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BUSINESS WITH PERSONALITY

GOLDMAN Sachs profits jumped in


the third quarter, bouncing back
from a loss over the same period of
2011 and joining the revival in
banks fortunes also seen by the
likes of JP Morgan and Wells Fargo.
The investment giant made a
profit of $1.51bn (937m) in the
three-month period, compared with
a loss of $428m a year ago.
The industry has improved in the
last quarter as the economy shows
signs of life and the Fed loosened
policy a key factor in pushing up
bond and stock values and so raising
Goldmans profits. But the bank also
performed more strongly itself, with
investment bank revenues up 49 per
cent to $1.16bn, largely on strong
underwriting figures.
Fixed income, currency and
commodities revenues rose 28 per
cent to $2.22bn, driven by the
mortgage and credit products
businesses. And the bank raised its
dividend for the second time this
year, unusually for an institution
more recently focused on raising
capital levels. Operating expenses
increased 40 per cent to $6.05bn,
with compensation and benefits
rising 133 per cent to $3.675bn.
As headcount has fallen five per
cent to 32,600, compensation per
employee rose to $336,441 for the
first nine months of 2012. Analysts
also praised the 8.6 per cent return
on equity, even though it is below
the double-digits hoped for before
the financial crisis.
VIKRAM Pandit stood down as
Citigroup chief executive yesterday fol-
lowing a boardroom row, shocking
investors and temporarily knocking
the banks share price.
Pandit had been at the top of the US
bank for more than five years, steering
it through the financial crisis and
implementing a major turnaround
programme.
Yesterday he resigned with immedi-
ate effect, to be replaced by Michael
Corbat, a career staffer at the bank and
chief of Citis Europe, Middle East and
Africa business.
President and chief operating officer
John Havens, long seen as a close advis-
er to Pandit, also stood down yesterday,
moving before his initial plan to leave
at the end of this year. It is thought
boardroom tensions have been sim-
mering since new chairman Michael
ONeill took the role in April.
Analysts at Bank of America said the
pair clashed as ONeill focused on oper-
ational management while Pandits
approach was more strategic a row
that is believed to have contributed to
www.cityam.com FREE
his departure. ONeill admitted in a
last night that the company had been
planning for Pandits departure for
years. We have been engaged in the
process for two years, we are very well
positioned, he told analysts in a con-
ference call, denying that Pandit has
resigned over pay, and saying he was
proud of what we have done.
A source at the bank insisted Pandit
parted on good terms. Even if there
was a row, the board is grateful for the
good work Vikram has done in the last
five years, the source said.
Pandit last night insisted the deci-
sion to leave was his.
I have been think-
ing about this for
a long time. It
was my deci-
sion. I made it
talking to Mr
ONeill, and we
did it under-
standing that
the company was
ready, he told
Bloomberg
TV.
ONeill praised the outgoing chief
executives work in turning the bank
around, and said that he remains con-
fident in the firms future.
New chief Corbat sent an email to
staff, explaining he will take the next
several weeks to immerse myself in
the businesses and review reporting
structures before making changes.
However he did make it clear that
there will be a shake-up.
Regulatory, legislative and econom-
ic changes around the world present
headwinds as we redefine our relation-
ships with all of our stakeholders, he
wrote. To thrive, we must be vigilant
about how we allocate our resources.
Corbat added last night that he
would focus on the core performance
of Citi, but would not alter the strate-
gic direction of the firm.
Shares initially dropped 1.5 per cent
on the resignation before rebounding
to end the day up 1.17 per cent.
Ratings agency Moodys cut the bank
late last night to a negative outlook.
BY TIM WALLACE
FTSE 100 5,870.54 +64.93 DOW 13,551.78 +127.55 NASDAQ 3,101.17 +36.99 /$ 1.61 unc / M1.23 -0.01 /$ 1.31 +0.02
ISSUE 1,740 WEDNESDAY 17 OCTOBER 2012
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BY TIM WALLACE
FACEBOOK LIKES LONDON
Vikram Pandit has led the bank since
2007, but fell out with the chairman
CITIS PANDIT
QUITS AFTER
BOARD ROW
Chief executive Lloyd Blankfein has slashed costs, cutting five per cent of jobs at Goldman
Goldman joins bank
revival as it swings
back into the black
WET WARSAW
England game
rained off
See Page 26
ZUCKERBERGS SOCIAL NETWORK OPENS TECH HUB IN SOHO
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
RUPERT Murdoch retained his grip
on News Corp last night, defeating
shareholder calls for his roles of
chairman and chief executive to be
split despite a number of influential
investors making their grievances
known at the firms annual meeting.
Murdoch, whose family controls
40 per cent of News Corps voting
rights, admitted the last 18 months
had been a difficult period in our
companys history but boasted
about News Corps performance, and
invited disgruntled investors to sell
out if they wanted to. If you dont
buy the company then dont buy the
stock, he said.
News Corp said the entire board
had been re-elected, with motions
from rebellious shareholders for an
independent chairman and an end
to the firms dual-class share
structure quashed.
However, Murdochs claims that
the current voting system actually
works in smaller investors favour
were met with outrage by some
dissidents.
The will of the majority of
shareholders has ceased to be
relevant, a representative for British
pension fund Hermes Equity said.
The details of the meeting,
published last night, revealed that
around 30 per cent of votes a
majority of independents backed
calls for Murdochs roles to be split.
Murdoch sails
through News
Corp meeting
BY JAMES TITCOMB
CITIGROUPS board unanimously
voted in favour of raising Mike
Corbat to the role of chief executive
when Vikram Pandit quit yesterday,
rewarding the European head for
decades of service at the bank.
Corbat has a long history both
retail and investment banking, and
takes charge at a time when Citi has
largely turned itself around, with
the third quarter results showing a
healthy underlying business.
He wrote to staff yesterday to
express the weight of responsibility
he feels in taking on the top job.
I am both humbled by the confi-
dence the board has placed in me,
and excited by the prospect of work-
ing closely with our management
team and the board to take our com-
pany forward, he said in a memo.
I say this as a true believer in this
company: I have spent my entire
career here and have had the oppor-
tunity to see first-hand the dedica-
tion, talent, and innovative spirit
that for 200 years has been the hall-
mark of how we serve our clients
and the communities around the
world in which we operate.
That career spans areas including
capital markets, corporate and com-
mercial banking, wealth manage-
ment, mortgages and credit cards.
And in the financial crisis Corbat
Apple set to unveil iPad Mini
Apple hopes to maintain its dominance in
the tablet market despite competition
from Microsoft, Google and Amazon with
a cheaper, smaller iPad, which is expected
to be unveiled next week. The California-
based technology group has sent out
invitations to a press launch next Tuesday.
Months of leaks suggest the event will
centre on an 8-inch iPad, which analysts
estimate might cost about $250 (155).
Confirmation of the press conference in
San Jose, California, helped lift Apples
shares 2.4 per cent to $649.79.
CWC set to offload Macau stake
Cable & Wireless Communications (CWC)
is in advanced talks to sell its controlling
stake in Macaus largest telecoms group
for as much as $650m to Citic Telecom
International, part of the Chinese state-
controlled conglomerate.
MasterCard mines data for marketers
MasterCard has started to analyse
transaction data to help marketers direct
targeted advertising at consumers, after
launching a controversial initiative to
make money from its vast database of
retail purchases.
Cosworth gives green light for sale
After months of waiting to test the stock
market with a flotation of the company,
the owners of British racing team
Cosworth have instructed UBS to find a
buyer for the business.
Bollor puts mobile sale on agenda
The French corporate raider Vincent
Bollor said yesterday that he had
acquired a 5 per cent stake in Vivendi,
increasing speculation that the firm is
planning a sell off its mobile business.
Rothschild 'wrong' on Bumi dangers
Nat Rothschild is completely wrong
about the controversial divorce deal
facing Bumi, according to deputy
chairman Sir Julian Horn-Smith, the man
trying to steady the troubled coal group.
Depp to become book publisher
Johnny Depp is launching a new career as
a book publisher, saying he hopes to bring
previously unheralded tomes on to the
market. The Pirates of the Caribbean star
has teamed up with HarperCollins.
EU official quits over tobacco probe
The European Union's commissioner for
health and consumer policy, John Dalli,
resigned following an investigation by the
EU's antifraud office into a complaint
made by tobacco firm Swedish Match.
Microsoft sets $499 price for Surface
Microsoft set the starting price for its new
tablet computer due out next week at
$499 (309), following the lead of
Apples iPad while undercutting pricing
of some of the software giant's allies.
LONDON should have the
autonomy to introduce local taxes
for major capital projects, an
independent panel heard yesterday.
Mayor Boris Johnson launched
the London Finance Commission in
June to find ways to keep more of
Londons tax in the capital.
Yesterday it heard evidence from
ex-Mayor Ken Livingstone, who
called for the existing 32 boroughs
to be replaced with five wedge-
shaped local areas and attacked
the need to spend years lobbying
before starting major projects.
Sir Michael Lyons, ex-chairman
of the BBC, told the panel that
businesses were willing to accept
additional rates for projects with
clear benefits, such as Crossrail.
Johnson commented:
Investment in London benefits
the wider UK economy, helping to
drive jobs and growth throughout
the country. Londons taxpayers
pour billions into the
nations coffers and
cannot simply be a
cash cow for the
country without a
greater say in how
this cash is used.
Boris seeks to
keep Londons
tax in capital
Corbat has spent almost 30 years at Citi and helped the bank restructure in the financial crisis
2
NEWS
BY JAMES WATERSON
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
H
ERE is the truth about the cuts
so far, courtesy of the Office for
Budget Responsibility (OBR).
The deficit is down by about a
quarter from its peak over the past two
years, though it has increased again
since the start of the current fiscal
year. Looking just at 2010-11 and 2011-
12, two thirds of the fall in the deficit
reflect lower public spending and one
third tax hikes. The deficit was 11.2 per
cent of GDP in 2009-10, 9.6 per cent in
2010-11 and 7.8 per cent in 2011-12,
though the latest data show that the
deficit is increasing again.
Capital spending has fallen by 1.8
per cent of GDP and current spending
by a much less than commonly under-
stood 0.6 per cent of GDP, a poor mix
which is clearly a mistake. Within cur-
rent spending, debt interest is up 0.9
per cent of GDP though this has been
offset by a 1.4 per cent of GDP fall in
EDITORS
LETTER
ALLISTER HEATH
Why Osborne has targeted the wrong kind of spending cuts
WEDNESDAY 17 OCTOBER 2012
other current spending. Tax receipts
have jumped 1.1 per cent of GDP,
entirely accounted for by higher VAT;
there has been a slight fall in income
tax as a share of GDP reflecting weak
self-assessment receipts and the
substantial rises in the personal
allowance.
As to the reasons why the economy
has under-performed so much, the
OBR highlights falling real wages
hopefully a trend that will abate, with
retail price inflation falling to 2.6 per
cent last month and consumer price
inflation to 2.2 per cent and weak
export markets. It was careful not to
state that austerity had proceeded too
fast or to endorse the ultra-Keynesian
claims made by the IMF last week.
To this perfectly reasonable analysis
I would add that the mix of cuts and
tax hikes was wrong: it would have
been better to rely less on tax hikes
and more on cuts to current spend-
ing. In order of importance, the
reduced deficit comes from less capex
(the one category of public spending
that can boost growth if it isnt wast-
ed); then tax (which damages growth,
though VAT less so than direct tax);
and only then current spending,
which remains far too high as a share
of GDP.
That is one of the problems with
George Osbornes austerity plan (it
was also shared by his Labour prede-
The answer is not to ditch the project
but to compensate the losers properly.
The expected cost of the project is
some 4.1bn so generously paying
off those affected, and in some cases
buying their homes at a premium to
market price (and reselling them
when the work is finished) would
hardly make much of a difference. It
would be better to spend 4.2bn, pro-
tect affected individuals and speed up
the planning process rather than risk
the entire project descending into
endless controversy.
In general, the UK needs to adopt a
far more generous compensation
regime for the losers in infrastructure
projects. It is the only way to prevent
nimbyism defeating all progress
while protecting individual rights.
cessor Alistair Darlings): the easy cuts
capex are always made first, with
the harder ones pushed back indefi-
nitely. Yet long-run that makes the job
of reducing the budget deficit even
harder: the wrong kind of austerity
ends up hitting growth and making
the adjustment process even more
painful.
COMPENSATE THE LOSERS
Londons Supersewer is a vital piece of
infrastructure, a 24 mile tunnel that
will prevent sewage from ending up
in the Thames and bolster our capi-
tals antiquated Victorian system. It is
officially called the Thames Tideway
Project and is due to start construc-
tion in 2015. But it is becoming clear
that the human cost of the project
will be very high, with hundreds of
homes blighted by extreme noise and
other problems for lengthy periods.
did his bit to restructure the bank by
selling off of more than 40 businesses.
He has consistently delivered
impressive bottom-line results at many
of our major global business units and
has forged a strong track record of
improving efficiency, said chairman
Michael ONeill.
But the Harvard graduates time in
business does stretch a little way
before his time at Citi.
When at university he established
MCI Enterprises, a contractor.
We do a lot of clean-up work. We
paint, landscape and do some light
construction. But most of these arent
small jobs. We work in large buildings
and large facilities requiring eight to
10 people per job, he told The Harvard
Crimson publication back in 1982.
At the time Corbat was an American
football star for the university.
Hes always been competitive in
sports, his mother told the Crimson.
But hes always been able to make a
dollar on his own.
The profile also noted Corbats looks
and charm: The ladies who serve and
prepare the food at Currier House all
have crushes on Mike Corbat.
Johnson said
London needs
more control
of its taxes
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
The Citi lifer selected to
lead bank after Pandit
PEARSON yesterday announced a
$650m (403m) buy-out of online
education firm EmbanetCompass,
in a move that signals Pearsons
increasing emphasis on digital
publishing and education.
The acquisition is Pearsons largest
since it spent $950m on Reed
Elseviers educational arm Harcourt
in 2007, and is expected to be the last
under departing chief executive
Marjorie Scardino.
Pearson which also publishes the
Financial Times, owns book publish-
er Penguin and a 50 per cent stake in
The Economist said the deal would
improve dividends and broadens
our leading position in the fast-
growing online educational services
market.
EmbanetCompass provides a range
of online learning services and soft-
ware to universities in the US. It was
previously owned by a group of
investors led by venture capital firm
Technology Crossover Ventures.
Pearson makes
$650m digital
learning buy
BY JAMES TITCOMB
Pearson has increasingly moved
into the university learning market
over the last few years, and two
weeks ago appointed education boss
John Fallon as Scardinos successor,
sparking speculation that the compa-
ny would sell off the FT and Penguin.
Education now makes up three-
quarters of the companys revenue,
with the firm eyeing further growth
in emerging markets and digital
learning.
Institutional services are one of
the fastest growing areas of the US
higher education market, the com-
pany said.
BBA plans to clean up industry
with new register of bankers
BANKERS could be forced to gain
approval from a professional body
to work in the City under proposals
being put forward by trade
association the British Bankers
Association (BBA).
The lobby groups chief
executive Anthony Browne said
last night that the BBA may push
for an independent sector
regulator with teeth that would
be able to fine or bar bankers from
the body if they fail to live up to a
BY JAMES TITCOMB set of standards.
Its very early days, but this is a
proposal submitted by Barclays and
theres a lot of interest among
banks in the industry, Browne told
City A.M. last night. Theres a lot
that would still have to be done.
New Barclays chief executive
Antony Jenkins submitted the idea
to the Parliamentary Commission
on Banking Standards set up in
the wake of the Libor scandal in
September, proposing it as a way to
restore trust in bankers and the
financial system.
The independent regulatory body,
similar to the Institute of Chartered
Accountants, could see bankers
struck off a register if they break
the rules.
The topic will be under discussion
at todays BBA annual conference,
where restoring bankers reputation
will be high on the agenda.
The association will also
announce that Sir Nigel Wicks, a
former aide to Margaret Thatcher,
will become the new chairman,
replacing ex-Barclays chair Marcus
Agius, Sky News reported yesterday.
CHANEL RESCUES SCOTTISH CASHMERE FIRM
Pearson PLC
16Oct 10Oct 11 Oct 12Oct 15Oct
1,230
1,235
1,240
1,245
1,250
p
1,243.00
16Oct
GLOBAL custody bank State Street
yesterday reported a strong rise in
profits despite falling revenues, as
it kept a tight cap on expenses.
Profits hit $654m (406m), up 20
per cent from $543m in the same
quarter of last year. Revenues slid
2.9 per cent, coming in at $2.36bn,
down from the $2.43bn a year ago.
Much of that came in foreign
exchange trading where revenues
plunged 44 per cent to $115m.
But expenses fell 20 per cent to
$1.42bn, in part thanks to a $600m
savings plan which includes cutting
the compensation ratio to 39 per
Cost cuts aid State Street profit
BY TIM WALLACE
cent something which was
achieved this quarter.
The bank returned capital to
shareholders with a $480m stock
buyback in the quarter.
WEDNESDAY 17 OCTOBER 2012
3
NEWS
cityam.com
CHANEL yesterday announced it has acquired the Barrie Knitwear, the Scottish cashmere
manufacturer, following the collapse of its owner Dawson International in August. The
fashion house said the deal with administrator KPMG will safeguard the jobs of all 176
staff at the mill. It will also continue to make knitwear for other brands as well as Chanel.
US BANKS THIRD
QUARTER PROFITS
Bank Q3 profit Change on
Q3 2011
Citigroup $468m Down 88%
JP Morgan $5.71bn Up 34%
Wells Fargo $4.9bn Up 22%
State Street $654m Up 20%
Goldman Sachs $1.51bn Up fromloss
IBM and Intel last night got the US
tech earnings season off to a gloomy
start, with the former missing
revenue forecasts and the latter
spooking investors with a downbeat
forecast.
IBM reported a five per cent drop
in quarterly revenues to $24.7bn,
compared to forecasts of $25.4bn,
but repeated its outlook for the
year.
Intel reported quarterly revenues
of $13.5bn, beating forecasts that
were pared back following a profit
warning in September.
Intel and IBM
fail to impress
BY CITY A.M. REPORTER
THE COMPETITION Commission has
given itself two extra months to
investigate anti-trust concerns in the
audit market, in a move that could
delay plans for new EU laws.
The commission has now penciled in
January for revealing its preliminary
findings, from November as first
planned. The past month has seen a
flurry of hearings and submissions
as the CC tries to examine all the
evidence. A spokesperson said it is
not unusual for CC probes to run
long, adding that the original
timetable was a little overzealous.
Audit probe to
report in 2013
BY MARION DAKERS
INFLATION dived in September, data
revealed yesterday, bringing it closer
to the Bank of England target is has
exceeded for 30 consecutive months.
Yearly inflation, as measured by the
consumer prices index (CPI), slid to 2.2
per cent in September, the Office for
National Statistics (ONS) said, down
from 2.5 per cent in August.
Driving the slower pace of price rises
was a much more subdued set of util-
ities, fuel and electricity bill increases
in the year to September compared to
the year to August 2.2 per cent com-
pared to 5.6 per cent. Behind this
reduction is the fact that last
Septembers big hikes in energy bills
have filtered through the index.
This slowdown in energy inflation
was working against faster inflation
in recreation and culture and trans-
port but ONS statisticians told City
A.M. that transport rises were due to
air fares whose prices are notorious-
ly volatile.
Some analysts said the fall indicated
inflation would stay close to or even
go below its two per cent target for
coming years, and the sustained peri-
Inflation drops
but above 2pc
for 30th month
BY BEN SOUTHWOOD
od of above-target results was at an
end.
We believe that the long period of
UK inflation stickiness is over, said
Michael Saunders at Citi. Inflation is
likely to be around target on average
in 2013 even with recently-announced
energy price hikes, dropping below
target later on.
But others said Septembers two and
a half year low was likely to be the low-
est inflation got. CPI inflation may
have got within touching distance of
the two per cent target, said Victoria
Clarke at Investec, But this is where
the good news probably stops. Clarke
cited tripled tuition fees as well as util-
ity and energy price hikes to support
her claim.
The retail prices index (RPI), which is
calculated with a different methodolo-
gy to CPI, and includes mortgage costs
in its basket of goods, also ticked down
in September, from 2.9 per cent to 2.6
per cent. RPI also feeds into business
rates, which will be raised in line with
this months rise. The British
Chambers of Commerce said this
inflexible system should be ended,
since incessant rates rises harm the
chances of businesses creating growth.
IS INFLATION GOING TO FALL BACK
TO EARTH? Interviews by Ben Southwood
Market conditions are very weak business is
doing poorly and commodity prices across
the world are rising. No one can be absolutely sure, but I
think ination is on its way back up.
These views are those of the individuals above andnot necessarily those of their company
NAVEEN SHARMA
RBC

Ination is set to rise, based on rapidly rising


fuel and food prices around the world. The
Bank of England and HM Treasury can only watch the
economy, they cant drive or control it.
MOHAMMAD FARHAN
KYNETIX
I expect ination to go up. In my experience,
across the world, governments want high
ination to deal with their massive debt burdens.
ROLAND HARVATH
CCA

CITYVIEWS
MORE US RESULTS: Page 15

WEDNESDAY 17 OCTOBER 2012
4
NEWS
cityam.com
INFLATION TICKS DOWN IN SEPTEMBER, BUT REMAINS ABOVE TARGET
3.0% 333.000%%
BEER
FRUIT
0.7%
1.1% 111.111%%%%
BREAD
8.8% 8888.8888%%%%
TOBACCO
7.2%
7777.2222%%%
JEWELLERY
0.5%
0
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0000.5555%%%
MILK
0.4% 000.444%%% 0000000000.44%%% 000
CLOTHES
26.4% 22226666.4444%%%%
CAMERAS
3.1% 3333.11111%%%%%
BOOKS
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S

DIRECT Line Group yesterday
completed its first day as a full listed
company, marking the official
completion of the largest London
float in 2012.
All 1.5bn shares in the firm were
added to the official list of the UK
Listing Authority, while it began
unconditional trading under the
DLG ticker.
The share price has been relatively
stable, floating at 175p last Thursday
and closing yesterday at 188.2p.
Panmure Gordon analyst Barrie
Cornes told City A.M.: The shares
were priced to get away and thats
exactly what theyve done.
Float of Direct
Line is official
BY JAMES WATERSON
THE FINANCIAL Conduct Authority
(FCA) yesterday unveiled its plan to
regulate behaviour in the City, pledg-
ing to force companies to put con-
sumers at the heart of their business.
Martin Wheatley, who will be chief
executive of the FCA when it is
spawned from the disbanding
Financial Services Authority (FSA)
next year, outlined its approach.
New powers will allow the FCA to
take pre-emptive action when it
believes a firms policies are set to be
detrimental to consumers.
The Financial Services Bill 2012, cur-
rently progressing through parlia-
ment, contains many of the powers
outlined by the FCA yesterday.
These include the ability to ban
financial products, publish details of
misleading financial promotions,
and let people know when we are
proposing to take disciplinary
action against a firm, the
report said.
Financial services groups
warned that the FCA, along
with the incoming Prudential
Regulation Authority, will need
to ensure that firms know
where they stand.
The FCA
w i l l
h a v e
a n
Wheatleys new
City watchdog
shows its teeth
BY JULIAN HARRIS armoury of new consumer powers at
its disposal, some of which like prod-
uct intervention are untried and
untested, said Paul Smee, director
general of the Council of Mortgage
Lenders (CML).
Firms will be looking for as much
information and help as possible from
the FCA, to ensure that they do not
inadvertently fall foul of the
regulators expectations, Smee added.
The scandal over the mis-selling of
payment protection insurance (PPI)
has convinced the FCA of the need to
intervene early; to pre-empt and pre-
vent widespread harm to consumers
from happening in the first place,
rather than clear up after the event.
Wheatley said the tough approach
would not prevent innovation or act as
a barrier to entry for new
firms. We will allow
firms to try new ideas
and develop their
business, he said.
We will set high
expectations for
those firms that
want to enter finan-
cial services, while
still allowing innova-
tion and good ideas to
flourish.
Building society
boss attacks BofE
THE BANK of England should face
more direct democratic oversight
and take action to become more
accountable and transparent, the
Building Societies Association (BSA)
said yesterday, voicing concern over
powers the Bank is being given.
Its Financial Policy Committee
(FPC) is set to gain wide ranging
macroprudential tools, allowing it
to determine the levels of capital
banks must hold overall, and to
vary capital requirements by sector.
Adrian Coles from the BSA
BY TIM WALLACE
warned that this gives the Bank
great power over credit, without
extra accountability. Because of
the wide ranging impact this has,
the Bank of England will be one of
most powerful unelected entities in
the democratic world, he told the
Treasury Select Committee.
Coles also said it may be better if
the FPC had more direct controls
for example the power to limit
mortgage loan-to-value ratios when
a bubble is growing rather than
change capital requirements, to
make sure consumers can see how
credit is being restricted.
CLEGG INSISTS BOUNDARY REFORM IS DEAD
Chief regulator Wheatley said
the City is one of our most
successful
industries
n The new regulator will be able to step
in and ban the sale of products that pose
unacceptable risks to consumers for up to
12 months, without consulting first.
n Wheatleys FCA will also have the
power to ban misleading advertising.
n New entrants to financial industries will
face more stringent tests. When we
consider authorising a firm, we will look
at its business model to ensure it meets
the needs of consumers.
n Wheatley wants to continue the FSAs
clamp down on financial malpractice. We
will keep up our policy of credible
deterrence, pursuing enforcement cases
to punish wrongdoing.
n We will carry on the fight against
insider dealing, which has secured 20
criminal convictions since 2009, it adds.
n The FCA says it also wants to boost
competition in financial services.
Promoting competition will play an
important part in this. We are not here to
stand in the way of progress that will be
of benefit to consumers, Wheatley said.
n A closer eye will be kept on specific
sectors in a bid to control how markets
develop. A new department will act as
the radar of our new organisation
combining better research into what is
happening in the market, and analysis of
the risks to our objectives.
THE FINANCIAL CONDUCT AUTHORITYS PLANS
WEDNESDAY 17 OCTOBER 2012
5
NEWS
cityam.com
LIB Dem leader Nick
Clegg yesterday
insisted that his party
will vote against
changes to MPs
constituencies a
decision that will
make it harder for the
Conservatives to win
an outright majority
at the next election.
Proposed changes to
boundaries were
published yesterday
and a vote is
scheduled for October
2013, but any change
is likely to need Lib
Dem support. The
reforms could give
the Conservatives up
to 20 extra seats at
the next election.
THE EUROZONE swung into a
trade surplus over the first eight
months of the year, data revealed
yesterday, driven by boosted
exports from southern regions.
The Eurozones trade balance
was 46.9bn (38bn) in surplus
between January and August 2012,
Eurostat said, up from a 26.8bn
deficit over the same period last
year. Spain, Italy and Greece all
saw exports rise and imports fall
in the first seven months of the
year, the data showed, even
pushing Italy into a 4.4bn
surplus in the period.
This positive data chimed with
business survey results from
Germany. Economic sentiment
jumped from minus 18.2 in
September to minus 11.5 in
October, ZEW said. Though this
was still negative, it was well
above expectations analysts
polled by Reuters had forecast an
improvement to minus 15.
But monthly car sales slumped
at the fastest rate of decline for 12
months in September, data from
the European Automobile
Manufacturers Association
showed.
New car registrations dived 10.8
per cent in just a month, hitting
1.1m during September, and
clobbering big European car
companies.
South pushes
Eurozone into
trade surplus
BY BEN SOUTHWOOD
MOODYS last night maintained its
Baa3 rating on Spanish sovereign
debt, one notch above junk, though it
moved to a negative outlook.
Moodys said Spain should have
access to the capital markets at rea-
sonable rates while it turns around its
economy, thanks to the combina-
tion of euro area and ECB support
and the Spanish governments
efforts.
The good news helped nudge the
euro 0.3 per cent higher against the
dollar.
It came after Spain sold more short-
term debt than planned at slightly
lower rates than a month ago, attract-
ing investors who traded on expecta-
tions that a sovereign aid request
could be near.
The countrys treasury yesterday
sold 4.9bn of 12- and 18-month debt,
beating the targeted upper range of
4.5bn and with the yield on the
longer paper dipping from
Septembers auction to just above
three per cent.
Rising expectations that Spain will
Moodys stops
short of Spain
downgrade
BY HARRY BANKS
soon ask for a Eurozone credit line to
help cut its borrowing costs look set to
dominate a EU summit beginning
tomorrow, potentially crowding out
talks on a disputed banking union.
The EUs two-day summit, the fourth
among the 27 leaders this year, was
meant to focus on efforts to establish a
single supervisor for the Eurozones
banks, as well as longer-term plans for
closer integration of the bloc.
There is even a narrow chance of a
separate summit of the 17 Eurozone
leaders after the main meeting to dis-
cuss the most pressing issues affecting
the currency bloc, including Greece,
Cyprus, Italy and Spain, officials said.
German finance minister Wolfgang
Schaeuble also threw his weight into
the mix ahead of the summit, saying
it was time for a leap forward in
European integration and that ideas
such as a super-empowered commis-
sioner for budgets needed serious con-
sideration.
Schaeuble said he had run his ideas
past Chancellor Angela Merkel and
while she was somewhat more cau-
tious, there was a need to take bold
action to quell the debt crisis.
GREECE plans to launch tenders to
sell or lease a string of state assets,
including its biggest refiner and
two largest ports, as it battles to
pay down debt and meet the terms
of an international bailout.
The deals will be a second wave
of privatisations after six projects
which are expected to complete in
early 2013.
We have some very significant
assets and tenders to launch in the
next few months, Yannis Emiris,
head of Greeces HRADF
privatisation agency said
yesterday.
Greece prepares second wave
of privatisations to raise cash
BY CITY A.M. REPORTER
Athens plans to launch tenders
to sell stakes in refiner Hellenic
Petroleum, the countrys two
biggest ports in Piraeus and
Thessaloniki, its second-biggest
water company Thessaloniki
Water, and Larco, one of the
worlds biggest nickel producers.
The country also plans to seek
investors for the countrys biggest
airport in Athens, the Egnatia
motorway as well as small regional
airports and marinas.
The first big sales, natural gas
firm DEPA and a 33 per cent stake
in gambling firm OPAP, are
expected to be completed early
next year.
WEDNESDAY 17 OCTOBER 2012
6
NEWS
cityam.com
Greek Prime Minister Antonis Samaras has pledged to revive privatisations
IN BRIEF
Gold Fields delivers strike ultimatum
n South African bullion producer Gold Fields
has given striking workers at its South Africa
mines until tomorrow to return to work or
face immediate dismissal, chief executive
Nick Holland said yesterday. Gold Fields said
23,500 workers in South Africa were still on a
strike that has cost the company 65,000
ounces of lost gold production, or 1.2bn rand
(84.4m) in revenue.
TNK-BP fails to stop documents
n A former employee of TNK-BP yesterday
won a High Court case in London to end a
gagging order to stop him from leaking
company documents, which he says show
corruption between company executives and
government officials. TNK-BP blocked the
disclosure of the documents, which former
head of logistics Igor Lazurenko claims are
damaging to TNK-BPs reputation, in July.
WEDNESDAY 17 OCTOBER 2012
7
NEWS
cityam.com
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ELIZABETH FOURNIER
Blankfeins caution proves risk-off banking is here to stay
F
OR a brief hour or so yesterday,
the banking world was gripped
by a success story.
Goldman Sachs, which this time
last year posted close to half a billion
dollars in losses, threw its hat into a
largely upbeat round of US results by
almost doubling overall revenues and
sending shares up in early trading.
But no sooner had Goldmans
Blankfein dropped a $1.46bn profit on
the market not to mention a four
cents per share dividend rise than
Citigroup chief executive Vikram
Pandit had stolen his thunder with a
carefully penned letter of resignation.
In doing so, he left Blankfein with
the dubious honour of being just one
of two remaining Wall St bank bosses
hired during or shortly before the cri-
sis whove survived this far (Jamie
Dimon at JP Morgan being the other).
Blankfeins memorable quotes (who
can forget Im doing Gods work and
I know I could slit my wrists and peo-
ple would cheer) and bullish invest-
ment attitude ensure that when he
does step down from Goldman, his
legacy will at least be colourful.
Pandit, on the other hand, will be
remembered for the sweeping job cuts
and government pandering that came
after Citi accepted a $45bn bailout, not
to mention a 90 per cent depreciation
in the banks share price over his five
years at the top.
Its unfair to put all that on the
departing chief executive, of course
poor Pandit was drafted into his very
own omnishambles back in 2007, and
though paying back loans and making
cuts might not be glamorous, hes
ensured Citi has hung on as Americas
number three ever since.
His method foreshadows the new
breed of risk averse, technocratic bank
bosses popping up all over the sector
most recently, some would argue, in
the form of Antony Jenkins at Barclays.
Even Pandits successor, Mike Corbat,
is seen as a safe pair of hands.
And as the focus banking sector
seems to shift more firmly towards fos-
tering a responsible business culture,
perhaps even Blankfein has tempered
his enthusiasm for a risk-on ride.
Despite investment banking rev-
enues that jumped 49 per cent to
$1.16bn and an investment and lend-
ing desk that generated $1.8bn in the
third quarter, Blankfeins outlook on
the next few months was about as cau-
tious as he has ever sounded. Far from
blowing his own trumpet, Blankfein
called the results generally solid in
the context of a still challenging eco-
nomic environment and warned that
the bank would continue to be disci-
plined in managing our operations
and capital.
Goldman has already been making
cuts headcount is down five per cent
on a year ago and the banks peripher-
al spend on areas including comms
and business development has been
stemmed. There could be more to
come. In the meantime the banks
average daily value at risk the
amount of money the investment
bank could lose in a day fell to $81m,
the lowest level in roughly six years.
In the wake of yesterdays big news,
the BBA today holds its annual confer-
ence, at which the Citys banking big-
wigs will again line up to tout just how
risk averse, cost conscious and keen on
regulation they all are. If there was
ever a sign that a new normal world
order is here to stay, then Blankfein
jumping on board would be it.
Elizabeth Fournier is City A.M.s news editor
@ej_fournier
TAKEOVER duo William Hill and
GVC yesterday finally won the back-
ing of the Sportingbet board for
plans to buy the online gambler after
sweetening its offer for the firm to
61.1p a share.
The companies will now start due
diligence on the businesses with
hopes of making a firm offer before a
Takeover Panel deadline of 13
November, which was extended from
5pm yesterday.
The offer is structured as 50p in
cash from by William Hill with the
rest of the offer coming in GVC
shares.
Analysts had long predicted
William Hill and GVC would have to
break the 60p barrier to secure
Sportingbet after an initial offer of
52.5p and a raised intention of
between 55p and 60p failed to crack
the board.
Sportingbets major shareholders,
which include Majedie Asset
Management, Bonaire Investment
and UBS Global Asset Management,
will now have to decide if they back
the inclusion of GVC shares in the
deal, which would see every one
Sportingbet share swapped for
0.0475 GVC shares.
It is understood Sportingbet sound-
ed out investors on the plan when it
William Hill and
GVC edge closer
to Sportingbet
BY MICHAEL BOW
announced its results last week.
Yesterdays compromise involves a
so-called mix and match facility,
which will allow Sportingbet share-
holders to take on more GVC shares
and less cash if they choose.
An increase in GVC share alloca-
tions would let investors keener on
cash take a higher proportion than
the 48.9p on offer, if there is a bal-
ance of payments.
A deal would allow William Hill to
skim off the regulated portions of
Sportingbets business in Australia
and Spain, with GVC able to hoover
up the rest of the unregulated busi-
ness. It is understood rival bids were
put off moving for Sportingbet due to
its unregulated businesses.
William Hill and Sportingbet shares
both closed up yesterday. GVC asked
for temporary suspension of its
shares yesterday morning.
Facebook checks in to London for
first non-US development office
FACEBOOK yesterday unveiled its
London engineering office, the
companys first outside the US.
The social networks Covent
Garden hub, opened by chancellor
George Osborne, has around 20
staff working on a number of
special projects, in particular
Facebooks smartphone apps.
However, the firms vice
president of engineering Mike
Schroepfer said there was potential
to expand to the size of the three
BY JAMES TITCOMB
US engineering centres, each of
which employ more than 100
developers. Schroepfer admitted
that the company could have
chosen other locations for the
office, but said it had been attracted
by the level of talent and the eco-
system of companies in the capital.
Facebooks choice of London will
be a boost to Osbornes campaign
for the capital to become Europes
technology hub. The chancellor said
he had urged Facebooks chief Mark
Zuckerberg to set up in Britain,
although he added: Im not
claiming that made any difference.
The office is being run by a
veteran of Facebooks Seattle hub,
Philip Su, who worked on the
companys iPad app and the
websites integration with video-
calling service Skype.
Despite the fanfare surrounding
yesterdays launch, Schroepfer
admitted it had been a difficult
time for Facebook, and that
negative publicity around the
company was disappointing for
staff, but said the company was
coming out of the tunnel. Facebook engineers in London will work on a number of special projects including apps
Sportingbet PLC
16Oct 10Oct 11 Oct 12Oct 15Oct
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WEDNESDAY 17 OCTOBER 2012
9
NEWS
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William Hill, GVC and Sportingbet have a
host of big name rainmakers on board.
Acting as lead adviser to William Hill is Citis
Jan Skarbek, managing director of the UK
banking and broking team.
Skarbek has a long track record of M&A and
equity transactions across a range of sectors
at Citi. He worked on the stock market oats
of Safestore, Debenhams and the initial
offering of William Hill.
In recent years, Skarbek has completed
transactions for a host of names, including
Balfour Beatty, BMG, Britvic, Debenhams,
Hammerson, Holidaybreak, Lonmin and
Travis Perkin.
Skarbek, who holds a double rst in
Chemistry from University College, Oxford,
has more than 18 years of investment bank-
ing experience, having joined Schroders
Investment Banking in 1993 which was
acquired by Citi in 2000.
Working alongside Skarbek on the deal is
Andrew Seaton, who is the head of corpo-
rate broking at Citi. Investec are also acting
as nancial advisers to William Hill along-
side Citi. GVC has appointed Daniel
Stewart, the investment bank catering for
smaller clients. Acting as nancial adviser to
Sportingbet is Lazards Cyrus Kapadia and
Aamir Khan.
ADVISERS CITI
JAN SKARBEK
CITI
SHARES in N Brown Group jumped
almost 14 per cent yesterday as the
home shopping clothes and
homeware retailer said a trial of its
brands in the US had proved it could
grab a share of the $35bn plus-size
ladieswear market.
Were very encouraged by our
performance there... everything
suggests there is a place for us in
that market, chief executive Allan
Brown said, warning that the US is
unlikely to show a profit for another
two years as it continues to build its
customer base.
Browns comments came as the
Manchester-based group, which
targets older and larger shoppers
with brands such as Simply Be,
Jacamo and Marisota, reported a 4.5
per cent drop in first-half underlying
profit to 42m around 1.5m
ahead of consensus forecasts.
The group saw a strong pick-up in
trading in recent weeks, with like-
for-like sales up 9.4 per cent in the
first six weeks of the second half.
Total sales rose 53 per cent to 3.4m
in the six months to 1 September.
N Brown aims
for extra large
US ambitions
BY KASMIRA JEFFORD
FORMER Asda boss and Royal Mail
chairman Allan Leighton is to join the
board of Matalan as chairman, the
discount fashion and homeware
retailer said yesterday as it posted
robust second quarter sales.
The highly-regarded Leighton will
replace John Mills, who has been in
the role for six years and will now
become deputy chairman.
Once described as the best-connect-
ed man in the business
world, Leighton said he
wanted to go plural after
leaving Asda in 2000 and
is currently chairman of
retailer Office and
Danish jewellery company
Pandora. Last month he
also joined the board of
Matalan names
Allan Leighton
as its chairman
BY KASMIRA JEFFORD
ready meal-maker Bighams as a non-
executive director.
Commenting on his appointment
yesterday he said: I am very excited
about this opportunity; Matalan is a
great company with a strong brand
and management team.
The news came as the retailer posted
a 4.1 per cent rise in sales 269.2m in
the 13 weeks to 25 August on earnings
of 17.3m compared with 13.6m last
year. It has guided towards a full-year
profit range of 95m to 105m.
Matalan recently started trialling its
click and collect scheme in stores
across Scotland ahead of a national
rollout next year as part of the groups
plans to step up its multi-channel
operations.
Bellway profits jump
as it hikes dividend
BY KASMIRA JEFFORD
HOUSEBUILDER Bellway said
yesterday that a strong performance
in the south of England and an
uptick in sales of private homes
helped boost full-year profits.
Shares in the FTSE 250 firm closed
up 3.2 per cent after it posted a 57
per cent jump in pre-tax profit to
105.3m for the year to 31 July,
prompting it to hike its final
dividend by 59 per cent to 14p per
share.
Like its peers, Bellway has
benefitted from buying cheap land
after the countrys property market
collapsed around 2007.
Chief executive John Watson said
it aims to continue with this
strategy of buying up land at lower
prices but he warned that lack of
availability meant less homes were
being built.
Weve got to keep an eye on
whats going on in Europe, and
weve got to keep an eye, more
importantly, on unemployment
levels, said Watson.
Bellways order book rose by three
per cent to 441.2m and reservations
since the end of July have remained
in line with expectations.
The average home selling price
jumped 6.3 per cent to 186,648, the
highest Bellway has ever achieved.
HOUSES near the Crossrail route
through London could enjoy a
boost in value of up to 25 per cent
once the rail link is up and
running, research claimed
yesterday.
While residents living in the
shadow of Crossrail stations must
endure years of construction work
until the route opens in 2018, they
can expect a handsome bump in
property values of a quarter
compared to current asking
prices, a study by GVA
commissioned by Crossrail has
found.
Houses close
to Crossrail set
for price boost
Informa maintains forecasts as revenue falls
BY MARION DAKERS
SPECIALIST business publisher
Informa announced a drop in
revenue for the first nine months
of 2012 yesterday, but said it was
still trading in line with its
expectations for the whole year.
Organic revenue fell two per
cent compared to last year in the
nine months to 30 September,
blaming a tough trading
environment for the decline.
The groups academic division
performed well, turning in like-
for-like growth of 2.2 per cent
year-on-year. But revenue was
dragged down by Informas
professional and commercial
information division, where
organic growth fell by 4.7 per
cent, and its events and training
arm, where it declined by 2.6 per
cent.
The quality of our content and
brands puts us in a strong
position even in what remains a
lacklustre macro environment,
said Informas chief executive
Peter Rigby.
BY CITY A.M. REPORTER
West End offices enjoys surge in investment
INVESTMENT in Londons sought-
after West End office market surged
by 30 per cent in the third quarter as
an influx of properties became
available on the market and demand
overseas investors continued to rise.
Research by BNP Paribas Real
Estate, the French banks property
arm, said West End investment rose
to 950m in the third quarter
compared to 730m in the previous
three months.
Elsewhere, investment fell, with a
42 per cent drop in the City and a 15
per cent drop in Midtown.
Investment in the Docklands dried
out completed in the period.
Paul Henwood of BNP Paribas Real
Estates investment team said:
Midtown investment transactions
were very limited, as the market is
seen as growth stock. In addition,
the City saw limited new stock
offerings due to the summer
slowdown and of course, the
Olympics.
Total take-up of space within
London rose 6.3 per cent in the third
quarter while supply remained
stable, rising by only 2.2 per cent
from the same period last year.
Whilst take-up was not
spectacular, there are some major
deals under offer which should
deliver a strong last quarter across
central London, said Dan Bayley,
head of central London.
BY KASMIRA JEFFORD
Local retailers see footfall slide
ONE in six independent retailers
fear they will collapse into
administration in 2013 unless sales
show signs of improving, according
to a new study published yesterday.
As the battle to retain footfall on
the high street continues and
family budgets remain squeezed, 16
per cent of small retail businesses
feared they were unlikely to
survive, the British Independent
Retailers Association said.
Out of 500 firms surveyed, 65 per
cent said footfall has fallen in the
past year or remained static, with
convincing customers to shop
locally highlighted as one of the
main challenges for the industry.
BY KASMIRA JEFFORD
FLOORING retailer Carpetright
yesterday reported its third quarter
of positive but slowing like-for-like
UK sales as self-help measures
such as the revamp of its stores
helped to bolster turnover.
Like-for-like sales increased 0.6
per cent in the three months to 13
October, a slowdown from the 1.7
per cent growth seen in the
previous three months but still
Carpetright UK sales edge up
as trading in Europe weakens
BY KASMIRA JEFFORD hailed as robust by analysts in the
face of gloomy high street.
With UK self-help initiatives
gaining traction, we look forward
to a positive outcome for peak
trading, Peel Hunt analysts said.
Its performance in the UK helped
offset deteriorating trading
conditions in Europe. Carpetright
said the collapse of the
Netherlandscoalition government
helped drag European same-store
sales down by 12.7 per cent.
Lord Harris of Peckham, chairman of Carpetright, founded the business 24 years ago
WEDNESDAY 17 OCTOBER 2012
10
NEWS
cityam.com
The new
jobs website
for London
professionals
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c
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m
Retailer Allan Leighton
joins Matalan as chairman
PADRAIC Fallon, the chairman of
Euromoney Institutional Investor,
passed away at the weekend after a
year-long battle with cancer.
Fallon was made editor of
Euromoney in 1974, and
rose through the ranks
to build the group
into a business
publishing
powerhouse. He is
succeeded by Richard
Ensor.
EUROPEAN regulators hit out at
Google yesterday, criticising the web
giant for changes to the way it
hoards users personal data and
demanding greater transparency
over its privacy policy.
A joint letter from the information
commissioners of 27 countries, fol-
lowing an investigation by French
data regulators CNIL, said that
Google had ignored its key data pro-
tection principles in changing its
privacy policy. Earlier in the year,
Google started to combine informa-
tion about individuals between the
dozens of services it runs, including
YouTube, Gmail and search, in order
to target adverts more effectively.
Google claimed the new system
made its policies easier to under-
stand, but the regulators said it had
not made the changes clear.
The investigation showed that
Google provides insufficient infor-
mation to its users, especially on the
purposes and the categories of data
being processed, the letter read. The
regulators including UK informa-
EU watchdogs
slam Google on
privacy policies
BY JAMES TITCOMB
tion commissioner Christopher
Graham are now calling for Google
to allow users to opt out of having
their data collected, as well as to
make it explicitly clear how it collects
and uses their data.
The company could face heavy fines
from each of the national regulators
if it is not seen to change its policies
to comply with recommendations.
The move will come as a big blow to
Google, which relies on targeting
adverts effectively.
Googles global privacy counsel
Peter Fleischer rejected the claims,,
saying: We are confident that our pri-
vacy notices respect European law.
L
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A

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A
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M
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MANTEL DOES THE BOOKER DOUBLE
Hilary Mantel last night became the first woman to win the Man Booker prize twice. The
author of Bring Up The Bodies and Wolf Hall, which won the 50,000 prize in 2009, was
described by the judges as the "greatest modern English prose writer".
Google Inc
16Oct 10Oct 11 Oct 12Oct 15Oct
735
740
745
750
755
$
744.70
16Oct
Fallon edited
Euromoney
THE RUSH of Russian firms looking
to list in London took a blow
yesterday as Promsvyazbank failed
to attract sufficient investors.
The dual London-Moscow listing
was set to follow Sberbank and
MegaFon in coming to the City.
But the bank 88.3 per cent
owned by brothers Dmitry and
Alexey Ananyev said it had
cancelled the listing because it
disagreed with investors over what
BY TIM WALLACE see as a fair price. They hoped to
raise $345m to $414m in London.
But some institutional investors
are still believed to be interested in
taking a stake in the bank.
Russian firms are keen to list in
the City because of its large pool of
buyers and the extra confidence in
governance the listing brings.
But a banker familiar with the
deal believes Russian firms may not
fully understand London investors.
They can underestimate the
conservative nature of investors in
INSURANCE firm Resolution
yesterday announced that it is
discussing whether to dispose of its
30 per cent stake in a Malaysian
joint venture.
The companys Friends Life unit
is looking at selling its shares in
AmLife Insurance Berhad and
AmFamily Takaful Berhad back to
AmBank Group, its local partner.
Resolution say the 30 per cent
stake had a Market Consistent
Embedded Value (MCEV) of 38m in
June.
Resolution eyes
sale of AmLife
BY JAMES WATERSON
Padraic Fallon
passes away
BY ELIZABETH FOURNIER
WEDNESDAY 17 OCTOBER 2012
11
NEWS
cityam.com
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Russian banks London listing
failure could hit future City IPOs
production beat expectations by grow-
ing 0.4 per cent in September, accord-
ing to Federal Reserve data, after the
1.4 per cent slide into August. Mining
output grew 0.9 per cent, utilities
output was up 1.5 per cent,
and manufacturers pro-
duced 0.2 per cent
more, compared to
the previous month.
One worry was a
surge in prices
the consumer price
index grew 0.6 per
cent in September
driven up by a seven per cent
jump in petrol prices, Labor
Department data showed.
This put prices two per cent
higher than they were a year
earlier.
INEFFICIENT government
departments are
overspending heavily on
office space, a report from
the Taxpayers Alliance (TPA)
claimed today, wasting
hundreds of millions of
pounds.
The Treasury spent 5,324
on property per full-time
equivalent worker (FTE),
compared to just 1,046 per
FTE at Her Majestys
Revenue and Customs
(HMRC), the TPA said,
calculating that if all
departments improved to
HMRCs standard, the
government could save
111.8m.
Though they admitted
some of this cost was from
high market rents, they said
a large part was down to
wide variations in office
space some departmental
staff enjoyed five times as
much space as others.
Whitehall
in property
overspend
BY BEN SOUTHWOOD
HOUSE PRICES continued to edge
up into August, official statistics
showed yesterday, confirming
earlier private sector data.
House prices were up 0.1 per
cent in the month, driven by a 0.5
per cent rise in London prices, the
Office for National Statistics said.
By contrast the east Midlands,
Yorkshire and the Humber, and the
south west saw small declines.
House prices
rose in August
BY BEN SOUTHWOOD
THE BANK of Englands quantitative
easing (QE) scheme damages pension
funds, research showed yesterday.
Seventy-six per cent of those
surveyed by Squire Sanders said QE
harmed their plans funding
position. This came as the National
Association of Pension Funds asked
the government and the pensions
regulator to give funds leeway to
cope with balance sheet holes down
to depressed gilt yields.
Pension funds
say QE a blow
BY BEN SOUTHWOOD
WEDNESDAY 17 OCTOBER 2012
12
NEWS
cityam.com
Budget watchdog admits errors in earlier forecasts
OBR recovery forecasts revealed as overly optimistic
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
93
94
95
92
96
97
98
99
100 100=GDP
Latestofficial figures
Original OBRforecast
12
1
res
OBR excessively optimistic about
2011-12 tax revenues
Current government receipts were
569.3bn
in the 2011-12 tax year
19.3bn lower than the OBR 2011
estimate of 588.6bn
Corporation tax receipts were
12%
lower than OBR forecasts
VAT receipts were
2.3% lower
than OBR forecasts
Income tax receipts were
3% lower than OBR forecasts
Business rates receipts were
1.7% lower
than OBR forecasts
Growth hit more by
inflation than cuts
FISCAL watchdog the Office for
Budget Responsibility (OBR) said
yesterday that high inflation and
weak exports were behind the UK
economy performing far worse that
it had predicted.
The governments deficit
reduction plans may have affected
growth, the OBR said, yet its
economists calculated that other
factors were considerably more
likely to have dragged on the
recovery.
Soon after it was formed in 2010,
the OBR predicted the UK economy
would expand 5.7 per cent between
the first quarter of 2010 and the
second quarter of 2012. Yet figures
now estimate that it grew just 0.9
per cent in that period.
However, cuts in government
spending on goods and services
have directly reduced GDP by less
than half the amount we expected
in June 2010, the report said.
While the OBR cannot rule out
the possibility that cuts to other
strands of state spending such as
on investment had a stronger
BY JULIAN HARRIS AND
BEN SOUTHWOOD
negative effect on confidence and
growth, it concludes: unexpectedly
stubborn inflation looks a better
proximate explanation for weak real
consumption in 2011 and
deteriorating export markets seem
to offer a better explanation for the
more recent weakness of net trade.
Constrained credit conditions
are likely to have hampered
investment by smaller firms, the
authors also said, suggesting bigger
firms cut down due to the global
economic slowdown.
Despite the larger-than-expected
fall in GDP over the past two years,
the OBR was fairly accurate in
predicting reductions in borrowing.
Public sector net borrowing
shrank from its post-war peak of 11.2
per cent of GDP in the 2009-10 tax
year to 7.8 per cent of GDP in the
2011-12 tax year close to the
original OBR prediction in spite of
the surprisingly poor output growth.
But there were still errors in both
spending and taxation forecasts. The
OBR over-predicted spending by
11.3bn as departments spent
under their budgets and counted
on 14.9bn more in tax revenue
than eventually turned up.
CONFIDENCE among US builders con-
tinued to rise into October, figures
revealed yesterday, just as new data
put September industrial output
growth above expectations.
Confidence hit an index score of 41
in October, the National Association
of Home Builders said, up from 40
in September to a six-year
high. But the index, released
jointly with Wells Fargo,
remained below the 50
level that indicates neutral
expectations, a level it has
not been above since April
2006.
This came as industrial
THE UKS official stats body
insisted yesterday that its
estimates of weak productivity
across the economy are correct,
pointing at tight lending
markets, underemployment,
and falling real wages as
possible causes.
The Office for National
Statistics (ONS) has been
questioned by some analysts
this year, as it has reported
shrinking GDP at the same time
as improving employment rates.
Yesterdays report says
statistical errors cannot be
ruled out, but touts ONS
methodological rigour as
making such errors unlikely.
Tight credit conditions are
forcing firms that want to
expand production to hire
employees instead of investing
in physical capital, it suggests.
Another possible explanation
for the divergence between
output and employment, the
ONS says, is the 980,000 rise in
underemployment since 2008
workers are being given fewer
hours instead of being sacked.
The ONS rejected the idea
that firms are hoarding
labour as inconsistent with the
data.
Official data body backs its own stats in
productivity puzzle but points to lending
Builders in US
most confident
since mid-2006
BY BEN SOUTHWOOD
More positive data will
buoy President Obama
BY CITY A.M. REPORTER
TO the gilded rooms of Dartmouth
House yesterday, where the wealth
management industry flocked for
the second annual Macmillan Pies
and Prosecco luncheon Mayfairs
equivalent to the traditional
Gulls Eggs luncheon held
every year in the City.
A highly indulgent menu
choice for midday on a
Tuesday, but all for a very
worthwhile cause, as Dan
Jarman who benefited from
Macmillans cancer support
explained.
During his treatment for
Hodgkins Lymphoma,
Macmillan nurses
Who ate all the
pies in Mayfair
at hedgie lunch
made a discovery which today
means that Jarman is still able to
have children.
Although they havent yet found
me anybody to have children with
he joked. Apparently that isnt
part of the
service.
L
A
U
R
A

L
E
A
N
/
C
I
T
Y
A
.
M
.
Left to right: Peter Fox Linton and
Charlotte Wilmot-Smith of
Odgers Berndtson and Ed Hicks of
PAM Insight; James Anderson of
PAM Insight (above)
Above: James Pargeter of
Future Capital Partners; Jo
Somers of Somers Partnership
(right) with Surinda Kaur and
DK Matai of mi2g (far right)
Left to right: Rupert
Phelps of BNY Mellon and
Dan Jarman of Adam
Smith International
13
cityam.com
Despite advertising the position
for the very first time, it doesn't
appear that budding candidates are
queuing up at the Bank of England's
door to jostle for the position of
governor. Manchester-born Jim O'Neill,
chairman of Goldman Sachs Asset
Management and football fanatic,
explained yesterday why he took his
name firmly off the table: My wife said
to me after the Southampton game
would you be able to stand in the United
away end if you had such a position and
I said that I didn't know that I would.
WEDNESDAY 17 OCTOBER 2012
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
Adrian Morgan (above) head of Xuber
Xchanging relaunched its software
business, Xuber, yesterday by
hiring butlers to hand out free coffee
outside Lloyds. The essential morning
lubricant was intended to symbolise
Xuber as the engine that keeps the
London insurance market humming.
IN BRIEF
Spirit sales offset rising costs
nSpirit Pub Company reported full-
year results in line with expectations
yesterday and said it was working to
strengthen its managed-pub estate in
the face of rising costs and muted
consumer demand. Spirit, which
manages more than 800 pubs in
Britain, saw sales at pubs open more
than a year rise 4.8 per cent in the
year to 18 August and pre-tax profit
up 16 per cent to 51.1m. It proposed a
full-year dividend of 1.95p per share.
Smiths News signals shift in focus
nSmiths News, the UKs largest
newspaper and magazine distributor,
yesterday signalled a further shift
from its core business, saying it
expected half of its profit to come
from books and educational supplies
by 2016, sending its shares up six per
cent. For the year to August,
underlying pre-tax profit rose to
47.5m from 38.6m a year earlier.
Revenue rose four per cent to 1.8bn.
Bertrams UK wholesale sales rose 2.5
per cent.
Chime snaps up pH Associates
nPR firm Chime Communication
yesterday announced it had bought
pH Associates, a pharmaceutical data
provider, for 6.92m. The deal is
comprised of nearly 90 per cent cash
with 10 per cent surplus working
capital of PHA after it joins Chime.
PHA, which reported revenue of 1.7m
and operating profit of 584,000 last
year, is owned by its two directors
Kate Peperell and Lesley Howell, who
will stay on under the Chime umbrella.
RIO TINTO and BHP Billiton, the
worlds biggest miners, have posted
iron ore production growth in spite
of lingering concerns about long-
term Chinese demand.
Rio produced 52.6m tonnes over
the third quarter, up five per cent
compared to the same period last
year.
The Australia and Canada-focused
miner said year to date global iron
ore production touched 147m
tonnes, up four per cent year on
year.
The FTSE 100-listed firm reported
record quarterly output at its
Pilbara mine in Western Australia,
producing 50.3m tonnes over the
three months to the end of
September, up five per cent from
the same period last year.
Rio, which said yesterday that pro-
duction continued to exceed sales at
Pilbara, is ramping up output at its
flagship mine to target 353m
tonnes of iron ore a year by the first
half of 2015.
Rio, which derives around 80 per
BHP Billiton and
Rio Tinto report
rising output
BY CATHY ADAMS
cent of its earnings from iron ore,
maintained its 2012 production tar-
get of 250m tonnes, adding that its
business has not overly suffered
from the fall in demand from
Chinese industry, in part due to
strengthening prices.
BHP Billiton reported steady
September quarter iron ore produc-
tion and maintained its guidance for
a five per cent increase in output of
the steel-making ingredient this
year.
Output was 39.8m tonnes against
39.6m in the corresponding period a
year ago, it said in its quarterly activ-
ities report this morning.
UK currency hedger Record up
30pc on billion dollar inflows
WINDSOR based currency hedging
manager Record yesterday beat
analyst forecasts to report $1.2bn
(744m) of net inflows in the second
quarter after increasing its managed
assets 8.7 per cent to $32.5bn.
The listed company, which trades
on the FTSE Fledgling exchange,
took its equivalent assets up from
$29.9bn at the end of June to
$32.5bn at the end of September
after winning three new clients.
Markets sent Records share price
up nearly 30 per cent in trading
yesterday on the back of the news.
Shares closed up at 24.50p from
BY MICHAEL BOW
19.70p at the start of the day, after
the firm revealed $1.1bn of inflows
into its passive strategies and
$200m into its absolute return
strategy.
Chief executive James Wood-
Collins said non-UK business, in
Switzerland and the US, was a boon
for the firm. Whilst the UK
continues to be a competitive
market with lower levels of activity,
we continue to see encouraging
engagement with prospective
clients and investment consultants
in North America, he said.
The firm took its client number
to 43, up from 40 at the end of June.
The positive flows allowed Record to
beat marked to market estimates
from analysts at JP Morgan
Cazenove, which was forecasting
equivalent assets under
management of $31.8bn.
Record PLC
16Oct 10Oct 11 Oct 12Oct 15Oct
21
22
23
18
19
20
24
25 p
24.50
16Oct
Rio Tinto PLC
16Oct 10Oct 11 Oct 12Oct 15Oct
3,000
3,020
3,040
2,980
3,060
3,060 p
3,061
16Oct
RUSSIAN precious metal miner
Petropavlovsk yesterday posted
gold production of 219,400
ounces over the third quarter, up
39 per cent year on year.
Over the nine months to 16
October, gold production was up
11 per cent to 498,500 ounces.
The FTSE 250 miner said
yesterday it was on track to
achieve its full-year production
target of at least 700,000 ounces
of gold.
Last year, the miner produced
630,100 ounces of the yellow
metal.
Petropavlovsk goes for gold as
production increases by a third
BY CATHY ADAMS
It added that over the period, it
identified new resources at the
Malomir and Pokrovskiy
operations and its flagship
Pioneer mine in Russia.
Pioneer, located in the Russian
Far East, produced 80,800 ounces
over the three months to 16
October, which was lower than
last year due to the scheduled
processing of lower grades.
Peter Hambro, chairman of
Petropavlovsk, said that the
group had identified further
promising targets for gold
exploration, which will be looked
at in 2013.
Shares closed up 3.1 per cent.
WEDNESDAY 17 OCTOBER 2012
14
NEWS
cityam.com
Peter Hambro, a member of the Hambro banking dynasty, founded Petropavlovsk in 1994
B
RANDS pump considerable
sums of money into
sponsorship, as demonstrated
vividly during the build-up to
the Olympic Games, and earlier this
week during Felix Baumgartners
dramatic skydive.
Companies buying the naming
rights for venues is a newer
phenomenon in the UK, though
firms in the US have long done this.
The Chicago Cubs ground was
renamed in 1926 and has been
Wrigley Field ever since.
Venues such as The O2, The
Emirates Stadium and The Etihad
Stadium have taken the name of a
sponsor but how much benefit do
brands derive from their associations
with venues? To find the answer Ive
taken a look at perceptions of Etihad
Airways on YouGovs BrandIndex.
Manchester Citys stadium was
renamed in July 2011 and
immediately attracted attention
the big spike in the chart (right)
shows people hearing recent news
about Etihad going from three per
cent to eight per cent. Since then it
has dropped back somewhat, but the
trend remains higher than it had
been prior to the naming rights deal.
We see from SoMA, YouGovs
social media analysis tool, that
mentions of Etihad on social media
are driven by the stadium
(increasing up to five times on home
game days) and the most recent
spike on the attention graph
coincides with City winning the
title.
So the stadium has undoubtedly
sparked additional attention for
Etihad, but how has that translated
into perceptions of the brand? The
Index score (a composite of six key
image measures) shows a steady
climb from +4 in July 2011 to +8 in
July 2012 (slipping back slightly
since).
The naming of the stadium has
not been the only marketing activity
that Etihad have conducted in the
last two years, and to get a more
comprehensive picture of the impact
of each element we would need to do
a much more detailed analysis of the
available data.
The top line results indicate,
however, that there is real value in
having your brand associated with a
venue where people go to have fun.
Stephan Shakespeare is the chief
executive of YouGov
BRAND
INDEX
STEPHAN SHAKESPEARE
Index Chart
2011 2012
2.0
3.0
4.0
0.0
1.0
5.0
6.0
7.0
8.0
Index
Attention Chart
2011 2012
2.0
3.0
4.0
0.0
1.0
5.0
6.0
7.0
8.0
9.0
Attention
Sponsoring a venue can help companies build growth
RARE coin dealer Noble
Investments UK yesterday said it
expected to hit trading forecasts
for the year despite not being paid
2.2m owed to it by a Qatari
collector.
The company, which auctions
international rare coins and
stamps, is hoping the collector,
who snapped up a number of rare
coins earlier this year, will pay up
2.2m they owe the firms auction
arm, Baldwins.
The group said yesterday it was
taking legal advice and would take
necessary steps to get the
payment, which amounts to about
one fifth of its revenue.
Managing director Ian Goldbart
Coin dealer Noble awaits 2m
payment from Qatari investor
BY MICHAEL BOW
said: We are naturally
disappointed with the continued
delay in receiving payment from
the Qatari collector; however, the
new financial year has started well
with a strong auction book for
2013 and we therefore hope to
make further progress during the
current year.
The auction house set a new
world record for an English coin
auction in September when an
Australian investor paid 780,000
for a rare George V 1920 Sovereign
coin, one of only a handful in the
world.
Goldbart said yesterday another
rare coin, the 1819 George III
Sovereign, would go under the
hammer in May 2013, which could
fetch a similar price.
ENGINEERING firm GKN yesterday
warned that challenging European
markets would weigh on its order
books, sending its shares down.
The FTSE 100-listed engineer
reported broadly flat pre-tax profit
in the three months to September,
as it said a continued market slump
would impact the group for the full
year.
It added that macroeconomic con-
ditions have deteriorated in recent
weeks, and as a result its order
book has weakened, particularly in
the European car and industrial
markets.
GKN, which makes parts for cars
and planes, reported pre-tax profit
for the third quarter of 99m, down
from 100m in the third quarter of
last year.
Revenue increased to 1.6bn over
the quarter, up from 1.48bn last
year.
The automobile division accounts
for around half of group sales. It was
boosted by the performance of
Getrag Driveline Products, which it
bought last year.
Profit warning
at GKN on poor
Euro markets
BY CATHY ADAMS
The company said its aerospace
unit posted a 7.6 per cent increase in
profit during the period, helped by
the strong growth in civil aviation
programmes, which has offset
falling military sales.
Chief executive Nigel Stein said yes-
terday: Looking forward, European
markets seem to be softening fur-
ther. We continue to focus on driv-
ing performance, keeping close
control of our cost base.
Stein added: Other automotive
markets and the civil aerospace mar-
ket are expected to remain solid.
GKN shares closed down 3.35 per
cent yesterday at 204.8p as news of
the profit warning broke.
GKN PLC
16Oct 10Oct 11 Oct 12Oct 15Oct
210.0
215.5
215.0
202.5
205.0
207.5
217.5
220.0 p
204.80
16Oct
WEDNESDAY 17 OCTOBER 2012
15
NEWS
cityam.com
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US corporate results round-up
COCA-COLA reported quarterly
revenue that came in short of Wall
Street expectations yesterday, hurt by
declines in Europe and Asia where it
sold more lower-priced drinks. Third-
quarter net income for Coca-Cola
was $2.31bn (1.43bn), up from
$2.22bn a year earlier. Revenue rose
one per cent to $12.34bn, while
analysts were expecting $12.41bn.
Coca-Colas revenue misses Wall Street forecasts
JOHNSON & Johnson reported better-
than-expected quarterly results
yesterday, as prescription drug sales
rebounded with the help of newer
products and jitters about medical
device sales proved unfounded. The
firm earned $3bn (1.86bn) in the
third quarter, compared with $3.2bn
the previous year. Revenue rose 6.5 per
cent to $17.1bn.
Prescription rebound helps Johnson & Johnson lift sales
BARBIE maker Mattel reported a higher-
than-expected quarterly profit yesterday
as the worlds largest toy company
benefited from raising prices and keeping
a tight rein on costs. Net income rose to
$365.9m (227m), up from $300.8m a
year earlier. Sales rose four per cent to
about $2.08bn, including six per cent for
Fisher-Price and 16 per cent for American
Girl.
Mattel tops estimates on price increases and cost cuts
DOMINOS Pizza yesterday reported
higher quarterly profit, topping Wall
Street forecasts, as the Olympics boosted
takings. Sales at established restaurants
increased more than expected in the
United States and abroad, sending
shares up 7.1 per cent. Net income grew
to $26m (16.1m) in the quarter ended 9
September from $22.1m a year earlier.
Revenue rose 0.5 per cent to $378.1m.
Olympic pizza demand helps Dominos succeed in the States
GKN offers a fairly unique investment opportunity, being exposed to a
number of the secular themes that we believe will be drivers of global demand
over the medium term. Following these results, we would expect to see
earnings downgrades of around ve per cent.
ANALYST VIEWS

GKNs shares were weak yesterday, with prot-warning comments


about the macroeconomic environment deteriorating in the last few weeks. This
offset third quarter performance. While showing growth and broadly in-
line with management expectations, it missed analysts expectations.

GKN's trading update is a clear indicator that Europe's industrial econo-


my has slipped back into intensive care since the summer. Recent dampening
European economic conditions highlight the importance of the group's
strategy as a global supplier to other markets.

IS GKNS PROFIT WARNING


A BAD OMEN FOR THE
COMPANY? Interviews by Cathy Adams
JONATHAN JACKSON KILLIK & CO

MIKE VAN DULKEN ACCENDO MARKETS

ROGER JOHNSTON EDISON INVESTMENT RESEARCH


WEDNESDAY 17 OCTOBER 2012
16
Earnings relief
helps send US
stocks higher
U
S stocks rose yesterday, giving
the S&P 500 its best two-day
advance in a month as strong
earnings from Johnson &
Johnson, Goldman Sachs and other
bellwether companies raised hopes
for the rest of the reporting season.
Johnson & Johnson increased its
full-year profit outlook. Its stock rose
1.4 per cent to $69.55, helping the
Dow Jones industrial average register
its best day since 13 September,
when the Federal Reserve unveiled
its third round of stimulus, better
known as QE3.
Goldman Sachs earnings also beat
expectations, its revenue more than
doubled, and it raised its quarterly
dividend. But it earned less money
from customers trading, and the
stock lost one per cent to $123.22.
Goldmans results followed upbeat
earnings from Citigroup in the
previous session. Shares of Citigroup
jumped 1.6 per cent to $37.25
yesterday after the surprising
resignation of chief executive
Vikram Pandit. An S&P financial-
sector index rose 0.7 per cent.
The earnings reports were among a
flood of results from 80 S&P 500
companies as the third-quarter
earnings season picks up the pace. A
spate of corporate warnings heading
into the period raised worries that
slower growth in Europe and China
may be affecting corporate America
more than previously thought.
The Dow Jones industrial average
jumped 127.55 points, or 0.95 per
cent, to 13,551.78 at the close. The
Standard & Poors 500 Index
advanced 14.79 points, or 1.03 per
cent, to finish at 1,454.92. The
Nasdaq Composite Index rose 36.99
points, or 1.21 per cent, to close at
3,101.17.
B
RITAINS top share index notched
up strong gains yesterday, and was
on the cusp of breaking out of its
recent trading range, as investors
welcomed a media report saying
Germany could adopt a softer approach
towards financial aid to Spain.
The index was already firmly in
positive territory, helped by solid US
corporate results and macro data, and a
German ZEW survey pointing to a
bigger than expected pick up in analyst
and investor sentiment this month.
For me the real mover and shaker has
been the shift towards getting even
closer towards a Spanish bailout, and
that's what the markets have been
waiting for, said Angus Campbell, head
of market analysis at Capital Spreads.
Its time to get back into risk assets.
Banking stocks were the best
performers yesterday, led by a 6.1 per
cent rise in Lloyds Banking Group,
with traders saying the bank was helped
by reports late on Monday that Britains
financial regulator had given the green
light for it to go ahead with a plan to
bolster its finances by swapping assets
with its insurance arm.
The FTSE 100 closed up 64.93 points,
or 1.1 per cent, at 5,870.54, adding to
the previous sessions 0.2 per cent gain.
While there appeared to be more
optimism, the potential for downside
risks was also illustrated, with GKN off
3.4 per cent in hefty trading volume,
after the car and plane parts maker said
a sluggish European automotive market
weighed on third quarter profit and
that a continued slump could hurt the
group for the remainder of the year.
Strong bank stocks drive FTSE 100
towards top of recent trading range
BESTof theBROKERS
Asos PLC
10Oct 11Oct 12Oct 15Oct 16Oct
p 2,425
2,400
2,375
2,350
2,325
2,300
2,275
2,250
2,394.00
16 Oct
ASOS
Morgan Stanley has
started covering the
online retailer with an
overweight rating and
a target price of 3,000p,
cheering the firms
superior sales offering
and entrepreneurial
management team.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
10Oct 11Oct 12Oct 15Oct 16Oct
5,880
5,860
5,840
5,820
5,800
5,780
5,870.54
16 Oct
BT Group PLC
10Oct 11Oct 12Oct 15Oct 16Oct
p 226
224
222
220
218
216
219.90
16 Oct
BT
The telecoms group is
Nomuras top pick in the
sector, with a buy
rating and a price target
of 260p. BT is set to
benefit from broadband
growing faster than
mobile internet in the
medium term.
Imagination Technologies Group PLC
10Oct 11Oct 12Oct 15Oct 16Oct
p 510
500
490
480
470
460
450
440
478.90
16 Oct
IMAGINATION
TECHNOLOGIES
Numis has upgraded the
tech group from hold
to buy with a 590p
target. The broker sees
potential for the firm to
play a key part in the
tablet market.
Saffery Champness
Ben Melling has been appointed
partner in the accountancy firms
London office. He joins from
Rawlinson & Hunter, where he
spent eight years as a partner.
Melling also worked for Grant
Thornton for 18 years, and was
appointed to the partnership in
2000.
Deloitte
The business advisory firm has announced two senior
appointments to its corporate finance advisory team.
Anurag Verma joins as a financial services partner from
PwC Corporate Finance, where he was most recently a
senior member of its financial institutions group. Duncan
Chandler joins as a director from Rothschild, where he
covered financial institutions across Europe. Chandler also
previously held roles at Abbey National.
JP Morgan Private Bank
JP Morgan has announced two appointments to its UK
private banking team. Raphael Schlaefli joins as an
executive director. He most recently served as chief
investment officer at Synergy Asset Management. Patrick
Vaccari joins as an associate from Morgan Stanley Private
Wealth Management, where he was an investment adviser
on its Italian and Middle Eastern teams.
Radcliffes LeBrasseur
Simon Hartley has been appointed partner in the law
firms property litigation and dispute resolution team. He
joins from Mayer Brown International, where he was head
of real estate litigation. Hartley advises on all aspects of
contentious commercial real estate work, with a particular
focus on the hotel, retail and leisure markets.
Aquila Capital
Stuart MacDonald has been appointed as managing
director at the alternative investment management firm.
He joins from Gems Advisors, and he has also previously
held senior roles at Henderson Global Investors, West
Merchant Bank and Buchanan Partners.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates
in association with
LONDONREPORT
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REPORT
in association with
in association with
I
N THE boom decade of the
2000s, corporate rebranding was
all the rage. Some were
successful. Others are best
forgotten, like PwCs proposal to
call its consulting arm Monday. But
as the worlds economic recovery
gathers momentum, perhaps it is
time to revive the practice.
A prime candidate is the
International Monetary Fund (IMF).
The brand has global reach, so why
not intensify its name to IMFSquared
or IMFF for clarity? But a change of
initial doesnt get us very far. IMFF
should stand for Intellectually
Massive Flip Flops.
The Fund is up to its old trick of
completely changing its mind.
Having backed austerity
B
Y 2025, China will have 221
cities with over 1m
inhabitants, adding more
than 350m to its urban
population. In response, 40
billion square metres of new
floorspace will be built.
In contrast, here in London, there is a
dynamic underground housing mar-
ket for beds in sheds in Thornton
Heath, Southall, and Stratford. Despite
pressing needs, house building at the
levels achieved in previous eras now
seems unimaginable.
In London, new development is most-
ly for the affluent, matched by a paltry
supply of more affordable stock. While
the current recession undermined any
innovation in the construction sector,
decay appeared earlier than the eco-
nomic downturn of 2008. The lack of
robust opportunities to invest prof-
itably in development has long been
disguised by the extension of easy cred-
it and the steady supply of foreign
investment. Blocks of flats have sprout-
ed on brownfield land everywhere, but
the developments on offer have not
provided a balanced supply of housing
to meet wider needs. Each design seeks
cityam.com/forum
House building on
the level achieved in
previous years now
seems unimaginable
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

18
WEDNESDAY 17 OCTOBER 2012
MICHAEL OWENS
A bold pro-growth strategy could
set the UKs housing market free
to outbid the last for its urban eco-
chic; the result has been a new order
of urban monotony. Worse, the UK has
the smallest room sizes, on average, in
Europe.
The criticisms have been innumer-
able: they meet the needs of a narrow
demographic; they give rise to a social
rented sector propped up by housing
benefit; some Thames riverfront devel-
opments are seemingly inhabitant
free. All these challenges miss the
point. The purpose of these develop-
ments was to provide a low-risk place
for spare capital investment to lie low
for a few years. Supplying homes for
real people to live in has been a side-
line for the construction industry.
Planning has been increasingly bur-
dened with wider civic tasks: creating
sustainable communities, healthy res-
idents, and crime free areas. While
planning should obviously engage
with, listen and respond to citizens,
good societies dont come out of the
imaginations of civil servants and
local government officers.
Society works best when its citizens
operate with greater autonomy and
control. We need clever designers to
produce smart streetscapes and
enriching parks, but good works of
engineering are being sold to us as
behaviour change programmes. This is
a political failing; planning regulation
is not the route to a good society.
Moreover, this use of planning obliga-
tions cripples an industry on its knees.
Backbench Tory advocates of free
markets are not alone in recognising
that deregulation of the land would
allow landowners and investors free-
doms to promote new development,
thereby increasing the housing supply.
But Eric Pickles, secretary of state for
Communities and Local Government,
has said no to building on the Green
Belt, which offers a plentiful supply of
redundant agricultural land.
Deregulation is unacceptable to gov-
ernments that are concerned with
land and property prices.
The more significant task is to chal-
lenge the political priorities of the
planning system. We need to decide if
we really want to encourage growth,
and if so, the direction for policy
becomes clearer. The use of pattern
books (architectual guides once used
by our Georgian forebears) to obviate
the need for planning consent for
every single development, the release
of agricultural land, the easing of plan-
ning gain obligations where develop-
ers pay for the infrastructure
expansion needed for their projects
could all simplify the planning
process, but would only be appropriate
if we embrace growth.
A more strident commitment to
planning by central government, set-
ting big priorities for extending infra-
structure and releasing development
land, could create greater certainty for
developers. Ironically, it could also cre-
ate opportunities for local, informal
planning. If central government
focused on creating the conditions for
growth, there could be more freedom
for local and site-specific experimenta-
tion for landowners, developers, and
individuals to get on with it, unimped-
ed by busy-body imperatives.
We will continue to need the politi-
cal process through which politi-
cians who unlike planners are at
least elected can set priorities and act
as arbiters when development priori-
ties are contested. The localism agenda
and the National Planning Policy
Framework promised such a root and
branch review, but their product
amounts to tinkering. Its time to be
bold.
Michael Owens is a contributor to the book
The Lure of the City. He is speaking at the
Battle of Ideas at the Barbican on 20-21
October, partnered by City A.M.
enthusiastically, its economists are
altering tack. The latest IMF World
Economic Outlook claims that the
impact of changes to fiscal policy
has been substantially
underestimated. In short, keeping a
tight grip on the public sector
deficit does not work. More, not less,
spending is needed to boost the
economy.
The IMF has serious form on this
matter. In August 2008, its chief
economist Oliver Blanchard
published a working paper on the
state of academic macroeconomics.
This is what he had to say: For a
long while after the explosion of
macroeconomics in the 1970s, the
field looked like a battlefield. Over
time, however, largely because facts
do not go away, a shared vision both
of fluctuations and of methodology
has emerged. The state of macro is
good.
The shared vision Blanchard
referred to is the superbly named,
but wholly useless, dynamic
stochastic general equilibrium
model. During the 1990s and 2000s,
mainstream economics in academia
and central banks reverted to the
old idea that economies have an in-
built tendency to move towards
equilibrium. On this basis, in August
2008 the Funds chief economist
believed that the state of macro is
good. Just a few weeks later, the
collapse of Lehman Brothers
shattered the illusion.
To be fair to Blanchard, the
terrifying events of the autumn of
2008 made him change his mind. By
January 2009, he was writing that
the crisis was caused by institutions
financing their portfolios with less
and less capital, thus increasing the
rate of return on that capital. What
were the reasons behind it? Surely,
optimism and the underestimation
of risk was part of it.
So instead of a theoretical world
in which rational decision makers
moved effortlessly towards
equilibrium, we had the reality in
2007 and 2008 of grossly optimistic
expectations about the future and
completely mispriced risks.
This sounds a pretty plausible
story. But only a few months before
the IMF believed that
macroeconomics was going
through a period of great progress.
Until recently the IMF thought fiscal
tightening did not have much
impact. Now it thinks austerity is
wrong. IMFF rules OK.
Paul Ormerod is an economist at
Volterra Partners LLP, a director of the
think-tank Synthesis and author of
Positive Linking: How Networks Can
Revolutionise the World.
AGAINST
THE GRAIN
PAUL ORMEROD
Forgetful IMF economists should remember their financial crisis failures
MORNING UPDATE
A.M.
19
WEDNESDAY 17 OCTOBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Trade to prosperity
[Re: Trade and tech are the solution to the
worlds food crisis, yesterday]
Nick Schulz is correct. Its vital that we dont
let international development policy get
captured by groups with no interest in the
development of poor, rural economies. This
is why its so worrying that the government
emphasises its commitment to spend more
money on aid projects over its supposedly
equal commitment to freedom of trade.
Without free trade, gains from aid will prove
unsustainable.
StevenMurphy
Greenpeace is able to exert such control
over government policy because it is well-
funded by taxpayer subsidies.
HarryBarrett
Schools for profit
[Re: Incentives must be the foundation of a
revolution in British education, Monday]
This article makes an interesting, and fairly
convincing, case for the injection of profit
motives into school. Im not totally
convinced, however. I did a degree in
economics, and I appreciate the role that
market forces play in ensuring
competitiveness. But I dont think that
trying to keep costs as low as possible,
while maximising revenue, is a particularly
sensible way to run a school. Schools should
be like greenhouses, not battery farms. Its
not about churning out chickens for profit,
but ensuring that children are given the
right skills to thrive in work and life. Of
course, Im being idealistic.
MichelleGreening
Y
OU might remember Daniel
Hannan as the Conservative
MEP who tore Gordon Brown
to pieces on the floor of the
European Parliament for his
spending spree with our money.
Until then, Hannan had been a rare
voice in the wilderness, attacking
the EU since he became an MEP in
1999.
Although he has now been vindi-
cated by the fallout of the euros
deep troubles, still the old European
establishment goes on praising the
crumbling edifice; not least the
Nobel Peace Prize committee. In his
new book, A Doomed Marriage,
Hannan outlines why the European
project was doomed from the begin-
ning. As he puts it, the EU is a symp-
tom of European peace since the
Second World War, not its cause.
Yet that is the great argument of
EU defenders that a supranational
state saved its constituent nations
from disaster and economic break-
down. In fact, as Hannan explains,
Europes rise to global hegemony
over the last millennium was due to
the independence of its nation states.
Countries fought to outdo each
other; new ideas could be tested in
one nation and, if successful, tried
elsewhere. It goes without saying
that the reason Greece, Spain, Italy
and Ireland have all been brought to
their knees is because of a suprana-
tional lock-in; if they could have
manoeuvred their economies inde-
pendently of European central poli-
cy, they would not be in this state.
It isnt just the principle of suprana-
tionalism that Hannan expertly
demolishes. The way that suprana-
tionalism was constructed was
extremely undemocratic. The EU is
run by a body that combines execu-
tive and legislative power. The
European Commission, as well as
being the EUs government, is also
TOP TWEETS
Im just back from Beijing, and the euro is no
longer the sole topic of conversation. QE and
the fiscal cliff are now major issues.
@KingEconomist
Francois Hollande is ruining the French
economy through taxation. Dont forget
Labour want to do the same thing in Britain.
@FaulconbridgeUK
Its vital that the government doesnt raise
business rates next year, despite yesterdays
inflation figures.
@anncoffey_mp
Well done Theresa May on the right Gary
McKinnon decision. And also to @JanisSharp
for her heroic efforts to protect her son.
@ZacGoldsmith
Has Goldman Sachs recovered from claims
that its managers called clients muppets?
YES
Goldman Sachss brand has been through considerable tumult in
recent times, but over the past six months it has seen a significant
increase in the scores it receives from our UK BrandIndex. Back in
March, the banks brand hit a major low when a former Goldman
worker claimed management thought of their clients as muppets.
The subsequent media fire severely scorched its reputation in the
eyes of consumers. But, while the financial sector as a whole is still
riding low due to the events of the past few years, Goldman Sachs is
no longer lagging behind all other financial institutions. Recent
events like the Barclays Libor scandal, technical glitches at RBS and
a money laundering scandal at HSBC have put the relative quiet at
Goldman Sachs in perspective, thus enabling its brand to recover
somewhat relative to its embattled competitors.
Sarah Murphy is associate director of YouGov and director of
BrandIndex.
Sarah Murphy
NO
Trevor Morris
The leaking of chapters in recent days from the new book by Greg
Smith who originally made the muppet allegations will likely
have another negative impact on Goldman Sachss reputation.
This could prove damaging in two areas. Firstly, new recruits may be
put off and skilled potential employees may look to join other firms.
Secondly, Goldman Sachs may have difficulty attracting new
business. This is especially true of work relating to sensitive sectors,
with a high level of public interest. It could include anything related
to government or high profile individuals. However, people have
remarkably short memories. Greg Smiths original claims are a
distant memory and will only be brought back to media attention
for a short period. We should expect a short-term fallout from
recent allegations. But will it have a lasting effect? Probably not.
Trevor Morris is visiting professor in public relations at the
University of Westminster.
RAPIDresponses
the only body that can propose legis-
lation in practically all areas. On top
of that, the 27 commissioners are
unelected. As a result, it moves ahead
at its own whim, irrespective of the
wishes of its constituents.
Its true that the first generation of
post-war euro-leaders were idealists
who believed in the glorious dream
of bringing stability and recovery to a
war-scarred continent. Now they
have been succeeded by those who
have discovered a marvellous, unac-
countable way to make a living.
Because the EU is run on such a
tyrannical infrastructure, its
extremely easy to bat away objec-
tions. If a European employee criticis-
es the euro as the British official
Bernard Connolly did well, just
sack him. And, if a country votes
against any lurching increase in EU
power, the answer is simple enough:
get them to vote again, until they
realise the foolish error of their ways.
Hannan is no mere critic of the sys-
tem. He also provides alternatives
notably Switzerland and Norway.
Switzerland still shares in the free-
doms of the single market and can
sign trade accords with third party
countries. Norway got no further
towards EU membership than the
European Economic Area. Both coun-
tries are prospering. Why cant we
just go ahead and join them?
Harry Mount is the author of How
England made the English. Daniel
Hannans book A Doomed Marriage
Britain and Europe (Notting Hill Editions)
is out now.
HARRY MOUNT
Printed by Iliffe Print Cambridge, Winship Road, Milton, Cambridge CB24 6PP
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Why the future of
Europe doesnt lie
with the failed EU
L
EGACY was one of the reasons
London won the rights to host
the unquestionably successful
Olympic and Paralympic games.
We all get a warm glow when one of
our medallists pops up on Question
of Sport or we read statistics showing
that thousands are trying new
sports. But are we getting the same
buzz from the UK businesses that
were promised their own legacy a
dividend from the games?
With 2012 looking like another lost
year for the domestic economy, and
with the balance of trade deficit
reaching 4.2bn in August, the task
of helping UK businesses to export
has become critical. That challenge
falls to the advisory community
(including accountants), to banks
and to government. And these
groups the equivalents of the
Olympic coaches, sports psycholo-
gists and sponsors must ensure
that businesses are fully prepared
before they compete. Too often, that
preparation is lacking.
PREPARING TO EXPORT
If businesses are to be successful in
the export market, they and their
advisers must be honest about
where they are now, and which
facets of the mechanics of export
might need addressing. With that in
mind, ACCA invited large and small
export businesses, professional advis-
ers, banks and other experts to give
their insights at three roundtable dis-
cussions in London, Cardiff and
Glasgow. Participants had an oppor-
tunity to vote on and debate key
issues.
The UKs standing as an interna-
tional brand was still seen to be a sig-
nificant asset, particularly in the
wake of the Olympics and the
Diamond Jubilee celebrations.
However, while a good international
standing undoubtedly helps open
doors, it is no substitute for prepara-
tion.
Larger businesses and their repre-
sentative bodies put considerable
resources into building their brand
in target export markets. This
includes the preparation of an export
strategy that maximises returns.
However, anecdotal evidence sug-
gested that small businesses, new to
export, do not always conduct them-
selves well abroad and risk damaging
the national brand. Examples
include failure to present themselves
and their businesses effectively,
using colloquial English, or failing to
find out whether interpreters would
be required at meetings.
REGIONAL GROWTH
We also asked exporters which coun-
tries and regions they currently
export to, and which they see as sig-
Accountants can boost UK exports
nificant in the next five years. For
London businesses, the Middle East is
currently most important region,
with Europe second. South America
and Asia were highlighted as the real
growth areas in the next five years.
While the Middle East was seen as a
potentially lucrative destination,
exporters felt that businesses should
concentrate on establishing them-
selves and expanding there before
looking further afield. Although
emerging economies still post growth
figures and attract headlines, these
markets can be challenging and
require a great deal of research on
cultural issues prior to entry.
Established markets like North
America and Europe, particularly
Germany, should not be ignored in
favour of emerging economies.
However, the complexities of these
markets should also not be over-
looked. North America has as many
regional variations as other large
markets, and business people in the
US have high expectations. Exporters
said this is something would-be
exporters should bear in mind.
WEIGHING UP RISKS
We also asked roundtable partici-
pants about the risks and obstacles
faced by exporters. In London, cultur-
al and language difficulties were
rated as the most significant barrier
to export success, with 29 per cent of
the vote. Legal and regulatory issues,
tax and customs, finding contracts,
intellectual property (IP) issues and
costs were all given equal weight,
with 14 per cent of the vote each.
Other issues highlighted included:
incorrect pricing, cultural misunder-
standings, foreign exchange, bad
debt, insurance, lost goods, delivering
on time, failure to clear customs,
labelling and classifying goods cor-
rectly, IP protection and the need to
be sceptical about research based on
statements made on the internet.
The issue of IP protection was seen
as critical for potential exporters to
consider at an early stage or risk
new products being copied in mar-
kets where IP is not respected.
THE ROLE OF GOVERNMENT
The overwhelming view from all
roundtables, particularly London,
was that government needs to do
more to support export activity, with
the emphasis on taking a long-term
view.
With no UK growth anticipated for
as long as five years, tax incentives
and help with the practicalities of
exporting are now imperative.
Potential exporters believe that gov-
ernment should ask what each new
measure it proposes will actually do
for growth.
Large businesses are very effective
exporters. But they make long-term
investment in overseas trade and can
gain government support at a high
level. Roundtable participants said
that, for government help to be mean-
ingful, it must be consistent.
Businesses were frustrated by how
little UK Trade and Industry (UKTI) is
empowered to help smaller business-
es a factor, ACCA believes, that fur-
ther underlines the need for a more
co-ordinated approach from govern-
ment policymakers.
While the majority of businesses
finance export activities through
their usual business facilities, in
London businesses said that working
capital could be a big barrier to
export. There is a need for greater
education about financing schemes
and practices.
All these challenges, alongside the
imperative for businesses to try to
export more, create a pressing need
for the best possible advice. With
accountants seen as trusted advisers,
our profession has a responsibility to
ensure business gets that advice. And,
along with lawyers and bankers, we
also have a duty to balance messages
about the need for preparation with
the fact that small enterprises are
often time poor. They will need exter-
nal affordable help to prepare them
for the export challenge.
The bottom line is that businesses of
all sizes need accessible, practical
help if we are to embed export into
the psyche of British business. ACCA
is committed to working in partner-
ship with other bodies to provide
information for potential exporters in
the coming months.
Andrew Leck is head of ACCA UK.
ACCA
COMMENT
ANDREW LECK
Bigger businesses are more effective at making the long-term investments necessary for foreign trade
Smaller firms need
advice before they
can expand abroad
The UKs brand is
still seen as a significant
asset, particularly in the
wake of the Olympics

WEDNESDAY 17 OCTOBER 2012


20
cityam.com
ACCOUNTINGBUSINESS
WEDNESDAY 17 OCTOBER 2012
21
cityam.com
MARKET MOVERS MANAGEMENT WEALTH
W
HEN Japanese mobile
operator Softbank smashed
records on Monday with a
$20.1bn (12.5bn) deal for 70
per cent of Sprint, it was the largest-
ever foreign acquisition by a Japanese
company. The acquisition has created
a company of 92m mobile users and
propels Softbank Group into third
place behind China Mobile and
Verizon Wireless in terms of mobile
revenue. It is hoped that the
bolstering of Sprints finances will
put it in a strong position to break
what Softbank chief executive,
Masayoshi Son referred to as a
duopolistic market in the US
telecoms sector, with AT&T and
Verizon dominating the market.
OUTBOUND GROWTH
This headline-grabbing acquisition
comes as part of a resurgence in
Japanese foreign M&A activity in
stark contrast with the barren land-
scape in European markets.
Despite threats by Tokyo officials to
intervene in the yen, it is this strong
currency that has underpinned the
surge in Japanese corporate acquisi-
tions of foreign companies. At the
International Monetary Funds annu-
al meeting in Tokyo last week,
Japanese officials warned that the
strength of the yen was a serious prob-
lem for the economy. This speculation
Japanese giants hungry for acquisitions
has lead to a short-term fall in the yen
against the dollar, but the six-month
bearish trend in dollar-yen is still
intact. A mixture of funds unwinding
carry trade positions and yen repatria-
tion has strengthened this trend and
put Japanese corporations on a strong
footing driving their merger and
acquisition activity in North America
to near-record levels. The number of
US and Canadian acquisitions are up
to 119, a year-on-year increase of over
60 per cent. This is part of 364 mergers
and acquisitions of foreign companies
in the first nine months of 2012.
HEEDING THE PAST
Of course, weve seen this kind of activ-
ity before. In the 1980s and early 1990s
trophy acquisitions such as
Mitsubishi Estates investment in the
Rockefeller centre, Sonys $3.4bn
acquisition of Columbia Pictures and
Matsushitas takeover of Matsushitas
takeover of Universal Pictures parent
company, MCA led many to opine
that Japan wanted to buy American
assets and they didnt care what they
paid for it. But rather than buying for
buyings sake, this new wave of expan-
sion is coming out of necessity. Japans
domestic market is shrinking its
population is expected to fall by some
800,000 a year, depressing demand
across the board. At the same time,
the fall-out from last years tsunami
IBEX-35 Daily
2008 2009 2010 2011 2012
14,000
12,000
10,000
8,000
6,000
50-DMA
200-DMA
A strong currency has helped fuel a return of frenzied M&A activity
Japanese Acquisitions of Foreign Comapanies Near Record
2002 2012 03 04 05 06 07 08 09 10 11
30
40
50
0
10
20
60
70
80
90
100
200
300
400
0
100
500
600
700
800
900 $bn Deal
Count Deal
Volume
Bullish dollar-yen
Oct May Jul Jun Aug Sep
79.0
79.5
78.0
75.5
78.5
80.0
80.5
81.0
81.5
S
INCE last week, Spains Ibex
35 has shown a Golden
Cross, a pattern whereby the
50-day moving average
crosses above the 200-day
moving average. When short-term
moving averages rise above longer-
term moving averages, this Golden
Cross pattern usually anticipates
higher prices. Conversely, when
moving averages cross below
longer-term ones the pattern is
known as Death Cross, and is
usually indicative of falling prices
to come. The key is to figure out
which moving averages to use in
combination. Since 2007, there
were five patterns of Golden and
Death Crosses in the Ibex 35. Each
of the patterns successfully
predicted declines and rallies
respectively. The two cases of
Golden Crosses since 2007 were in
June 2009, when a 50-200-day
moving average crossover preceded
a 35 per cent increase over seven
months; and in February 2011,
when a Golden Cross preceded a 0.7
per cent increase over four months.
The three cases of Death Crosses
since 2007 were as follow: January
2008 (a Death Cross preceded a 54
per cent decline over a 14 month
period); March 2010 (a Death Cross
preceded a 24 per cent decline over
a three month period); June 2011 (a
Death Cross preceded a 44 per cent
decline over a 13 month period).As
the ensuing Golden Cross in the
Ibex 35 takes hold, it could well
predict the inevitability of Madrid
seeking assistance from the EU/IMF.
In this case, the European Central
Banks Outright Monetary
Transactions boosting Spanish
bonds would also be beneficial for
Spanish shares.The Ibex 35 may be
down 10 per cent year to date, but
up 28 per cent off its July lows. The
latest monthly reversal gave way to
a break-out above the 16 month
trendline. An extension towards
the 9,000 territory is not ruled out
for the end of the fourth quarter,
as long as the required support for
the index holds at 7,500.
Keep informed with the expert opinion of
City Indexs chief global strategist, Ashraf
Laidi: www.cityindex.co.uk/market-analysis
MARKET
COMMENT
ASHRAF LAIDI
Spains embattled stock index might be about to take a turn for the better
Big players in Tokyo have been hunting for American targets
and nuclear disaster highlighted
Japans reliance on Asian markets,
meaning a downturn for Japan usually
went hand-in-hand with a downturn
in demand from end partners.
As well as their strong currency posi-
tion, cash-rich Japanese corporations
are also seeing the benefit of European
uncertainty. As economic instability
pushes investment funds to divest out
of their US and European holdings in
order to strengthen their cash
reserves, Japanese firms are waiting in
the wings.
EMERGING CHALLENGERS
There is the risk that a decline in yen
strength though a boon for the
domestic Japanese economy would
weaken Japans outbound M&A renais-
sance. But previous yen repatriation
attempts by its central bank have seen
only short lived success, and in the
long term, US financial worries should
keep dollar-yen below the 80 mark.
Instead, competition in the
European and US M&A sphere could
come from cash-heavy emerging mar-
ket corporations Brazilian tech com-
pany Cielos $670m acquisition of
Merchant eSolutions, and Thai
Indorama Ventures $760m purchase
of Advance America Cash Advance
Centers could be a sign of things to
come.
Craig Drake
Euro summits
tend to follow
clear patterns
cityam.com
22
WEALTHMANAGEMENT FOREX
G
OING into tomorrows
European summit, there seems
to be an air of optimism even
excitement. With positive
chatter, you might dare to hope that
this summit will be the one where
Europes politicians finally deliver.
This week, confidence has come
from economic data showing
Eurozone inflation to be stable at 2.6
per cent, as well as an improvement of
German investor sentiment, which
rose for the second consecutive
month.
The tone in Germany is also chang-
ing. It is now prepared to accept a pre-
cautionary credit line (PCL yet
another acronym) for Spain, which is a
veiled way of showing support for a
bailout. This is contrary to what some
leading politicians have suggested.
But euro-dollar appreciated the com-
ments. Yesterday the currency pair
was trading above $1.3050 previously
a key resistance level. The single cur-
rency was also up against sterling and
the yen. Chris Vecchio of FXCM says
that if it is time for the euro to move
forward, it is this week.
Spain needs to be careful about play-
ing this game. After the announce-
ment of outright monetary
transactions, its yields stabilised below
6 per cent as traders saw a credible
safety net. Cheaper funding costs gave
Spain leeway to put off requesting a
bailout. The latest talk is that PCLs will
have the same effect: apparently Spain
was considering requesting help, but
there was still not unanimous backing
within its government.
This is where sentiment departs
from reality. Recently Standard &
Poors downgraded Spains rating by
two notches, and downgraded 15 of its
banks, saying the sovereign down-
grade has direct negative rating impli-
cations on those banks. The upshot is
that the government must rectify its
finances; that is the requisite precur-
sor to long-term stability in Spain, par-
ticularly for its finance sector.
If Spain requests a bailout, it is diffi-
cult to see how much further up the
euro may go. The target to look
towards is $1.3175, according to
Vecchio, and if that level is breached,
then the $1.33 mark will be the next
target.
But there are doubts whether the
euro has enough strength to move to
these levels. Angus Campbell of
Capital Spreads says that recent euro
rallies have been met with sell-offs,
and sell-offs have been met with ral-
lies, as we have traded within a range
since early September. Kathleen
Brooks of Forex.com is slightly wary
about a move higher in euro-dollar
and believes that strength will be sold
into.
The market also wants to see devel-
opment on Greeces next bailout
tranche, as well as a Eurozone bank-
ing union. Greek Prime Minister
Antonis Samaras was confident that
the country would receive its next
bailout tranche, declaring that Greece
is in the last stretch. It is a bold
claim, but one he would not have
dared make earlier in the year.
Nothing definitive can be expected on
the issue of banking union. It is a vast-
ly complex issue and it will take time
to arrive at an agreement (or disagree-
ment).
So traders hope to see progress from
Europes politicians on three fronts.
This is slightly concerning: when, in
recent times, have the Eurozones
politicians fully and convincingly
delivered on one front, let alone
three? I wouldnt build up too much
hope, says Campbell.
Given these issues, currency traders
need to manage their risk. Neil Looker
of City Index thinks that traders may
get more bang for their buck by
looking to the downside. Negative
news coming from the Eurozone may
pull the currency down to $1.2820.
Eurozone summits have typically fol-
lowed a trend: rallies leading up to the
summit, and sell-offs preceding them.
Whether this summit will be different
remains to be seen. But if the trend is
really your friend, then you should
look to protect your downside.
Traders need to question whether this time
will be different, writes Yogesh Chandarana
Euro-dollar
16Jul 14Aug 12Sep 11 Oct
1.20
1.22
1.24
1.28
1.26
1.30
1.32 $
23
WEALTHMANAGEMENT FOREX
W
ITH many central banks debasing the value
of their currency through monetary easing,
investors and traders have been struggling
to achieve meaningful yields. The euro,
dollar and sterling all offer yields near zero (the yen
has been in this position for nearly two decades).
Factoring in the effects of inflation, investors and
traders are effectively getting negative yields.
In this environment, traders can take advantage
of the differential between countries interest rates
through what is known as the carry trade. This
involves borrowing money in a currency with a low
yield, for example sterling which is currently
yielding 0.5 per cent and investing that borrowed
money into a currency where higher yields can be
achieved, like South Africas rand currently
yielding 5 per cent.
Most retail investors using spread betting
platforms will have no currency base risk involved
in the trade. For example, trading a yen-Aussie-
dollar carry trade sell yen, buy Aussie-dollar,
involving paying interest on the yen, and earning
interest on the Aussie would not require
converting sterling (into either yen or Aussie dollar):
you can take direct positions in these currencies.
Chris Beauchamp of IG likes this particular trade,
but warns carry trades are for experienced
investors; to go short on one currency and go long
on another involves taking double the risk.
Beauchamp says that the yen carry trade is
becoming popular: People said it was dead, but it is
becoming fashionable again.
For carry trades to work successfully, currency
pairings need to remain stable so that gains that are
made through yield are not wiped away through
price fluctuations. Traders should seek currencies
with stable political and economic outlooks.
Currency pairs should also have a wide differential
in interest rates. But with the onset of monetary
easing, differentials have reduced. Neil Looker of
City Index says the small differentials will mean
more risk for the investor. Looker therefore thinks
opportunities for short-term carry trades are
limited, and advises traders to carefully check the
costs. Profits may be wiped out by the charges
involved. Looker gives the example of the dollar-
Mexican peso. Currently the carry charge is 15 pips
(which you receive), but the spread between the
currencies is about 50 pips (which you pay), putting
you down 35 points, assuming no movement in the
underlying currencies.
Looker says the trade will work better in the
medium-term, playing on macro economic
fundamentals. He adds that the dollar-rand trade is
attractive and will perform well when the industrial
action within South Africa comes to an end.
Beauchamp urges inexperienced traders to be
cautious about exotic pairings. It is surprising how
much liquidity drops off when you go into the
exotics, he says, the volatility spikes, so you need
to be sharp. He says that you need to keep a sharp
eye on the economy of the currency and that data
sources may be thin, potentially laying a trap.
Profiting from the carry trade in the current
environment is difficult. For most traders it may
make more sense carrying on without this
sophisticated strategy.
How to profit
from interest
rate variances
Its not a play without risk,
writes Yogesh Chandarana
Carry on trading
and its new free-breathing exhaust
system which was first used on the
Continental Supersports Ice Speed
Record car is truly a lovely thing.
Bentley says it has built this
Continental to be two cars in one. So
is it a GT and an extreme sportscar?
Almost. It weighs 2,320kg so no
amount of marketing spin will
negate the fact that this is a big,
heavy beast. Despite this, it does feel
sportier through the bends, but you
cant throw it around with total
abandon. I became more confident
with it over time but I would have
liked to have really got to know the
car over a longer period or, even bet-
ter, drive it on track because its
clear, its capabilities outstrip mine.
In a straight line, it is awesome and
makes short work of overtaking. The
transmission system allows you to
shift down in blocks, from 8th to 4th
say, before speeding off. So, push
down on the accelerator pedal and
youre away and tucked back in
front of whatever it was that was
delaying you; the engine having
thundered you past the slower traf-
fic before returning to an irritated
growl when you ease back off the
throttle, like a curmudgeonly old
greyhound.
And it looks great. My test car was
painted bright yellow and was fin-
ished with a dark tint radiator and
front bumper grille, carbon fibre
side sill blades and 21-inch, ten
twin-spoke dark-tint alloys, with a
new rifled exhaust tailpipe at the
rear. The effect is a car that looks
cooler and more menacing.
We pull up to the airport for our
flight home. Lifting off the throttle
sounds like a distant machine gun
fire. I shake my head. I cant help but
glare at the sky. And then I get it.
There were 20 Bentley Continental
GT Speeds thundering through the
Bavarian Alps. Collectively we made
such a din we were cloud busting.
The new and improved Bentley Conti in bright yellow
24
WEDNESDAY 17 OCTOBER 2012
cityam.com
CAR TALK
BY RYAN BORROFF
The new Turbo S Porsche is a powerful upgrade on the V8
Porsche has introduced a new flagship Cayenne SUV, the Turbo S. The
4.8-litre twin-turbocharged V8 has had its power increased by an
additional 10 per cent over the Turbo model. The extra 50bhp translates
to a 0-62mph time of 4.5 seconds and a claimed top speed of 175mph.
Price from 107,460.
The Nissan Micra is still value for money and comes MP3 ready
If youre looking for an inexpensive commuter car, Nissan has just
dropped the prices of models in its Micra range. All Micra cars are now
cheaper, including the super frugal three-cylinder DIG-S version. The
entry-level Visia model now starts at 7,995, yet still includes Bluetooth
and MP3 player connectivity.
Land Rovers Defender 110 Double Pick Up on show at Harrods
The brouhaha around the latest Bond movie Skyfall is increasing daily
and Harrods has now joined the fray. The Land Rover Defender 110
Double Cab Pick Up, which is driven by bond girl field agent Eve
played by Naomie Harris in the films opening sequence- will be in
Harrods shop window until 27 October.
BY RYAN BORROFF
THE VERDICT:
DESIGN hhhhi
PERFORMANCE hhhhi
PRACTICALITY hhhhi
VALUE FOR MONEY hhhii
THE FACTS:
BENTLEY CONTINENTAL GT SPEED
PRICE: 151,000
0-62MPH: 4.1 secs
TOP SPEED: 205mph
CO2 G/KM: 338g/km
MPG COMBINED: 19.5mpg
Bentley taps into the need for speed
The latest Continental GT is the fastest road-going model yet and it doesnt sound too shabby either
I
TS POURING with rain as we
speed along the autobahn
towards the Bavarian Alps. I
dont have the cojones to get
anywhere close to the 205mph top
speed that this new Bentley
Continental GT Speed is capable of,
which is a shame because this is the
fastest road-going Bentley ever
made and were on an unrestricted
road.
This makes me a wuss, because the
cars all-wheel-drive system with
its 60:40 torque split that favours
the rear isnt bothered by any-
thing I subject it to over the two
days of near constant rain. Yet
theres no doubt the inclement
weather has rather deflated our
excitement. My desire to push quick-
ly through the corners is countered
by plain old common sense. There is
standing water on the road and Im
grumpy as a result. Dammit.
Bentleys new flagship Conti has
been on something of an improve-
ment programme. It has an
enhanced chassis, including uprat-
ed springs and anti-roll bars, and its
self-levelling air suspension system
constantly monitors ride height and
damping. The car now rides 10mm
lower than the standard. But its the
twin-turbo, 6.0-litre W12 engine and
exhaust that demands all of the
attention. Upgraded now to an awe-
inspiring 616bhp, it has a new
engine management system and
new, eight-speed automatic trans-
mission, which makes shifting gears
almost effortless.
This GT Speed is brutally fast and
sounds like it too. Zero to 62mph
can be reached in just four seconds
and 100mph from a standing start
in only nine seconds something
we didnt get the chance to confirm.
The harder you drive, the louder
and more sonorous the GT Speed
gets. It will scream at you and take
off with a roar or simply grumble at
you with a tessitura of lovely bass
notes deep from the rear. At times,
the W12 engine boils away with
such resonant character that you
can feel it through your seat.
Amazingly, after two days of driving
and trying varying amounts of
throttle, I was entirely unable to
find a note I dont like. This engine
LIFE&STYLE MOTORING
25
TV & GAMES
cityam.com
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BBC1
SKY SPORTS 1
7pmFIFA Futbol Mundial 7.30pm
Live Johnstones Paint Trophy
Football 10pmFIFA Futbol
Mundial 10.30pmTotal Rugby
11pmTrans World Sport 12am
A League Football 12.30am
Johnstones Paint Trophy Football
2amFIFA Futbol Mundial 2.30am
Total Rugby 3amTrans World
Sport 4amJohnstones Paint
Trophy Football 5.30am-6am
FIFA Futbol Mundial
SKY SPORTS 2
7pmTotal Rugby 7.30pmLive
Elite League Speedway 10pmGolf
11pmChampions Tour Golf 12am
Asian Tour Golf Show12.30am
Inside the PGA Tour 1am
European Tour Weekly 1.30am
Asian Tour Golf Show2am-4am
Elite League Speedway
SKY SPORTS 3
7pmFIBA Basketball 7.30pm
Live Greyhound Racing
10pmCage Fighter 10.30pm
Poker 12.30amCage Fighter 1am
World Eightball Pool
Championships 2am-3amGolf
BRITISH EUROSPORT
5.30pmLive WTA Tennis 7.30pm
Wednesday Selection 7.35pm
Equestrian 8.35pmRiders Club
8.40pmPGA Tour Golf 9.40pm
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Club 10.15pmAlexias Selection
10.20pmSailing 10.50pm Alexias
Selection 10.55pmYacht Club
11pmWednesday Selection
11.15pm-12.15amWorld Cup
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ESPN
7pmESPN FC Press Pass
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12amUFC: The Ultimate Fighter
1amLive WNBA Finals 3.30am
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SKY LIVING
7pmCriminal Minds 8pmFat and
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Medium5.10am-6amAmericas
Next Top Model: All-Stars
BBC THREE
7pmBe Your Own Boss 8pm
Gavin & Stacey 9pmCome Fly
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Family Guy 11.30pmAmerican
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Your Own Boss 2amGavin &
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Bride
E4
7pmHollyoaks 7.30pmHow I Met
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Theory 8.30pm2 Broke Girls
9pmMeet the Parents 10pmRude
Tube: Rude Tunes 11.05pm
Shameless 12.10amThe Big Bang
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Mother 1.35amIT Crowd 2.05am
Balls of Steel Australia 2.55am
Scrubs 3.20am90210 4amBeing
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HISTORY
7pmStorage Wars 7.30pmPawn
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People 10pmAx Men 11pm
Storage Wars 11.30pmPawn
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Ax Men 2amAmerican Pickers
3amSwamp People 4amThe Last
Days of World War Two 5am
Pawn Stars 5.30am-6am
American Restoration
DISCOVERY
7pmBear Grylls 8pmAmerican
Guns 9pmFast n Loud 10pm
The Devils Ride 11pmDeadliest
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The Devils Ride 2amSons of Guns
3amFast n Loud 3.50amThe
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5.30am-6amMeerkat Manor
DISCOVERY HOME &
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7pmDr Oz 8pmIm Pregnant and
Have OCD 8.30pmIm Pregnant
and HIV Positive 9pmHospital
Sydney 10pmTrauma: Life in the
ER 11pmMy Deadly Appetite
12amHospital Sydney 1am
Trauma: Life in the ER 2amMy
Deadly Appetite 3amIm Pregnant
and Have OCD 3.30amIm
Pregnant and HIV Positive
4am-6amA Baby Story
SKY1
8pmThe Glee Project 9pmTrollied
9.30pmAn Idiot Abroad 2
10.30pmCop Squad 11.30pmDog
the Bounty Hunter 12.30amRoad
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Hunter 3.30amUK Border Force
4.30amBest of Oops TV
5.30am-6amAirline
BBC2 ITV1 CHANNEL4 CHANNEL5
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6pmBBC News
6.30pmBBC London News
7pmThe One Show; BBC News
8pmWatchdog
9pmCHOICE Who Do You
Think You Are?
10pmBBC News
10.25pmRegional News 10.35pm
The National Lottery Draws
10.45pmNot Going Out 11.15pm
FILMIts a Wonderful Afterlife;
National Lottery Update 12.50am
Weatherview12.55amSign Zone:
See Hear 1.25amAndrew Marrs
History of the World 2.25am
Hilary Deveys Women at the Top
3.25amCelebrity MasterChef
3.55am-6amBBC News
6pmEggheads: Quiz show,
hosted by Dermot Murnaghan.
6.30pmStrictly Come Dancing
It Takes Two
7pmThe Hairy Bikers:
Mums Know Best: Cooking and
eating outdoors.
8pmGreat British Food Revival
9pmWelcome to India
10pmThe Culture Show
10.30pmNewsnight; Weather
11.20pmFILMGirl Model:
Storyville: Premiere. The supply
of girls to the Japanese
modelling industry. 2011.
12.35amBBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
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Paddy McGuinness, Nadia
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9pmDCI Banks
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10.35pmExposure
11.35pmPerspectives:
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12.30amJackpot247; ITV
News Headlines
3amFILMColumbo: Etude in
Black. 1972. 4.40am-5.30amITV
Nightscreen
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12.05amMusic on 4: Mercury
Prize: 2012 Albums of the Year Live
12.55amMusic on 4: Spotlight:
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Fire. 1996. 3.05amMisfits 4am
Deal or No Deal 4.55am
Countdown 5.40am-6.05am
Baking Mad with Eric Lanlard
6pmHome and Away
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9pmCHOICE Dallas
10pmLaw & Order:
Special Victims Unit
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Special Victims Unit
11.50pm Serial Killing Saviour:
Born to Kill? 12.50am Forensic
Files 1.15amSuperCasino 3.55am
Great Artists 4.20amHouse
Doctor 4.45amMichaelas Wild
Challenge 5.10amWildlife SOS
5.35am-6amWildlife SOS
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
digits1-9 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 BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd 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.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7
8 9
10 11
12 13 14
15
16 17 18
19
20
21
10 26
24 34
12 21
39 4
6 34
6 5
15 7
17 23
28 4
24 9
33 23
17
35
31
24
11
11
7
8
38
35
17
30
16
21
10
9
16
20
32
16
ACROSS
1 Verdigris (6)
6 Exclusive circle
of people (6)
7 Fellow (4)
8 Made up ones
mind (7)
10 Harden to (5)
12 Cure-all (7)
15 Condensed but
memorable
saying (5)
16 Attendant on an
aeroplane (7)
19 Informal
conversation (4)
20 Stroke
tenderly (6)
21 In accord with
the latest
fad (6)
DOWN
1 Remaining scraps
or leftovers (8)
2 Drinking vessel (6)
3 Disease of the skin (4)
4 Restricted (7)
5 Ofspring of a male donkey
and a female horse (4)
8 Hideout (3)
9 Without deviation (8)
11 Period at universities
during which money is
raised for charities (3,4)
13 Morally reprehensible
person (3)
14 German city known
to the French as Aix-
la-Chapelle (6)
17 Rupture (4)
18 Oxidisation caused by
moisture in the air (4)
R
G
S
N
Y U
I
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E

4

4

4

S I X T H B A K E S
E H P B T
R E C A L L B I L E
A V O W U O P
P E R S E C U T O R
H G K N P
D I S M I S S I V E
P I E T O I L
R O P E S P I N A L
O G T L E
P I P E R A L E R T
4 1 2 1 2 4 3
8 6 9 7 6 8 9 5
6 4 8 9 1 6 2
7 3 1 2 6 8 8 1
9 2 4 1 8 5 7 3
7 9 1 3
5 2 3 1 6 9 7 4
1 7 4 5 7 8 9 1
7 9 8 2 3 6 3
2 4 1 5 9 7 8 5
3 8 6 9 1 5 2
4
4
4
4
4
4
4
4
4
The nine-letter word was
UNIVERSAL
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
WEDNESDAY 17 OCTOBER 2012
WHO DO YOU THINK YOU ARE?
BBC1, 9PM
Former footballer John Barnes
explores the role his grandfather
played in Jamaicas fight for
independence from Britain.
EMMERDALE
ITV1, 7PM
Two wedding celebrations are under
way, but while Declan and Katies is
full of love and happiness, Chas and
Dans is riddled with secrets and lies.
DALLAS
CHANNEL5, 9PM
John Ross struggles to stay on top of
the drilling operation, while Rebecca
reveals news that has serious
consequences for Christopher.
TVPICK
prepared well for this start, as no
doubt the Poles have too, but now
weve got to do it all over again
and hopefully well be as prepared as
we were.
I have chosen the team to start
the game and I have no intention of
changing it unless someone falls ill.
For the travelling England fans
2,000 of which were scheduled to fly
home last night the officials deci-
sion not to close the roof despite the
forecasting of rain is sure to be the
subject of intense dismay. The
Warsaw-based stadiums retractable
roof cannot be moved while rain is
falling so even then substantial
action could not be taken and those
with tickets remained exposed to the
elements for an additional 45 min-
utes as a decision was delayed regard-
ing the evenings outcome.
In addition to the Polish FA, the
postponement of a first England fix-
ture since 1979 could also result in
scrutiny on the role of the Italian
referee Gianluca Rocchi.
ENGLANDS vital World Cup qualifier
away to Poland was last night post-
poned until 4pm today because of a
torrential downpour that left the
surface of the 400m national
stadium unquestionably unplayable.
Upon his first inspection, England
manager Roy Hodgson was visibly
unhappy with the pitchs condition
after significant storms around
Warsaw, and the officials damaging
failure to close the stadiums
retractable roof, ensured that water
engulfed the pitch to leave postpone-
ment until today as the only apparent
option and one that the manager was
concerned may not get fulfilled.
Im rather hoping they will get it
[the roof] closed as quickly as possible
and start to do some work on the
pitch because the pitch is in very poor
condition, Hodgson said. Its going
to need a lot of attention if its going
to be playable.
There are no other possibilities.
You cant find dates at international
level. The dates that are available are
all taken up, so you cant just sudden-
ly decide well play it another time.
It is the rules of world footballs
governing body Fifa that dictate that
both teams must attempt to replay a
fixture within 24 hours if there is no
option but to postpone it under such
circumstances, and if that is not pos-
sible then a date must be agreed by
the two relevant associations.
Polands players were believed to be
reluctant to reconvene again today
due to their club commitments of
domestic fixtures on Friday but
Hodgson, in contrast, was adamant
that that should still be the case.
What you have to do is to try to
organise to get the game played as
quickly as possible, Hodgson (right)
explained. Were disappointed. We
Roofs and rain cause
Poland vs England
called off after bad
Warsaw weather
Ireland ease
Traps pain
Stubborn Northern Ireland resist
powerful Portugal for vital point
could bring them to within two
points of both Israel and Portugal
who are tied in second with seven.
The Portuguese featuring some
of Europes most decorated players
in Ronaldo, Pepe and Nani
dominated the vast majority of the
game but the visitors, and in
particular Manchester Uniteds
Jonny Evans, defended stubbornly
and resolutely to ensure that they
remained in the game.
It was Evans and Kyle Lafferty
who combined for McGinns
opener but though Craig Cathcart
almost scored an own goal, and
Ronaldo, Postiga and Ruben Micael
all went close against a side with
just one win in their last 18, it
wasnt until Postigas well-placed
equaliser that the game changed.
WEDNESDAY 17 OCTOBER 2012
26
SPORT
cityam.com/sport
Scotland keep
bad Kompany
HILLSBOROUGH campaigners have
welcomed the attorney generals
decision to apply for the original
inquest verdicts relating to the 1989
stadium disaster to be overturned.
Dominic Grieve QC said yesterday
he would apply to the High Court to
have the 96 verdicts of accidental
death quashed, paving the way for a
second inquest likely to be held next
year. Grieves move comes after last
months Hillsborough Independent
Panel (HIP) report, which published
evidence that victims had been
failed by emergency services and
unfairly smeared by police.
He said: My consideration of the
evidence is far from complete but,
given the anxiety further delay may
Second Hillsborough inquest
set to follow verdict quashing
cause the families affected by the
Hillsborough disaster, I have decided
to take an exceptional course and
state at this stage that, on the basis
of what I have already seen, I have
determined that I must make an
application to the court.
It is the latest victory for
campaigners, who last week saw the
Independent Police Complaints
Commission launch the biggest ever
review of conduct, following
revelations in the HIP report.
Were very pleased with the pace
things are going at, said
Hillsborough Family Support Group
chairman Trevor Hicks.
We have waited 23 years. Due
process will have to take place. We
are pleased he has pointed out it will
be 96 fresh inquests.
BY FRANK DALLERES
BY DECLAN WARRINGTON
@cityam_sport
Wales return
to losing ways
FAROE ISLANDS ..........................1
REPUBLIC OF IRELAND..............4
WORLD CUP 2014 QUALIFIER
CROATIA.....................................2
WALES .......................................0
WORLD CUP 2014 QUALIFIER
REPUBLIC of Ireland last night got
their 2014 World Cup qualification
campaign back on track with
a victory that eased the pressure on
manager Giovanni Trapattoni.
Marc Wilson gave the away side
the lead with a header immediately
after half-time and Jonathan Walters
added another headed goal less than
10 minutes later.
Arnbjorn Hansens shot from
inside the area into the bottom left
corner in the 68th minute created
brief uncertainty before an own goal
from Pol Johannes Justinussen five
minutes, and Darren ODeas close-
range strike two minutes from time,
later sealed Irelands win.
WALESS World Cup qualification
hopes took a significant blow with
defeat away to second-placed Croatia.
It had been hoped that Fridays
dramatic 2-1 victory over Scotland
would inspire some momentum but
a goal for each of Mario Mandzukic
and Eduardo gave the home side a
lead that would not be threatened.
Wales have three points from four
games in Group A but with both
Croatia and Belgium on 10 their
hopes already appear slim.
Croatia took the lead after 27
minutes when Mandzukic charged
down goalkeeper Lewis Prices
clearance, and half an hour from the
end Eduardo scored with a tap in
from a rebound.
PORTUGAL..................................1
NORTHERN IRELAND..................1
WORLD CUP 2014 QUALIFIER
NORTHERN Ireland produced a
defiant defensive display to secure
an equally surprising and
impressive point in their World
Cup qualifier away to Portugal.
Niall McGinn chipped Michael
ONeills team ahead after 30
minutes before Helder Postigas
equaliser 10 minutes from time
rescued the home side from an
embarrassing defeat. Northern
Ireland now have two points from
three games but with a game in
hand on those above them, victory
BELGIUM....................................2
SCOTLAND .................................0
WORLD CUP 2014 QUALIFIER
SCOTLAND last night lost again
to effectively end their hopes
of qualification for the 2014
World Cup.
Under-pressure manager Craig
Levein has now led his side to only
two points from four matches to
leave them bottom of Group A
after goals from Christian Benteke
and Vincent Kompany for an
under-strength Belgium brought
further dismay.
Levein had admitted beforehand
that a win was necessary so when
Benteke headed Belgium in front on
69 minutes, Scotland were in
trouble, and it took only a further
two for Kompany to fire the winner.
27
FERRARI have become the last top-
five team to finalise their driver
line-up for next season after
Felipe Massa signed a one-year
contract extension.
The 31-year-olds deal is a reward
for his recent upturn in form, which
has seen him recover from a slow
start to earn points in seven of the
last eight races.
Massas much-anticipated
signature will only heighten
speculation that he is keeping a seat
warm until Sebastian Vettel moves
from Red Bull at the end of 2013.
Fernando Alonsos contract with
Ferrari runs until 2016.
McLaren, Red Bull and Mercedes
have already confirmed their 2013
line-ups, with Lotus seemingly
certain to retain Kimi Raikkonen
and Romain Grosjean.
Ferrari retain
Massa as Vettel
talk persists
big pain
J
ETTING in from the other side of
the world for talks with the
England hierarchy yesterday
shows that Kevin Pietersen is
making an effort to build bridges after
the text message row that threatened
his international career.
Having been the cause of the
controversy, Pietersen appears to
appreciate that the onus is on him to
repair the damage done to his
reputation and regain the trust of
selectors, coach Andy Flower and his
dressing room colleagues.
Judging by what some of those
players have been saying lately, there
seems to be a willingness to welcome
the batsman back into the fold, and
if thats the case then I think it
would be crazy not to play him in
next months tour of India.
Delaying his playing comeback
until Februarys trip to New Zealand
would needlessly deprive England of
experience in the top order when,
with Andrew Strauss retired and Ian
Bell likely to miss the second Test for
the birth of his child, they need it.
Simply put, he is a better player
than the alternatives, Eoin Morgan,
Jonny Bairstow, Ravi Bopara, knows
subcontinent conditions better than
most from his Indian Premier
League stints and would, youd like
to think, feel he had a point to prove.
But his diplomacy doesnt have to
end there. Pietersen could really do
himself a favour by spending some
time giving guidance to Englands
younger players, many of whom
havent played in India before.
His coach at Delhi Daredevils has
praised him for taking teenager
Unmukt Chand under his wing to
great effect the likes of Joe Root
and Nick Compton could benefit
from the same treatment.
It wouldnt cost Pietersen much
but might help England greatly and,
by showing everyone that he has
turned over a new leaf, would heal
the damage done to his image.
Andy Lloyd is a former England Test
cricketer and chairman of Warwickshire.
IN BRIEF
Hughes continues winning form
n RACING: Jockey Richard Hughes
followed Mondays seven victories from
eight races with three yesterday at
Leicester, and there was also a treble for
Ryan Moore. Hughes said: It keeps
getting better. The bookies are running
for cover.
Brook in career best shape
n BOXING: Britains Kell Brook has
warned Hector Saldivia not to judge
him on his last fight against Carson
Jones, in which he faded after the sixth
of the 12 rounds in an unconvincing
points victory, when they meet in an
IBF welterweight title eliminator on
Saturday. He said: If Hector has gone
off my last performance, well that
wasnt me. Things have been addressed
and Im a different animal. I am in the
best shape I have been in.
Fickou earns first France call
n RUGBY UNION: Precocious centre
Gael Fickou has been given his first
international call up after being
included in Frances 33-man squad for
the autumn internationals. The 18-year-
old is one of seven to earn a first call.
Englands Lumb sinks Yorkshire
n CRICKET: Yorkshire made a
disastrous start to their Champions
League T20 campaign proper yesterday,
losing by eight wickets to Sydney Sixers
in Cape Town. Englands Michael Lumb
hit an unbeaten 43 as he surpassed
Yorkshires 96-9 in just 8.5 overs.
Torres reveals lack of care
n FOOTBALL: Chelsea striker Fernando
Torres has admitted he once did not
care if the team won or lost.
SEBASTIAN Coe is to be elected as the chairman of the British Olympic Association after
his only rival for the role withdrew from the race. Richard Leman, the boss of British
hockey, was the other potential candidate but was a huge underdog given the success
Coe had throughout the London 2012 Olympic Games. Coe will succeed Colin Moynihan
in the role when the elections take place on 7 November.
I definitely believe in myself. I wouldnt be in the game if I
didnt. I have the mental toughness and the capability to do it
British No1 Heather Watson believes she can become the world No1

cityam.com
WEDNESDAY 17 OCTOBER 2012
BY FRANK DALLERES
SERBIA U21........................0
ENGLAND U21 .....................1
BY SPORTS DESK STAFF
EURO 2013 QUALIFIER
ENGLAND WIN 2-0 ON AGGREGATE
Pearce proud
despite new
race row
ENGLAND U21 manager Stuart
Pearce said that Serbia had
been reported to European
footballs governing body Uefa
because of the alleged racial
abuse directed towards his
players as they secured
qualification for Euro 2013.
Full-back Danny Rose
gestured that monkey noises
were being made at him just
before he was sent off on the
stroke of the final whistle as
aggressive confrontations
followed Connor Wickhams
stoppage-time goal with the
victory already assured.
Pearce said: I think there
were one or two racist
incidents that came on from
the crowd and they have been
reported to Uefa, I believe,
by ourselves.
I am very proud of my
players and my staff and very
proud of the achievement in
getting to a fourth
tournament in a row.
In an unconvincing display,
England spent the majority of
the game fending off pressure
before Wickham slotted in to
an open goal on the break
after Serbias goalkeeper
Branimir Aleksic had gone up
for a late, final attack.
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CRICKET
COMMENT
ANDY LLOYD
Mentoring England
starlets would show
Pietersens changed
COE TO CHAIR BRITISH OLYMPIC ASSOCIATION
Referee Gianluca
Rocchi inspected the
pitch to see if it was
playable despite the
appalling conditions
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