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Issue 1,229 Tuesday 28 September 2010

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IMF: WE BACK OSBORNE’S CUTS

UK ECONOMY

BY MATTHEW WEST

THE International Monetary Fund (IMF) gave its full backing to the coalition govern- ment’s deficit reduction plans yesterday, announcing that the UK economy is on the mend after the longest and deepest reces- sion of the post-war era. In its annual health check of the UK econ- omy the IMF said the recovery was under- way, unemployment had stabilised and the health of the financial sector had improved. Calling the government’s deficit reduc- tion plan “appropriately ambitious” the IMF report said: “The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainabili- ty.” It added the plan “greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery.” Fiscal tightening would dampen short- term growth, said the report, but not stop it as other sectors of the economy emerged as drivers of recovery, supported by continued monetary stimulus. The backing of the IMF will come as a huge vindication of chancellor George Osborne’s proposals to cut public spending by £83bn in order to get the £155bn budget deficit under control. The chancellor will reveal where the cuts will come when he announces the results of the comprehensive spending review on 20 October. The chancellor welcomed the IMF report saying: “They have made it pretty clear that the deficit reduction plan that we have set out is essential for bringing about sustain- ability in our budget. It reminds us that if we divert from the course the new government has set out then we really will be heading back into a disastrous period of economic instability for Britain.” The report puts the new Labour leader, Ed Miliband, under immediate pressure ahead of his conference speech today. Earlier this week the Labour leader described the gov- ernment’s policies as “economically danger- ous” and called for deficit reduction “at a

Chancellor George Osborne’s deficit reduction plans were called “strong and credible” by the IMF yesterday
Chancellor George Osborne’s
deficit reduction plans were
called “strong and credible”
by the IMF yesterday
Picture: GETTY

cautious pace in a way that is going to help our economy, not hinder it”. But while there were risks to economic recovery given the “continued fragility of confidence and “signs of renewed housing market weakness,” the IMF predicted GDP growth would be two per cent in 2011, rising gradually to 2.5 per cent the following year.

Inflation should also fall back to the govern- ment’s two per cent target by early 2012. In another boost for the government the IMF said financial sector reform ”would be crucial to move to a safer system that fea- tured stronger capital and liquidity buffers, supported by tighter regulation and supervi- sion.” ALLISTER HEATH: P2

RBS AXES 500 MORE STAFF

BANKING

BY STEVE DINNEEN & MATTHEW WEST

ROYAL Bank of Scotland (RBS) will shed up to 500 jobs from its investment banking arm, it announced to staff yesterday. City A.M. understands the redundancies – most of which will affect London-based employees – will be in the bank’s backroom departments with its IT and marketing departments likely to be most affected . Client-facing staff are thought to be safe for the time being. The news comes less than a month after RBS announced that up to 3,500 support staff jobs will go from its consumer banking

arm. Those jobs losses were described by Unite, which represents staff at the bank as “horrific”. National officer Rob MacGregor said it would be particularly difficult for staff to accept as RBS had decided to move some of the jobs abroad. At the time he said: “Just three weeks ago staff were boosted to hear of the £1.1bn half year profit yet today thousands of them are told that they have no future at the bank. Unite is appalled that this 84 per cent tax- payer-supported institution has since 2009 – under the banner of a strategic review – cut 21,500 staff.” Just three months earlier RBS announced redundancies among back-office staff in its

wealth management division which includes Coutts, the bankers to the Queen, and Adam & Co. In May it said 2,600 posi- tions would go at its insurance and retail banking arms. An RBS spokesman said: “We continue to make efficiencies across our business to ensure that we have the right people and resources in place to meet our client needs. We will do all we can to support our staff, offer redeployment opportunities wherever possible and keep compulsory redundancies to an absolute minimum.”

Certified Distribution 02/08/10 – 29/08/10 is 93,782

Certified Distribution 02/08/10 – 29/08/10 is 93,782

FTSE 100 5,573.42 -25.06

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TOO BIG TO FAIL

WE INTERVIEW AUTHOR ANDREW SORKIN

TOO BIG TO FAIL WE INTERVIEW AUTHOR ANDREW SORKIN P21

P21

1.58 -0.01 £/¤ ▲ 1.18 +0.01 ¤/$ ▼ 1.34 -0.01 TOO BIG TO FAIL WE INTERVIEW

2

News

CITYA.M.

28 SEPTEMBER 2010

IMF is right – but savings crisis looms

28 SEPTEMBER 2010 IMF is right – but savings crisis looms EDITOR’S LETTER ALLISTER HEATH GEORGE

EDITOR’S LETTER

ALLISTER HEATH

GEORGE OSBORNE was a happy man yesterday, courtesy of the usually dour International Monetary Fund (IMF), which released an unusually effusive and gushing endorsement of the coali- tion’s macroeconomic policies. The IMF is upbeat for 2011, predict- ing growth of two per cent. It makes it clear that slashing the deficit and con- trolling public spending is the only way forward to avoid a sovereign debt crisis. While squeezing state spending will slow growth, the IMF is confident that liberating resources for the pri- vate sector will ensure that the recov-

ery continues strongly. More emphasis should be given to reducing public sec- tor compensation wage premia and achieving savings in benefits through better targeting, it argues, policies that will be music to Osborne’s ears as he prepares for next week’s party con- ference in Birmingham. But while the IMF is right to high- light Britain’s economic recovery and cyclical upswing, many longer-term challenges remain for Britain. Two in particular stole the limelight yester- day. First, pensions. According to a study by A.T. Kearney, the manage- ment consultancy, 95 per cent of Britons will find themselves having to downgrade their lifestyle significantly or be plunged below the poverty line in retirement. The bottom 88 per cent of British households own only £7,000 on aver- age in liquid assets, with many relying on downsizing their homes when they get older. The next four per cent own an average of just £71,000, with the next 2.8 per cent an average of

£141,000. Only the top five per cent of households have any substantial amount of liquid assets – and even then only the truly rich have anything like enough. Someone aged 54 and earning £150,000 with £200-£500,000 in liquid wealth will only take home an annual retirement income of

£20,000-£31,000.

The study demolishes the myth that “my house is my pension”. Downsizing won’t unlock enough cash for the majority of the popula- tion; most would only have £30,000 left in equity, after stamp duty and other costs. The government’s Nest scheme to auto-enrol those on lower incomes into approved pension plans will be a case of too little, too late. Charlie Bean, the Bank of England’s deputy governor, was being too short- termist when he called yesterday on consumers to save less and spend more – low savings are a much greater threat to the UK’s prosperity than a couple of years of weak consumer spending and sluggish GDP growth.

Second, the corporate exodus. Wolseley, a heating and plumbing firm with a turnover of £13.2bn, will adopt a Jersey structure and base itself in Switzerland for tax reasons. The move will save it millions of pounds and lower its tax rate substantially. The result for Britain will be an even higher deficit, fewer jobs and less investment. The government is con- sulting on a reform of the tax system but UK Plc has run out of patience – understandably, given the growing anti-capitalist mood music. Britain is the only country in the world which appears actively to want to chase away its multinationals. So the IMF is largely right about the short-term – but Britain’s longer-term prospects remain dire. Osborne is understandably concerned primarily with fire-fighting right now, but he will eventually also have to address those extraordinarily difficult issues if he truly wishes to make his mark as a reforming chancellor. allister.heath@cityam.com

NEWS | IN BRIEF

Rolls-Royce sued over patent

In a continuing battle over engine part designs, jet engine-maker Pratt & Whitney yesterday sued Rolls Royce, accusing the British company of mis- leading the US Patent and Trademark Office to obtain a patent. Pratt & Whitney, a subsidiary of United Technologies, said in its lawsuit that Rolls-Royce’s patent is invalid and unen- forceable. The East Hartford-based com- pany accused Rolls Royce of unlawfully using its patent and taking other actions to harm Pratt & Whitney.

Crossrail plans efficiencies

Crossrail set out a series of cost savings to its £16bn budget yesterday but said there would be no cuts in its planned stations or branches. Instead efficien- cies would be found by making use of existing train designs, rather than build- ing new carriages from scratch as origi- nally planned. The latest cuts are part of Crossrail's ongoing review of costs on the line, which will run for more than 73 miles from Maidenhead and Heathrow in the west, through new, twin-bore 13- mile tunnels under central London to Shenfield and Abbey Wood in the east.

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Moody’s adds to euro woes

EUROZONE

BY HARRY BANKS

CREDIT ratings agency Moody’s slashed its ratings on Anglo Irish Bank’s lower-grade debt yesterday, unnerving investors as Dublin tots up the final cost of rescuing a lender whose soured loans have crippled the country’s economy. Yields on 10-year government bonds increased to 430 points above the equivalent German securities as investors fretted over a writedown of debt. Moody’s cut the nationalised bank’s senior unsecured debt by three notches to Baa3 -- just one notch above junk status -- citing a small risk the government would not continue to support that class of debt, the agency said. It slashed Anglo Irish’s subordinated debt by six notches to

Caa1.

The steadily mounting scale of the bank’s rescue has put massive pres- sure on already strained public finances, propelling the former “Celtic Tiger” economy to the fore-

the former “Celtic Tiger” economy to the fore- Irish finance minister Brian Lenihan says its

Irish finance minister Brian Lenihan says its “unthinkable” Ireland will default on debt

front of investor concerns about the sustainability of sovereign debt in the Eurozone. The government has previously indicated the bailout of Anglo Irish will cost around 25bn (£21.3bn), although Standard & Poor’s has esti- mated it could be as high as 35bn.

Finance minister Brian Lenihan has said it is unthinkable that Ireland would default on senior debt but, in the absence of such assurances given on subordinated paper, analysts say those might face a buyback at well below par. “Anglo Irish is the millstone

around our necks,” says Bill Blain, a fixed income trader at Matrix in London. Meanwhile, in another part of the fragile Eurozone area, the OECD rec- ommended that Portugal swiftly con- solidate public finances to restore investor confidence and stand ready to raise value-added and property taxes if necessary. The OECD warned that the country’s high sovereign debt spreads could put recovery at risk, and urged labour market reforms to boost com- petitiveness. “I am confident Portugal will weather this crisis,” OECD Secretary-General Angel Gurria said. The OECD’s warning came as the Financial Stability Board said yester- day that the global financial system remains vulnerable because of contin- uing fiscal tensions in developed economies and fragile banks, and warned that these risks could be amplified by weakening economic conditions. “The potential for adverse feedback loops between weak economies, fragile banking systems and fiscal strains remain significant,” it said.

WHAT THE OTHER PAPERS SAY THIS MORNING

it said. WHAT THE OTHER PAPERS SAY THIS MORNING BRAZIL IN GLOBAL CURRENCY WAR’ ALERT An

BRAZIL IN GLOBAL CURRENCY WAR’ ALERT

An “interntaional currency war” has broken out according to Guido Mantega, Brazil’s finance minister, as governments around the world com- compete to power their exhange rates to boost competiveness. Mantega’s comments in Sao Paulo follow a series of interventions by central banks in Japan, South Korea and Taiwan in an effort to make their cur- rencies cheaper.

REVERSAL ON CARILLION’S RECLASSIFICATION

Carillion has successfully persuaded the body responsible for deciding the sectors in which listed companires are categorised to backtrack on a recent decision to reclassify it as a constrution company. Carillion called on the Industry Cassification Benchmark committee to ‘correct’

the move.

GERMANY PRESSES FOR SHAKE-UP OF LANDESBANKEN

The German government believes it could take until spring for the trou- bled publicly owned Landesbanken to agree the first steps of a reorganisa- tion after the global financial melt- down and Eurozone crisis. Steffen Kampete, deputy finance minister said consolidation was vital to “win back the confidence” of the markets. “I don’t think we’ll get anythinng definitive by year’s end. But we’ll see the contours by spring 2011,” he said.

AIG TO FACE SHARE LOCK UP AFTER AIA HONG KONG LISTING

AIG will keep a minimum stake of 30 per cent in AIA for at least a year after its Asian businesses are listed in Hong Kong next month. It will also be banned from selling any shares at all for six months after the listing. The lock up will also apply to AIA itself and cornerstone investors.

up will also apply to AIA itself and cornerstone investors. STANDARD LIFE CHIEF HITS BACK AT

STANDARD LIFE CHIEF HITS BACK AT VINCE CABLE

The man who runs one of the City’s most respected institutional investors has hit back at Vince Cable, describ- ing his attack on shareholder short- termism as “disappointing”. Keith Skeoch, chief executive of Standard Life Investments, accused the Business Secretary of ignoring “all the good work done” by investors in improving the way they hold compa- nies to account in the past year.

TERM

THROUGH GREEN-TINTED LENS

P&G

LOOKS

AT

THE

LONG

Procter & Gamble has pledged to power its factories with 100 per cent renewable energy. The world’s largest consumer products company also said it would use only renewable and recycled materials in all its products and packaging and would report on its progress annually.

and packaging and would report on its progress annually. BP WARNS RESTART OF DRILLING IN GULF

BP WARNS RESTART OF DRILLING IN GULF OF MEXICO WILL BE SLOW

BP has admitted that a resumption of deepwater drilling in the Gulf of Mexico is likely to be slow, delivering a blow to the thousands in the region whose livelihoods depend on it. It’s likely to be “a phased restart,” Doug Suttles, BP’s chief operating officer for exploration and production,” told the Presidential commission investigating the spill.

TOPSHOP TO OPEN SECOND US STORE

Topshop, the fashion retailer owned by Sir Philip Green, has signed a lease on its second US shop, in Chicago. The 35,000 sq ft store on the city’s North Michigan Avenue will open in autumn 2011. He is also in talks to open shops in Los Angeles and Las Vegas, and is considering San Francisco. Topshop opened its first US store – in New York – in 2009.

opened its first US store – in New York – in 2009. UK'S IMMIGRATION RULES SLAMMED

UK'S IMMIGRATION RULES SLAMMED

Large corporations and other employ- ers are turning up the heat on the UK government as it finalises new immi- gration rules that industry says would restrict their ability to recruit key talent. Border authorities in June introduced a temporary cap on how many skilled and highly skilled work- ers employers can hire from outside the European Union. In the coming months the government is expected to announce the permanent rules that will take effect in April.

FORD CEO EXPECTS SOLID PROFIT

Ford still expects to make a “solid profit” this year and plans to invest £1.5bn in the UK over the next five years, the car manufacturer's presi- dent and chief executive Alan Mulally said yesterday. He added he expects the car manufacturer to post an improvement in performance in 2011.

CITYA.M.

28 SEPTEMBER 2010

News

3

JPM sets up alternatives unit in the US

BANKING

BY HARRY BANKS

JPMORGAN Chase is starting a new alternatives unit in its asset manage- ment business, formed from traders who are no longer allowed to trade for the bank’s own account under new US rules, according to a company memo. The fate of the JPMorgan traders has been up in the air as banks scram- ble to come to terms with the so- called Volcker rule restricting banks from betting with their own money, among other regulatory changes. A person familiar with JPMorgan’s changes said about 45 traders will move from its investment bank to a new unit within its asset manage- ment business. “We are confident that clients will benefit from their investment experi- ence and insight,” wrote investment bank and asset management heads Jes Staley and Mary Erdoes in the memo to employees.

Mike Stewart, co-head of the invest- ment bank’s global emerging mar- kets business, will run the new business, according to the memo. Stewart will work with Larry Unrein, head of private equity and hedge funds within asset manage- ment, in establishing the business. JPMorgan expects to complete the transition over several years, accord- ing to the memo. Chief Executive Jamie Dimon had said earlier this month the bank would remove some traders from its investment bank unit because of reg- ulatory changes. Dimon has complained about the scattershot nature of US financial reform, which he says is making banking businesses more complicat- ed rather than improving the finan- cial system. JPMorgan, the second-largest US bank by assets, also expects revenues to be hurt by new rules that limit the charges it can apply to credit card and current account customers.

it can apply to credit card and current account customers. RIM founder Mike Lazaridis with the

RIM founder Mike Lazaridis with the new Blackberry PlayBook

Picture: REUTERS

RIM unveils Blackberry PlayBook as rival to iPad

TECHNOLOGY

BY MATTHEW WEST

RESEARCH in Motion (RIM) unveiled its own tablet computer to rival Apple’s iPad yesterday. The computer, named BlackBerry PlayBook, has a seven-inch screen and dual facing cameras. It is WiFi and Bluetooth enabled but needs to link with a BlackBerry smartphone to access the mobile phone network.

Shares of RIM jumped nearly two per cent to $49.29 in after hours trad- ing following the announcement at the company’s annual developers’ conference in San Francisco. RIM expects to ship the device to corporate customers and developers in October. It will become commer- cially available early in 2011. While yet to set an exact price RIM said the PlayBook will fall in the lower range of prices for consumer tablets already on the market.

Former US Treasury chief joins BA board

TRANSPORT

FORMER US Treasury secretary John Snow, and Telefónica chairman César Alierta, are to join the board of the newly formed International Airlines Group (IAG) as non-executive direc- tors, it was announced yesterday. The company, which is being formed by the planned merger of British Airways and Iberia, will create Europe’s second-largest airline by market value after Lufthansa. Under the rules of the merger, BA had to nominate a Spaniard to the board, Iberia had to choose a Briton and both had to pick someone who was neither Spanish nor British. Alierta and Snow, an appointee of former US president George W. Bush, are two of four new faces on the 14- member board of IAG, which will be chaired by Antonio Vázquez, current Iberia chairman. Willie Walsh, BA chief executive, will become chief executive of IAG. Patrick Cescau, former Unilever chief executive and Kieran Poynter, former chairman of PricewaterhouseCoopers are the other two non-executive direc- tors. Last week the merger cleared a sig- nificant hurdle when Iberia said it had decided not to exercise its right to cancel the deal over a BA employ- ees’ pensions deficit of £3.7bn.

said it had decided not to exercise its right to cancel the deal over a BA
said it had decided not to exercise its right to cancel the deal over a BA
said it had decided not to exercise its right to cancel the deal over a BA

4

Focus on Unilever

CITYA.M.

28 SEPTEMBER 2010

This purchase makes financial sense

INVESTORS should keep their hair on. Financially, this deal makes sense. Unilever’s $37.5bn-a-share offer, which values Alberto Culver at around $3.6bn, is good value. The offer, which is worth around 12 times prospective earnings for 2011, is pret- ty cheap when compared to similar deals. Which is just as well, because the deal – while sensible – is not going to change the world. It will strengthen Unilever’s number three position in the haircare market, but that’s about

it. Procter & Gamble has a 23 per cent share of the global haircare space, compared to 18 per cent for L’Oreal and 11 per cent for Unilever. Alberto’s

share is just two per cent, however, although it does have a strong show- ing in North America, where it has 11 per cent of the market compared to six per cent for Unilever. Still, the North American strength belies an international weakness. Around 75 per cent of Alberto’s rev- enues come from more mature mar- kets. Hopefully Unilever will be able to squeeze value from the acquisition by using its strong emerging markets network to distribute brands like VO5 and TRESemme.

Savings of around 150m a year, while welcome, are hardly big news either. This is what Unilever does best: a sensible – if somewhat bor-

ing – acquisition.

 

ANALYSIS l Unilever

 

1,817.00

1,950

1,850

p 27 Sep
p
27 Sep

1,750

1,650

7 JJul

27 Jul

16 Aug

6 Sep

24 Sep

 

BOTTOM LINE

 

Analysis by David Crow

  BOTTOM LINE   Analysis by David Crow Unilever boss Paul Polman said the personal care
  BOTTOM LINE   Analysis by David Crow Unilever boss Paul Polman said the personal care
  BOTTOM LINE   Analysis by David Crow Unilever boss Paul Polman said the personal care
Unilever boss Paul Polman said the personal care sector is growing fast Picture: GETTY
Unilever boss
Paul Polman said
the personal care
sector is growing
fast
Picture: GETTY

Unilever is hoping for a good hair day

CONSUMER

BY STEVE DINNEEN

UNILEVER yesterday announced it will buy US hair and skin care special- ist Alberto Culver in a deal worth $3.7bn (£2.34bn). The acquisition of the firm behind household names such as V05 and TRESemme marks the single biggest Unilever acquisition in almost a decade. The new brands will complement Unilever’s existing portfolio, which includes Dove, Clear and Sunsilk in hair care, and Vaseline in skincare. It will also enhance Unilever’s presence in key emerging markets such as Mexico. Moreover, the deal will bolster Unilever’s flagging hair care sales in its core US market. In the last year Alberto Culver generated sales of $1.6bn and earnings of $250m. It is also likely to herald as-yet

unspecified cost savings. Execution Noble called the deal “more evidence of a strategically and financially sound re-investment phi- losophy at Unilever” and Charles Stanley reiterated its “accumulate” recommendation in the wake of the news. The acquisition follows a yet-to-be completed deal to buy Sara Lee’s body care division for $1.3bn. The firm’s largest value acquisition was the massive $20.3bn acquisition of Bestfoods in 2000. Chief executive Paul Polman said:

“Personal care is a strategic category for Unilever and growing rapidly. “Ten years ago it represented 20 per cent of our turnover; strong organic growth has driven it to now reach over 30 per cent, with strong posi- tions in many of the emerging mar- kets.” Unilever shares closed up 1.28 per cent on the back of the news yesterday.

Unilever takeovers Bestfoods Inmarko TIGI Sara Lee Alberto haircare $20.3bn Bodycare Culver $? $412m $1.3bn
Unilever takeovers
Bestfoods
Inmarko
TIGI
Sara Lee
Alberto
haircare
$20.3bn
Bodycare
Culver
$?
$412m
$1.3bn
$3.7bn
2000
2008
2009
2010
2010

CITYA.M.

28 SEPTEMBER 2010

News

5

▲ CITY A.M. 28 SEPTEMBER 2010 News 5 The resignation of star manager Gervais Williams has

The resignation of star manager Gervais Williams has led to further changes at Gartmore

New setback for Gartmore

FINANCIAL SERVICES

BY STEVE DINNEEN

EMBATTLED fund manager Gartmore suffered a fresh setback yesterday when it lost the mandate to run a £50m investment trust following the resignation of a star manager. The Gartmore Growth Opportunities fund (GGO), said it has reached agree- ment in principle with Artemis Alpha Trust for a merger of the two compa- nies’ assets. The proposal will be put to a shareholder vote in December. GGO said earlier this month it was considering its management arrange- ments after the resignation of smaller companies manager Gervais Williams from Gartmore. Shareholders in GGO can opt for a cash exit at 95 per cent of asset value but that will be limited to 30 per cent

of the trust’s issued share capital. If they stay invested they will receive shares in the Artemis fund at 98.5 per cent of asset value. After GGO started its review of man- agement, 14 investment managers including Gartmore submitted propos- als. Artemis Alpha Trust said the enlarged fund will be managed by John Dodd and Adrian Paterson. Williams’s departure from Gartmore marked the latest in a succession of set- backs this year for the fund manager. Star manager Guillaume Rambourg quit in July to focus on a regulatory probe, having been suspended as part of an internal investigation which sparked heavy outflows of assets as clients took their money elsewhere. The company’s shares have lost near- ly half their value since listing last December.

WILL ROGERS CENKOS WILL Rogers is advising Gartmore on the Artemis deal. The former head

WILL ROGERS

CENKOS

WILL Rogers is advising Gartmore on the Artemis deal. The former head of investment companies corporate finance at UBS has launched over 50 investment com-

panies with a total value of over £35bn. He has advised on a wide range of recon- structions, equity and debt issuance, buy back programmes, remuneration struc- tures and other corporate finance mat- ters. He has recently worked with the UKLA and AIC on the proposed changes to the listing rules for investment companies. Rogers qualified as a corporate lawyer at Allen & Overy in 1989 and joined SG Warburg in 1994, becoming head of investment companies corporate finance in May 2000.

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▲ 6 News CITY A.M. 28 SEPTEMBER 2010 Wolseley boss Ian Meakins says the move to
▲ 6 News CITY A.M. 28 SEPTEMBER 2010 Wolseley boss Ian Meakins says the move to

6

News

CITYA.M.

28 SEPTEMBER 2010

Wolseley boss Ian Meakins says the move to Switzerland will save the firm £23m in tax receipts

Wolseley blames UK tax for Swiss move

REGULATION

BY MARION DAKERS

PLUMBING group Wolseley sparked talk of another exodus of firms from the UK yesterday by announc- ing plans to move its base to Switzerland for tax reasons. The group said it expects to save £23m a year by setting up a Swiss- based holding company, but stressed that it will continue to pay tax on its UK operations. “Clearly if there hadn’t been the difference in the tax rate we would- n’t have made this proposal,” chief executive Ian Meakins said on a call with journalists yesterday. The company spoke to the Treasury and HMRC before making the decision. It blamed the move on controlled foreign companies (CFC) rules, which tax UK compa- nies for certain profit made abroad.

Chief financial officer John Martin said: “It is 100 per cent the CFC regime in the UK. It’s not very helpful to Wolseley. The principle reason for that is 81 per cent of our revenue is from outside the UK.” The CBI called yesterday for the government to do more to keep companies here: “We hope the cor- porate tax roadmap due to be announced in the autumn will pro- vide companies with greater clarity on planned reforms.” The government said it could not comment on individual compa- nies, but a Treasury spokesperson said: “The Government is commit- ted to reform of the CFC rules and will introduce new rules in 2012. Any changes will deliver a more ter- ritorial approach refocusing on artificially diverted UK profits and exempting genuine commercial activities.” Wolseley made flat trading prof-

it of £450m last financial year, it announced yesterday, driven by cost cutting. Revenue fell nine per cent to £13.2bn. Wolseley added that Gareth Davis, the former boss of Imperial Tobacco, would succeed John Whybrow as chairman after the annual shareholders meeting in January. Shares closed down 0.65 per cent at £15.16 yesterday.

ANALYSIS l Wolseley p 1,516.00 1,550 27 Sep 4,150 1,350 1,250 7 Jul 27 Jul
ANALYSIS l Wolseley
p 1,516.00
1,550
27 Sep
4,150
1,350
1,250
7 Jul
27 Jul
16 Aug
6 Sep
24 Sep

ANALYST VIEWS: WHAT WILL THE MOVE TO SWITZERLAND MEAN FOR WOLSELEY?

Interviews by Marion Dakers

CHRIS ALEXANDER | BNP PARIBAS

Wolesley’s news has come out of the blue. But the question is whether it will make much difference to the compa-

ny; I think probably not. It's symptomatic of the tax situation in this country. Wolesley has the majority of its busi-

ness abroad, and it’s logical to move to benefit shareholders. It’s absolutely a part of an exodus to overseas.

ANDY BROWN | PANMURE GORDON

The move doesn’t really change the way we should look at the shares. It’s financial management rather than an

operational change; they will still have a sizeable plumbing business in the UK. For shareholders, it’s clearly a helpful

move, if an international company is in the position to do it. The results as a whole were largely as expected.

JONATHAN JACKSON | KILLIK & CO

It’s obviously a beneficial move for the company, though it does raise the broader question of whether companies

have the proper incentive to stay in the UK. The company’s performance has improved as the year has gone on, and

they have cut costs. The share price has gone up recently, and we saw some profit-taking after the announcement.”

they have cut costs. The share price has gone up recently, and we saw some profit-taking
they have cut costs. The share price has gone up recently, and we saw some profit-taking
they have cut costs. The share price has gone up recently, and we saw some profit-taking

CITYA.M.

28 SEPTEMBER 2010

News

7

Tax rules create a hole in coalition plans for growth

7 Tax rules create a hole in coalition plans for growth COMMENT MARC SIDWELL T HE

COMMENT

MARC SIDWELL

T HE coalition is well aware of Britain’s problems with its Controlled Foreign Company (CFC) rules. George Osborne’s

June budget promised that the gov- ernment was “committed to reform”: new CFC rules are to be legislated in the spring of 2012 and interim measures to improve the current rules will be legislated in the spring of 2011. The CFC rules allow the UK to tax the profits of some subsidiaries of UK firms that are resident in low- tax jurisdictions. Wolseley is only the latest company to be affected and to find the promised timetable for reform too slow. CFC rules have been a problem for years, with Vodafone’s decade-long legal battle only ending this summer. Vodafone agreed to pay £1.25bn after losing an appeal that the CFC rules should not apply to them under EU law. That case was not

unreasonable, given the 2006 rul- ing of the European Court of Justice (ECJ) in a case involving Cadbury Schweppes that UK CFC rules restricted the right to free- dom of establishment. Unfortunately the ECJ argued that the rules could continue if they were restricted to “wholly artifi- cial” cases. Vodafone found itself at the mercy of an unclear legal posi- tion on what constituted genuine economic activity overseas. It is scarcely a surprise that in the face of such certain costs and uncertain outcomes, companies with large overseas operations are moving. The coalition government finds itself in a disastrous position, and not entirely an inherited one. Despite fine words, plans for a slow, careful review with full industry consultation were not just a matter of good practice. They are also George Osborne’s attempt at footdragging to maintain tax receipts in the face of the vast gov- ernment deficit. That thinking is clear in the promised review: the new rules promised for 2012 are “to provide adequate protection of the UK tax base”. But if our economic situation is hard on Britain’s government, it is harder still on private enterprise. Despite a nascent recovery, the eco- nomic environment remains too

difficult for companies to wait for much-needed reforms, especially if at the end of the process they find that changes are neutralised by the desire to keep milking them for their money. Britain needs growth, and com- panies that locate themselves here need the freedom to grow if they are not to move elsewhere. We need to remember the lessons of nations that have lowered taxation on the productive economy radical- ly and reaped great rewards. Angus Maddison’s 2003 research for the OECD shows that from the 1950s to the 1990s, Hong Kong, with a 15 per cent tax rate, grew by 800 per cent while Britain, with a 98 per cent top rate in the 1970s and a 35 per cent basic rate, grew by 175 per cent. Low tax regimes like Switzerland dominate the list of the wealthiest global jurisdictions, according to World Bank figures. Light taxation drives growth and increases the pie from which tax receipts are taken. The coalition has apparently decided that if com- panies are pressed artfully they will still pay out as they used to. It is the difference between wasting time trying to find a better milk- maid instead of aiming to build a bigger herd. Only a serious ambi- tion for growth can help Britain thrive in the hard years ahead.

DEPARTURES FROM THE UK

COMPANY

MOVED TO

OLD AND NEW TAX RATES

AMOUNT SAVED

Wolseley

Switzerland

was taxed in the UK at 34%, new tax 28%

£23m a year saved

November 2010

Informa

Switzerland

26 - 27%, new tax 26 - 27%

£50m a year saved

May 2009

Ineos

Switzerland

tax rates unknown

£100m a year saved

April 2010

WPP

Ireland

25.3%, new tax 23.8%

unknown amount saved

September 2008

Henderson

Ireland

28%, new tax 20%

unknown amount saved

August 2008

UBM

Ireland

17%, basic new rate of 12.5%

unknown amount saved

April 2008

Shire

Ireland

22%, basic new rate of 12.5%

unknown amount saved

April 2008

Tax Exodus: The companies which have lost patience with waiting for a change in rules

WOLSELEY’S announcement yes- terday has sparked fears in govern- ment of a second wave of UK-based companies decamping to Switzerland as frustration grows with the long wait until 2012 before the pledged improve- ments to Controlled Foreign Company (CFC) rules are unveiled. It was a row over profits gener- ated overseas that prompted the first exodus of major businesses in 2008 with several high-profile businesses quitting to take up res- idence in low-tax havens. Ineos, the world’s third-largest chemicals group and the UK’s largest private company, moved to Switzerland in April this year where it said the company could

expect to save 450m (£390m) in tax over four years. Many of the biggest US firms operating in Europe, including Kraft and McDonald’s, which moved its European headquarters to Geneva, followed suit. Switzerland and its 26 autonomous cantons have also welcomed publishing and confer- ences group Informa – the profes- sional publisher behind Lloyd’s List – which generates four fifths of its earnings overseas. At the time, Informa said that Switzerland had “a less complex taxation system which offers upfront certainty of treatment” and in a direct complaint about “double taxation” it said that

Switzerland “does not seek to impose tax on the unremitted profits of subsidiary companies in other jurisdictions”. Its move follows similar deci- sions from fellow publisher United Business Media (UBM) which generates 85 per cent of its earnings overseas and WPP, the advertising group, both of whom moved to Ireland. Ireland has proved a haven for several companies keen to reduce their tax bills, with Dublin’s 12.5 per cent corporation tax rate attracting pharmaceutical firm Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm Henderson.

Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm
Shire, engineering business Charter, Sir Martin Sorrell’s adver- tising group WPP and the invest- ment firm

8

News

CITYA.M.

28 SEPTEMBER 2010

▲ ▲ ▲ ▲ 8 News CITY A.M. 28 SEPTEMBER 2010 Charlie Bean says the Bank

Charlie Bean says the Bank of England wants people to start spending

BoE says spend not save

UK ECONOMY

BY MATTHEW WEST

THE deputy governor of the Bank of England called for Britain’s 22m savers to eat into their reserves and spend more to help stimulate the economy yesterday. Charlie Bean said the BoE wanted households to spend more rather than save. Bean’s comments come as

British savers suffer poor returns on their deposits following the Bank’s intervention in the financial crisis which have brought interest rates to their lowest level in history. Bean said this was part of an “aggressive policy” designed to deal with a “once-in-a-century” financial crisis. In an interview with Channel 4 News Bean added that while savers

might be suffering now “there will be times in the future as there have been times in the past when they will be doing very well out of the fact that interest rates are at a relatively high level.” The deputy governor added it was Bank policy to “encourage more spending” although he admitted the BoE would prefer to see that in the form of more business spending.

Eurozone lending up in August

EU ECONOMY

BY MATTHEW WEST

LENDING in the Eurozone increased in August by the fastest rate in more than a year, the European Central Bank (ECB) said yesterday. Loans to the private sector were 1.2 per cent higher in August than a year earlier, the fifth monthly rise in a row and the fastest growth since June last year, the ECB said. Meanwhile, loans to companies also rose in August but remained neg- ative over the year down 1.1 per cent. The ECB stressed loans to compa- nies typically lag the economic cycle but added it was keen to see a sus- tained resumption in lending to firms, especially after banks had ben- efitted from two years of cheap and generous liquidity supply. Loans to households rose at an annual rate of 2.9 per cent in August up from 2.7 per cent the previous month, with loans for house pur- chase up 3.5 per cent over the year. Overall, money supply growth also jumped, although it remained short of the level the ECB sees as a warning of inflation. M3 money supply, the amount of cash readily available to spend, which is a leading indicator of inflation, jumped 1.1 per cent in August com- pared with a year earlier and against expectations of a 0.3 per cent rise. It was also the strongest growth in a year. At 0.5 per cent, the three-month moving average of M3 growth remains well below the ECB’s refer- ence rate of 4.5 per cent, above which the bank would see a danger to medi- um-term price stability. Societe Generale economist James Nixon warned: “If this kind of growth is sustained month after month, then maybe in six months time the ECB will start thinking about raising inter- est rates, but it is still early days.”

raising inter- est rates, but it is still early days.” Price of gold could hit $1,500
raising inter- est rates, but it is still early days.” Price of gold could hit $1,500
raising inter- est rates, but it is still early days.” Price of gold could hit $1,500
raising inter- est rates, but it is still early days.” Price of gold could hit $1,500
raising inter- est rates, but it is still early days.” Price of gold could hit $1,500
raising inter- est rates, but it is still early days.” Price of gold could hit $1,500

Price of gold could hit $1,500

WORLD ECONOMY

BY HARRY BANKS

THE price of gold could reach record

highs of up to $1,500 (£949) an ounce

in the next twelve months delegates

at the London Bullion Market Association (LMBA) annual confer- ence said yesterday. The majority of delegates saw the

price of gold rising to $1,406 an ounce by September next year but 32 per cent of delegates believed the price could rise beyond that. The news came as spot gold hit a record $1,300 an ounce as an initially weaker dollar and speculation that the US Federal Reserve might further resort to quantitative easing to give the economy a leg up, supported sen- timent. The Fed said last week it was pre- pared to take action to help the recov- ery and lift inflation. Many analysts expect it to resume buying longer- term government debt later in the year to drive borrowing costs down further. In the last 12 months, the gold price has risen by 30 per cent against

a backdrop of volatile currencies,

stocks and bonds and doubt over the resilience of the global economy. With investors looking to protect against potential inflation, or defla-

tion, analysts have also said that gold

is a viable investment for both scenar-

ios. One of the major forces feeding investor demand has been the prolif- eration of exchange-traded funds backed by physical metal held in vaults. This has made investing in gold a reality for retail investors for the first time. At the LBMA’s event in Edinburgh last year, at which the association conducted a formal price poll on the last day of the conference, delegates forecast a gold price of $1,18 by this September.

CFOs call for less rules in financial narrative

FINANCIAL SERVICES

BY EMMA SADOWSKI

MORE discretion and less regulation is needed when auditors deliver financial commentary at the front of annual reports, according to a raft of chief financial officers (CFOs) at large commercial companies. A new report published by Deloitte and the Association of Chartered Certified Accountants (ACCA) found

that over 65 per cent of some 230

CFOs interviewed said they would like

a reporting environment with more

discretion and less regulation. Almost 60 per cent said there should be an emphasis on forward looking information in narrative

reporting found at the front of annu-

al accounts.

Meanwhile, meeting legal and reg- ulatory requirements were the most important drivers for narrative disclo-

sures, according to 83 per cent of CFOs, while meeting the needs of

shareholders came marginally below this at 82 per cent. Isobel Sharp, Deloitte audit part- ner, said: “Companies are trying to serve two masters at the same time. They want to inform shareholders of

what is happening in the business. They need to satisfy regulators by meeting all the disclosure rules. To achieve both is a major challenge.”

FSA slams asset auditing

REGULATION

THE Financial Services Authority (FSA) has launched a review into the auditing standards of client assets after deeming current practices as flawed. After reviewing auditors’ reports of client assets, the watchdog said it found “a number of serious failings” that indicated a raft of general defi- ciencies within the practice.

As a result it will work alongside the Auditing Practices Board for the next three months to review the cur- rent landscape. It will focus on clarify- ing current standards, improving firms’ governance oversight and cre- ating more consistency in the sector. The review comes after the FSA slapped JP Morgan with a mammoth £33.3m fine for “failing to protect client money” in June. A policy statement is due in 2011.

CITYA.M.

28 SEPTEMBER 2010

Labour Conference

9

▲ CITY A.M. 28 SEPTEMBER 2010 Labour Conference 9 Alistair Darling warned the party to stick

Alistair Darling warned the party to stick to the cen- tre ground and not tack to the left

The new leader of the Labour party Ed Miliband wants his brother to be shadow chancellor

party Ed Miliband wants his brother to be shadow chancellor But David Miliband is refus- ing
party Ed Miliband wants his brother to be shadow chancellor But David Miliband is refus- ing

But David Miliband is refus- ing to be drawn on his future

Pictures: PA/

REUTERS

Miliband the elder wows the crowds

out in the race to become Labour’s new leader, seems to have tri- umphed where his tutor failed. Yesterday, he delivered a barn- storming speech, his best confer- ence address ever. He was gracious in defeat, but also had a stark warn- ing for those who want the party to tack to the left under his brother Ed. Labour went into politics “not to practice class war, but to end it,” he said. The elder Miliband also appeared to contradict his brother and leader on foreign policy. In his campaign, Ed promised a foreign policy based on “values” not “alliances”, a nod to those Labour members who think the former government was slavish-

The elder brother has left the crowd wanting more, says David Crow

WHEN Tony Blair stood down as Prime Minister, an embarrassing memo detailing plans for his exit from office was leaked to the press. “He needs to go with the crowds wanting more. He should be the star who won’t even play the last encore,” it read. In the end, Blair’s departure left the public – and the party – strangely cold. But his disciple David Miliband, who narrowly lost

CITYVIEWS:DIDTHELABOURPARTYPICKTHERIGHTMILIBANDBROTHER?

ly pro-American. But yesterday David Miliband said: “It’s not the opposite of an independent foreign policy to choose to work with President Obama and Secretary Clinton. Britain’s values and inter- ests are best pursued with a super- power whose leaders share our values and interests.” David Miliband is refusing to say whether he will serve under Ed, but this speech sounded more like a swansong than a pitch for a shadow cabinet job. He won’t announce his intentions until tomorrow after- noon, for fear of overshadowing his brother’s big speech today. If he does go, it will certainly be with the crowds wanting more.

Interviews by Victoria Scholar

ELLIOTT BONASSERA |

ICAP

“No – Ed’s policies are far too anti-business and I think it is a real shame. His policies are not conducive to recovery nor with the much needed re-estab- lishment of the City’s reputation for successful wealth creation in the aftermath of the 2008 crisis.”

wealth creation in the aftermath of the 2008 crisis.” ROB TAYLOR | A&T CONSULTING Yes, because

ROB TAYLOR |

A&T CONSULTING

Yes, because with Ed as leader the Labour Party will never beat the Conservatives. I think Ed’s reformist views are mis- aligned with the needs of today’s economy. We need to encourage entrepreneurialism rather than head towards a situa- tion of more over- regulation.”

head towards a situa- tion of more over- regulation.” NICK ANDERDON | PROMONTORY FINANCIAL GROUP “If

NICK ANDERDON |

PROMONTORY FINANCIAL GROUP

“If the Labour Party wants to strangle the UK’s dominant wealth generating sector then Ed was the right choice. Ed Miliband and Vince Cable seem to have been living in a dream world and have no chance of tackling today’s economic challenges.”

no chance of tackling today’s economic challenges.” Ignoring the deficit would be a disaster, Darling warns

Ignoring the deficit would be a disaster, Darling warns party

POLITICS

BY DAVID CROW

ALISTAIR Darling yesterday warned of “disastrous consequences” if the Labour party ignores Britain’s £160bn budget deficit. Darling, who as chancellor pledged to halve the deficit within four years, said the party needed to set out a “credible plan with conviction and confidence”. He added: “People know there is a deficit, they know it needs to come down and if you deny that, frankly, people will not listen to you, they will walk away and it will have a disastrous consequence.” The former chancellor has previously said Labour lost the election because it was dishonest about the deficit. Darling’s remarks will be seen as a thinly-veiled attack on Ed Balls, the for- mer schools secretary who argued for a slower pace of deficit reduction in the

Labour leadership campaign. His comments come as new Labour leader Ed Miliband tries to convince his brother David, who he defeated in the contest to lead the party, to become shad- ow chancellor. But while David Miliband is fully signed up to Darling’s deficit reduction proposals, his younger brother this week said it was a plan that needed to be “improved”. David Miliband has refused to say whether he will serve in his brother’s shadow cabinet, leading to speculation he will quit frontline politics this week. Sources close to Ed Miliband are annoyed at his brother’s refusal to set out his position. “The will he stay, will he go show is a massive distraction,” a cam- paign aide said yesterday. Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief if David Miliband does quit.

Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief
Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief
Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief
Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief
Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief
Balls and wife Yvette Cooper are being considered as contenders for the top eco- nomic brief
10 The Capitalist CITYA.M. 28 SEPTEMBER 2010 EDITED BY VICTORIA BATES GOT A STORY? EMAIL
10 The Capitalist
CITYA.M.
28 SEPTEMBER 2010
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com

GOVERNANCE TRAINSPOTTERS GET KNICKERS IN A TWIST OVER FLINT

IT’S been a tiring week for HSBC, which is currently juggling the han- dling of a full-scale management game of musical chairs, the fallout from its leaky succession-planning AND a band of disgruntled sticklers for corporate governance among its shareholder base. So it’ll come as a welcome surprise for the bank to learn that a conserva- tive core of its investors remains as

married as HSBC itself to the bank’s traditional policy of appointing man- agement from within. Corporate governance concerns have centred around the appoint- ment of the finance director to the chairman’s position – particularly as Douglas Flint has worked so closely in the past with new chief executive Stuart Gulliver – and the practical problems associated with the geo-

graphic separation of the chairman in London and the chief in Hong Kong. (The latter, of course, has been a problem for far longer – with Standard Life’s head of corporate gov- ernance Guy Jubb raising the issue, along with his concerns over board remuneration, at the group’s AGM back in May. “Our experience and sharpened sense of stewardship sug- gests to us that the arrangement is

of stewardship sug- gests to us that the arrangement is Flint’s appointment to chair HSBC has
of stewardship sug- gests to us that the arrangement is Flint’s appointment to chair HSBC has

Flint’s appointment to chair HSBC has governance sticklers hot under the collar Pic: REX

not sustainable,” Jubb warned.) But one large investor The Capitalist chatted to yesterday, who wished to proffer his support to the bank’s embattled board anonymously, hit back at the boffins with the rule book. “This is bureaucracy gone mad – who cares!” he roared. “If the finance director is the best person to be chairman, then so be it – and sucks to the legions of trainspotters in the City getting their knickers in a twist.” That’s told’em.

MAKING A DEBUT

Despite less-than-enthusiastic reviews from critics, the second Wall Street

reviews from critics, the second Wall Street The cast of Wall Street 2: Money Never Sleeps

The cast of Wall Street 2: Money Never Sleeps

movie, “Money Never Sleeps”, man- aged to clean up on its opening week- end at the US box office. The film made $19m (nearly £12m) at US cinemas – hardly a record-break- er in itself, but not at all shabby for director Oliver Stone, representing the biggest gross debut weekend of his career, behind the $18.7m opening of World Trade Center. And for Michael Douglas – aka the film’s star “Gordon Gekko”, it’s his second-biggest debut ever, behind You, Me and Dupree’s

$21m.

Ideologies”. It’s not the first time Cattelan has courted controversy, either – his work includes a sculpture of Pope John Paul being hit by a mete- orite, as well as an installation of three baby puppets hanging from the branch of a tree – both of which, unsurprisingly, have provoked heated protests in the past. Luckily for the financial workers at the Italian exchange, Cattelan insists the hand sculpture is meant more as an “act of love” than a middle-finger- up to the banking villains-du-jour…

BRAGGING RIGHTS

Ping! In zooms an invitation to a whole host of debates being organised by Mayor of London Boris Johnson as part of the Story of London festival at the beginning of October – including one, the first of the bunch, on the role of the City. “Bankers and Bonuses: What has the City ever done for London?” is its acerbic title, and it will feature, among others, entrepreneur Luke Johnson, financial journalist Daniel Ben-Ami (author of “Cowardly Capitalism: The Myth of the Global Financial Casino”) and… musician Billy Bragg. That’s the same Billy Bragg who earlier this year threw his penny’s worth into the debate by refusing to pay his taxes unless the government acted to curb RBS bonuses. Should turn out to be an insightful spectacle, then…

Should turn out to be an insightful spectacle, then… RUNNERS AND RIDERS Something of a fillip

RUNNERS AND RIDERS

Something of a fillip for Nationwide chief executive Graham Beale, who Paddy Power has decided is top of the list of runners and riders to succeed Eric Daniels as the next chief execu- tive of Lloyds Banking Group. The bookie has Beale at 5/2, with Lloyds insider favourite Helen Weir coming in at 11/4. Former trade minister and Standard Chartered boss Lord Davies and RBC boss Gordon Nixon are at 4/1 and 6/1 respectively. Given those odds, it might bode well to have a quick flutter on ex-Barclays retail and commercial bank- ing boss Fritz Seegers, con- sidered a top contender by the City but looking long with at 12/1. Or perhaps former JP Morgan Cazenove chief executive Naguib Kheraj, who doesn’t get a look- in with Paddy at all?

FINGER SALUTE

The Italians aren’t exactly known as a nation of shrinking violets, but a new sculpture erected in front of the Milan Stock Exchange has challenged even their free-and-easy attitude to life. The sculpture, which stands 11 metres high and is called “L.O.V.E.”, features a hand with the middle finger sticking up in the tradition- al gesture of profanity. It is part of a retrospec- tive dedicated to the work of contemporary Italian artist Maurizio Cattelan, labelled “Against

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12

News

CITYA.M.

28 SEPTEMBER 2010

AIG forced to defend suit over subprime exposure

INSURANCE

BY HARRY BANKS

A JUDGE yesterday refused to dismiss

a securities fraud lawsuit accusing

American International Group (AIG) of misleading investors about its exposure to subprime mortgages, which led to a liquidity crisis and $182.3bn of federal bailouts. The ruling by US district judge Laura Taylor Swain allows the case to

go forward and could pave the way for a trial over AIG’s near collapse. The government rescue led taxpayers

to take a nearly 80 per cent stake in

the New York-based insurer. AIG spokesman Mark Herr declined to comment. Investors led by the State of Michigan Retirement accused AIG, executives and directors of failing to disclose the risks that AIG had taken on through its portfolio of credit

default swaps (CDS) and a securities lending program. Swain wrote that the allegations in the class-action lawsuit were suffi- cient to suggest there was “a strong inference of fraudulent intent” in how AIG communicated publicly about the risks in the portfolio of credit default swaps. The lawsuit cov- ers investors who owned AIG securi- ties between 16 March 2006, and 16 September 2008.

securi- ties between 16 March 2006, and 16 September 2008. Among the defendants are former AIG

Among the defendants are former AIG chief executive Martin Sullivan Picture: REUTERS

NEWS | IN BRIEF EU ends Apple probe Flash crash sparked by order surge European
NEWS | IN BRIEF
EU ends Apple probe
Flash crash sparked by order surge
European Union competition regulators
said yesterday they will drop an investi-
gation into US computer giant Apple
after the company eased restrictions on
programming tools and cross-border
warranties for the iPhone. The move
comes after Apple changed its policies to
make it easier for iPhone users to get
repairs under warranty in an EU country
other than where it was bought.
A
surge in quote traffic immediately fol-
lowed by heavy sales of key securities
sparked the “flash crash” on US stockmar-
kets on 6 May, datafeed vendor Nanex
said yesterday. The sale of $125m worth
of
Chicago Mercantile Exchange S&P500
stock index e-mini futures contracts fol-
lowed 25 milliseconds later by the sale of
more than $100m worth of exchange-
traded funds triggered the sell-off it said.
News CITYA.M. 28 SEPTEMBER 2010 13 Aberdeen inflows up on equity sales ASSET MANAGEMENT BY
News
CITYA.M.
28 SEPTEMBER 2010
13
Aberdeen inflows
up on equity sales
ASSET MANAGEMENT
BY HARRY BANKS
FUND firm Aberdeen Asset
Management said yesterday that
inflows accelerated over the sum-
mer, with clients favouring equity
funds despite volatile markets
which have made investors cau-
tious.
The firm reported a net £621m
of new inflows during July and
August, above the £337m in the
previous three months.
The firm’s equity and money
markets funds saw net inflows,
while its bond funds and alterna-
tive portfolios – which include
higher-margin funds of hedge
funds and multi-asset funds – saw
clients exit.
The numbers appear to counter
the wider sector short-term trend,
with flows statistics for July from
Lipper FMI showing sustained
strength in sales of bond funds
while new money invested in equi-
ty products slumped.
Combined with buoyant markets,
the inflows lifted Aberdeen’s assets
under management – on which
fund firms earn fees – 2.6 per cent
to £168.8bn. Almost 70 per cent of
that is evenly split between equities
and fixed-income products, with
alternatives and property at about
17 and 13 per cent respectively.
“We remain firmly focussed on
organic growth, generating cash
and strengthening our balance
sheet further,” said chief executive
Martin Gilbert.
ANALYSIS l Aberdeen Asset
Management
p
43
844.00
27 Sep
41
39
37
7 JJul
27 Jul
16 Aug
6 Sep
24 Sep
CHINA AIRLINES TO PAY $40M FINE
Japan set for
fresh stimulus
as growth slows
WORLD ECONOMY
CHINA Airlines yesterday pleaded guilty and agreed to pay a $40m (£25.2m)
fine in the US for price-fixing related to its cargo business. The US Department
of Justice has said that the Taiwan-based airline conspired to fix cargo prices
between January 2001 and February 2006. China Airlines will pay the fine in
annual instalments over the next five years.
JAPANESE Prime Minister Naoto Kan
ordered his ministers yesterday to
plan a second budget for the remain-
der of the financial year amid con-
cern the country’s economy is
faltering.
A government official said spend-
ing could total 4.6 trillion yen
(£34.5bn) but would not require addi-
tional government bonds to be issued.
However, economics minister Banri
Kaieda called for Japan’s central
bank – Bank of Japan (BoJ) – to lift its
ceiling on government bond purchas-
es effectively calling for a resumption
of quantitative easing. The BoJ could
lift the ceiling by as early as next week.
The news came as official figures
from the ministry of finance showed
exports slowed for the sixth straight
month. For the twelve months to
August exports grew by 15.8 per cent,
well down from a peak in February of
45.3 per cent.

14

News

CITYA.M.

28 SEPTEMBER 2010

Carlyle launches student housing investment push PRIVATE EQUITY BY VICTORIA BATES CARLYLE Group, the private
Carlyle launches student
housing investment push
PRIVATE EQUITY
BY VICTORIA BATES
CARLYLE Group, the private equity
firm known for its large-scale invest-
ments in the defence industry, yester-
day sealed a joint venture deal with
Generation Estates, kickstarting its
next big push in the student accom-
modation sector.
Carlyle, led by co-founder David
Rubenstein, and Generation said they
had acquired one site in Highbury
and Islington and are progressing
work on a further three sites in
London, to build an initial portfolio
worth around £350m.
The private equity giant believes
student housing is an attractive long-
term investment proposition due to
excess demand and a shortfall of sup-
ply, particularly in London. There are
currently over 260,000 full time stu-
dents in the capital, yet purpose-built
accommodation can only cater for
around 16 per cent of them.
The excess demand has led to long-
term average rental growth of around
seven per cent – a figure which grew
to 10 per cent in 2009, Carlyle said.
The firm expects the number of
post-graduate and overseas students -
a group which tends to favour secure
purpose-built accommodation – to
grow by around 15 per cent over the
next couple of years. But it said cur-
rent supply will struggle to keep up,
with only 4,000 new beds due for
delivery between 2010 and 2012.
Carlyle co-founder David Rubenstein sees
student accommodation in London as an
attractive investment
Picture: PA

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CITYA.M.

28 SEPTEMBER 2010

News

15

China’s Bright Foods is weighing a bid for United Biscuits and its iconic brands
China’s Bright Foods is weighing
a bid for United Biscuits and its
iconic brands

China bid for

UB gives Cable

a headache

FOOD AND DRINK

BY STEVE DINNEEN

UNITED Biscuits could be the next iconic British firm to be snapped up by a foreign buyer, posing a fresh problem for embattled business secre- tary Vince Cable. China’s Bright Food Group has its eye on a $3.2bn (£2bn) bid for the maker of Jaffa Cakes and McVities bis- cuits. Cable has campaigned for tougher regulation to make it more difficult for foreign firms to buy UK compa- nies after Kraft’s controversial takeover of Cadbury earlier this year. However, he appears to be power- less to stop the deal going through if owners Blackstone and PAI Partners decide to cash in on the business they bought for £1.6bn four years ago. It would be the first time a Chinese firm has taken outright control of a major European food firm. Bright Food has hired Rothschild to help broker the deal, although both firms declined to comment. It is understood US-based Blackstone and French PAI had been planning an auction for the firm but are now in exclusive talks with Bright

Food. Other parties linked with the group included Kraft and Campbell Soup. United Biscuits has struggled in

recent years, with analysts criticising

it for failing to take the initiative in

emerging markets. The Chinese firm, which recently lost a bidding war for Australian sugar refiner CSR, has a diverse port- folio that includes a taxi business in Shanghai, ham and milk production facilities, a property empire and a tourism business. Despite being formed just four years ago, Bright Food now has sales topping £4.3bn and profits of £200m. United Biscuits employs 7,000 peo- ple in Britain at 11 factories. The company, which has been in

business for over 100 years, has other of well-known brands including Jacob’s, Carr’s, McCoy’s and Hula Hoops. United Biscuits grew its profit for a fifth straight year in 2009, when its earnings grew by 13.7 per cent to £223.4m. That year, the firm notched

a 5.1 per cent rise in its revenues to

£1.3bn. The food firm in recent years

has made inroads to the US and Australian markets.

Third time lucky for Cinven as it snaps up Spice at 70p per share

PRIVATE EQUITY

SPICE, the UK’s biggest installer of water meters, yesterday succumbed to a £251.1m takeover bid from Cinven, after the private equity group twice sweetened its offer. Cinven submitted its recommend- ed bid through its investment vehicle Cilantro Acquisitions at 70p per share, after offering 54p a share for the firm in May and raising the bid to 62p-65p in July. Spice chief executive Martin Towers said the offer would prove “good for customers, employees and sharehold- ers” alike. He added: “Cinven is a highly cred-

ible institution with substantial funds at its disposal. As an investor, Cinven will take a long-term perspec- tive on our business with a view to supporting continued delivery of excellent service levels to our cus- tomers and opportunities for our employees.” The 70p-per-share offer represents a 5.3 per cent premium to Spice’s clos- ing share price of 66.5p last Friday, though it remains substantially lower than the 130p highs at which the stock was trading prior to the finan- cial crisis in 2007. Spice was advised by boutique Hawkpoint and Cinven by investment bank Altium.

3i ramps up debt operations with £18m Mizuho purchase

PRIVATE EQUITY

BY VICTORIA BATES

PRIVATE equity group 3i yesterday moved to expand its reach into the debt management space, snapping up debt specialist Mizuho Investment Management (MIM) for £18.3m. MIM will merge with 3i’s existing small-scale debt activities to create a third substantial string to the firm’s bow, alongside its private equity and

infrastructure arms. The new business – 3i Debt Management – will have assets under management of around £4bn, almost £3.7bn of which come from MIM. MIM’s management and 3i’s exist- ing debt management employees are to sink their own capital into the new business to acquire a 45 per cent stake, while 3i will retain a 55 per cent controlling interest. MIM’s current chief executive

Jeremy Ghose will move over to 3i with his 28-strong team as chief exec- utive of the debt management arm. The move by 3i comes just over a week after chief executive Michael Queen initiated a revamp of the group’s private equity operations, merging the buyout team with its growth capital arm. 3i lost one of its top dealmakers, head of buyouts Jonathan Russell, as a result of the shake-up.

its growth capital arm. 3i lost one of its top dealmakers, head of buyouts Jonathan Russell,

CITYA.M. CITYA.M.

28 28 SEPTEMBER SEPTEMBER 2010 2010

News

17

Sirius completes share placing

ENERGY

BY MARION DAKERS

SIRIUS Petroleum is close to complet- ing a $40m (£25.2m) money-raising drive to pay for its first oil field in Nigeria, more than seven months after suspending its shares on the AIM market. Sirius is set to beat its $40m target with both a share placing with insti- tutional investors and a debt agree- ment, a person close to the company said yesterday. The group is expected to

announce the results of the share placing later this week, before resuming its AIM listing. Sirius froze its shares in February to work on a $2m takeover of the Ke field from a Nigerian company, Del Sigma Petroleum. The firm said the rest of the cash would be spent on developing the field in the Niger delta. Under the terms of the deal, Sirius will receive a net preferential cash flow of 78 per cent from revenues once oil is produced, until full recov- ery of its investment. After this the

company will receive 40 per cent. Sirius has signed four joint ven- ture agreements with local compa- nies, who will work with Chevon, Shell and Mobil to develop oil deposits in the region. Emerging markets investment banks Renaissance Capital and Strand Hanson are working on the equity raise with Sirius, which was set up in 2009 with the aim of invest- ing in Nigerian oil assets. Shares in the company froze in February at 9p, valuing the company at £46.87m.

WYG says it will continue to slim down after cuts

ENGINEERING

TROUBLED engineering consultant WYG said yesterday its major restruc- turing was on track, after announcing pared losses for the year of £21.9m. The company, which undertook a debt for equity swap with its lenders in January, said it cut 620 jobs in the year to 30 June, costing £8m in redun- dancy payments and office closures. More cost-saving measures are expect-

ed in the current financial year, said chairman Mike McTighe. “The much awaited outcome of both the comprehensive spending review and the strategic defence spending review continues to induce paralysis across both the public and private sector markets,” said Tighe Revenue at the firm fell 16 per cent to £220.6m. Shares in the firm, which was recently demoted to the AIM market, dropped 8.8 per cent to 28.5p.

OFT puts off decision on Travis Perkins

PROPERTY

BY MARION DAKERS

BUILDING merchant Travis Perkins said yesterday its £558m purchase of BSS Group has been delayed after the Office of Fair Trading (OFT) said it needed more time to examine the deal. Travis Perkins, which also runs the Wickes DIY chain, told the stock mar- ket the OFT had extended the deci- sion date on whether to approve the deal to 19 October. The company’s original timetable for completing the deal will now not be met and it said will update the market in due course. It had planned to complete the acquisition on 22 October. Travis Perkins said in May it was interested in buying BSS, and agreed a 435.8p a share deal in July. The deal would create the biggest plumbing and heating trade and retail distribution business, with 19,000 employees and a combined turnover of more than £4bn. The

group would overtake Wolseley, the current market leader that yesterday said it was moving its base to Switzerland. The enlarged group would repre- sent around a quarter of the sector, prompting the OFT to open a consul- tation shortly after the deal was agreed in July. Travis Perkins has said the deal will deliver £25m in savings by 2013, and become profit-making the fol- lowing year. Shares in Travis Perkins fell 1.6 per cent to 840p yesterday, while BSS closed down one per cent at 450p.

ANALYSIS l Travis Perkins p 840.00 43 27 Sep 41 39 37 7 JJul 27
ANALYSIS l Travis Perkins
p 840.00
43
27 Sep
41
39
37
7 JJul
27 Jul
16 Aug
6 Sep
24 Sep

TFL HANDS OUT £320M IN TUBE REPAIR JOBS

Aug 6 Sep 24 Sep TFL HANDS OUT £320M IN TUBE REPAIR JOBS TFL named the

TFL named the 17 companies it had chosen to make £320m worth of repairs to the Tube

network yesterday. The work includes new plumbing, fire prevention and an upgrade to

the communications system. Companies that have won three-year contracts include Siemens, Atkins and MJ Quinn, which will focus on the stations previously maintained

by Metronet.

Picture: PA

US vote over firms too big to fail postponed

REGULATION

US BANKING regulators yesterday put off proposing how the government would use its new authority to dis- mantle large, collapsing financial companies, saying they need more time for industry and other regula- tors to weigh in. The Federal Deposit Insurance Corp (FDIC) had tentatively planned to vote yesterday on issuing an interim final rule that would have put in place some aspects of how the agency would handle the winding down of large financial firms previously con- sidered “too big to fail.” The so-called resolution authority was a main plank in the financial reform legislation, and is designed to avoid massive government bailouts such as the one for AIG, and destruc- tive bankruptcies like Lehman Brothers. On a separate matter, the board approved yesterday a final rule that gives federal protection to securities backed by home loans and other con- sumer debt if they meet higher stan- dards and banks retain some of the risk associated with the products. Industry officials criticised this move, saying the FDIC rule only applied to some parts of the market, creating an uneven and unfair play- ing field.

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18

News

CITYA.M.

28 SEPTEMBER 2010

System C sees profit up 32pc

HEALTH

BY HARRY BANKS

HEALTH and social care solutions provider System C Healthcare yester- day reported a 32 per cent rise in pre- tax profit to £5.4m from £4.1m for the year to 31 May. Revenue surged by 75 per cent to £38.3m from £21.9m. Excluding new acquisitions, revenue increased by 44 per cent to £31.5m. Meanwhile, earn- ings per share were up nine per cent at 4.07p from 3.72p. System C said its strong cash gener- ation had been strong, with a net position at the year-end of £18.6m, up

from £14.7m. Final dividend was increased to 0.50p from 0.44p, with total dividend up 14 per cent to 0.75p. The acquisition of Liquidlogic in July 2009 for £10.2m had given System C entry into the social care IT market, while acquisition of Conscia Enterprise Systems in October for £0.8m had strengthened the group’s expertise in web-based technologies. Chief executive Ian Denley said:

“This is a time of great upheaval for the NHS, in both policy and econom- ic terms, with changes under way that are generating both risks and opportunities.

“At System C, we are completing our five-year strategic investment in our Medway software and bringing the products to market at a time when NHS Trusts have been newly freed from central purchasing obliga- tions. “We are now experiencing a surge in procurement activity and have already achieved strategic contract wins, including The Royal Devon & Exeter NHS Foundation Trust.” Denley added that services rev- enues were down but holding steady and the sales pipeline for Medway had “never been stronger”.

AstraZeneca drug fails in key prostate cancer trial

PHARMACEUTICAL

ASTRAZENECA’S experimental prostate cancer pill Zibotentan failed to improve survival in a late-stage clin- ical trial, dealing a fresh blow to the company’s drug pipeline. As a result, AstraZeneca plans no regulatory submissions for ziboten- tan at this time and a spokesman said yesterday it was discussing the impli- cations of the setback with investiga- tors working on other studies involving the drug.

The failure of zibotentan to improve overall survival in the late stage, or Phase III, study follows simi- larly unsuccessful trials for two other AstraZeneca pills, Recentin in colon cancer earlier this year and Vandetanib in lung cancer in 2009. Vandetanib has since gone on to show benefits in thyroid cancer, a smaller potential market. Zibotentan, a once-daily tablet, is being studied in more than 3,000 men with prostate cancer in a pro- gramme of clinical trials.

Nestle in plan to open new nutrition unit

HEALTH

BY JOHN DUNNE

NESTLE, the world’s biggest food group, is setting up a new company to develop products it says will treat dis- eases like diabetes. The maker of Nescafe coffee, and KitKat chocolate bars has been advancing into healthy foods to tap into growing consumer awareness of the benefits of a healthier diet. Nestle chief executive Paul Bulcke said the market was still crystallising, with some estimating it to be worth up to $150bn (£94bn). The firm said Nestle Health Science, to be opera- tional from 1 January 2011, will con- duct research into foods that can improve health and longevity. The parent company will invest around SwFr500m (£321m) the next decade and the new offshoot will compete with companies such as Abbott Laboratories, chairman Peter Brabeck said. It will be run at arm’s length from Nestle’s main food, bev- erages and nutrition activities, and will incorporate its HealthCare Nutrition unit. The HealthCare Nutrition unit had a turnover of SwFr1.6bn in 2009. Nestle as a group is one of the

world’s biggest producers of processed foods, including Nesquik drink and Haagen-Dazs ice cream, with sales of SwFr108bn last year. Luis Cantarell, currently head of opera- tions in the Americas, will head the new company from the start of next year. Nestle chairman Peter Brabeck- Letmathe said: “Personalised health science nutrition is about finding efficient and cost effective ways to prevent and treat acute and chronic diseases in the 21st century.” Around 285m people have dia- betes, one of the major causes of pre- mature illness and death worldwide. Vevey-based Nestle said as a result of Cantarell’s move, Chris Johnson would join the Nestle executive board.

ANALYSIS l Nestle 52.80 27 Sep 43 CHF 41 39 37 7 JJul 27 Jul
ANALYSIS l Nestle
52.80
27 Sep
43
CHF
41
39
37
7 JJul
27 Jul
16 Aug
3 Sep
23 Se

PZ CUSSONS BUYS ST TROPEZ FOR £63m

16 Aug 3 Sep 23 Se PZ CUSSONS BUYS ST TROPEZ FOR £63m SELF-TANNING products company

SELF-TANNING products company St Tropez, whose fake tan spray is used by celebrities such as Victoria Beckham (left), has been sold again. Its UK owner LDC, the private-equity arm of Lloyds Banking Group, sold the firm for £62.5m to PZ Cussons, the maker of Imperial Leather soap and Carex handwash, it announced yester- day.

Picture: GETTY

Sanofi-Aventis sticks to its $69 per share offer for drugmaker Genzyme

PHARMACEUTICAL

SANOFI-AVENTIS has not changed its

offer of $69 per share for drugmaker Genzyme, it said yesterday.

Genzyme rejected Sanofi’s offer, claiming it had dramatically under- valued the US company.

But Sanofi spokesman Jean-Marc Podvin said yesterday: “We have one offer at $69. No other offer has been

made

dialogue.” He declined to comment on a Wall Street Journal report released over the weekend that said Sanofi had approached Citigroup and Bank of America about additional financing as it contemplates raising its $18.5bn (£11.6bn) bid. Industry analysts said the fact that Sanofi may have roped in more

We would like to enter into a

lenders did not change prospects for a deal as funds were already available for the move. Sanofi has said it already has financing from JP Morgan Chase, BNP Paribas and Societe Generale. The French drugmaker wants to reach an agreement but has not ruled out a hostile offer made directly to Genzyme shareholders if its efforts continue to be blocked.

Actelion shares fall after haemorrhage drug fails to impress in experts’ study

PHARMACEUTICAL

BY HARRY BANKS

ACTELION’S experimental drug Clazosentan is unlikely to make it to market after it failed in a late-stage study, dealing the biotech group another blow following a setback for its key drug Tracleer. Shares in the Swiss group closed down almost eight per cent at SwFr 40 yesterday. “The failure of clazosentan is bad news for Actelion,” said Sarasin ana-

lyst David Kaegi. “The study was potentially the most important catalyst for Actelion shares this year. “According to my estimates, cla- zosentan had sales potential of up to SwFr1bn (£850m),” he said. Actelion, which is trying to cut its dependence on heart and lung treat- ment Tracleer, said clazosentan failed to meet its primary endpoint in the Conscious-2 trial in patients with aneurysmal subarachnoid haemor- rhage, a type of bleeding in the brain.

The failure in the long-awaited Phase III study means it is very unlike- ly that clazosentan will make it to market, although a company spokesman said all the data still need- ed to be evaluated and the group would provide an update with Actelion’s third-quarter results on 21 October. Another late-stage trial is still ongo- ing. “We have four drugs on the market and a growing revenue stream,” the spokesman said.

Healthcare Locums sees profits drop as cuts bite

HEALTH

SPENDING cuts by NHS managers have hit profits at medical staffing company Healthcare Locums. The firm said yesterday pre-tax profits dived 21 per cent to £6.8 m in the first half of 2010. Executive vice-chairman Kate Bleasdale said: “We have experienced challenging trading conditions in our NHS operations as a consequence of managers’ uncertainty over spending

priorities in the run-up to the general election.” The firm places medical staff including doctors, specialist nurses, and physiotherapists with the NHS and private-sector clients. However, the NHS accounts for less than half of Healthcare’s revenues and the pres- ent uncertainty in the UK has been partly offset by strong international growth, it said. Bleasdale said trading would improve as the coalition had secured frontline spending.

CITYA.M.

28 SEPTEMBER 2010

News

19

Google keeps top ranking as best employer

RECRUITMENT

BY EMMA SADOWSKI

GOOGLE is the most attractive employer in the world, according to new research, which shows that fewer students and graduates are turning to the financial services industry for work. Up to 130,000 job seekers with either a business or engineering back- ground have voted the internet giant into the top spot in employment con- sultancy Universum’s annual survey. Google has maintained the leading ranking both as a business and as an engineering employer for the second year in a row. Universum cited Google’s profes- sional training opportunities and its strong brand as some of the reasons why it held on to the top spot. However, the search engine is fac- ing increasingly stiff competition from the world’s largest accounting firms, as KPMG, Ernst & Young, PricewaterhouseCoopers and Deloitte

have also climbed up the business table. “We’re witnessing the auditing firms and consumer goods compa- nies re-conquering their talent group after a brief love-affair with the IT industry,” said Universum chief exec- utive Michal Kalinowski. IT companies such as Microsoft, IBM and Sony remain popular choices among students looking to start an engineering degree, according to the survey results. While BMW is still the most powerful employer brand in the automotive sector, according to the survey. But employers within the banking, oil and gas, and management consul- tancy sectors which were once popu- lar among young jobseekers, are now perceived as responsible for the finan- cial crisis and are therefore less attractive, said Universum. Goldman Sachs, which ranked as the fourth most popular business to work for in 2009 fell to tenth place, while JP Morgan dropped to ninth place.

WORLD'S MOST ATTRACTIVE EMPLOYERS

World’s Top 10 acc to BUSINESS STUDENTS 1. Google (1) CEO: Eric Schmidt 2. KPMG
World’s Top 10 acc to BUSINESS STUDENTS
1.
Google (1)
CEO: Eric Schmidt
2.
KPMG (8)
CEO: Timothy Flynn
3.
Ernst & Young (5)
CEO: Jim Turley
4.
PricewaterhouseCoopers (2)
CEO: Dennis Nally
5.
Deloitte (10)
CEO: Jim Quigley
6.
Procter & Gamble (6)
CEO: Bob McDonald
7.
Microsoft (3)
CEO: Steven Ballmer
8.
The Coca-Cola Company (13)
CEO: Muhtar Kent
9.
J.P. Morgan (7)
CEO: Jamie Dimon
10. Goldman Sachs (4)
CEO: Lloyd Blankfein
World’s Top 10 acc to ENGINEERING STUDENTS 1. Google (1) CEO: Eric Schmidt 2. Microsoft
World’s Top 10 acc to ENGINEERING STUDENTS
1.
Google (1)
CEO: Eric Schmidt
2.
Microsoft (2)
CEO: Steven Ballmer
3.
IBM (3)
CEO: Sam Palmisano
4.
Sony (7)
CEO: Howard Stringer
5.
BMW (4)
CEO: Norbert Reithofer
6.
Intel (5)
CEO: Jane Shaw
7.
General Electric (6)
CEO: Jeff Immelt
8.
Siemens (8)
CEO: Peter Löscher
9.
Procter & Gamble (10)
CEO: Bob McDonald
10. Apple (NEW ENTRY)
CEO: Steve Jobs
Siemens (8) CEO: Peter Löscher 9. Procter & Gamble (10) CEO: Bob McDonald 10. Apple (NEW

20

News

CITYA.M.

28 SEPTEMBER 2010

Vivendi sells its NBC stake

MEDIA

BY STEVE DINNEEN

VIVENDI has offloaded its stake in NBC Universal to General Electric (GE) for $2bn (£1.26bn). The French conglomerate sold a third of its 20 per cent stake and says it will sell the remainder for $3.8bn when GE completes a separate deal with entertainment firm Comcast. Earlier this month Vivendi chief executive Jean-Bernard Levy said the group could use the NBC sale pro- ceeds to buy telecom operator SFR, of which it currently owns 56 per cent. Vivendi has seen its shares slide to

seven-year lows – largely underper- forming peers – on concerns about acquisitions, the cost of a US class- action lawsuit and intensifying com- petition in the French telecom sector. Vivendi’s company structure – under which it does not wholly own its major divisions – has led investors to apply a 25 to 40 per cent conglom- erate discount. Earlier this month Vivendi, Europe’s largest telecom and entertainment group, raised its profit targets on the back of forecast-beat- ing first-half results. It also attempted to reassure investors on its acquisition strategy,

temporarily lifting its flagging stock. Vivendi raised its 2010 guidance to an “increase” in Ebitda, compared with a previous forecast of “slight growth”. It also gave guidance on its adjusted net income for the first time, forecasting it would rise from 2.59bn (£2.15bn) in 2009. First-half operating profit rose to 3.24bn.

Vivendi chief executive Jean-Bernard Levy has tried to reassure investors about his firm’s acquisitions tried to reassure investors about his firm’s acquisitions

Southwest to expand its presence with AirTran buy

AVIATION

SOUTHWEST Airlines is to purchase AirTran Holdings for $1.04bn (£656m) in cash and stock in a deal that will allow Southwest to expand its pres- ence in major East Coast US markets. The merger, announced yesterday, is the first among leading low-cost US airlines and the second notable deal this year after United Airlines and Continental Airlines. Delta Air Lines bought Northwest Airlines in 2008. “The acquisition of AirTran repre-

sents a unique opportunity to grow Southwest Airlines’ presence in key markets we don’t yet serve and takes a significant step toward positioning us for future growth,” said Southwest chief executive Gary Kelly. He also said the deal with Atlanta- based AirTran would allow Southwest to expand in markets such as New York LaGuardia, Boston Logan, and Baltimore/Washington. It also allows the airline access to leisure markets in the Caribbean and Mexico.

Wal-Mart set to offer $4bn for Massmart

RETAIL

BY HARRY BANKS

WAL-MART is in talks to buy South Africa’s Massmart, in a $4bn (£2.52bn) deal that would give the US

retailer a big presence in fast-grow- ing Africa and boost its emerging markets strategy. Wal-Mart has made a non-binding proposal of 148 rand (£13) per Massmart share, valuing it at around

30 billion rand (£2.7bn), a premium

of nearly 10 per cent over its last clos-

ing price of 134.75 rand. Massmart said it has granted the US firm an exclusivity period and

there is no certainty of a formal offer. But Massmart’s share price jumped

11 per cent to 150 rand, above the

value of the proposed offer. Buying Massmart, South Africa’s third-largest listed retailer by value, would give Wal-Mart a considerable network in Africa’s biggest economy and a foothold in 13 other countries in sub-Saharan Africa. The world’s largest retailer has recently been hit by weakness in the United States where low-income shoppers are particularly vulnerable to unemployment and higher gaso- line prices. It has responded by focus-

ing on cost cuts and international growth. “Massmart is a very good fit with their business,” said Bryan Roberts, global research director at London industry research firm Planet Retail. Some analysts have said the acqui- sition might not be the best use of Wal-Mart’s cash. “Wal-Mart should be allocating its capital first and foremost to develop- ing US urban stores and then return- ing cash to shareholders,” said Wall Street Strategies analyst Brian Sozzi. Wal-Mart would become the first major international retailer to enter South Africa, but others could soon follow by targeting one of Massmart’s local competitors,

Roberts said.

ANALYSIS l Massmart 15,000 rand 149.00 27 Sep 14,000 13,000 12,000 11,000 10,000 9,000 9,000
ANALYSIS l Massmart
15,000
rand
149.00
27 Sep
14,000
13,000
12,000
11,000
10,000
9,000
9,000
12 Oct 09
4 Mar 10
27 Aug

BEST OF THE BROKERS11,000 10,000 9,000 9,000 12 Oct 09 4 Mar 10 27 Aug ANALYSIS l Lukoil €

ANALYSIS l Lukoil

€ 52.74 53 27 Sep 52.6 52.2 51.8 28 Jun 16 Jul 5 Aug 25
€ 52.74
53
27 Sep
52.6
52.2
51.8
28 Jun
16 Jul
5 Aug
25 Aug
15 Sep

LUKOIL

UBS sees Lukoil as cheap stock with a number of positive short-medium term cat- alysts not yet priced in. The broker, which reiterates a “buy” rating for the Russian energy group, says on a relative basis, Lukoil is starting to receive tax breaks and is probably set to acquire the most desired upstream assets at a reasonble price.

ANALYSIS l Virgin media

P 1432.00 1,500 27 Sep 1,400 1,300 1,200 1,100 28 Jun 16 Jul 5 Aug
P
1432.00
1,500
27 Sep
1,400
1,300
1,200
1,100
28 Jun
16 Jul
5 Aug
25 Aug
15 Sep

VIRGIN MEDIA

Like all telecoms companies, Virgin Media is heavily operationally geared with high gross margin services layered on top of fixed network running costs, according to JP Morgan Cazenove. The broker forecasts 70 per cent of additional revenue added in 2010-15 to drop through to cash flow and gives Virgin Media an “overweight” rating.

ANALYSIS l InterContinental Hotels

P 1200 1,432.00 27 Sep 1,150 1,100 1,050 1,000 28 Jun 16 Jul 5 Aug
P
1200
1,432.00
27 Sep
1,150
1,100
1,050
1,000
28 Jun
16 Jul
5 Aug
25 Aug
15 Sep

INTERCONTINENTAL HOTELS

InterContinental Hotels has seen asset ownership diminish, while growth is skewed more to Asia, says Credit Suisse. An “outperform” rating is retained by the broker, which has increased the price tar- get for the hotels group to 1343p. The bro- ker expects concerns about the US system to be compensated by Asian profit impact.

To appear in Best of the Brokers email your research to notes@cityam.com

Takefuji eyes bankruptcy as it becomes the biggest Japanese lender to collapse

BANKING

JAPAN’S Takefuji Corp is preparing to file for bankruptcy with $5.2bn (£3.2bn) in debts, making it the biggest consumer lender to fail under the weight of court-ordered interest repayments and tighter lending rules. Takefuji, which has been consid- ered at risk for failure because it does-

n’t have the financial backing of any of Japan’s big banks, is making final preparations to file for bankruptcy protection. Once Japan’s largest moneylender, Takefuji said it had not decided to file for bankruptcy, but would not com- ment on whether it was considering such a move. “It is untrue that we made such a decision as some media have report-

ed,” it said in a statement. Shares of Takefuji closed untraded yesterday due to a glut of sell orders. Trading in the stock had been sus- pended by the Tokyo bourse for most of the day due the news. Analysts have said this highlights a major risk to the industry. A Japanese court in 2006 ruled the lenders had charged too much in interest and ordered them to repay borrowers.

CITY MOVES | WHO’S SWITCHING JOBS in association with Edited by Victoria Bates London Stock
CITY MOVES | WHO’S SWITCHING JOBS
in association with
Edited by Victoria Bates
London Stock Exchange
Jenkins joins from Barclays Wealth,
where he spent the past three years,
latterly as a director. He was previously
head of investments for the Americas
at Ansbacher in the Cayman Islands.
Arbuthnot Securities
The exchange has named Paolo Scaroni (pic-
tured), the chief executive of Italian oil and gas
group Eni and one of its non-executive direc-
tors, as its new deputy chairman.
The LSE also said Massimo Tononi has joined
the board as a non-executive director. Tononi
was a partner at Goldman Sachs until July this
year and, between 2006 and 2008, was
Treasury undersecretary at the Italian Ministry
of Economy and Finance in Rome.
of business development in the Channel
Islands. Murray joins from Kleinwort
Benson, where he spent the past 13
years as head of business development,
head of product development and a
senior private banker.
Drax Group
The bank has appointed Adam Lloyd as
its new director of corporate broking.
Lloyd joins from Evolution and has also
worked at Albert E Sharp, James Capel,
Merrill Lynch and Durlacher.
Arbuthnot has also hired Andrew
Kitchingman from Brewin Dolphin as a
director in corporate finance and Emma
Harrison from Altium as an investor
relations manager.
Equatorial Palm Oil
Collins Stewart
GAM
The investment management firm has
hired Andrew Jenkins as a portfolio
director in its UK private client team.
The power group has taken on Tim
Cobbold, the former chief executive of
Chloride Group, as a non-executive
director.
Following Emerson Electric’s $1.5bn
takeover of Chloride earlier this year,
Cobbold now holds responsibility for
the Chloride group of companies within
Emerson.
The bank’s wealth management arm
has hired Murray Montgomery as head
The Aim-listed sustainable oil palm
plantation group has appointed
Shankar Varadharajan, a representative
of its strategic partner the Siva Group,
as a non-executive director.
Varadharajan, 36, has over 13 years
of experience in management positions
at Motorola and the Tata Group.
To appear in CITYMOVES please email your career
updates and pictures to citymoves@cityam.com
+44 (0)20 7557 7245
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
morganmckinley.com
News CITYA.M. 28 SEPTEMBER 2010 21 WORDS BY JULIET SAMUEL
News
CITYA.M.
28 SEPTEMBER 2010
21
WORDS BY JULIET SAMUEL

Lurking behind the financial crisis:

the Fed puppeteer and the trader

Wall Street’s bankers always thought they had another card to play: the US bailout proved them right

I WANTED it to be like that Quentin Tarantino movie: every person should come away with a different picture. I wanted to almost do it with no judg-

ment.” Andrew Ross Sorkin is in London for the Samuel L Johnson literary awards after Too Big To Fail, his best-selling account of the financial crisis, was short-listed for the prize. But before heading off to a string of other engagements, he finds time for a leisurely iced tea with City A.M., to talk all things Wall Street. His desire to write the book “without judgment” is hardly surprising coming from the star finance reporter of the New York Times, a paper that regards itself as a keeper of historical records. But Sorkin has a further reason to write this particular story “without judgment”:

his aim was to complicate the convention- al narrative about “greedy bankers” bring- ing down the economy. “Part of the goal of the project was to put the reader in the room with them. When you get inside the room, your field of vision changes,” he says. His tactic is to take readers so close to the main characters of his story – charac- ters that include former US Treasury sec- retary Hank Paulson and former Lehman Brothers CEO Dick Fuld – that we can see the dandruff on their collars. At this mag- nification, a simple reading of who is to blame for what becomes easily confused. And he applies this nuanced narrative about blame and hindsight to his views on the need for regulatory changes prompted by the financial crisis. “It’s about the poli- tics of the regulation – somebody has to be the policeman,” he says. But on the other hand: “You can’t prevent the next crisis. The only thing you can do is create param- eters to limit the damage and give regula- tors tools to mitigate the crisis.” As a man who has spent years getting as close as possible to the behemoths of Wall Street and their Treasury counterparts (since they are often the same people), Sorkin seems vaguely resigned to the imperfections and contradictions of regu- lation. After all, a man who chronicled the making of Paulson’s bailout plan (see box

CV | ANDREW ROSS SORKIN

Age: 33

Education: Cornell University

Career: After stints writing for the New York Times as an intern during university, Sorkin joined the paper in 1999 and lived in London covering mergers and acquisi- tions (M&A). In 2000 he moved to New York where he also covers M&A on Wall Street.

Biggest moment: The 2008 financial cri- sis and the publication of his book. “It was a very terrible thing for most of the world and I’ve been an odd beneficiary in a way. The book allowed me to use all I’d learned over the past decade covering Wall Street. As a journalist, you’re almost sitting, wait- ing for this moment,” he says.

almost sitting, wait- ing for this moment,” he says. bottom right) could hardly maintain faith in

bottom right) could hardly maintain faith

in

centrally

effectiveness

planned regulation.

the

cool

of

TRADER’S PHILOSOPHY

And more broadly, he does not believe that rules can prevent financial misdirec- tion. As he says: “The desire for power and pride is something you can’t legislate.” This might sound like typical banker-bash- ing, but there is a subtle difference between Sorkin’s view and the usual “Wall Street versus Main Street” lament. Asked why “greed” was supposedly allowed to trump self-interest in the pursuit of exces- sive risks, he disputes the premise: “To me, Wall Street is less about greed than it is about power and pride – it wasn’t greed that made Dick Fuld ride his $1bn in stock down to something like $56,000.” Instead, Sorkin blames Fuld’s over- whelming desire to win and, when every- thing went pear-shaped, not to lose face for driving Lehman off a cliff. In his book, Sorkin is at pains to convey the fierce cul- ture that made beating rivals the be-all and end-all for Wall Street’s CEOs: money is important, undoubtedly, but above a certain level of wealth, it serves more as a measure of one’s prowess and superiority than as a measure of buying power. And as Sorkin chronicles the thrill of deal-mak- ing and the cut and thrust of the trading floor, it becomes clear that this is a story being told by a man who cannot help but empathise with Wall Street’s culture. As he comments of his book: “To write it, you have to want to live with the characters for a year.” This makes Too Big To Fail as much a psychological study as it is a historical nar- rative. Because, to Sorkin’s mind, although the banking system was flawed in its interconnectedness and systemic importance, it was not merely the banks that were “too big to fail”; it was the men running them. “All this stems from a trader’s philoso- phy,” he explains. “There’s always another trade, a way out or another card to play. Dick Fuld always thought he had one more card in his back pocket.” The book

Sorkin has become a regular talking head on all things Wall Street

Picture: REX

regular talking head on all things Wall Street Picture: REX portrays this society of “masters of

portrays this society of “masters of the universe”, many of them self-made, who thrived by pursuing their goals relentless- ly in the face of setbacks and losses. These were CEOs who, until the dying days of their empires, were unable to really com- prehend the idea of final, total failure. In Sorkin’s words: “There was a collective failure to imagine how bad it could be.”

PLAYING THE LAST CARD

And as it turned out, many of them – with the exception of Dick Fuld – were vindicat- ed in their denial. A forced merger in unfavourable conditions is hardly a good outcome, but it is a far cry from bankrupt- cy and defaulting on creditor loans. In that sense, that one card in the back pock- et turned up trumps, in the form of a gov- ernment bailout – and numerous state-brokered deals. So deeply involved was the Treasury that, during bankruptcy court proceedings, the judge deemed Lehman a “victim” whose “real tragedy” was to have been the only firm not includ- ed in the government’s rescue package. In fact, for a financial collapse so often blamed on the untamed forces of capital- ism, what is striking about Sorkin’s book is how central a role the government takes in backroom deal-making from the very beginning. As Sorkin wrote after the sale of Bear Stearns: “Adam Smith’s invisible

hand has a puppeteer: the Federal Reserve”. It was not until later he discov- ered the full extent of it: “Really, I don’t think I ever appreciated how active a role the US government was playing behind the scenes,” he tells me. Active, of course, does not mean compe- tent and Sorkin does not gloss over the Treasury’s chaotic interventions. He just doesn’t see a better option. The problem is that Sorkin’s thinking brings him to a dead-end. He readily admits the incentive problem created by government bail-outs, but his suggested solutions – a resolution authority, higher capital ratio requirements, a bank-funded “rainy day fund” for bailouts and a return to banking by private partnerships – carry an air of compromise, the echo of a shrug about the how and when: “What’s depressing is you have to do it on a global basis,” he says. “And if you’re a bank not lending now, you won’t be lending under Basel III.” It is clear that Sorkin’s instincts push him towards regulating the actions of the hubristic characters he covers on Wall Street. But his tendency is tempered by an awareness of the practical pitfalls of law- making: do it wrong, he says, “and you have yourself a sequel!” And even with the acclaim his first book has brought, not even Sorkin wants that.

EXTRACT | HOW THE BAILOUT WAS COSTED

“What about $1 trillion?” Kashkari said. “We'll get killed,” Paulson said grimly. “No way,” Fromer said, incredulous at the sum. “Not going to happen. Impossible.” “Okay,” Kashkari said. “How about $700 billion?” “I don't know,” Fromer said. “That's better than $1 trillion.” The numbers were at best, guestimates, and all three men knew it. The relevant fig- ure would ultimately be the one that repre- sented the most they could possibly ask from Congress without raising too many ques-

tions. Whatever the sum turned out to be, they knew they could count on Kashkari to perform some sort of mathematical voodoo to justify it… As he plucked numbers from thin air even Kashkari laughed at the absurd- ity of it all.

Too Big to Fail: Inside the Battle to Save Wall Street by Andrew Ross Sorkin is pub- lished by Penguin Books for £12.99. The book is shortlisted for the 2010 FT/Goldman Sachs Business Book of the Year Award.

22

Markets& Investments

CITYA.M.

28 SEPTEMBER 2010

LONDON’STOP250

Tradethesesharesfrom£1.50withInteractiveInvestor - www.iii.co.uk

Company Name

Closing Price Price Change

52wk High

52wk low

Company Name

Closing Price Price Change

52wk High

52wk low

Company Name

Closing Price Price Change

52wk High

52wk low

(p)

(p)

(p)

(p)

(p)

(p)

(p)

(p)

(p)

(p)

(p)

(p)

3i

286.50

–1.50

310.00

246.90

Compass

 

538.50

–5.00

574.50

353.00

JPMorgan Emerg Mkts Jupiter Fnd Mgmt

 

.581.50

+1.50

587.50

441.00

3i Infrastructure A.B. Foods Aberdeen Asset Man Admiral Aegis Afren African Barr Gold Aggreko Alliance Trust AMEC Amlin Anglo American Antofagasta Aquarius Platinum ARM Holdings Ashmore Astrazeneca Atkins(Ws) Autonomy Corp Aveva

.

.

.

.

.

.

.

.

.

.

.

113.80

1061.00

161.00

1623.00

123.40*

.110.30

578.50*

1536.00*

333.80

985.50

395.00*

2531.00

.1195.00*

340.30*

409.50*

335.10

3280.00

745.00*

1800.00

1455.00

–0.30

115.00

97.00

.511.00

–4.00

616.00

347.60

.251.90

+12.90

256.50

180.00

–10.00

1096.00

790.00

Croda Intl Daily Mail ‘A’ Dana Petroleum Davis Service Debenhams Derwent London Dexion Absolute Diageo Dimension Data Dixons Retail Domino’s Pizza Drax Dunelm Easyjet Edinburgh Inv Tst Electrocomponents EnQuest Essar Energy Eurasian Nat Res Euromoney Inst Inv Experian Ferrexpo FirstGroup Foreign & Col Inv Tst Fresnillo

G4S

 

1458.00*

+8.00

1468.00

637.00

.1442.00*

+21.00

1634.00

955.00

+1.20

163.20

111.00

525.00

+13.50

539.00

381.00

Kesa Electricals

.144.20*

+2.50

162.00

98.45

–9.00

1686.00

1003.00

1801.00

+4.00

1817.00

968.50

.232.50

+1.20

255.00

196.50

+0.60

137.30

103.10

404.90*

+3.10

442.30

356.00

Ladbrokes Lamprell Lancashire Hldgs Land Legal & General

 

.138.40*

+0.60

171.31

114.60

+1.80

111.10

73.00

66.30

+0.70

90.00

51.95

.342.00*

349.90

156.70

–18.00

685.00

520.50

1522.00

–18.00

1562.00

1174.00

.563.50*

+4.00

565.00

416.70

+2.00

1639.00

664.50

140.80

+0.60

148.00

128.30

.641.50*

+3.00

743.50

543.00

–3.00

352.70

292.80

.1100.00*

+2.00

1176.00

930.50

.103.90*

+0.90

105.00

69.05

–8.00

–3.40

–4.00

+14.00

1002.00

437.60

3015.50

1222.00

724.50

350.80

1846.50

699.50

.119.50

24.87

470.50

400.40

–0.30

+0.63

–2.30

+5.70

125.50

39.75

481.10

479.30

59.30

23.07

273.10

321.50

Lloyds Banking Gp

. London Stk Exchange

Lonmin

Logica

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.75.84

.126.20*

706.50

1692.00

–0.81

+1.00

+4.00

–26.00

79.15

149.10

949.50

2198.00

45.30

100.80

540.50

1344.00

+3.20

490.00

211.50

387.90

–3.00

438.40

303.00

Man

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.219.30

–2.50

373.60

199.60

–5.10

419.50

134.40

375.10

–2.90

499.90

339.80

Marks &

.378.80

–1.70

412.70

321.90

+5.00

338.00

215.00

424.00

–3.10

436.00

338.00

Meggitt .

Melrose

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.300.20*

+0.30

331.00

220.10

–54.00

3389.50

2668.00

231.70

–2.10

246.30

142.90

.

.

.

.

.

.

.

.

.

.269.40*

+3.90

275.10

160.00

+6.00

801.00

532.50

.116.80

+1.10

125.90

87.35

Mercantile

.965.00

+4.00

1002.00

822.50

+29.00

2012.00

1278.00

438.50

–2.50

475.90

358.50

Michael Page

.454.70*

–3.20

470.70

314.40

+20.00

1487.00

856.50

907.00*

+4.00

1276.00

781.00

Micro Focus

.385.20*

+19.20

550.00

272.20

Aviva

398.70*

–2.20

474.00

290.20

613.50

+12.50

630.00

308.50

Millen & Copthorne

527.50*

+4.00

547.00

321.40

Babcock International

BAE Systems

Balfour Beatty

Barclays

Barratt Development

BBAAviation

554.00

346.40

269.40

310.75

104.00

190.50*

+3.50

–1.10

+1.20

–1.00

–0.10

–2.50

660.50

389.90

304.80

394.25

178.75

220.00

489.00

288.10

228.60

253.40

89.10

145.90

681.50

293.20

348.60

285.10

1225.00

252.90*

+3.00

–0.50

–2.30

–0.20

–7.00

–7.30

686.50

396.20

443.90

297.20

1240.00

285.70

516.50

138.00

331.20

248.70

647.00

217.70

. Mitchells & Butlers

. . Monks Inv Tst Morrison Wm Murray Intl National

.

.

.

MITIE

.

.

.

Misys

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

National Grid

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.289.40

.296.30

.199.00

.504.50

.317.00

.301.70

+1.10

–5.30

+0.60

–5.00

–5.00

–0.20

295.80

343.90

257.00

519.00

324.80

307.10

192.60

228.30

187.80

300.70

265.00

255.00

Bellway

593.50

–6.50

848.50

510.00

Genesis Emerging Mkts Fd GKN GlaxoSmithKline Great Portland Estates Greene King Halfords Halma Hammerson Hargreaves Lansdown . Henderson Heritage Oil Hikma Pharma Hiscox Hochschild Mining Home Retail Homeserve HSBC Hldgs Hunting ICAP IG Imagination Tech Gp IMI Imperial Inchcape Informa Inmarsat Intercontl Hotels Intermediate Capital Intertek

.

.

.

.

.

.

.

.

.

.

.

.

506.00

–0.50

511.50

370.00

 

.879.00

–3.00

907.50

720.00

Berkeley

.

BG .

.

.

.

.

.

.

.

.

.

.

818.50

1166.00

–11.50

–3.00

949.50

1248.00

735.00

966.90

165.00*

1272.50*

–1.90

+8.00

172.60

1347.00

100.40

1088.00

.238.50

.543.00

+2.10

258.60

607.65

155.86

474.80

. BHP Billiton BlackRock Mining BlueBay Bluecrest Allblue GBP Booker BP Brit Insurance British Airways British Amer. Tob British Empire Tst British Land Britvic Brown(N.) BSkyB BT Bunzl Burberry Cable & Wire Comms Cable & Wire Wwide Cairn Energy Caledonia Invs Capita Capital & Counties Capital Shopping Centres Carillion Carnival Catlin Centamin Egypt Centrica Charter Intl Chemring Close Bros Cobham COLT Group

2010.00*

627.00

347.10

169.00

48.39

403.90

1028.00

243.60

2395.00*

461.60

472.20

475.60

237.10

710.00

140.70

760.50

998.00

59.15

74.55

464.30

1625.00

766.00*

132.50

370.00

317.60*

2485.00

341.10*

182.00

327.50

683.50

3000.00

727.00

233.40

122.30

+0.50

2346.00

1583.50

339.40

–2.40

346.60

236.60

Next

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.2200.00

–19.00

2360.00

1726.00

–2.50

654.50

474.00

421.90

–3.80

484.00

372.50

Northumbrian Water

.335.40

–1.00

353.00

225.20

+5.10

393.00

251.00

440.00

–3.20

562.50

339.40

Ocado Grp

.136.80

–1.20

169.00

132.00

+0.40

+0.20

169.00

49.99

144.40

37.50

305.50

403.60*

–0.20

–2.60

320.50

460.30

210.30

332.20

Old Mutual

.138.30

.280.10

–1.40

–3.90

140.50

339.70

94.75

205.80

–1.00

658.20

296.00

435.00*

–2.00

478.00

259.40

Pearson

.

.

.