2008.

12.40am Inside Hollywood12.50amSuperCasino3.55am

County Secrets 4.05am The Hotel

Inspector 4.55amRough Guide to

Short Breaks 5.10am HouseBusters

5.35am-6amHouse Doctor

18 7

10 28

21

30

35 19

12 29

12 16

39

10

17 13

22 20

13

23

6

3

28

11

10

17

16

15

13

15

14

21

33

7

21

4

10

31

12

13

8

14

Fill the grid so that each block

adds up to the total in the box

above or to the left of it.

You can only use the digits 1-9

and you must not use the

same digit twice in a block.

The same digit may occur

more than once in a row or

column, but it must be in a

separate block.

COFFEE BREAKCopyright Puzzle Press Ltd, www.puzzlepress.co.uk

KAKURO

QUICK CROSSWORD

LAST ISSUE’SSOLUTIONS

KAKURO

WORDWHEELUsing only the letters in the Wordwheel, you have

ten minutes to find as many words as possible,

none of which may be plurals, foreign words or

proper nouns. Each word must be of three letters

or more, all must contain the central letter and

letters can only be used once in every word. There

is at least one nine-letter word in the wheel.

SUDOKU

Place the numbers from 1 to 9 in each empty cell so that each

row, each column and each 3x3 block contains all the n umbers

from 1 to 9 to solve this tricky Sudoku puzzle.

SUDOKU

QUICK CROSSWORD

ACROSS

1 Spoken (5)

4 Ordain (5)

7 Lax (7)

8 Extreme (5)

9 Food provider (7)

13 Grave (4)

16 Certain (4)

17 Not in goodcondition (7)

19 Firearm (5)

20 Antonio ___, Italiancomposer (7)

21 Coloured transparentgemstone (5)

22 Colour slightly (5)

DOWN

1 Volcanic island

republic inMelanesia (7)

2 Traditions (7 )

3 Pale purple colour (5)

5 Sounds (6)

6 Sign of the zodiac (6)

10 Beard found on abract of grass (3)

11 Brutal fellow (7)

12 Daydream (7)

14 Connected to acomputer network (6)

15 Study of plants (6)

18 Float (5)

I

I

M

L

NC

E

A

D

E S C A L A T O R

P A P I C U

E Q U I P T I E I N

R N L A C A D

P E A C E H I N G E

E A O R

T H A N K S N A I L

U L N I L T I

A B O D E A L L I N

L U E K A E

E D E L W E I S S

8 6 1 9 6 8

1 5 3 2 4 1 2 6

2 9 5 9 8 7

4 7 9 9 6 3 8

6 1 4 6 2 1 3

4 2 5 7 3

6 9 8 4 7 4 2

3 6 2 1 8 4 9

7 3 8 9 3 7

9 4 5 3 2 7 1 5

8 1 3 8 9 7

WORDWHEELThe nine-letter word was

PENTHOUSE

Lifestyle | TV& Games CITYA.M. 11 OCTOBER 201132

8/3/2019 Cityam 2011-10-11


Sport 33CITYA.M. 11 OCTOBER 2011

Fowler’s emergence good for the game

BRITAIN’S hopes of gold medal suc-cess at London 2012 have suffered adouble blow after major setbacks intwo of Team GB’s strongest suits,cycling and gymnastics.

Rebecca Romero, who won individ-ual pursuit gold in Beijing three yearsago, yesterday ruled herself out of next summer’s Games following aseries of injuries.

The 31-year-old former rower, theonly British woman to win Olympicmedals in two different sports, hadmissed the Manchester World Cupearlier this year.

“Having suffered several setbacksat crucial points, I believe I’m nolonger on a pathway which will seeme fulfil my Olympic ambition to

win a second Olympic gold medal,”said Romero.

“I’m proud to have contributed tothe cycling team’s great Olympic tri-umph in Beijing and I thank all theamazing people within BritishCycling who were central to my suc-

cess. I wish my current team-matesevery success in London next year.”

Double world champion Romero would not have been able to defendher title in London anyway as themen’s and women’s individual pur-suits were scrapped in a shake-up of Olympic track cycling.

She would have been in contentionfor the team pursuit and road timetrial, however, although nationalcompetition is particularly stiff in

both events, with Britain holding the world titles.

Her absence was compounded by the shock failure of Britain’s malegymnasts to secure their place atLondon 2012 at the gymnastics worldchampionships in Tokyo yesterday.

They were expected to comfortably attain the top-eight finish needed forOlympic qualification, as Britain’s

women did on Saturday, but ended ahugely disappointing 10th.

Louis Smith made the final of thepommel horse but the team sufferedon the high bars. Britain’s nextchance to qualify is at the London2012 test event at the O2 in January.

BY FRANK DALLERES

OLYMPICS▲

I T WAS a weekend of maiden victo-ries with two players, whose careertrajectories could not be more con-trasting, enjoying landmark suc-

cesses.I was delighted for Englishman Lee

Slattery, who clung on to secure the

Madrid Masters. It’s sometimes easy to forget there are guys out there bat-

tling for their livelihoods and cling-ing to their tour status.

Slattery, 33, lost his card four yearsago and was in danger of doing soagain. With so much riding on victo-ry it was understandable that hestumbled across the line.

Hopefully victory in Spain, and theaccompanying £143,000 cheque, willgive him the confidence and peace of mind to finish his season strongly.

While Slattery’s victory may proveto be his career highlight, I firmly expect American Rickie Fowler’s tri-umph at the Korea Open to be thefirst of many.

Big things have been expected of Fowler since he turned pro in 2009and all the signs so far suggest he hasthe required temperament to match

his undoubted skill.His dress sense might not be for the

traditionalists, but for me anyone who adds a bit of flamboyance to thegame is a good thing, particularly if the sport hopes to attract and capturethe imagination of new young fans.

TIGER’S RETURNIt was interesting to see Fowler go toe-to-toe for the majority of the tourna-ment with Rory McIlroy and that’s arivalry I’d love to see develop.

It’s been a while since the sport was able to enjoy a rivalry along thelines of Jack Nicklaus and Tom

Watson, who used to slug it out at theMajors.

That such confrontations failed toemerge over the last decade waslargely down to the dominance Tiger

Woods enjoyed for so long, but you’ve

only got to look at the recent greattennis contest between Rafael Nadal

and Novak Djokovic to see what aseries of epic duels can do for the pop-ularity of a sport.

I wouldn’t quite put Fowler inMcIlroy’s class at present, but theingredients are there for some mouth-

watering clashes in the future.Meanwhile, just when he must

have thought he’d seen it all over thelast couple of turbulent years, a f lyinghot dog interrupted Tiger’s comeback from injury at the weekend.

I’m sure he wouldn’t have beenunduly bothered by that bizarreepisode and, more pertinently, he’llhave taken encouragement from the

way he performed in California. A 30th-placed finish was probably asgood as he could have anticipatedand, with his swing looking in good

order, I expect him to be climbing therankings swiftly.

DOUBLE world champion Sebastian

Vettel’s standing in the pantheon of Formula One greats can only be judged once he has faced an intenserivalry, according to British track iconDamon Hill.

Red Bull star Vettel, 24, ensured hisplace in motorsport history atSunday’s Japanese Grand Prix whenhe became the youngest man ever to

win consecutive drivers’ titles. The German’s landmark season

has seen him compared to FormulaOne’s very best, including compatriotand seven-time champion MichaelSchumacher.

But Hill, who beat Schumacher tothe 1996 title in an era dominated by their fierce rivalry, believes the truetest of Vettel’s quality will only come

when he is subjected to a similarly protracted duel.

“In Formula One you do need somesort of personal rivalry to find out

what is going on within each com-petitor,” said Hill.

“It seems to be that any time there

is another driver and the question is‘which one of these two is better?’ –that spurs them on to push them-selves to greater heights.

“It’ll come because he’s so young.He’s obviously going to be driving fora few years yet and there are going to

be much tougher times ahead.”Hill believes there is no shortage of

potential rivals already on the grid,should they be furnished with a carequal to the Red Bull that helped

Vettel wrap up the championship with four races to spare.

Jenson Button, Lewis Hamilton and

Fernando Alonso are all former cham-pions, while the latter two also haveexperience of intense rivalries – witheach other.

“I wouldn’t like to guess what would happen if you put him upagainst a Hamilton. It might fireHamilton up. He might need to getsome sort of rivalry going,” Hilladded.

“Button has shown he’s better than we ever thought he was. Alonso is thesort of fiery character who you canimagine it being interesting themcoming together.”

Hill: Rivalry would test Vettel’s mettle

Results

email [email protected]

SPORT | IN BRIEF

Worthington ready to step downFOOTBALL: Northern Ireland managerNigel Worthington will take charge of his country for the final time thisevening against Italy. The formerNorwich boss took over from LawrieSanchez in March 2007, but the sidehave won just two of their last 23

games under his stewardship and havemissed out on qualification forEuro2012.

FA reveal cost of World Cup bidFOOTBALL: The Football Association’sfailed World Cup 2018 bid was yester-day revealed to have cost a staggering£21m – £6m more than had been tout-ed. The bid ultimately garnered the sup-port of only two Fifa members as thetournament was awarded to Russia.Sports minister Hugh Robertson said: “Iwish we had the knowledge to realisethat Fifa wanted something differentthan what we were put on the table.”

Cavendish Quick Step deal KOCYCLING: World champion MarkCavendish has moved a step closer to

joining Team Sky after Bessel Kok, partowner of the Quick Step team, deniedthere was a deal in place for the Brit to

join them next season. “Cavendish willnot ride for us,” said Kok. “There havebeen discussions about his future, butboth parties mutually agreed not to signthe contract.” Cavendish’s current HTC-Highroad team is to be dissolved at theend of the current season.

Whip bans for Fox and HughesHORSE RACING: Kieren Fox andRichard Hughes were the first jockeys tofall foul of new whip guidelines yester-day. Fox was handed a 15-day ban atSalisbury after hitting Orthodox Lad 11times, while Hughes was given five daysafter finishing third on Swift Blade, whowas adjudged to have been hit six timesinside the final furlong.

GOLF COMMENT

SAM TORRANCE

Romero blow

for Team GB2012 chances

BY FRANK DALLERES

FORMULA ONE▲

Romero is aworld championand won gold at the last Olympics

Picture: PA

8/3/2019 Cityam 2011-10-11


ENGLAND scrum-half Ben Youngshas defended under-fire team-mateManu Tuilagi by laughing off his infa-mous leap from an Auckland ferry boat as nothing more than “a bit of banter”.

Samoan-born centre Tuilagi wasfined £3,000 and warned about hisfuture conduct by embattledEngland manager Martin Johnson forthe incident which saw the 20-year-old repirmanded by Auckland policefor jumping from a ferry into the har- bour.

Youngs was among a clutch of England players to have toucheddown at Heathrow yesterday – theremainder of the squad will landtoday – and attempted to play downthe severity of Tuilagi’s (right)offence, which represented the final blot on England’s copy book follow-ing a month of scandaland disappointingperformances.

He said:“You know perhaps thatis anotheri n c i d e n t where it is notthat big a deal, but of course,naturally, it isgoing to comeout like that because we arein the public eye.

“I feel sorry for

Manu, he is a 20-year-old kid, he just jumped off [the ferry] for a bit of ban-

ter and swam 10 metres in – it is hardfor me to comment about because I was not there but the tournament was done and dusted by then.”

Johnson, meanwhile, must waituntil the RFU conclude their review into England’s dismal World Cupcampaign – which ended tamely atthe quarter-final stage against Franceon Saturday – to find out whether he will be retained beyond December, when his current contract expires.

The former World Cup winningskipper has come under intensescrutiny as a result of England’sinsipid displays, but he would appearto have the complete support of hisplayers.

“You ask any of the players that were out there. Johnno is definitely

the man and, hopefully,the RFU will keep himon,” added Youngs.

But several of hisformer team-mates,including Jeremy Guscott, believe Johnson should pay

the price forEngland’s failure toreach the last four.

Guscott said: “If this was a business

decision Martin Johnson would be

unlikely to continue. As aplayer he was all about winning and in that

regard he’s come upshort.”

Tuilagi ferry

leap was justa bit of banter,claims YoungsBY JAMES GOLDMAN

RUGBY UNION▲

WALES have received a fitness boost ahead of the World Cupsemi-final against France, a matchthat some within the camp are billing as the biggest in the coun-try’s history.

Lock Luke Charteris and fly-half Rhys Priestland were both forcedoff with shoulder injuries duringSaturday’s quarter-final win overIreland, but hopes are high thepair will recover by the weekend.

“It is pretty sore, but it should be good to go,” Charteris said yes-terday of his knock, which limitedhim to just 40 minutes againstthe Irish.

Of Priestland, Wales skillscoach Neil Jenkins said: “We are waiting to see what happens thenext couple of days and hopefully he will be fine.”

Warren Gatland’s youthful sidehave already secured their bestperformance at a World Cup sincethe inaugural tournament in1987, but could go one better onSaturday by beating England’sconquerors to reach the final.

Jenkins said: “This is certainly the biggest game I have beeninvolved in, and the same for Welsh rugby history.”

Duo boostfor Wales

semi clashBY FRANK DALLERES

RUGBY UNION▲

Sport34

MULIAINA OUT FOR ALL BLACKSNEW ZEALAND backs Colin Slade andMils Muliaina have been ruled out of the rest of the World Cup. The AllBlacks have reacted by calling upBath’s new recruit Stephen Donald.Slade had become first choice fly-half after the tournament hosts lost DanCarter but he suffered a groin tear inSunday’s 33-10 quarter-final victoryover Argentina. Muliaina, meanwhile,fractured his shoulder and failed to re-appear after half-time in what was his100th – and now last – Test appear-ance. “They are very disappointed to beleaving the group at this stage of thetournament. It’s a difficult situation,”said New Zealand coach GrahamHenry. “Hosea Gear and StephenDonald joined the team yesterday.”

ROLLAND TO REFEREE WALESALAIN ROLLAND will referee the open-

ing World Cup semi-final between

Wales and France in Auckland onSaturday. Irishman Rolland, whotook charge of the World Cup finalwhen South Africa beat England inParis four years ago, will have England’sWayne Barnes and South AfricanJonathan Kaplan as his assistants.

AUSSIES COUNT ON COOPERAUSTRALIA coach Robbie Deans isadamant that under-fire fly-half QuadeCooper will have a decisive say in thedestination of the World Cup. TheWallabies No10 was again some wayshort of his best against South Africaon Sunday, but Deans continues to havefaith in the Queensland Reds playmak-er. “Clearly he wouldn’t have beenhappy with his performance on Sundaybut everyone made mistakes,” Deanssaid. “Some of our best made mistakesbut they collectively worked their waythrough it. Quade’s a resilient character

and he’ll bounce back.”

Charteris suffered a shoulder injuryagainst Ireland Picture: PA

ENGLAND wicketkeeper CraigKieswetter insists he is ready foraction despite arriving in India aheadof the upcoming one-day series lateand sporting a badly bruised arm.

The South African-born opener washit by a straight-drive from his battingpartner Jos Buttler four days ago dur-ing Somerset’s Champions League Twenty20 semi-final defeat against

Mumbai Indians.But the 23-year-old is set to take

part in England’s final warm-upgame today against a Hyderabad CA XI ahead of the first contest of thefive-match series against the 50 over world champions on Friday.

“I feel fighting fit,” he said. “I’m a bit of a late arrival with Somerset inthe Champions League, but there’s no better preparation than being out inthe middle playing.

“The tempo is a little bit different, but there’s no better method of preparation than being out there in

the middle in a match environment.”Kieswetter, an explosive hitter, may

well have attracted the attention of Indian Premier League (IPL) franchis-es for the next round of auctionsearly next year, but he insists he is inno hurry to fit in an IPL stint betweenclub and country commitments.

“At this stage of my career I’drather be playing for Somerset,” headded. “The IPL is a hell of a tourna-ment to be playing in and playingagainst some of the IPL teams, we gota bit of a taste of what it is.

“It’s really addictive. I’d love to be

part of it at some stage, but I haven’tthought about it in the short term.”

Kieswetter fighting fit afterbeing caught in friendly fireBY JAMES GOLDMAN

CRICKET▲

THE BREAKDOWN | WORLD CUP BRIEFS

Youngs flew homeearly with several of his team-mates andlanded at

Heathrow yesterday

Picture: PA

8/3/2019 Cityam 2011-10-11


SCOTLAND captain Darren Fletcher isconfident of being fit to face worldchampions Spain tonight after recov-ering from an ankle injury.

Fletcher missed Saturday’s 1-0 winin Liechtenstein, which offered CraigLevein’s men renewed hope of quali-fying for Euro 2012.

Scotland go into the game needingto at least match the result achieved by the Czech Republic in Lithuania tosecure a play-off spot – and Fletcher is

aware of the size of the task.He said: “We are under no illusions,

they are the best side we have faced by a long way.

“I watched them against the CzechRepublic the other day and they had65-70 per cent of the ball. So we haveto go with a game plan.”

REPUBLIC of Ireland striker RobbieKeane has been ruled out of tonight’spivotal Euro 2012 qualifier against Armenia at the Aviva Stadium.

Giovanni Trapattoni’s side need just a point to guarantee a play-off spot, but victory coupled with Andorra securing an unlikely winover Russia would see Ireland qualify outright for their first major tourna-ment since the 2002 World Cup.

But Ireland will have to face

Armenia without record goalscorerKeane, who sustained an abductor

muscle injury in Friday’s 2-0 win over Andorra.

West Brom’s Simon Cox willdeputise for Keane, while RichardDunne returns from suspension.

Keane injury adds furthercomplications for IrelandFOOTBALL▲

FOOTBALL▲

Man United’s latest signing: Club

spend £8m on snapping up landIT IS not quite the glamour signingthat supporters crave, butManchester United have dipped intotheir coffers and splashed the cash –on acquiring land around Old Trafford.

The club have paid £8.2m for aone-acre site directly opposite the sta-dium, an estate of seven industrialunits and a 177,000 sq ft warehouse. All were bought from investmentand development company SEGRO, which is landlord to 110 businessesin the nearby Trafford Park industri-al estate.

United’s move raises the possibility that they could consider redevelop-ing their 76,000-seater home, whichis already the biggest capacity clubground in Britain. However a clubspokesperson said there were noimmediate plans to use their newly-acquired land.

“The stadium is an iconic asset forthe club and we feel it is beneficial toinvest in the surrounding area,” saida spokesperson. “If more land becomes available we will assess whether it suits our purposes.”

United chief operating officerMichael Bolingbroke added: “We aredelighted to have completed thesepurchases from SEGRO to furtherconsolidate our ownership of landand buildings around the stadium.”

United also addressed on-fieldmatters yesterday when they con-firmed midfielder Tom Cleverley hassigned a new four-year contract.

Cleverley, 22, has completed hisgraduation through the ranks thisseason, following several loan spells,and broken into Fabio Capello’sEngland squad.

Manager Sir Alex Ferguson hailedthe youngster as “one of the bright-est prospects in the English game”,adding: “Tom has grabbed his chance with both hands.”

Cleverley, who spent last season onloan at Wigan, injured ligaments inhis foot last month but is expected to be back in contention for Saturday’strip to Liverpool.

BY FRANK DALLERES

FOOTBALL▲

Fletcher acknowledgessize of task facing Scots

35HILL: RIVALRY WOULDTEST VETTEL METTLEBRIT ICON SAYS JURY OUT ONGERMAN’S GREATNESS: P33

Already qualified: Germany, Italy,Holland, England and Spain will join theco-hosts Ukraine and Poland.Nearly there: France need a pointagainst closest rivals Bosnia in Paris,while a win for Sweden over Hollandwould see them qualify as best runners-up. Greece need a point from their lastgame to qualify ahead of Croatia.Portugal and Denmark meet inCopenhagen to decide who wins Group H.Set for the play-offs: Turkey can pipBelgium for second place in Group A,while Serbia must win in Slovenia to fin-ish above Estonia in Group C. Norway canstill finish ahead of Portugal or Denmarkas long as the Group H summit meeting

doesn’t end in a draw.

EURO 2012 | THE PERMUTATIONS

EURO 2012 D-DAY +++ EURO 2012 D-DAY +++ EURO 2012 D-DAY +++ EURO 2012 D-DAY +++ EURO 2012 D-DAY

BLUE TUBE | City’s web video deal

MANCHESTER CITY havestepped up their quest for global domination bybecoming YouTube’s first Premier League content partner. The move allowsCity to manage advertising around their online videoclips, which do not includematch action, and is part of their plan to increase their digital presence.

Picture: ACTION IMAGES

Spain 7 7 0 0 18 21

Scotland 7 3 2 2 1 11

Czech Rep 7 3 1 3 1 10

Lithuania 7 1 2 4 -6 5

Liechtenstein 8 1 1 6 -14 4

GROUP ITEAM PLD W D L GD PTSRussia 9 6 2 1 7 20

Rep Ireland 9 5 3 1 7 18

Armenia 9 5 2 2 13 17

Slovakia 9 4 2 3 -3 14

Macedonia 9 2 1 6 -6 7Andorra 9 0 0 9 -18 0

GROUP BTEAM PLD W D L GD PTS

8/3/2019 Cityam 2011-10-11


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