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BUSINESS WITH PERSONALITY
Issue 1,328 Wednesday 23 February 2011 www.cityam.com FREE
FSA boss
GADDAFI PLEDGES to head EU
watchdog
TO DIE A MARTYR
▲
REGULATION
BY DAVID CROW
100 DAMAGE OF
Gaddafi however crushed any
hopes that he would stand aside to
prevent more bloodshed, saying: “If
Libya’s youth with “drugs and
money,” branding his enemies “rats”.
He said: “You men and women who
Merkel described his speech as “very
frightening” and said he had virtual-
ly declared war on his own people.
98
96 NZ QUAKE
I were president, I would have
resigned, but I have no position to
love Gaddafi, get out of your homes
and fill the streets. Leave your homes
ALLISTER HEATH: P2,
MIDDLE EAST CHAOS: P8
94
24 Jan 31 Jan 7 Feb 14 Feb 21 Feb
EXPERTS TALLY
THE COSTS P4
FTSE 100 t5,996.76 -18.04 DOW t12,212.79 -178.46 NASDAQ t2,756.42 -77.53 £/$ 1.62 unc £/¤ 1.18 t-0.01 ¤/$ 1.37 unc Certified Distribution
29/11/10 till 02/01/11 is 98,444
Distribution helpline Trustee Irving Picard said red flags a Citigroup Global Markets trader to spiral. “Putting the welfare of British
If you have any comments about the distribution BY KATIE HOPE
of City A.M. Please ring 0207 015 1230, or email about Bernard L. Madoff Investment another bank saying: “We’re needing citizens foremost does not imply taking
distribution@cityam.com Securities were apparent to Citi as to terminate our Madoff trade. Do THE public’s fears over inflation should them seriously as macroeconomic fore-
early as 2005, according to court you have appetite for that risk over not pressure the Bank of England into casters”, Posen said.
Editorial Statement papers. The lawsuit seeks $425m there?” raising interest rates, external MPC Speaking at the Oxford Institute for
This newspaper adheres to the system of (£263m) from the bank. member Adam Posen argued yesterday. Economic Policy, ahead of today’s publi-
self-regulation overseen by the Press Complaints Citi said in a statement yesterday Bernard Madoff, 72, is Posen, who in direct contrast to fel- cation of February’s minutes, Posen
Commission. The PCC takes complaints about the that the allegations in the lawsuit low Monetary Policy Committee (MPC) said that a pre-emptive interest rate
editorial content of publications under the Editor’s now serving a 150-
Code of Practice, a copy of which can be found at were false and it would “vigorously members Andrew Sentance and Martin increase now would bear similarities to
www.pcc.org.uk defend against these claims”. year jail sentence for a Weale, has consistently voted to keep mistaken tightening moves by central
Printed by Newsfax International,
Madoff, now serving a 150-year sen- Ponzi scheme worth rates on hold in recent months, said his banks in the early 1930s Great
Beam Reach 5 Business Park, tence, was arrested in December 2008 up to $50bn colleagues were wrong to worry that Depression and the Bank of Japan in
Marsh Way, Rainham, Essex, RM13 8RS after admitting he ran a decades- expectations of rising prices are becom- 2000. ECONOMICS: P13
3 cheers for
E.ON customers.
Now E.ON customers can cap
their energy prices for 3 years.
” ”
slides. House reconstruction costs are likely to September quake it may not result in the same
exceed the Earthquake Commission’s ‘first size of loss. It means 2011 is starting off as
loss’ limits of £47,000 per building. an active year for natural catastrophes.
“ This quake looks to have been far worse in terms of loss of life and physical damage than the September quake
”
where loss estimates have been consistently revised upwards. Market estimates currently suggest insured losses amount-
ing to $5.5bn-$6bn, however it seems likely that the market loss will be larger than the September quake.
Rescue workers fear hundreds are still missing in the rubble in Christchurch
New Zealand
quake payout
may top $6bn
or more, based on its exposure to last
▲
INSURANCE
BY ALISON LOCK September’s earthquake.
It took a $324m loss from the 2010
LONDON insurers were facing the quake, equivalent to 5.9 per cent of all
prospect of further large losses yester- losses, said JP Morgan analyst
day after a 6.3 magnitude earthquake Andreas de Groot van Embden in a
devastated New Zealand’s largest note. Amlin lost $160m while Beazley,
south island city Christchurch. Catlin, Hiscox and others each lost
The quake, the country’s worst nat- less than $60m.
ural disaster in 80 years, struck the Peel Hunt analysts led by Stuart
busy business district at lunchtime Duncan also expected yesterday’s loss
leaving hundreds trapped by fallen to outstrip the September quake, and
buildings and at least 75 dead. said reinsurers of state-backed home
Sources close to Lloyd’s insurers insurer the New Zealand Earthquake
told City A.M. insured losses were like- Commission may be worst-affected.
ly to start at $5.5–6bn (£3.4-3.7bn), the Lloyd’s spokesperson Sarah Robson
level incurred from a 7.0 magnitude said it was too early for it to estimate
quake that flattened parts of its exposure to the quake.
Christchurch last September. “Lloyd’s is contacting all of its part-
But they said yesterday’s loss of life ners in the region to ensure they are
and damage to commercial city cen- safe and accounted for. We will do
tre buildings means losses to UK everything we can to support them
insurers, particularly in the Lloyd’s and to help the city recover by pro-
market, are likely to be far higher. cessing and paying claims as quickly
Lloyd’s could face losses of $330m as possible,” she said.
MARKETS
into question whether the deal will
CANADA’S most powerful province survive an intense review process.
yesterday vowed to launch a nonparti- “If it’s an investment, great. If it’s a
san review of Toronto and London takeover, and operations move to
stock exchange plans to merge. London, that’s not what we’re inter-
Ontario, whose capital, Toronto, is ested in,” said Ontario finance minis-
Canada’s financial centre, questioned ter Dwight Duncan
whether London Stock Exchange’s TMX chief executive Thomas Kloet
planned acquisition of Toronto Stock said he takes the opposition seriously
Exchange parent TMX Group would as Canada’s reputation on free trade
benefit the province and the country. and competition hinges on the deal.
6 News CITYA.M. 23 FEBRUARY 2011
▲
RETAIL
ing from a poorly executed decision, giant posted earnings per share of
BY HARRY BANKS since reversed, to pare down the num- $1.34 (83p) before one-off items, against
WAL-MART yesterday posted its sev- ber of items it offered. expectations of $1.31. Total fourth
enth consecutive quarterly drop in “Some of the pricing and merchan- quarter sales of $115.6bn missed Wall
sales at established US stores and said it dising issues in Wal-Mart ran deeper Street expectations of $117bn.
will take some time to turn things than we initially expected, and they Meanwhile, staff at Asda, the British
around in its biggest market. require a response that will take time supermarket chain owned by Wal-
The world’s largest retailer, whose to see results,” Wal-Mart chief executive Mart, will share in a £27m bonus pot.
shares closed down 3.1 per cent, has Mike Duke said. Asda helped boost its parent compa-
Mike Duke blamed pricing and merchandising issues for poor sales Picture: Reuters struggled with pricing as it has lost cus- Fourth quarter like-for-like sales at ny’s international sales nine per cent.
▲
RETAIL TECHNOLOGY
BY RICHARD PARTINGTON BY RICHARD PARTINGTON
THE WORLD’S largest home-improve- HELWETT-PACKARD failed to meet
ment retailer, Home Depot, has post- investors’ sales expectations, resulting
ed sales of $15.1bn (£9.3bn) in its in a fall in shares.
fourth quarter results. The US technology giant said rev-
Analysts had predicted lower rev- enue for its first fiscal quarter of this
enues of $14.8bm. year climbed 3.6 per cent to $32.3bn
The US firm, which operates 2,248 (£20bn), below forecasts of $33bn.
retail stores worldwide, also updated Shares in the firm fell 12 per cent in
its profit forecasts for this year on after hours trading to $42.4 following
the back of the stronger than expect- the news.
ed performance. Sales in two of its core businesses –
It said it now anticipated a 2.5 per personal computers and technology
cent increase in sales for this year, services – contributed to the drop.
with earnings per share increasing The limp performance overshad-
approximately 9.5 per cent to $2.20. owed higher than expected fiscal first-
Home Depot’s net income quarter profit, driven in part by cost
increased to $587m in the three discipline and lower component costs.
months to 30 January this year, up The firm recorded a 16 per cent
from $301m a year earlier. jump in profit to $2.61bn, or $1.17 per
Overall sales last year for the firm share. Revenue increased 3.6 per cent
hit $68bn, an increase of 2.8 per cent to $32.3bn.
on a year earlier. Earnings per dilut- The results could worry investors in
ed share were $2.01, compared to the world’s biggest PC maker, which
$1.55 per diluted share a year earlier. had become a likely candidate for a
The company said it planned to turnaround story.
open ten new stores this year and Shares in the firm fell significantly
repurchase approximately $2.5bn of following the departure of chief execu-
outstanding shares. tive Mark Hurd last summer.
Chairman and chief executive However stocks had begun to rise
Frank Blake said: “We continued to again this year prior to yesterday’s
invest in our business and made announcement.
solid progress against our key initia- New chief executive Leo Apotheker
tives. will attempt to address the California-
“We completed the roll out of our based firm’s woes as he unveils his
Rapid Deployment Centers, an strategy for the firm next month.
important part of our distribution
network; we saw year-over-year ANALYSIS l Hewlett Packard
improvement in customer service 50 $ 48.23
ratings; and we continued progress 22 Feb
on our merchandising transforma-
tion. Our actions, coupled with an
improving economy, resulted in pos- 46
itive sales growth for the year, the
first time since 2006.
“Our associates did an outstanding 42
job in 2010. Their hard work and ded-
ication made these accomplishments
possible.” 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb
RETAIL RETAIL
BY RICHARD PARTINGTON earlier. gins and continued expense discipline. serve its shrinking cash reserves.
Cincinnati-based Macy’s recorded “A successful holiday selling period in BARNES & NOBLE, the world’s largest Barnes & Noble also decided not to
MACY’S, the US department store chain, sales of $25bn for the full-year, up 6.4 per 2010 reinforced the effectiveness of our bookseller, has suspended its divi- give investors a sales and profit fore-
has increased its fourth-quarter profits cent on 2009. talented team, our unique organisation- dend payments after a drop in profits. cast for the current quarter, saying
by 50 per cent, predicting further The retailer opened several new stores al structure and the process that has Net profits for the three months to that going-out-of-business sales at 200
growth this year. across the US, as well as a branch of transformed Macy’s to a culture of the end of January fell to $60.6m locations operated by its bankrupt
The retailer, which also operates the Bloomingdale’s operated under licence growth. (£37.6m) for the US retailer, down 25 rival, Borders Group, could pressure it
Bloomingdale’s brand, saw sales by a third party in Dubai. “We believe that our company is now per cent from the $80.4m recorded a in the short term.
increase to $8.27bn (£5.1bn) in the 13 Chief executive Terry J. Lundgren on a clear path that will lead to contin- year earlier. Chief executive William Lynch said:
weeks to 29 January this year. said: “2010 was a very successful year for ued growth in sales, earnings and cash The results, impacted by a poor hol- “We’re pleased with our financial
Net income for the firm was $667m Macy’s and Bloomingdale’s based on a flow in the years ahead,” he added. iday period quarter, prompted the results this quarter.”
CITYA.M. 23 FEBRUARY 2011 News 7
Revenue up as 55
45
£bn
2010/11
2009/10
public purse 35
Jun Sep
hits a surplus
66 Jan
£bn
56
2010/11
46
2009/10
36
UK ECONOMY
▲
“ “
coalition’s austerity plan. make tough choices quickly, he
The government’s preferred meas- locked this coalition into a set of
ure of borrowing, which excludes reforms that were very good.” The figures are a relatively small January’s public finances data delivered
financial sector interventions, However, the government’s net improvement from a wretched position last year a positive surprise, as both tax receipts and
revealed a £3.7bn surplus, as tax rev- debt still stands at £867.2bn, 57.6 per
enues soared. cent of GDP, up from £720.9bn, 50.4
when we had the first ever January deficit. The spending showed favourable trends. However,
Total borrowing including inter- per cent of GDP, at the same time government still has a long way to go in terms of there is still a long way to go. Government bor-
reining in its expenditure. Next month's budget rowing in calendar year 2010 amounted to
” ”
ventions (PSNB) hit a surplus of last year. Expenditure was up 4.4 per
£5.3bn. cent on the same time last year. will show how committed it is to bringing around 10 per cent of GDP, the same size
Tax receipts jumped by 12.4 per “Underlying net debt as a propor- the public finances into order. as the Greek deficit.
cent compared to the same time last tion of GDP is a relatively benign,”
year, with corporation tax up 13.2 said Investec’s Philip Shaw, “but the
per cent, and income taxes up 18.9 debt will stay on a rising trend as the MICHAEL SAUNDERS | CITIGROUP
“
per cent. annual deficit remains high.”
VAT revenue surged to £8.5bn – “Next year’s discretionary fiscal
from £7.8bn in December – following consolidation of £41bn, 2.7 per cent In all, these figures leave borrowing in April to January down by £14.2bn from a year ago, a markedly faster
”
the chancellor’s decision to hike the of GDP, will be critical in ensuring pace of improvement than expected by the Office for Budget Responsibility. It seems likely that the deficit will undershoot
tax to 20 per cent from 4 January. that borrowing continues to fall,”
And Osborne’s plan to reduce Shaw warned.
the OBR’s forecast by about £8bn, ending up at about £140bn excluding financial interventions.
8 Focus on Middle East turmoil CITYA.M. 23 FEBRUARY 2011
Egypt asks UK for debt help Italian bourse shut down after
spooked investors sell off stocks
level of investment in the country. Meanwhile, EU finance ministers
▲
WORLD
The new government said it would yesterday discussed freezing the market participants pointed out that
▲
BY STEVE DINNEEN TRADING
continue with dramatic economic assets of a string of high-profile for- it followed a sharp spike in volumes
Egypt has asked the UK to help it can- reforms and would seek to compen- mer Egyptian officials. THE Italian bourse was brought down on Monday.
cel its debt with the EU. sate those who had property dam- The UK, US and France confirmed yesterday following frenzied sales of Lobby groups have called the clo-
Finance minister Samir Radwan aged or lost jobs as a result of the the request but said Mubarak was not stocks by investors spooked by its sure “suspicious” and called for more
revealed he held talks with new UK protests. on the list. heavy exposure to Libya. information on the technical prob-
trade minister Lord Stephen Green. Mubarak, who resigned on Friday Trading in stocks, bonds, warrants lems. Italian market regulator
Egypt wants the EU to halt interest Trade minister Lord after weeks of protests, and other sen- and exchange-traded funds (ETFs) had Consob demanded an explanation for
payments and consider cancelling the Stephen Green dis- ior officials are suspected of having been suspended from the start of the the embarrassing halt, the longest in
entire debt, as the North African coun- cussed bringing UK sent billions of dollars of assets day until 2.30pm. at least seven years.
try seeks to get back on its feet follow- investment into the abroad. Protesters have called for the Borsa Italiana, a unit of the London Italy has massive exposure to Libya,
ing the overthrow of Hosni Mubarak. cash to be clawed back to help allevi- Stock Exchange, said the cause of the especially through its mining opera-
It also wants the UK to increase the Egyptian economy ate poverty in Egypt. total shutdown was not known but tions in the country.
Saudi says it
LIBYA | LIBYA’S CHEQUERED
RELATIONSHIP WITH THE WEST
shortages
the oil industry.
1981: US shoots down two Libyan
aircraft over what Libya considers its
waters, after US warplanes were
confronted.
could spread to places like Algeria, 1984: British policewoman is shot
▲
OIL
BY STEVE DINNEEN
Kuwait or the United Arab Emirates. dead outside the Libyan embassy in
Analysts and investors are also London.
SAUDI Arabia yesterday said it would increasingly concerned that tensions
step in to meet shortage in oil caused in Bahrain could spill over the border 1988: A PanAm airliner is blown up
by the chaos in Libya. into Saudi Arabia. over the Scottish town of Lockerbie.
Saudi Arabian oil minister Ali al- Shell yesterday continued the evac-
Naimi said there would be no shortage uation by oil firms of non-essential
and that other Opec members would staff, while German company 2001: Abdelbaset Mohmed Ali al-
step into the breach should produc- Wintershall has wound down produc- Megrahi is found guilty of the plane
tion be jeopardised. tion completely as a precautionary bombing in a trial in the Netherlands.
Speaking at the sidelines of an oil measure. He is sentenced to life imprisonment.
conference in Riyadh, al-Naimi also Iran has also stopped its oil-related His co-accused is found not guilty. His
said that oil supply and demand were activities in Libya and will evacuate conviction is widely questioned.
equal and that there was no shortage staff in the next 48 hours.
of supply. Brent futures rose again yesterday 2009: Al-Megrahi is controversially
Libya is the third-largest oil produc- and US crude oil reached a two and a freed from prison on compassionate
er in Africa, and has Africa’s largest half year high on concerns the revolt grounds.
proven oil reserves at 44bn barrels. in Libya could spread to other major
However, Libya produces around oil producers as companies suspended 2011: Protests start on 16 Febfuary
1.6m barrels of oil per day, and OPEC operations and ports were disrupted.
has spare capacity of up to 6m barrels, US crude for April delivery was up
in Benghazi and quickly turn violent.
meaning that in theory even if all $5.71 at $95.47. Brent crude oil futures Protesters take over the city and
exports were stopped this would not for April delivery were up 75 cents to Gaddafi is forced to flee. Hundreds
create a supply shortage. $106.46, after earlier touching $108.57, are killed in brutal clashes.
However, the fear is the contagion near Monday’s high of $108.70. Protesters tear a copy of Colonel Gaddafi’s Green Book yesterday
THE GADDAFI EFFECT | HOW MARKETS WERE HIT BY THE CHAOS IN LIBYA
ANALYSIS l Brent Crude Oil ANALYSIS l FTSE 5996.76 ANALYSIS l Xetra DAX ANALYSIS l FTSE Eurofirst 100
110 $ 106.46 6,100 22 Feb 7,450 7318.35 1,190
22 Feb 22 Feb
108
6,050 7,400
1,180
106
1165.57
104
6,000 7,350 22 Feb
1,170
102 5,950 7,300
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CITYA.M. 23 FEBRUARY 2011 News 9
M&A by energy
Santander in firms at highest
sale of LatAm levels on record
insurance arm
ENERGY
▲
DEALS between energy and power
firms have helped to boost the volume
of mergers and acquisitions to
$93.7bn (£57.9bn), the highest level
since records began.
Activity, boosted by several large
▲
INSURANCE ance business is well-established with deals, lifted deal volume by 40 per
BY ALISON LOCK more than 5,600 branches, and the cent compared to the first few months
deal will make Zurich the region’s of last year.
INSURANCE giant Zurich Financial fourth-biggest insurer. Zurich gener- Emilio Botín’s Santander booked a $1.2bn capital gain on the deal Picture: REUTERS The figure was helped by three of
Services signed a $1.67bn (£1.03bn) ates 35 per cent of its life insurance the year’s biggest energy deals so far.
distribution deal with Spanish bank new business value from emerging Anglo-Australian mining giant BHP
Santander yesterday to fast track its
growth in Latin America.
The 25-year deal sees Zurich take a
markets. The deal will be earnings-
accretive immediately.
Santander expects to bank $1.21bn
Zurich taps growth market Billiton’s £4.75bn move for US energy
firm Chesapeake, announced yester-
day, is one of the biggest cross-border
51 per cent stake in Santander’s life in capital gain from the sale, which is deals to be unveiled this year to date.
insurance, pension and general insur- a non-core asset for it as it buys bank- YOU would think Santander must per cent), and Uruguay (1.6 per Cross-border merger activity
ance operations in Brazil, Mexico, ing assets across Europe. be mad for selling part of its life cent). In the UK and Switzerland, between energy firms has hit $58.1bn
Chile, Argentina and Uruguay. JPMorgan Chase advised Zurich on insurance business in Latin the figure is nearer 13 and 10 per in total so far, accounting for 63 per
The sale will free up valuable cash the deal, which should close by the America. True, the industry hasn’t cent respectively. cent of worldwide merger activity in
at fast-growing Santander to help it first quarter of 2012. been growing at its scorching pre- Santander’s rationale for selling the sector.
meet more stringent Basel III capital crisis rate, but the potential still up is two-fold. First it thinks, right- Deals targeting US energy firms have
requirements coming into effect in ANALYSIS l Banco Santander eclipses most other markets. ly, that an insurance specialist will hit a record $47.2bn, or 50 per cent of
2013, and absorb recent acquisitions. 9.00 € In 2010, Santander grew its Latin grow the pie more quickly (even if worldwide activity in the sector.
Zurich chief executive Martin Senn 8.86 American insurance premiums by the Spanish slice is now half the US gas and electricity provider
said the acquisition offered “a rare 8.50
22 Feb almost a third to $1.9bn, and there size). And a $1.2bn capital gain will Duke Energy’s $25.7bn merger with
combination of high growth poten- is considerable scope for further help it fatten up to digest recent Progress Energy, announced last
tial and strong cash flow generation”. gains. In earthquake-prone Chile, acquisitions and meet stricter capi- month, is the biggest deal so far this
8.00
The price covers 80 per cent of the the region’s most mature market, tal requirements. year.
deal value, with Zurich paying gross written premiums are equiva- London-based oil giant BP’s pur-
Santander the remaining 20 per cent 7.50 lent to just 3.9 per cent of GDP, fol- chase of a $9bn stake in Indian firm
in installments every five years on a
profit-share basis.
lowed by Brazil (3.1 per cent),
Argentina (2.6 per cent), Mexico (2
BOTTOMLINE Reliance Industries, announced earli-
er this week, is the biggest cross-bor-
Santander’s Latin American insur- 29 Nov 13 Dec 10 Jan 31 Jan 21 Feb Analysis by David Crow der deal so far. BHP DEAL: P11
The Capitalist
10 CITYA.M. 23 FEBRUARY 2011
EDITED BY
ELIZABETH FOURNIER
GOT A STORY? EMAIL
thecapitalist@cityam.com
CITY EYE
WINDOW cleaners
Lee Mason (left) and
Paul Wright pause
for a break in their
cleaning gondola out-
side the 50th floor of
the One Canada
Square skyscraper,
the London home of
Bank of New York
Mellon and NYSE
Euronext, on 8
February 2011.
It takes a month to
clean all the windows
on what is currently
the tallest building in
Britain (until the
Shard takes over in
2012), with the clean-
ers suspended up to
190m from the
ground.
Picture: GETTY
CITYA.M. 23 FEBRUARY 2011 News 11
BARCLAYS
CAPITAL
BarCap yesterday, although the bank
declined to comment on this.
Vickers helped set up the bank’s
energy and resources team alongside
ENERGY Arkansas to gain an exposure to the Australia-listed shares as part of its Mark Warham, co-head of European Leeds-born Warham is currently a
BY MARION DAKERS growing shale gas industry. $10bn buyback announced last week. M&A at the bank. member of the Takeover Panel, and
BHP Billiton’s share price rose yester- The acquisition, BHP’s largest in six Charles Kernot at Evolution The BHP advisory job comes closely served as its director general
day after details of its $4.75bn years, pits it against China in a race Securities welcomed the Chesapeake after Warham’s team brought in the between 2005 and 2007.
(£2.94bn) purchase of US gas firm for global energy assets, following deal, saying in a note to investors that London Stock Exchange as a client for Advising BHP on the US aspects of
Chesapeake’s assets and $5bn buy- state-owned PetroChina’s C$5.4bn “shale gas has the scope to grow into its £4bn merger with Canadian the deal is Scotia Waterous, the oil
back filtered through the market. (£3.38bn) agreement to buy shale gas a significant business line for BHP exchange TMX earlier this month. and gas M&A specialist owned by
BHP, which announced the plans to stakes from Canada’s Encana earlier Billiton”. Market chatter named energy spe- Canada’s Scotiabank.
the London market yesterday, said it this month. BHP shares rose 1.6 per cent to cialist Julian Vickers as the banker Chesapeake Energy is being
would take over Chesapeake’s shale BHP also announced plans for a £24.13 yesterday, beating a general who won the BHP mandate for advised by Jefferies.
gas reserves in the Fayetteville field in $5bn off-market buyback of its decline in the FTSE 100
BAA narrows
annual losses
despite snow
▲
TRANSPORT
inquiry into its performance during
BY MARION DAKERS the weather. It was headed by non-
HEATHROW and Stansted owner BAA executive director David Begg and is
narrowed its losses to £316.6m in 2010, due to report in March.
it announced yesterday, as a rise in Matthews said he was confident
retail spending at its airports made up that BAA could improve on its
for some of the £58m hit from snow, “robust financial performance”.
ash and strike disruption. “We would expect business travel
BAA, owned by Spain’s Ferrovial, to keep growing – especially to China
said revenue rose 4.9 per cent to and India given the growth there. In
£2.07bn last year. 2011, we expect to deliver a strong
Losses were cut by 61.5 per cent to increase in profits and cash flow,” he
£316.6m, in part due to a £218m pen- said.
sions charge in 2009 that skewed the He added that the firm had not
figures. decided its next steps after a competi-
Net retail income per passenger tion commission ruling that ordered
rose 12.1 per cent to £5.29, while over- BAA to sell Stansted and one of its
all passenger numbers declined 1.8 Scottish airports.
per cent.
BAA said that stripping out one-off ANALYSIS l British Airways
disruption, passenger numbers actu- 305 p
ally rose 3.4 per cent at Heathrow and 282.50
fell by up to 4.8 per cent at Stansted. 295 22 Feb
“These results represent pretty
solid progress given the numerous 285
setbacks we had last year,” said BAA
275
chief executive Colin Matthews, who
turned down his bonus after criti- 265
cism of the firm’s handling of the
snow over Christmas. 255
The firm launched an 10 Dec 30 Dec 19 Jan
£316.6m
Revenue up 4.9 per UK passengers using BAA Stansted traffic
cent to airports fell 8.1 per cent to fell 7 per cent to
d
– 2.4m journeys lost d
through strikes, ash
clouds and snow
d
12 News CITYA.M. 23 FEBRUARY 2011
Minerva values
ANALYSIS l February has been a busy month for European debt sales
UK market for 60
$bn
14
54.9
50 £ and € sovereign debt issues ($bn) 12
Numbers of issues
cocos to be 40
10
remain elusive
40.3
8
worth £44bn
30 PROPERTY
▲
6 PROPERTY developer Minerva
remained tight-lipped over possible
20 tenants for its Walbrook and St
21.3
21.0
4 Botolph developments yesterday, as it
19.1
20.3
reported a 6.2 per cent rise in net asset
value.
13.9
10
17.6
17.3
17.7
2
▲
8.3
BY JULIET SAMUEL due to higher capital requirements. £10.4m profit in the last six months of
0.0
0.0
1.0
Basel III’s limited definition of qualify- 2010, while the value of its properties
THE market for contingent convertible ing capital could make cocos, which 0 rose 3.2 per cent to £1.2bn
bonds (cocos) in the UK alone is worth are bonds that turn into equity if a Jan Feb 2 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb “Our short term priority is to lease
2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011
at least £44bn, according to analysis by bank’s capital ratio falls below a trig- our City properties, finish and sell
Bank of America/Merrill Lynch. ger threshold, the cheapest option. Lancaster Gate and consider a joint
as five per cent, or £110bn. tier one capital ratio of seven per cent issuances, with sovereigns placing the retail space at the St Botolph office
Banks are being forced to consider by 2019. On top of this, systemically BY JULIET SAMUEL £20.3bn versus nothing in December block now pre-let.
important financial institutions (SIFIs), 2010. Industry insiders said this week that
ONLY A HANDFUL OF BANKS HAVE ISSUED COCOS which will include a country’s largest FEBRUARY has been the busiest Portugal was also due to hold an Santander was in talks with Minerva
WHEN BANK ISSUANCE CAPITAL
banks, will have to have to hold two to month for European sovereign debt auction this week, but backed out to take space in the Walbrook, but
RATIO TRIGGER five per cent extra. issuance since March 2010, accord- after its last auction saw yields on five- Hasan declined to comment on
Credit Suisse’s public issuance of ing to data from Thomson Reuters. year debt rise to a punitive 6.4 per whether the bank is still interested
November 09 Lloyds £8.5bn 5%
€2bn in cocos last week was heavily With only a few days in the year’s cent – the highest since 1988 – and He told City A.M. that there has been
March 10 Rabobank €1.25bn 7% over-subscribed, with yield-hungry shortest month left to go, the data forced the European Central Bank to renewed interest since the start of the
investors snapping up the five year shows that sovereigns have been intervene to the tune of €711m. year, putting the number of potential
July 2010 UniCredit €500m 6% notes at a 7.88 per cent coupon rate. packing their debt sales into the first Spain has held the biggest sale so tenants in the “mid-single figures”.
January 11 Rabobank $2bn 8% The high demand is likely to encour- quarter, with $21.3bn (£13.1bn) far in 2011, having sold €6bn of 10- Minerva also said takeover talks
age other banks to issue the notes as issued so far and Germany planning year notes in January at a 5.5 per with an unnamed possible bidder
February 11 Credit Suisse SFr6bn 7% soon as the European Commission a €7bn (£5.9bn) auction today. cent yield, but that is due to be were ongoing, but refused to reveal
February 11 Credit Suisse €2bn 7% approves them. January also saw a rush of eclipsed by Berlin’s auction today. any details.
Europe
one way from
£ 49
including taxes
CITYA.M. 23 FEBRUARY 2011 News 13
despite upward revisions being made The index climbed back to 25 this
BY JULIAN HARRIS to recent months due to changes in month, as new orders soared by 10
the Conference Board’s methodology. points (from 17 to 27), the Richmond
EUROZONE ECONOMY
▲
AMERICAN consumers are the most The headline figure for consumer Fed announced yesterday. ECB’s two per cent target of for the
upbeat they have been since February confidence reached 70.4 this month, However, the US housing market whole of 2011, Mersch said.
2008 as the US economy continues to from 64.8 in January. continues to slump, with prices THE euro held up against the dollar “I would not be surprised at most
rebound, official data showed yester- And consumers are optimistic for falling 0.4 per cent in December, com- yesterday, as chaos in Libya was offset ECB colleagues concluding that we
day. the near future, with the survey’s pared to the previous month. by hawkish rhetoric from a senior have upside risks to price stability,” she
“Rising equity prices, falling unem- expectations index surging to 95.1, In the final three months of 2010, European Central Bank official. added, stressing that the outlook has
ployment and the boost to disposable from 87.3 last month, smashing the prices in 20 main US cities dropped Having dropped as much as one per changed.
incomes from the payroll tax cut are long term average of 92 for the first 3.9 per cent on the previous quarter, cent against the dollar as the Libyan “We are experiencing a new exter-
more than offsetting the effects of time since the recession. the Case-Shiller home price index crisis escalated, the euro recovered to nal shock -- this is not only coming
higher gasoline prices and lower America’s recovery was also reflect- revealed yesterday. test $1.37 (£0.85) following the com- from oil prices, it’s all kinds of com-
house prices,” commented Paul Dales ed in the Federal Reserve Bank of “The silver lining that they should ments by ECB policymaker Yves modity prices and on top we also have
of Capital Economics. Richmond’s manufacturing figures, be bottoming out soon,” said ING’s Mersch. pressure on food prices.”
High street morale was boosted which bounced back strongly. Teunis Brosens. Inflation is likely to stay above the WEALTH MANAGEMENT: P19
Best Buy in
Pendragon in China exit
profit surge but UK safe
after job cuts
▲
RETAIL
BY JOHN DUNNE
US electricals giant Best Buy yesterday
reaffirmed its determination to suc-
ceed in the UK market despite pulling
CONSUMER cars last year – or five per cent of the out of China and Turkey.
▲
BY MARION DAKERS In total, 8.2 per cent of Ocado than 72 per cent of the shares avail-
shares covered by Data Explorer are able for loan, or 11.5 per cent of the
ONLINE grocer Ocado’s shares are on loan to hedge funds and traders total shares, were being used to bet
still being shorted aggressively betting on a collapse in the share on a slump.
Do you trade privately? despite enjoying record highs this
month, according to figures seen
price. One company insider sug-
gested that the real sum could be
A US hedge fund, Blue Ridge
Capital, is thought to have lost up
Or institutionally? by City A.M.
The firm, which floated at 180p
even higher.
The number of short positions
to £40m by shorting the stock last
year as it bottomed out at 120.9p.
in July, closed at 224p yesterday on Ocado is more than double the While Ocado bosses blamed
It’s all about confidence. after spiking at 290p on 10
February.
average for a FTSE-listed company,
which would normally see between
hedge funds for partially keeping
the stock price low after flotation,
But figures from Data Explorer, two and three per cent of its shares Data Explorer figures suggest that
Have you got it? which monitors stock loan and
short selling activity, show that
used for shorting.
Investors owning around 20 per
only two per cent of the shares
were used for shorting in the first
You want it? more than 40 per cent of shares
available for borrowing in order to
cent of Ocado’s shares make their
stock available for short-selling.
month after the IPO.
Ocado declined to comment yes-
short the company were being used The outlook for Ocado shares is terday.
R
ISING petrol prices have stalled this can hit similar companies which the country to improve and 77 per This support is consistent across all
BP’s recovery from the Macondo become tarred by association) but cent think their own situation will demographic groups, for example 51 -10.0
oil spill. In the two months once again in this sector we have seen improve. Encouragingly three quar- per cent amongst those with a house-
from mid-April to mid-June the how much price increases impact on ters also expect the country to respect hold income of less than $266 and 47 19 May 19 Jul 19 Sep 11 Nov 19 Jan
return of confidence
Google said yesterday it is working with
the European Commission to address
and iPhone 5
BY STEVE DINNEEN achieved, he says, by standardising
reporting mechanisms and making tices. The French company is one of
NEW Sage boss Guy Berruyer says systems more efficient. three online search engines that have
confidence is returning to small He said Sage is now looking to already accused the world’s number one
and medium enterprises (SMEs) but the “new frontier” of cloud-based web search provider of abusing its domi-
that those in western Europe are software, which his firm will be at nant position by demoting rival sites in
struggling to get hold of funds com- the forefront of. results and giving preference to its own
pared to their US counterparts. Berruyer believes services.
TECHNOLOGY Apple has increased its iPad target Berruyer, who took control of the new
▲
BY STEVE DINNEEN from 38m to 45m units. Sage in October, was tasked with systems will compli- Informa starts the year well
Apple has often struggled to keep turning around the fortunes of a ment, rather than Publishing and conference group
APPLE may face production delays up with huge demand for new releas- firm struggling to drive revenue cannibalise, exist- Informa posted a 1.5 per cent rise in
that could push back the launch of es, with previous iterations of the iPad growth after its core market of ing accountancy earnings for the year, broadly in line
both its iPad 2 and iPhone 5. and iPhone sold out globally for SMEs were holding back on spend- software platforms. with analysts’ expectations, and said it
The iPad 2 was slated for release in months after their launch. ing. Last month Sage’s half year fig- was well placed to grow as the global
April but people hoping to get their The new iPhone is expected to fea- ures showed a gradual return to economy improved. The company, which
hands on the latest tablet could now ture near-field communication technol- form and Berruyer says the market publishes shipping newspaper Lloyd’s
have to wait until June. The iPhone 5 ogy, allowing it to be used as a portable is continuing to recover. List, posted adjusted pre-tax profit of
was expected in July but could now be payment device, while the iPad 2 will He told City A.M. he believes £276.4m, up six per cent, on broadly flat
delayed until September. have front and rear-facing cameras. confidence is returning to the revenue of £1.23bn.
However, conflicting sources last The news comes as iPad retailers sector, with a new survey by
night claimed it could be unveiled in slashed their prices on the first version the firm showing 44 per cent Misys’ investors redeem shares
California as soon as 2 March. of the tablet, suggesting they expect of SMEs are more optimistic Software firm Misys said the majority of
The Cupertino-based firm has never the new one to arrive soon. Carphone about 2011, compared to just its shareholders had chosen to have
confirmed when either product will Warehouse is completely out of stock 19 per cent who are less opti- their shares redeemed as part of a
be launched but iPhones are generally and Orange has cut its prices to just mistic. scheme to return to investors some of
released in June or July each year. £99 with a 24-month contract. But he said one of the the proceeds from the sale of its stake in
FBR Capital Markets analyst Craig A new MacBook Pro computer is biggest stumbling blocks Allscripts-Misys. The company said 69.5
Berger said: “With various casing sup- also expected soon, with Apple staff remains the difficulty small per cent of shareholders elected to have
pliers and touch suppliers still ramping being asked to sign non-disclosure firms have accessing capital their “B” shares redeemed. Meanwhile,
up, with some chip vendors not having agreements about a top-secret meet- markets. 23.3 per cent elected to take a single
yet received firm iPhone 5 orders, and ing, believed to be about its launch. He also called for an eas- dividend of 38p. Misys is returning
with other sockets like the image sen- Apple will face tough questions ing of government bureau- £145m to shareholders, equivalent to
sor… a September launch is likely.” from shareholders today about who cracy, which he says impacts 38p per share, following the sale of its
Berger says he expects Apple to shift will succeed boss Steve Jobs, who is on the confidence of small GUY BERRUYER 55 per cent stake in healthcare IT com-
100m iPhones in 2011. He also believes thought to be extremely sick. pany Allscripts for $1.2bn last year.
Boisdale of Bishopsgate,
Swedeland Court, 202 Bishopsgate, London, EC2M 4NR
020 7283 1763
www.boisdale.co.uk
16 News CITYA.M. 23 FEBRUARY 2011
Sindall chair SWISS WATCH EXPORTS UP 16.9 PER CENT NEWS | IN BRIEF
Cold weather spurs Drax revenue
Drax, the operator of Britain’s largest coal-
fired power station, reported higher rev-
BY MARION DAKERS adding that the firm’s overall market expensed for purchased CO2 emissions
is looking 10 per cent smaller. allowances was £12.6 per tonne, down
CONSTRUCTION group Morgan Sindall Morgan Sindall snapped up the bulk from £14.3 per tonne last year.
painted a bleak picture of the UK build- of social housing services group
ing market yesterday but said it plans Connaught’s troubled assets last year Hargreaves on track for 2011
to increase its share of the shrinking and has finished the year with a cash British energy support services firm
market in 2011. balance of £149m, up 26 per cent year- Hargreaves Services has posted a near 10
Morgan Sindall posted a full-year on-year. per cent rise in first-half pre-tax profit
pre-tax profit of £40.7m for 2010, miss- Morgan said the move “was quite a driven mainly by higher commodity prices,
ing consensus forecasts of £46.9m, on difficult integration for us... and said it was on track to meet its full-
a five per cent fall in revenue to Connaught’s contracts were not run as year profit targets. The supplier of solid
£2.102bn. we would have liked”, but said the fuels and bulk material logistics said it saw
The company, which recently won firm was already seeing modest a robust performance from its energy and
part of a large tunnelling contract for returns. commodities business with revenue
the £15bn Crossrail project, said Margins in the firm’s affordable increasing 32 per cent to £149.5m.
underlying pre-tax profit before amor- housing division Lovell, which has
tisation and non-recurring items for taken the Connaught work, rose 0.2 Price rise boost for Dragon Oil
the year ending was flat at £51.3m. per cent to 4.2 per cent, delivering an Dragon Oil’s profit soared 49 per cent
Chairman John Morgan told City operating profit of £16.1m, up eight in 2010 on higher oil prices as the
A.M.: “I don’t think the order book will per cent. Its overall margin rose from Turkmenistan-focused company said it
grow significantly this year, but I’m two per cent to 2.2 per cent. had widened its scope for potential
confident that we are going to Morgan Sindall said its order book acquisitions to include West Africa.
increase market share across the grew to £3.6bn from £3.2bn last year. Dragon Oil's pre-tax profit jumped to
board.” RBS analyst Mark Howson said in a $514.7m (£318.2m) in 2010, slightly
The firm’s order book last year was note that the firm’s underlying profit behind a consensus of $517m in a poll
made up of 60 per cent government was better than expected, with cost of five analysts, from $345m the year
work, but Morgan said this had savings helping overcome a slower- before. The company’s profits benefit-
already dropped to 50 per cent and is than-hoped recovery in the firm’s SWISS watch exports rose 16.9 per cent from the same period a year earlier to SwFr1.1bn ed from stronger oil prices in 2010 and
expected to fall further as the year refurbishment business. (£723m) in January, the watch industry federation FH said yesterday. Exports of wrist after its daily rate of production rose
goes on. The FTSE-listed firm’s shares closed watches were up 17.1 per cent year-on-year in January, with shipments of gold watches 5.5 per cent to 47,211 barrels of oil per
“The private sector is coming back, down 3.3 per cent at 692.5p yesterday. increasing by twice the average rate. day.
ENERGY
president and chief executive, effec-
DYNEGY’S top management have tive 11 March. Williamson has also
announced their resignations after resigned as a director and chairman
failing to sell the company for the sec- of the board, effective immediately.
ond time in a year. David Biegler, currently an inde-
The power company terminated its pendent Dynegy director, has been
$665m (£413m) deal to sell itself to appointed interim president and
Carl Icahn because the billionaire chief executive. Patricia Hammick,
investor was unable to convince previously lead director of Dynegy,
shareholders to agree to the $5.50-a- now serves as chairman, the company
share cash bid on the table. said.
CITYA.M. 23 FEBRUARY 2011 News 17
CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel in association with
will report to Duncan Gwyther, chief and management after serving on the at Dresdner Kleinwort Benson and
Hawkpoint Partners investment officer and cover segregat- boards of Aozora bank, DMC Japan Goldman Sachs.
Simon Russell has been appointed as managing ed securities and bond funds. Holdings and the Japan Ministry of
director of Hawkpoint Partners. With an exten- Carter has over ten years’ experience Economy, Trade & Industry. Credit Suisse
sive portfolio across top European companies, in investment management, having pre- The financial services company named
Russell was previously head of technology at viously spent seven years at Baring Matrix Group five new research analysts to cover the
Dresdner Kleinwort as well as the head of Asset Management. Prior to joining The investment banking business has banks sector, based in London. Carla
European technology at Thomas Weisel Quilter, he was global fixed income and appointed Richard Morse as senior Antunes da Silva will join Credit Suisse
Partners. He has also provided advice to corpo- currency fund manager at Blackfriars adviser where he will be primarily as managing director, Amit Goel as vice
rate clients including Liquavista, 2e2, Wolters Asset Management. focusing on small to mid-cap energy president, Ignacio Cerezo Olmos as a
Kluwer and Datatec Group on M&A and capital technology companies in the power, director responsible for Southern
market assignments. Governance for Owners Group new energy and clean tech space. European banks coverage, and Andrea
Yoichiro Iwama, chairman of the Japan Morse has more than 30 years of cor- Unzueta as an associate and Maxence
Securities Investment Advisers porate finance advisory experience Gouvello as director.
Quilter appointed Richard Carter as its senior Association, will be joining Governance with a strong emphasis in the utilities In addition, Nick Gough and Justine
The specialist in personalised invest- fixed interest specialist. Based in the for Owners’ board of directors. Iwana and infrastructure sectors. Shih join as directors on the specialist
ment management services has 20-strong research team in London, he has extensive experience in insurance He was previously managing director sales desk.
BEST OF THE BROKERS To appear in Best of the Brokers email your research to notes@cityam.com
440 1,250
2300
22 Nov 10 Dec 4 Jan 24 Jan 11 Feb 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb
B W
RITAIN’S top share index closed Sainsbury down 1.5 per cent and sions in the Middle East and North ALL Street suffered its worst Jones Transportation Average lost 3.8
lower yesterday as troubles in Argos and Homebase owner Home Africa could tempt investors to test day since August yesterday per cent, with FedEx down 5.1 per
the Middle East clouded senti- Retail off 1.0 per cent, as commodity the FTSE support levels at 5,920/30 as investors dumped stocks cent at $93.29.
ment, but bumper consumer price pressures show no sign of eas- from the July 2010 lows at 4,790. on turmoil in oil exporter Despite the sharp pullback, the
confidence figures from the US ing. European shares also fell yesterday, Libya, in what could be the start of a benchmark S&P 500 Index held a key
spurred a late rally and boosted com- Banks were mainly weaker as risk extending the previous session’s long-anticipated pullback after a support level near 1,313, representing
modity stocks. appetite remained largely off the hefty selloff on escalating tensions in lengthy rally. highs reached earlier in February.
The FTSE 100 closed down 18.04 table for investors. But Royal Bank of oil producer Libya. Rising volatility and heavy volume Many analysts have been anticipat-
points or 0.3 per cent lower at Scotland, which reports results on The pan-European FTSEurofirst 300 added heft to the possibility of a larg- ing a correction in a market that saw
5,996.76, having finished at a two- Thursday, rose 2.3 per cent. index of top shares ended 0.6 per cent er pullback. With 9.76bn shares trad- the S&P 500 climb last week to double
week closing low on Monday. London’s blue chips, however, lower at 1,164.60 points, its lowest ed on the New York Stock Exchange, its 12-year low hit in March 2009.
“The 6,000-level will be a hard one rebounded off the session low of close since 3 February. It has shed 1.8 the American Stock Exchange and Still, optimism about the U.S. recov-
to hold in the short-term until the sit- 5,926.55 after US consumer confi- per cent in two straight sessions of Nasdaq, it was the highest volume ses- ery appeared in a report that showed
uation in the Middle East has a little dence rose in February to a three-year losses on concerns over Libya. sion for the month and the second- consumer confidence rose in
bit more direction,” Martin Dobson, high. Italian oil firm ENI, the main for- highest for the year. February to a three-year high.
head of trading at Westhouse The improved optimism over the eign oil group in Libya, shed 0.5 per The CBOE Volatility Index, Wall The Dow Jones industrial average
Securities, said. health of world’s biggest economy cent while Spanish peer Repsol, Street’s so-called fear gauge, surged lost 178.46 points, or 1.44 per cent, to
Muammar Gaddafi vowed to die in fuelled demand for mining and ener- which said it was shutting down its 26.6 percent to end at 20.80, its high- end at 12,212.79. The Standard &
Libya as a martyr in an angry televi- gy stocks as confidence grew over the oil output in Libya, fell 1.2 per cent. est one-day jump since May 20, 2010. Poor’s 500 Index fell 27.57 points, or
sion address yesterday, as rebel troops demand outlook for commodities. “We’ve got some smoldering fires 2.05 per cent, to 1,315.44. The Nasdaq
said eastern regions had broken free The data from US helped offset ANALYSIS l FTSE 5996.76 and it’s an excuse for the market to Composite Index dropped 77.53
from his rule in a burgeoning revolt. concerns of political unrest in Libya 6100 22 Feb sell off,” said Stephen Massocca, man- points, or 2.74 per cent, to 2,756.42.
“There is probably more risk on the and the wider North Africa and aging director of Wedbush Morgan in After the closing bell, Hewlett-
downside but the FTSE might hold Middle East region would derail the San Francisco. Packard slumped 10 per cent to
better because of the gold and oil global economic recovery. 5900 The benchmark Standard & Poor’s $43.42 in extended trade after the
price being stronger, with its com- The FTSE volatility index, a barom- 500 lost 2.05 per cent, its worst one- Palo Alto, California-based company
modity focus,” Dobson said. eter of investor anxiety, is up sharply 5700
day percentage drop since 11 August. trimmed its 2011 revenue projections
The turmoil in the region and the on the week as investors have “How significant a sell-off we get, on falling consumer demand for its
threat of unrest spreading has hit responded to the troubles. the next 24 to 48 hours is going to be personal computers.
stocks such International Back on the downside, defence 5500 important. If we can hold this 1,315 Wal-Mart Stores fell 3.1 per cent to
Consolidated Airlines and travel firm firm BAE Systems was the biggest on the S&P and hold the trendline, $53.67 after posting its seventh
TUI Travel, whose businesses are blue chip casualty, down 4.3 per cent 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb than we can probably get through straight drop in US sales.
Wealth Management | Forex
18 CITYA.M. 23 FEBRUARY 2011
CABLE BULLS
WILL HOPE FOR Speculators seek out
THREE HAWKS
BORIS SCHLOSSBERG
sanctuary from shock
DIRECTOR OF CURRENCY RESEARCH, GFT
Tremors see investors
T
WO or three? That’s the critical question that
currency traders will be asking today upon the
release of the Monetary Policy Committee (MPC)
flee to safe ground,
minutes due at 9:30am. Last week, the market
was abuzz with speculation that Charles Bean may writes Craig Drake
have been the third MPC member to join the two Bank
of England (BoE) hawks Andrew Sentance and Martin
Weale in voting for a rate hike. Today those rumors
S
may be confirmed. HOCKS, both in the political and seis-
Until recently, Sentance has been the only hawk on mic sense, have driven flight into the
the MPC, despite headline inflation that is now double US dollar and the Swiss franc as
the 2 per cent target rate set by the BoE. In contrast, investors shy from risk.
Mervyn King and other more temperate policymakers Headlines in recent weeks have been
remain concerned that any hike in rates could snuff out dominated by political unrest in north
the nascent UK economic recovery. The UK economy Africa and the Middle East, but Libya’s tur-
remains in a fragile state and although last Friday’s moil is the first time that a major oil pro-
retail sales showed a strong rebound after a weather- ducing country has been affected by the
plagued December, the employment situation in upheavals. Libya is the world’s eighth
January actually deteriorated, with jobless claims ris- largest oil exporter. According to Nick
ing by 2,400 when a fall of 3,000 had been forecast. Beecroft of Saxo Bank, with anti-monarchy
The perilous nature of the UK recovery is the pri- protests planned for Thursday in Saudi
mary reason that the BoE was so circumspect in last Arabia, the world’s largest oil exporter,
week’s quarterly inflation report, noting that inflation there could be volatile times ahead for oil
risks were “broadly balanced.” King played down spec- prices “The fall of Gaddafi, or even com-
ulation over interest rate rises, saying no decisions plete interruption of Libyan oil supplies,
would be made until future quarterly meetings. are not in themselves events to derail the
There is no doubt that the UK faces some of the developed world’s recovery, but they do rep-
strongest inflation pressures in the G10 universe, but it resent another important step along the
is far from certain whether a rate hike would be effec- road that could lead to the destabilisation Christchurch, NZ sur-
tive in curbing these price pressures. Interest rate hikes of Iran, Iraq and Saudi, and their oil sup- veys the earthquake
tend to work best when inflation is the result of exces- plies. That is something that really could damage
sive demand, but the latest rise in prices has been cause real damage. Oil at $150 a barrel Picture: Reuters
caused by supply shocks, most particularly in energy as would be a severe setback for the developed
the turmoil in the Middle East continues to push the economies.”
price of Brent crude above $100 per barrel. With risk-aversion dominant, the unrest that had been anticipated later in the week. same time, political tremors from the
Nevertheless, if the MPC minutes reveal that Bean in the Maghreb and the Middle East has This was before the news of the devastating shifts in power in the Middle East will con-
voted for a rate hike, momentum will shift to the hawks seen flows into the dollar and swiss franc, earthquake in Christchurch sent the NZ tinue to have currency speculators running
with three out of the nine members looking to hike seen as “safe” currencies by investors – the dollar down to $0.7455. for safer ground.
rates. If the situation in the Middle East begins to sta- franc’s one-month implied volatility jump- Following the seismic events earlier this
bilise and risk sentiment improves, cable could resume ing to a two week high of 11.20 per cent week, New Zealand’s central bank may ANALYSIS l AUD/USD
its rally, targeting yearly highs at $1.6279 as the mar- While the effect on the dollar was dulled hold off on the rise in interest rates. On the 1.006
USD
kets assume rate hikes are on the way. by the US markets having been closed for other side of the Tasman Sea, risk-aversion
President’s Day on Monday, Richard had the Australian dollar bobbing around
1.004
Wiltshire of ETX Capital reported Swiss pri- parity with the US dollar for most of yester-
vate banks and funds are aggressively buy- day. (see chart)
ing Swiss francs. Though the area will glean hope from 1.002
In the butterfly effect that is the foreign the fact that earthquakes do not usually
exchange market, the flows into the dollar have lasting effects on the economies of 1.000
drove the New Zealand dollar down, developed countries, the Kiwi dollar will
already driven low by the prospect of an likely continue to be kicked around the cur-
announcement of a rise in interest rates rency markets for the short term. At the
15 Feb 16 Feb 17 Feb
THE
The attack of the TIPSTER
MERSCH
T
HE euro was dropping steadily against
H
AWKISHNESS is not new at the of the ECB makes me think a rate rise Franc has natu-
European Central Bank (ECB), but could come sooner. A string of negative rally risen
this week its most notorious birds market data is more likely to force their against all
of prey have been flapping their hand.” other curren-
beaks. cies and this
This has got foreign exchange traders EXPECTATIONS ARE OVERDONE could continue
rather excited, and stabilised the euro Richard Wiltshire, a currency expert at as long as the
against the dollar at a time when the ETX Capital, however, thinks that situation
upheaval in the Middle East should have market expectations are overdone: “Most remains tense.
had them flooding in that direction. of it is just rhetoric for now.” The New Zealand
While the dollar did gain ground, it did Duncan Higgins, a market analyst at dollar has been hit
not have the impact most would expect: Caxton FX, agrees: “Unlike sterling, the since an earthquake in
the euro reached around $1.3653 yester- market hasn’t priced in much chance of Christchurch killed 65 people.
day. a rate rise yet. I doubt that Mersch’s com- The Kiwi dollar already slid 2.4 per cent
The language of Yves Mersch and ments will have drastically altered the against the Swiss franc, and based on the
Juergen Stark has certainly toughened ECB’s view.” overall situation there could be potential for
up the ECB’s stance on inflation ahead of He argues that the Eurozone is still a this trend to go on. Capital Spreads quotes
next week’s meeting, but does this mean hotbed of uncertainty, confidence is still SFr0.7052-SFr0.7059 on New Zealand dol-
the board will raise rates earlier than low and Portuguese bond yields are hit- Who knows when they Higgins and Wiltshire may have a lar-Swiss franc.
expected? ting record highs: “The ECB will not will strike point. Mersch and Stark are known for The Swiss franc’s appeal as a safe haven
want to risk undermining a still nascent holding hawkish views. Indeed Stark was in times of geopolitical uncertainty com-
RATE RISE IN THE PIPELINE recovery by raising rates prematurely.” Picture: Reuters once described as the very “representa- bined with Japan’s recent downgrade by the
Most have taken the view that an ECB tive of a good old Bundesbank tradition.” Moody’s ratings agency has made the Swiss
rate rise was in the pipeline, expecting it franc-yen pair an interesting trade in recent
to come later this year. The political ANALYSIS l The performance of euro-dollar over the last five days SURPRISE CURRENCY MOVEMENTS days.
debate around the restructuring of its 1.375 $
Yesterday’s surprise currency movement A break above ¥90.00 on the pair would
bailout fund and the periphery coun- certainly bodes well for single currency be seen as significant by many because this
tries’ debts was expected to be enough to bulls. And with inflation edging up, the would pave the way for a return to the
slow down the decision-making process ECB can relied upon to be getting con- 2008 highs above ¥100.
1.365
on rates. With this consideration, BNP cerned. So long as the uncertainty in North Africa
Paribas’s Ken Wattret said he did not But whether a rate rise is actually due and the Middle East remains an open-ended
expect rates to be lifted until the fourth is quite another matter. The fact that the proposition then the Swiss franc is unlikely
1.355
quarter of this year. euro found a support level against the to be short of fans. The current IG Index
But now he is not so sure: “The poten- dollar amidst the Middle East crisis goes price on dollar-yen is ¥88.406-¥88.431.
tial for further turbulence in the Middle to show that the market is longing to
East and the increasingly hawkish tone 15 Feb 16 Feb 17 Feb 18 Feb 22 Feb hear more from the ECB’s hawks. Donata Huggins
My pick: Buy dollar-Canadian dollar Ca$0.9800 My pick: Stay short euro-dollar My pick: Short Australian dollar-dollar below $0.9900
Expertise: Technical analysis Expertise: Global macro Expertise: Fundamental and technical analysis and risk management
Average time frame of trades: 1 to 6 weeks Average time frame of trades: 1 week to 6 months Average time frame of trades: 1 day to 1 week
Daily studies are starting to look a little stretched, and in conjunction with I sold euro-dollar last week at $1.3568. The prices are retreating after last A strong range reversal from dollar-Swiss franc prevented a long breakout
longer-term cyclical studies, warn of a major base. This leaves us looking for week’s upswing as the greenback capitalises on safe-haven demand amid trade. However, a jolt in underlying risk appetite may put my previously laid
opportunities to buy rather than sell into the downtrend. The Ca$0.9800 the broadening crisis in Libya. With the pair testing resistance-turned-sup- out Australian dollar-dollar short setup into play. A controlled short below
figure seems to be offering itself as a formidable support zone and ulti- port at the top of a falling channel established earlier this month (now at $0.9900 with an initial stop and first target of 150 basis points looks bet-
mately, only a weekly close back below Ca$0.9800 would delay the outlook $1.3573), I will remain short and look for a break below this juncture. I will ter now than last week. Another appealing risk-based setup is to short
and give reason for pause. do this in the hope that I will clear the way back below the $1.35. euro-yen below ¥113.00 with another 150-point buffer on each side.
20 Wealth Management CITYA.M. 23 FEBRUARY 2011
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Business Features
21
| Law
LLPs need to
watch out for Changes to insurance regime
bullying risks could mean a PII revolution
BY DOUG PREECE AND Proposals to alter the
JAMES DAUGHTREY way solicitors are
insured would have
wide-ranging effects
T
HE pressure on partners to perform is a
constant characteristic of a professional
firm. In such an environment perhaps it
should not come as a surprise when the
behaviour of some high calibre individuals falls
short of the mark. Generally, firms are alive to
the dangers of employees being bullied, particu-
larly following the case of Helen Green.
Damages of £828,000 were awarded to
Green, who suffered a nervous breakdown as a
result of workplace bullying while at Deutsche
Bank. However, when it comes to bullying
between partners, City firms are often not so
assiduous in tackling the problem.
Most firms try to deal with behaviour that
STEVE HOLLAND
does not conform to the business’s values.
However, partners are not always treated the
S
same; a big billing partner, for example, may be OLICITORS are dealing with a
tolerated more than others. The typical set of number of challenges that threat-
circumstances is of bullying causing illness en the futures of many within the
which affects performance, leading to the vic- legal profession. The recession has
tim partner leaving the firm and then facing affected everyone and solicitors are no
great difficulty finding an alternative position. exception.
What kind of behaviour should firms look out Corporate lawyers aren’t seeing the
for? Case law shows that a group of partners deals that used to see them working into
ganging up on a fellow partner to pressure him the early hours of the morning and the which is the exclusion of cover for claims A safety net is vital buy back this cover. On the basis that 64
into accepting a position to his detriment can property lawyers have seen their con- made by lenders/financial institutions. for solicitors per cent of the profession currently
be treated as bullying. Foul and abusive lan- veyancing practices grind to a halt as the The SRA mandates the breadth of cover undertake residential work, this could
guage, behaviour designed to humiliate or property market remains stagnant. that insurers must provide solicitors, Picture: GETTY mean that half of firms will no longer
embarrass, or to intimidate or demoralise a fel- On top of these worries, the same known as the Minimum Terms and have the cover and will consequently
low partner all fall within the scope of bullying. solicitors are faced with increases in the Conditions (MTC). If the proposal to have to stop doing conveyancing work.
Less obvious examples include a partner per- number of claims brought against them exclude lender claims from the MTC is The cost of buying this cover back may
sistently dismissing or belittling the input of a for professional negligence, much driven adopted, insurers will only allow certain well result in higher costs for the con-
fellow partner. Bullies might say that this is by the recession. The latest High Court practices to buy back this cover. sumer. On the other hand, if the cost is
part and parcel of being a partner in a high figures indicate that negligence claims Where the firm is unable to buy back absorbed by the partners this could
pressured environment. Are they right? All against solicitors reached 210 in 2009, up cover, they are almost certainly going to cause confrontation between different
partners in a general partnership owe a duty of from 80 in 2008. The banks are leading lose all of their work from the lenders. departments which might drive strug-
good faith to their fellow partners. There is case the charge against solicitors, looking to This will mostly affect smaller con- gling firms to break up.
law authority to the effect that bullying can recoup their losses on defaulting borrow- veyancing firms and unless they can One of the consequences of this
amount to a breach of the duty of good faith. ers. show they have a good claims record restriction in cover may be a move by
This may give the victim partner the right to All solicitors in England & Wales must with robust risk management, insurers some firms of solicitors to change their
claim damages and even the right to apply to hold professional indemnity insurance will be reluctant to allow those practices regulator from the SRA to the Council of
wind up the firm. (PII) at all times in order to provide their to buy back the cover. Licensed Conveyancers (CLC).
If the firm is a limited liability partnership clients with financial protection; howev- Statistics show that claims from con- There is no such restriction in cover
(LLP), a member in a LLP owes a duty of good er, the system in place to provide this veyancing represent 50 per cent of all for licensed conveyancers who arrange
faith to the LLP. There may also be an express cover is in crisis due to the rising level of claims by value – with half of these made their professional indemnity through
provision in the members’ agreement imposing claims. by lenders. The conveyancing process the CLC scheme. Solicitors looking to
an obligation of good faith between the mem- The Solicitors Regulation Authority that causes these losses must also be up retain their work with lenders may well
bers. Even if there is no express term, there may (SRA) agreed to carry out a thorough for a fundamental review and should shift their conveyancing business into a
be a duty of mutual trust and confidence review on the future of the PII market undergo a thorough investigation. This separately regulated firm. Only those
between the members and the LLP. Bullying for solicitors and released a consultation was the recommendation made by an firms thinking and planning ahead that
would be a clear breach of this kind of duty. paper in December inviting interested independent report by Charles Rivers have their wits about them will survive
Also, the common law duty of care to maintain parties to submit their responses by 28 Associates (CRA) which was commis- in this constantly changing environ-
a safe workplace should apply equally to a part- February 2011. sioned by the SRA last year. ment.
nership and an LLP. The SRA paper contains a number of CRA estimates that 30-60 per cent of Steve Holland is the executive director for
The firm may also find that it is liable to the proposals, the most controversial of firms in England and Wales may seek to insurance brokers Lockton
victim partner under the Protection from
Harassment Act 1997, which provides that a
person must not pursue a course of conduct
which he knows or ought to know amounts to CASE STUDIES| NEWS FROM THE COURTS THIS WEEK by Henry Farris, of City Law LLP
harassment. The partner responsible for the
bullying will not be able to defend a claim on the
basis, for example, that the victim was overre- SHARE-RAMPING BAN UPHELD SYRIAN VS ENGLISH LAW DIRECTOR BAN OVERTURNED
acting, if a reasonable person would have The Upper Tribunal (Tax and Chancery) British Arab Commercial Bank issued pro- The Upper Tribunal has decided
judged the behaviour as harassment. Once guilt has upheld the decision of the FSA to fine ceedings against China’s Bank of that a person whom the FSA
has been established, both the bullying partner and issue a prohibition notice to a stock- Communications and the Central Bank of had deemed not a “fit and
and the firm could be liable for damages and broker involved in a share-ramping Syria to determine the respective positions proper person” can become
the firm may also be liable for harassment scheme. Graham Betton had 30 years on counter-guarantees between them in a company director. The FSA
under the Equality Act 2010. experience and was the managing direc- relation to a construction project. The said Mandeep Panesar
While many City firms are holding up in the tor of his firm. The scheme involved unau- High Court had to decide whether English lacked competency and
current climate, in countless cases partners are thorised trading of his clients’ accounts or Syrian law governed their agreements. capability to comply with
running faster in order to stand still, with the and the use of roll-overs to artificially It held that Syrian law was applicable the regulatory require-
attendant pressure this creates. Firms should be inflate demand for the AIM-listed shares because the factors connecting the dispute ments. This related to his
aware of the potential risk posed by a success- and thus their value. The tribunal held with Syria were stronger, disregarding the previous involvement with
ful but acerbic and dominating partner and, that although Betton was not a co-conspir- presumption of English law. It also held the company. Panesar appealed
where bullying behaviour comes to the atten- ator, his knowledge of it, coupled with his that, under Syrian law, neither BACB nor and the tribunal found that there
tion of the firm, it needs to take action. position in the firm, justified the prohibi- CBS was liable under the guarantees or was no doubt as to his honesty,
Doug Preece and James Daughtrey are part- tion and financial penalty. counter-guarantees. integrity and reputation.
nership law experts at Fox Williams LLP
Lifestyle
22 CITYA.M. 23 FEBRUARY 2011
| Motors WORDS BY
RYAN BORROFF
I
T’S not often I get woken up to the ent 911s with prices that more than dou- The Carrera GTS is available with a six-
deep rumbling sound of a flat-six ble from the entry level Carrera to the speed manual or seven-speed PDK trans- 0-62MPH: 4.6secs
engine firing up but it certainly most expensive GT2 RS. It’s a range with mission. I drive both but it’s the GTS TOP SPEED: 190mph
makes a change from my 16 month- such a variation in model and price that coupe with the manual gearbox I prefer CO2 G/KM: 242g/km
old daughter singing and it’s almost as the 911 is now effectively its own brand. although the PDK is slightly quicker. MPG COMBINED: 27.4mpg
delightful in its way, even before coffee at Which begs the question: does Porsche Stepping in to the cockpit, the car promis-
7.30am. really need another 911 model? es to be a “proper 911”, thanks to its thick,
It’s the sound of a Carrera GTS, the lat- It would seem so. The Carrera GTS has Alcantara-trimmed steering wheel which THE VERDICT:
est in the 911 range, a range that encom- rear-wheel drive only but this time it’s suggests a purity of purpose even before DESIGN hhhhh
passes 22 models, now that Porsche has housed in the widest 911 body Porsche you start the car, which of course, sounds PERFORMANCE hhhhh
added a new GTS coupe and GTS cabriolet makes, the one usually reserved for the RS great thanks to its iconic flat-six engine. PRACTICALITY hhhii
to its Carrera offering. Twenty-two differ- or all-wheel drive 911 models. Porsche has The 3.8-litre engine produces 408hp of VALUE FOR MONEY hhhhi
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Futbol Mundial 11.30pm Show 4am-4.30am Ladies SKY LIVING Scrubs 1.20am Samantha That Work?
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Cricket World Cup 4am Boots 6.10pm Live WTA Tennis Minds 12am CSI: Crime Scene Heels 4.50am-6am Switched 7pm A Baby Story 8pm How BBC2, 9PM
’n’ All 5am-6am UEFA 8.10pm Wednesday Selection Investigation 2.40am Charmed Clean Is Your House? 9pm Neil Oliver delves into the mysteries of
Champions League Highlights 8.15pm Show Jumping 9.15pm 4.20am Four Weddings US HISTORY Mystery ER 10pm Hospital the Stone Age and the meaning of the
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Backcountry 1.30am Kings of 12.30am Live NHL Ice Hockey 7pm Hollyoaks 7.30pm Friends Weapons 3am Greatest Tank 6am Sell Me the Answer travelling to Eastbourne and Cardiff.
COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
QUICK CROSSWORD
SUDOKU KAKURO
10 15 19 13 29 17 17
5 24 12
20 34
45
Place the numbers from 1 to 9 in each empty cell so that each
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 22 23
11 16 9
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 6 35
above or to the left of it. 14
You can only use the digits 1-9 13 11 7
and you must not use the
31 7
19
same digit twice in a block. 16 20 32 4
The same digit may occur 23 9 3
11 9
more than once in a row or
column, but it must be in a
18
22
18
21 16
separate block.
4 8 14
45
4 8 15
ACROSS DOWN
1 Hoodlum (4) 1 Digit of the hand (5)
WORDWHEEL A P
3 Conclude by reasoning (5)
6 Kitchen appliance (4)
2 Pointed beard (6)
3 Devise (6)
Using only the letters in the Wordwheel, you have
ten minutes to find as many words as possible,
F E 7 Arm bone (4) 4 Keep from
happening, make
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters R 9 Expiation (9) impossible (9)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
T O 10 Not having a protective
covering (4)
5 Corroded (5)
C A S U A L C M
5 3 2 4 7 1 7 1 SUDOKU 17 Dependent upon or
occurrence (9)
E U O R A T O R
2 1 3 5 3 9 6
characterised by 12 Stroke lovingly (6)
1 5 1 6 4 2 5 3
N I M B U S K V chance (3-2-4) 13 Appraise (6)
O T N E M E S I S 9 6 8 8 3 1
T O O L S A S T E R 2 1 4 3 8 4 5 1
18 Long fishes (4) 14 Item (5)
A
P
T
L A
U
I N
R
I M
O
P E
I
L
7
8 3 9
1 3
6 1 2
7 9
6
8
4
WORDWHEEL 19 Looks (4) 16 Pried (5)
H A L O G E N P A
7 2 6 6 8 9 7 The nine-letter word was
M N C A N A A N
Z E N I T H G K 4 1 3 4 6 7 8 9 20 Conjecture (5)
D C O E D E M A 9 7 1 2 1 4 2
TRANSCEND
21 Slipped smoothly (4)
Sport
24 CITYA.M. 23 FEBRUARY 2011
@
Milestone as
velodrome
is unveiled
▲
OLYMPICS
BY FRANK DALLERES
THE 2012 Games may still be more
@
than 550 days away, but London offi-
cially received its first Olympic venue
yesterday when the velodrome was
declared open.
British cycling stars Sir Chris Hoy,
who helped to design the 6,000-seat
venue, and Victoria Pendleton were in
attendance at the Olympic Park in
Stratford for the unveiling.
The velodrome’s Siberian pine
track is being billed as the fastest in
the world, and four-time Olympic The velodrome will
gold medal winner Hoy said it would be able to seat 6,000
@
be “the best in the world – I can’t wait cycling fans
to compete on it”.
Lord Coe, chairman of London Pictures: GETTY
2012’s organising committee, called
the eye-catching arena, which was
completed on budget and within two
MORE NEWS years, “a stunning venue built for
champions”.
ONLINE The velodrome could prove the
www.cityam.com seen of some of Britain’s greatest
moments next year, with track
cycling the team’s most successful
email sport@cityam.com discipline in Beijing in 2008.
CITYA.M. 23 FEBRUARY 2011 25
England set
Bopara digs to keep faith
sorry England with Tindall
out of a crisis RBS
6 NATIONS
BY JAMES GOLDMAN
ENGLAND coach Martin Johnson is
▲
CRICKET against India. He said: “We got a lot of expected to again entrust Mike
BY JAMES GOLDMAN things wrong with our bowling. It was Tindall with the England captaincy
a very poor first 50 overs, we need to after opting not to recall Lewis Moody
ENGLAND captain Andrew Strauss take it on the chin. to the starting line-up for Saturday’s
admitted his side got out of jail after “We were very disappointed with crunch RBS 6 Nations clash against
Holland came within a whisker of ourselves in the field, but fortunately France at Twickenham.
causing a major World Cup upset. we got ourselves out of jail. It was Moody, who has only just returned
Ryan ten Doeschate’s magnificent nervy and we need to improve.” after five weeks out with a knee liga-
119 helped Holland set a challenging ment strain, may yet be named as a
target, boosted by some woeful bowl- WORLD CUP FINAL VENUE IS SAFE replacement when Martin Johnson
ing and comical fielding, of 293. confirms his side on tomorrow.
Strauss led from the front in MUMBAI’S Wankhede Stadium, the venue for France coach Marc Lievremont,
response with 88, but a late flurry of the Cricket World Cup final, has been given meanwhile, has gambled by making
wickets saw the asking rate climb clearance to host matches by the city’s fire sweeping changes to his team.
alarmingly, before Paul Collingwood Scrum-half Morgan Parra and cen-
steadied the ship and Ravi Bopara got department. Last week safety inspectors were tre Damien Traille are among four
England over the line with a couple of unhappy that mandatory fire equipment, players dropped from the side that
much needed lusty blows. including water hydrants, alarms and extin- laboured to a 25-22 win over Ireland
Strauss’ side eventually sneaked guishers were still not in place. The 33,000- almost two weeks ago.
home by six wickets with eight balls The talismanic Sebastien Chabal,
to spare and he appreciates there is seater stadium will host the final on 2 April and wing Vincent Clerc, scrum-half
significant room for improvement two group stage matches on 13 and 18 March. Dimitri Yachvili and centre Yannick
ahead of Sunday’s crunch clash Bopara struck 30 from 20 balls to see England home Picture: ACTION IMAGES Jauzion are recalled.
26 Sport CITYA.M. 23 FEBRUARY 2011
Walk in the
Nani has scored 10 goals this season Pic: PA
Fergie: Nani
Parken
l Anelka’s double eases the pressure on Ancelotti
l Chelsea boss says strikers are happy to be rotated
can become
new Ronaldo
MARSEILLE
FC COPENHAGEN 0
MAN UNITED
CHELSEA 2
▲
FOOTBALL
BY JAMES GOLDMAN
▲
FOOTBALL
BY JAMES GOLDMAN
CHELSEA manager Carlo Ancelotti
MANCHESTER UNITED manager Sir claimed his big-name strikers are
Alex Ferguson believes Nani is show- comfortable with being part of a
ing signs that he is capable of emulat- rotation policy after a Nicolas
ing the success Cristiano Ronaldo Anelka double all but booked his
enjoyed at Old Trafford. side’s place in the quarter-finals of
Ronaldo spearheaded United’s suc- the Champions League.
cessful Champions League campaign Since the arrival of Fernando
in 2008 and so dramatic has Nani’s Torres, Ancelotti has unsuccessful-
transformation from bit-part player ly attempted to harness the
to automatic starter this season been Spaniard, Anelka and Didier sions without problems, and this is well off the pace and were sliced forced his view that all is not lost this
that it has taken even Ferguson by Drogba in a three-pronged attack. important. To have them available, apart time and again. season. Indeed, his side face an excit-
surprise. But last night the Italian took it’s important at this time of year. Anelka opened the ing few weeks which will see both
Ahead of tonight’s Champions the bold step of reverting to a 4-4-2 “We have fantastic strikers. I have scoring in the 17th Manchester clubs travel to west
League last 16 first leg tie in Marseille, formation, which meant a night of to make a decision about the minute, and an London, and there’s also the matter
Ferguson said: “Nani has been fantas- bench warming for Drogba. games, to put them in or not. almost identical of a tough trip to Blackpool sand-
tic this season. He has scored goals As a result, Chelsea delivered “Didier played for two hours finish nine min- wiched in between.
and created them. He has made an their most cohesive performance against Everton. Torres and utes after the “We are still alive,” he said. “I had
amazing contribution. since Torres joined from Liverpool, Anelka were fresh and, together, break secured a an idea before the game, and I main-
“But Cristiano went on to become with the £50m man, despite not they played well.” confidence boost- tain it. We are not dead. It’s just one
the best player in the world. The chal- scoring, looking more like his FC Copenhagen, unbeaten ing victory. game, though. I want to see my team
lenge for any player is to improve as usual self. in the Champions League at The return leg at play again, again, again.”
much as that. Nani is showing signs Ancelotti (right) said: “We want the Parken Stadium, were Stamford Bridge on 16 As for Torres, whose search for a
of it at the moment.” to maintain their fitness, but rota- expected to provide a stiff March ought now to be first goal in Chelsea colours goes on,
Ferguson also revealed he is hope- tion could do them good with the test. a formality, and he said: “Torres had a lot of opportu-
ful that veteran midfielder Paul Premier League and the But the Danish champi- Ancelotti believes the nities that he created with his move-
Scholes, 36, will follow Ryan Giggs’ Champions League. ons, currently in the midst manner of last night’s ment. I am sure that he will score in
example and sign a new one-year con- “They are accepting my deci- of a winter break, looked performance rein- the next game he plays.”
tract with the club.
CITYA.M. 23 FEBRUARY 2011 Sport 27
FOOTBALL
BY FRANK DALLERES
▲
FOOTBALL
TOTTENHAM manager Harry
Redknapp lambasted his toothless BY FRANK DALLERES
strikeforce after their hopes of hold- ARSENAL could close to within one
ing onto a Champions League spot point of Premier League leaders
suffered a major blow with defeat to Manchester United tonight but will
17 mins: Anelka latched onto former Chelsea struggling Blackpool. have to do so without their most in-
winger Gronkjaer’s wayward pass, raced into A Charlie Adam penalty and fur- form attacker, Robin van Persie, after
the penalty area, shifted the ball onto his right ther goals from DJ Campbell and the Dutchman’s injury curse struck
foot and drilled it beyond the goalkeeper Brett Ormerod brought the visitors again.
down to earth following last week’s Van Persie, who has 11 goals in
win over AC Milan at the San Siro. eight games, and centre-back Laurent
Roman Pavlyuchenko snatched a Defoe (right) has gone 17 Premier League games without a goal Pic ACTION IMAGES Koscielny are both sidelined for the
consolation for Spurs, but it did little visit of Stoke this evening, while mid-
to quell the ire of Redknapp after a leaves Tottenham fourth, just two Pavlyuchenko’s deflected volley in fielder Abou Diaby is suspended.
second half in which Blackpool goal- points ahead of Chelsea having injury time rounded off the scoring. Manager Arsene Wenger, however,
keeper Richard Kingson repeatedly played one game more. insists the hamstring and back
justified his selection.
“I have never seen a team miss so
Blackpool climb to 12th in the
Premier League but are still just five
TOP SIX injuries suffered by Van Persie and
Koscielny are minor and that both
TEAM PLD W D L F A PTS
many open goals in my life. We had points above the drop zone. “have a chance” of playing in
54 mins: Essien shoveled the ball onto chances from two, three, four yards Adam opened the scoring after 18 Man United 26 16 9 1 57 25 57 Sunday’s Carling Cup final.
Lampard who managed squeeze a perfectly out and we just couldn’t score or hit minutes, converting from the spot Arsenal 26 16 5 5 56 27 53 Stoke are the first of five opponents
weighted pass between two defenders, and defenders on the line,” said and Campbell got on the scoresheet Man City 27 14 7 6 43 24 49 in a hectic 14 days and Wenger
Anelka finished beautifully across Wiland Redknapp. “In the second half at 2-0 just before half time, heading in a admits he has never been busier. “We
Tottenham 27 13 8 6 38 31 47
we had chance after chance after James Beattie cross at the far post. were never involved in four competi-
chance. We missed about 10 open Ormerod poached the third with Chelsea 26 13 6 7 46 22 45 tions at this stage of the season so
goals and defended badly.” Defeat 10 minutes remaining, before Liverpool 27 11 6 10 35 32 39 that is credit to the squad,” he said.
| PROMOTION
Win
Fulham FC are offering one lucky City AM reader
the opportunity to win two hospitality places in
the exclusive Riverside Restaurant at Craven two hospitality places to see
Cottage when the Whites face Blackburn Rovers
on Saturday 5th of March. FULHAM VS. BLACKBURN
The winners will be hosted by Fulham Legend Fred Saturday 5th March
Callaghan and receive a Champagne reception, (Kick-Off 3pm)
sumptuous three course meal with refreshments
provided at half-time and full-time.
A Defender
B Striker
C Midfielder
The prize is hospitality tickets for two in the Riverside Restaurant at Craven Cottage on 5th March 2011. Tickets are not for resale and no cash alternative offered. The promoter is Fulham FC and reserve the right to change
the prize to one of equivalent or greater value without notice. Entry into the promotion is free and no purchase is necessary. The closing date is Midnight Friday 25th February 2011. The winner will be drawn at random from
all the correct entries and will be notified on Monday 28th February 2011. By entering the promotion you agree to receive further information and similar promotions from City AM and Fulham FC. If you wish not to receive
any further information please add ‘No’ after your answer. The winners, by accepting the prize, agree to publicity if required. The Editor’s decision is final.
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