BUSINESS WITH PERSONALITY

WHY THE LICENCE FEE’S UBS SHOCKS

CITY
DAYS ARE NUMBERED INVESTMENT
BANK PERFORMS
GREG DYKE SPEAKS OUT P26 POORLY P6
Issue 1,250 Wednesday 27 October 2010 www.cityam.com FREE

DEFECTIVE DIRECTIVE
As controversial EU rules on alternative funds were finally agreed in Brussels
yesterday, fears are mounting that they will cripple the private equity industry
PRIVATE EQUITY the directive, which will also impose Walker said: “This remains a defec-
▲

restrictions on remuneration and tive directive. The EU has taken a hos-

BY STEVE DINNEEN
THE private equity industry yesterday
railed against an EU directive which
will subject alternative investment
funds to draconian new rules.
While the compromise deal won’t
be as bad for hedge funds as originally
feared, the spotlight turned yesterday
on private equity firms, which now
appear to have been one of the great
losers from the agreement.
New rules against “asset stripping”
will be imposed on the industry, limit-
ing the selling of assets immediately
after a takeover, a development which
many believe will simply discourage
investment and make it harder for pri-
vate equity to improve the perform-
ance of weak firms. Funds will also
have to inform employees of portfolio
companies of their plans.
The head of the British Venture
Capital Association (BVCA) warned
tough new capital requirements, risks
undermining the economic recovery.
The Alternative Investment Fund
Managers (AIFM) directive will also
force hedge funds and private equity
houses to comply with a costly regis-
tration regime before they can market
funds in the EU.
Simon Walker slammed the “defec-
tive directive”, saying Brussels should
instead be fostering the industry as a
means of shoring up the economy.
He said the new rules are “an act of
folly akin to a drowning man waving
away a rescue boat because he did not
like the colour”.
A compromise deal struck means
companies that have completed the
registration process will be allowed to
market their funds across Europe,
rather than having to apply to each
individual country, as France was
pushing for.
tile interest in the wrong industry at
the wrong time and for the wrong rea-
sons. No serious analyst has conclud-
ed that private equity, let alone
venture capital, caused the crisis or
served to enhance it. These regula-
tions will needlessly increase costs.”
The directive is expected to be
approved by the European Parliament
next month. The final draft was
bogged down for months as EU gov-
ernments and the European
Parliament fail to agree on a common
text, with the UK’s laissez-faire atti-
tude clashing with France’s approach.
London scored a partial victory,
with the legislation allowing non-
European domiciled funds – includ-
ing most UK funds, which are based
offshore for tax purposes – to apply
for a “passport” allowing them the
same pan-European marketing rights
as their EU-based counterparts. Draconian rules from Brussels (pictured) drew scorn from BVCA head Simon Walker (inset)

STRONG GDP GROWTH DASHES CHANCES OF FURTHER QE

ECONOMICS yesterday showed that the economy Bank with little reason to resume asset But with PMI surveys trending Critics suggest that it is not clear
▲

BY JULIET SAMUEL
THE UK’s unexpectedly strong growth
last quarter will mean the Bank of
England will keep the presses off and
delay any restart to quantitative easing
(QE), according to City economists.
Preliminary growth figures released
smashed consensus forecasts of 0.4 per
cent to surge 0.8 per cent from July to
September. The news prompted
numerous City economists to up their
growth forecasts for 2010 to around
1.7-1.8 per cent.
Above-trend growth coupled with
above-target inflation will leave the
purchases, strengthening Andrew
Sentance’s hawkish stance that the
Monetary Policy Committee (MPC)
should instead raise interest rates.
Barclays Capital’s Simon Hayes says:
“It will be difficult to motivate mone-
tary loosening this month – it’s off
the cards for the rest of 2010.”
downwards and the housing market
uncertain, the fourth quarter is widely
expected to bring a slowdown and
renewed calls for QE. IHS Global
Insight’s Howard Archer says that it
remains “a serious possibility should
growth slow markedly over the com-
ing months”.
that QE would effectively stimulate
the economy, especially with high lev-
els of inflation but chancellor George
Osborne has made it clear that he
would support a decision by the Bank
to complement fiscal cuts with mone-
tary expansion. ALLISTER HEATH: P2;
NEWS: P10; INVESTMENT: P28, P30

FTSE 100 t5,707.30 -44.68 DOW ▲11,169.46 +5.41 NASDAQ ▲2,497.29 +6.44 £/$ ▲ 1.58 +0.01 £/¤ ▲1.14 +0.01 ¤/$ 1.39unc Certified Distribution
30/08/10 – 03/10/10 is 110,015
 2 News
Strong recovery requires a rate hike
EDITOR’S LETTER
ALLISTER HEATH
So much for the merchants of doom
and all of those who, desperate for
another fix of cheap money, have
been calling for a resumption of quan-
titative easing. They have all been
proved completely wrong. Yesterday’s
excellent GDP growth numbers con-
firm what I have long been arguing:
that far from being on the brink of a
vicious double-dip recession, the UK
economy is doing surprisingly well,
despite weak credit growth, a flagging
consumer and a declining housing
market. Further monetary loosening
now would be madness.
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News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Pictures Alex Ridley
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Commercial Director Harry Owen
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WHAT THE OTHER PAPERS SAY THIS MORNING
CHINA AND US CLOSER ON TRADE
TARGETS
China and the US have the basis for
an agreement at the summit of the
Group of 20 leading nations next
month on setting targets to cut trade
imbalances, according to an adviser
to the Chinese central bank. Li
Daokui, a member of the central
bank’s monetary policy committee
and professor at Tsinghua University,
said on Tuesday there had been “good
progress” at the weekend meeting of
G20 finance ministers in South Korea
which had moved debate from the
“surface issue” of nominal exchange
rates to “talking about the substance
of rebalancing world trade”.
UBS WANTS WATCHDOG TO WAIVE
$1M CAP ON CASH BONUSES
UBS, one of the banks hardest hit by
the financial crisis, is lobbying Swiss
regulators to scrap a $1m cap on cash
Bizarrely, some were still claiming
last night that the reduction in the
UK’s rate of growth from 1.2 per cent
in the second quarter to 0.8 per cent in
the third quarter was something to
worry about. Given that even annu-
alised growth of 3.2 per cent, as we
saw in the most recent three months,
is unsustainably strong, it is hard to
see how anybody could possibly have
expected the UK to have continued to
expand at the even more extreme
annualised rate of 4.8 per cent seen in
the second quarter. Economic literacy
is evidently a rare commodity.
The expansion will now slow. It has
to. Next year will be tough, as the state
starts to retrench in earnest; at some
point the UK will revert to its now
much lower trend rate of growth of
two per cent a year or so. But so far
even economic realists have been con-
founded by the speed of the recovery.
GDP has now recovered 40 per cent of
its loss between the first quarter of
2008 and the third quarter of 2009,
according to analysis from
Court drama
over EMI deal
COURTS
▲
BY HARRY BANKS
CITIGROUP banker David Wormsley
yesterday testified that he could not
remember specifics of any of the
phone calls that are at the heart of a
civil fraud trial over Terra Firma pri-
vate equity chief Guy Hands’s $6.4bn
(£4.2bn) purchase of EMI in 2007.
In the first full day of court battle
between the two former friends,
Wormsley also told the US District
Court jury that Hands had misrepre-
sented him to EMI during the bidding
for the music company.
The banker also denied advising
Hands to bid high, an assertion made
by Terra Firma in suing the bank in
December 2009 for fraud and seeking
up to $8bn in damages.
“I don’t remember any of the calls
specifically,” soft-spoken Wormsley
bonuses paid to its top bankers, amid
complaints it has strained some exec-
utives’ personal finances. The Swiss
banking group wants to pay out more
cash to top earners, most of whom
work in London, New York, and other
places with relatively high rates of
personal income tax, say people
familiar with the situation. Under the
bank’s existing pay structure agreed
last year with Finma, Switzerland’s
financial regulator, the cash compo-
nent of bonuses is limited to $1m,
with the remainder paid out in
deferred cash and share awards that
vest over several years.
SCOPE OF FED’S QE2 COMES UNDER
SCRUTINY
The US Federal Reserve’s meeting next
week is likely to result in a new dollop
of quantitative easing – nicknamed
QE2 – but how many assets it should
ultimately buy remains a hot topic for
debate within the Fed.Markets think
the Fed initially will announce
$500bn in asset purchases.
Henderson’s Simon Ward. Even
assuming that growth slows to 0.4 per
cent in the fourth quarter, GDP will
increase by 1.8 per cent in 2010, easily
smashing the consensus forecast of 1.3
per cent made by economists at the
start of the year.
Of course, the economy remains
smaller than it was at the peak of the
bubble: third-quarter GDP was 3.9 per
cent below its first quarter of 2008
record, compared with a maximum
decline of 6.5 per cent in the third
quarter of last year. But at the equiva-
lent stage in the early 1980s recovery,
ten quarters after output peaked in
1979, GDP was still 4.4 per cent lower.
We are doing remarkably well.
Yesterday’s figures reveal that GDP
growth hit 2.8 per cent year on year,
above the 1998-08 average of 2.6 per
cent, according to Citigroup esti-
mates. The figures were substantially
stronger than the Bank of England’s
monetary policy committee had
expected: it had estimated that
growth by now would only be around
said. “I remember speaking to him
over the weekend on the subject of
financing.”
Hands has testified that Wormsley,
50, had lied to him in three phone
calls on the weekend of May 18-20,
2007 about a rival bid for EMI from
Cerberus Capital Management at
262p per share. In fact, there was no
rival bid, and Terra Firma's bid of 265
pence per share was the only one at
auction on May 21.]
The label, known for musicians like
the Beatles and Pink Floyd, is strug-
gling under the weight of its debt.
Guy Hands (left) claims
Citigroup banker David
Wormsley misled him
during the bidding for
music firm EMI
BUFFETT, 80, BETS ON A RISING STAR
LESS THAN HALF HIS AGE
Warren Buffett’s latest hot pick could
be one of his most daring gambles
yet. In hiring the little-known hedge
fund manager Todd Combs to man-
age a big part of Berkshire
Hathaway’s investments, the billion-
aire investor has added a new name
to the list of runners and riders
tipped to succeed him. At 39, Mr
Combs could stay at Berkshire for
decades.
RURAL DISABLED GET MOBILE
M-Pesa has provided a spur for eco-
nomic growth in Tanzania, but the
mobile money transfer service is also
being harnessed to help to save lives.
The CCBRT Disability Hospital in Dar
es Salaam is using the system to pay
to transport women suffering from
fistula and children with cleft palates
or club feet to the city for surgery.
2.3-2.5 per cent year on year. The Bank
has argued that the aim of its ultra-
loose monetary policy is to boost nom-
inal GDP growth – actual growth plus
inflation – to five per cent a year; we
are well above that today, especially
with price rises at elevated levels.
One reason why the economy did
better than many feared in the third
quarter is that most analysts have mis-
understood what is happening to the
all-important money supply. While
the total amount of money in the
economy has been growing at a slug-
gish rate, it has been circulating much
more quickly, boosting demand.
The economy will probably grow by
1.8 per cent this year. Next year will be
tough but the private sector’s momen-
tum should allow it to cope with pub-
lic sector cuts; these may even prove
expansionary if they reassure compa-
nies that the UK is once again a safe
place in which to invest. The debate
needs to move on: it is time for the
Bank to start hiking interest rates.
allister.heath@cityam.com
The Serious Fraud Office (SFO) brought the case against Julian Messent
Ex-insurance boss is jailed
FINANCIAL CRIME
▲
BY HARRY BANKS
A FORMER chief executive of a City
firm who admitted paying bribes to
win contracts overseas has been jailed
for 21 months.
Julian Messent, 50, resigned in
2006 as chief executive officer at
insurance firm PWS – founded by for-
mer UKIP leader Lord Pearson – after
admitting to funnelling £1.2m worth
of corrupt payments to government
officials in Costa Rica between
GERMAN BOOM CREATES ECB POLICY
NIGHTMARE AS SOUTH LAGS
Blistering growth in Germany is
aggravating the growing gap between
the eurozone's North and South and
may force the European Central Bank
to tighten monetary policy long
before the high-debt states are ready,
Standard & Poor’s has warned. A sepa-
rate report by Simon Ward from
Henderson Global Investors said
Eurozone indicators are showing
“unprecedented divergence”.
PENGUIN TO LAUNCH A SOCIAL NET-
WORK FOR BOOKWORMS
Penguin is set to launch a social net-
work for teenage bookworms called
Spinebreakers, in an effort to keep
young people interested in reading.
Penguin views Spinebreakers, the
social network, as a crucial part of
future-proofing the book industry.
The site exists as a content website.
CITYA.M. 27 OCTOBER 2010
NEWS | IN BRIEF
Indonesia facing double disaster
Indonesia is facing the double disaster
of a volcanic eruption and a tsunami.
Yesterday’s eruption of Mount Merapi
killed at least 18 perople and forced
thousands to flee their homes as the vol-
cano spewed burning ash above the
island of Java. About 1,300 km west,
rescuers raced for Indonesia’s Mentawai
islands, which was hit by an earthquake
on Monday night. At least 113 died and
more than 500 are missing after 3m
waves swept away hundreds of homes.
PayPal expects $1bn payments
Online payments system PayPal said
yesterday that $1bn (£631m) in transac-
tions will flow through its developers'
platform this year, driven largely by pay-
ments made over cellphones. PayPal
opened its platform to outside develop-
ers last year and has so far attracted
50,000 worldwide. Some 1,000 outside
applications have been launched for use
on the platform, said PayPal President
Scott Thompson, speaking at the sec-
ond-annual developer conference in San
Francisco. Of that $1bn, some $700m is
expected to come from mobile pay-
ments, said Thompson.
February 1999 and June 2002.
The payments were made while
Messent was a director of the compa-
ny’s international property division
and his pay was directly linked to the
amount of business he won,
Southwark Crown Court heard. In
2003, he became the company’s CEO.
Sentencing him to 21 months in
prison, Judge Rivlin said: “It is plain,
Mr Messent, that you were deeply
involved in the decision making and
the process of these crimes. You
orchestrated them.”
SENATOR ASKS FACEBOOK, MYSPACE
TO DETAIL PRIVACY SAFEGUARDS
The chairman of the Senate
Commerce Committee asked top
executives of Facebook and MySpace
to detail how they safeguard informa-
tion about users, in the wake of Wall
Street Journal articles revealing priva-
cy breaches on the social-networking
sites. Sen. Jay Rockefeller, D-W. Va.,
sought the information in letters
Tuesday to Facebook Chief Executive
Mark Zuckerberg and MySpace
President Michael Jones.
OIL MAJORS CRITICISE BP'S WELL
DESIGN
Senior executives at major oil compa-
nies Total and Chevron yesterday crit-
icised the safety of the design BP
used on its Macondo well in the Gulf
of Mexico, which spilled millions of
barrels of oil earlier this year follow-
ing a blowout.
CITYA.M. 27 OCTOBER 2010 News 3

NORTHERN ROCK’S HOFFMAN EYES NEW PASTURES

NORTHERN ROCK
Macquarie division
cuts staff by 10pc
chief executive
Gary Hoffman (pic-
tured) is one of the
front runners to
run NBNK
Investments – a
firm set up by
Lloyd’s of London Martin Stanley, the new London-

▲
BANKING
chair Lord Levene BY STEVE DINNEEN based head of the division, said that
to acquire govern- following a merger between two sepa-
ment-owned bank AUSTRALIAN lender Macquarie will rate parts of the bank, his group has
assets, according to slash a tenth of its staff from its glob- “refocused” and aims to ensure it is
Sky News. NBNK al infrastructure and real assets divi- “adding value to investments”.
said yesterday that sion. The bank will cut its annual man-
a chief executive The move, which the bank con- agement fee on a major infrastruc-
had yet to be firmed to City A.M. last night, will see ture fund, following concerns that its
appointed. it shed 60 of its 590-strong workforce, risks were too concentrated. The fund
as part of a streamlining operation was capped after raising less than a
Picture: REUTERS mooted over the summer. quarter of the initial target.

JP Morgan in
$800m deal “BE SIMPLER THAN
WHAT COULD

to buy Gavea
exposure to the rapidly developing
SPREADS?
”
▲

BANKING
BY STEVE DINNEEN Brazilian market and fits well with
the bank’s plans to grow inorganical-
JP MORGAN has agreed to buy ly outside the US.
Brazilian hedge fund and private It is understood the talks have been
equity firm Gavea for an undisclosed running since early this year, when
sum.
The second largest US lender by
assets will acquire a 55 per cent stake
the purchase of a minority stake in
Gavea was considered.
Under the terms of the original
NOTHING.
in the company, with an option to agreement, JP Morgan would carry
purchase the remainder in the next out the acquisition of a part of Gavea
five years. through Highbridge Capital
The deal is expected to value the Management, a hedge fund company
Brazilian firm at around $800m that manages alternative investments
(£505m). Gavea manages about $6bn for the New York-based bank.
in assets. JP Morgan bought control of
Under the terms of the agreement, Highbridge, which manages about
Gavea’s founder Arminio Fraga will $21bn of assets, in 2004.
be required to stay at the helm of the
Rio de Janeiro-based investment firm ANALYSIS l JP Morgan
$ 37.20
for at least another five years, accord- 26 Oct
ing to sources close to the deal. 41
Fraga is also a member of JP 40
Morgan’s international board and is
well known in Brazil as a former
head of the central bank, where he 38
held the position between 1999 and
2002.
36
JP Morgan declined to comment
last night when contacted by City A.M.
26 Jul 13 Aug 3 Sep 23 Sep 13 Oct
The deal will increase JP Morgan’s

United Biscuits deal

is close to the rocks
▲

FOOD AND DRINK

BY STEVE DINNEEN
UNITED Biscuits’ investors held their
breath last night after reports a £2bn
deal to offload the firm to China’s
Bright Foods was close to hitting the
rocks.
Blackstone Group and France’s PAI
Partners were close to a deal to sell
the snack maker after entering exclu-
sive talks but negotiations were near
to collapse last night, according to
the Wall Street Journal.
Sources close to the deal were
unsure what had unsettled the
Shanghai-based firm but it is believed
it is now eyeing alternative acquisi-
tions.
The deal would have been the first
time a Chinese company has taken
outright control of a major European
food firm.
Blackstone refused to comment on
the negotiations last night. United
Biscuits employs 7,000 people in
Britain at 11 factories.
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CITYA.M. 27 OCTOBER 2010 News 5

WPP sees best organic

growth in over 10 years
there was a high degree of

GSK, whose UK headquarters are in
Brentford, (pictured), will pay
$750m for problems in Puerto Rico
▲
CONSUMER
WPP enjoyed its strongest
quarterly organic revenue
growth for ten years, accord-
ing to chief executive
Martin Sorrell.
However, Sorrell said
there is “a tremendous
amount of uncertainty”
among company bosses
uncertainty about the con-
tinued economic recovery,
especially in the US.
The world’s biggest adver-
tising group by sales saw its
pre-tax profit surge a stag-
gering 36 per cent in its sec-
ond quarter, with its US
operations enjoying a better
than expected recovery.

GSK hit with

about the future direction
of the world economy.
He said: “Everything we
see in the rear view mirror
is good,” adding growth was
helped by a recovery in the
This was largely driven by
a spike in traditional media,
which grew by more than
six per cent after a drop of
almost 10 per cent last year.
The firm hailed the per-

$750m fine
US and in traditional media.
“We’ve seen sequential
improvement, month by
month improvement,
through to September, with
the exception of June.”
However, Sorrell said
formance of television
advertising, a medium it
says is often far too easily
written off by critics.
Sorrell said the budget
has not yet been set for next
year.

PHARMACEUTICALS
▲

The whistleblower who filed a

BY STEVE DINNEEN
GLAXOSMITHKLINE yesterday
agreed to pay $750m (£473m)
after pleading guilty to manufac-
turing and distributing adulter-
ated drugs from a plant in
Puerto Rico.
The company admitted in July
it had reached an agreement in
lawsuit under the US False
Claims Act will receive about
$96m from the federal share of
the settlement, the Justice
Government launches
Department said.
A federal judge must approve
the plea agreement.
Glaxo expressed regret that
junior ISA for children
its factory did not operate with-
in the necessary standards and
POLITICS

principle relating to problems at
the plant and would pay out to
resolve the allegations.
The case centred around the
anti-nausea medicine Kytril, skin
ointment Bactroban, anti-depres-
sant Paxil CR and diabetes drug
Avandamet, which were made at
the plant between 2001 and
2005.
Of the $750m, Glaxo will pay
$600m to settle allegations that,
because the drugs were adulter-
ated, false claims for reimburse-
ment were submitted to
government healthcare pro-
grams.
SB Pharmco Puerto Rico, the
plant where the drugs were man-
ufactured, will plead guilty to
releasing adulterated medicines
and pay a $150m, including for-
feiture of $10m in assets.
▲
practices.
A company spokesman said: BY DAVID CROW
“We worked hard to resolve fully
the manufacturing issues at the THE government yesterday said
facility prior to its closure in it would introduce a new tax
2009 and we are committed to free savings account for chil-
continuous improvement in our dren, to replace the child trust
manufacturing processes.” fund it scrapped when it came
The company no longer owns into office.
the facility. Funds in the so-called “Junior
ISA” will be deposited by par-
ANALYSIS l GlaxoSmithKline ents, but the account will be
p
1,350 1,265.00 owned by the child and will be
26 Oct locked until they reach adult-
1,300 hood. The accounts are expected
to be available from autumn
1,250 2011.
Investments can be made in
1,200 both cash and stocks and all
returns will be tax free, but
1,150
annual contributions will be
capped.
26 Jul 13 Aug 3 Sep 23 Sep 13 Oct The government has not yet
decided the annual contribu-
tion cap, although Treasury
sources indicated it would likely
be the same as that for an adult
individual savings account (ISA).
In 2011-12, adult investors will
be able to put £10,680 in an ISA,
after the limit rose by £480 in
line with inflation.
Unlike the child trust fund,
which will be scrapped in
January 2011, the government
will not make any contributions
to the account.
Mark Hoban, financial secre-
tary to the Treasury, said: “The
introduction of this new
account means that we can still
offer people a clear way of sav-
ing for their children, while sav-
ing the half a billion pounds a
year that we currently spend on
Child Trust Funds.”

BA’s chairman attacks Warning on

security checks in US demand
dents ARM
AVIATION nally a lot of the things they raids on both sides of the
▲

BY PHILIP WALLER demand that we do,” he was Atlantic a year earlier that also
quoted as saying in the FT. involved the US Department TECHNOLOGY
▲

THE chairman of British
Airways has attacked US air-
port security checks and has
called for the UK to stop “kow-
towing” to US security
demands.
Practices such as forcing
people to take off their shoes,
and checking laptops separate-
ly, should be abandoned,
Martin Broughton said.
Speaking at the UK Airport
Operators’ Association annual
conference, Broughton – who
is also chairman of Liverpool
FC – said the UK should only
agree to security checks that
the US requires for passengers
on domestic flights.
“America does not do inter-
“We shouldn’t stand for that.”
Broughton’s outburst came
as it emerged yesterday that
BA may face a fine of up to
£70m for allegedly fixing
cargo prices with other air-
lines.
The European Commission
is understood to be consider-
ing fining BA between €60m
(£53m) and €80m, although it
is thought it has not made a
final decision and talks are
continuing.
The commission charged
BA, Franco-Dutch airline Air
France-KLM and several other
airlines in December 2007
with allegedly taking part in
an airfreight cartel, following
of Justice.
At the time, Lufthansa, SAS,
Air France-KLM, Japan
Airlines, Hong Kong carrier
Cathay Pacific, All Nippon
Airways, Air Canada and
Alitalia said they had been
investigated. The EU watchdog
is expected to announce penal-
ties for the carriers on 9
November, although the com-
mission said it had not set a
date for an announcement.
A BA spokesman said the
airline was co-operating with
the commission on its investi-
gation, but declined to com-
ment further. “We’ve not said
anything at all on this,” he
said.
BY HARRY BANKS
CHIP designer ARM’s confidence that
it would see more growth, after third-
quarter revenue beat expectations,
was overshadowed by a warning from
one of its chipmaking customers that
demand could be weakening.
Its shares, which have risen by 120
per cent since the start of the year, fell
5.9 per cent to close at 366.20p after
Texas Instruments said end-demand
for chips could be weakening.
Execution Noble analysts said ARM
would not be immune to a slowdown.
But ARM was positive, saying it would
continue to outgrow the market.
ARM reported a 60 per cent rise in
pre-tax profit to £38.8m on revenue of
£100.4m.
 6 News
Investment
bank loss hits
profits at UBS
▲
BANKING
BY VICTORIA BATES
SWISS bank UBS yesterday shocked
the City with the worst set of third
quarter numbers from the banking
sector so far, with muted client activi-
ty in the wealth management divi-
sion compounded by a spectacularly
poor investment bank performance.
Pre-tax profit crumbled by over two
thirds quarter-on-quarter to SwFr818m
(£524m), 45 per cent below consensus
analyst forecasts of SwFr 1.5bn.
UBS’ investment bank was the
main drag on the results, reporting a
pre-tax loss of SwFr406m compared to
a profit of SwFr1.3bn in the second
quarter, due to subdued client activi-
ty levels and low market volumes.
Fixed income, currencies and com-
modities were particularly weak, the
bank said, while it was also hit by sub-
dued investor demand for equities.
UBS’ core wealth management
business put in a strong performance,
attracting net inflows of SwFr1bn.
But the bank admitted that the gross
margin on invested assets had decreased
six basis points to 89 basis points,
prompting a 25 per cent fall in the divi-
sion’s pre-tax profit to SwFr492m.
Execution Noble analyst Fiona
Swaffield said the inflow of new
money in wealth management was a
“significant positive”. But she said the
rest of the numbers were disappoint-
ing and highlighted a wider concern
that compensation costs across the
investment banking sector can no
longer adequately accommodate
wide fluctuations in profitability in
the wake of regulatory changes.
ANALYSIS l UBS
18.50
CHF 16.76
26 Oct
18
17
16
26 Jul 13 Aug 3 Sep 23 Sep 13 Oct
Grübel in danger of missing crucial targets
WHEN Oswald Grübel took the helm
at UBS in February 2009, he quickly
made a rod for his own back by set-
ting gruelling targets. The bank
would be booking at least SwFr15bn
(£9.7bn) in annual profits sometime
between 2012 to 2014, he said. After
yesterday’s disastrous results, such a
target seems laughably bullish.
There were few glimmers of hope
in the Swiss bank’s third quarter
numbers. According to analysts at
Merrill Lynch, underlying pre-tax
profit excluding non-recurring items
came in at SwFr986m, compared to
analyst consensus of SwFr1,888m.
That is a simply staggering miss of 48
per cent.
The main culprit was the invest-
ment bank, which missed pre-tax
profit consensus by SwFr600m.
Trouble in the Fixed Income
Currencies and Commodities (FICC)
arm saw revenues of SwFr969m
against expectations of around
SwFr1,379m. The Corporate division
also put in a lacklustre performance,
with pre-tax profits coming in
around SwFr200m.
There was some good news at the
wealth management division, where
UBS hailed a recovery in new inflows.
The Swiss bank pulled in SwFr900m
of net new money compared to out-
flows of SwFr5.5bn in the previous
quarter, while the Americas bank
secured SwFr300m of new money,
against SwFr2.6bn of outflows a quar-
ter earlier.
It’s worth remembering that UBS
CITYA.M. 27 OCTOBER 2010
UBS chief Oswald
Grübel was forced
to deliver shocking
results from bank,
which had the
worst set of third
quarter numbers
from the banking
sector so far.
will struggle to keep this up in future
quarters, however, as the UK and oth-
ers line up to extract tax revenues
from Swiss bank account holders.
This new money also came at the
expense of weaker margins, which
fell from 94 basis points in the sec-
ond quarter to 88 basis points.
Consequently, wealth management
missed expectations for pre-tax profit
by SwFr100m.
Excepting a remarkable turn-
around in its fortunes, Grübel’s tar-
gets look more elusive than ever. He
should start trying to manage expec-
tations as soon as he can.
BOTTOMLINE
Analysis by David Crow
 8 News CITYA.M. 27 OCTOBER 2010

AIG chief exec

Brit insurance reveals he has
has accepted cancer to staff

£888m offer
INSURANCE

▲
ROBERT Benmosche the chief execu-
tive of US insurance giant American
International Group (AIG) has
revealed he has cancer and is current-
ly undergoing “aggressive chemother-
apy” to fight the disease.
▲

M&A
BY MATTHEW WEST
BRIT Insurance yesterday accepted a
formal offer from private equity
firms Apollo Management and CVC
Capital Partners, which values Brit at
up to £888m.
The offer from Apollo and CVC,
which have formed a new company
called Achilles to make the offer, val-
ues the Lloyds of London insurer at
£10.75 per share but includes a provi-
sion through which shareholders will
receive a futher 25p per share if Brit’s
net tangible asset value is higher
than £11 per share by the end of the
year. The offer represents a premium
of 47 to 51 per cent to the insurer’s
closing price of £7.29 on 10 June, the
last day before the beginning of the
offer period.
John Barton, chairman of Brit
Insurance, said: “Having given full
consideration to the offer from
Achilles, the independent directors
believe it represents good value for
Brit shareholders and recommend
that they accept the offer.”
Brit Insurance said in a separate
statement yesterday that overall gross
written premiums for the nine
month period to 25 October fell 8.5
per cent to £1.22bn, compared to
£1,334.4bn a year earlier, as under-
writing conditions remained compet-
itive.
Dane Douetil, chief executive, said
trends in the third quarter were simi-
lar to those in the first half of the
year.
Brit’s shares closed 2.7 per cent
higher yesterday at 1,045p.
ANALYSIS l Brit insurance
p Lexicon Partners is a corporate finan-
1,040 1,045.00
26 Oct
1,000
960
920
26 Jul 13 Aug 3 Sep 23 Sep
Brit insurance chief executive Dane Douetil has accepted a formal offer
ANDREW SIBBALD
LEXICON
PARTNERS
BRIT Insurance has been advised by
Lexicon Partners over the takeover bid
from Achilles. Co-founded in 2000 by
Andrew Sibbald and Angus Winther,
cial advisory and investment banking
firm that focuses on financial services
and utilities sectors.
The firm provides advice on mergers
and acquisitions, public takeovers,
management buyouts, joint ventures,
IPOs, debt finance, equity placing, and
alternative finance.
In its first three years Lexicon advised
13 Oct
Picture: PA
on 45 deals. It has since grown from a
London-based financial services bou-
tique into a corporate finance adviser
covering a number of specialist sectors
with offices in London, New York and
Hong Kong.
The firm has advised on a number of
deals and IPOs this year including the
listing of Jupiter Asset Management in
June. It also advised on deals including
the acquisition of Thames River Capital
by F&C Asset Management in April
and the merger of Coventry and Stoud
& Swindon building societies in March.
Previously Sibbald has said the bou-
tique partnership model means "cre-
ative, bright people who are unfettered
by all the woes of the big banks can
just get out there and find business."
The firm’s clients include 3i, Aviva,
Gartmore, ISIS, the Blackstone Group,
Barclays, Rubicon, QBE, and Prudential.
The 66-year-old said in a letter to
employees on Monday that he began
treatment last week and felt fine,
although the long-term prognosis
would be clearer over the next couple
of months.
Benmosche, who has said he plans
to retire sometime in 2012, took over
as chief executive in August last year,
as AIG was struggling to sell assets to
repay the US government after receiv-
ing a $182.3bn (£115.4bn) taxpayer-
funded bailout during the crisis. He
was the fourth person to take the top
job at AIG in just over a year.
Since then, he has led a surprising
turnaround for AIG, bringing the
insurer to a point where the govern-
ment has an accelerated path out of
its investment in the company.
Robert Benmosche has
led AIG through its
toughest period to
date and to a surprise
turnaround in fortune.

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 10 Focus on GDP
Osborne: News vindicates cuts S&P cites spending cuts
▲
POLITICS
BY DAVID CROW
GEORGE Osborne yesterday hailed a
“double dose of good news” as proof
his austerity cuts will underpin confi-
dence in the British company.
The chancellor’s comments came
after the latest GDP figures showed
the British economy grew by 0.8 per
cent in the third quarter, much faster
than economists predicted.
Meanwhile, Standard & Poor’s
revised its outlook for the UK economy
to stable from negative, citing
Osborne’s spending cuts as the main
reason for its decision. It also reaf-
Broad based
recovery as
GDP growth
stuns critics
The widely anticipated collapse in growth was
nowhere in sight as preliminary figures showed
the UK grew 0.8 per cent, writes Juliet Samuel
THE UK economy has confounded
forecasts by growing 0.8 per cent dur-
ing the third quarter of this year.
Consensus was for an expansion of 0.4
per cent, on the basis of slowdowns in
consumer spending, house prices and
declining sentiment in PMI surveys.
Unexpectedly strong figures for the
construction sector were one reason
for the surprise: the sector accounted
for a quarter of the overall 0.8 per cent
rise, despite making up only six per
cent of the economy.
Construction grew four per cent
quarter-on-quarter, faster than servic-
es or manufacturing, which each
grew 0.6 per cent. Services account for
76 per cent of GDP.
Government output
expanded 0.6 per cent, also above
growth
expectations. It is not yet clear
whether the construction sector’s
strong performance is due to private
or public investment and therefore
what effect government spending
cuts will have.
The figure means that the economy
as a whole has now grown 2.8 per
cent since the end of the recession, in
line with recovery speeds after previ-
ous downturns. It has prompted econ-
omists to revise their overall forecasts
for GDP growth to around two per
cent for the year, up from many previ-
ous estimates of 1.5 per cent.
The data release came as ratings
agency Standard & Poors raised the
outlook on the UK’s AAA credit rating
to stable from negative, citing
reduced uncertainty about the coali-
tion’s deficit reduction plan.
But economists warned that the
strong growth might be only a tempo-
rary respite.
firmed Britain’s coveted AAA rating
for sovereign debt.
Osborne said both pieces of news
were “a vote of confidence in the gov-
ernment’s economic policies” and said
Britain now had “the confidence to
look to the future with some opti-
mism.
The chancellor also dismissed talk
of a double-dip recession. “I think
what you see today, in an uncertain
global economic environment, is
Britain growing, growing strongly –
the strongest growth we’ve seen in this
part of the year for a decade,” he said.
And Osborne said the electorate
understood that Britain’s deficit need-
RBS’s Ross Walker, whose GDP
tracker correctly forecast the surprise
figure, thinks that the fourth quarter
will see growth halve to 0.4 per cent.
“The recent headline growth rates
are obviously not sustainable,” he
says. “The construction sector was hit
hard during the recession so this is
partly a private-sector rebound. The
services PMI is the chink in the third-
quarter GDP armour, with risk of fur-
ther moderation or sluggish growth.”
But he says the distribution of the
growth raises the possibility that the
economy could rebalance away from
a concentration in services.
Expectations are now that the Bank of
England (BoE) will wait for more data
before kicking off any quantitative
easing (QE) programme. Some had
anticipated a possible resumption of
asset purchases next month.
Schroders’ Azad Zangana says:
“Even using pre-crisis measures of
trend growth, this figure is above
trend. With inflation still running
above the BoE’s three per cent upper
limit, it will be incredibly difficult to
justify resuming QE in November.”
ANALYSIS l GDP Output
Total
105
100
95
90
85
2007 2008 2009 2010
CITYA.M. 27 OCTOBER 2010
ed to be urgently dealt with, despite
in upgrade for UK outlook
polls showing the public thinks the
government is going too fast with
▲
spending cuts. ECONOMICS in 2014 and that the current 11.2 per
The GDP figures and statement cent structural deficit could narrow to
from Standard & Poor’s put the Labour STANDARD & Poor’s (S&P) yesterday three per cent by 2014. This is still
party on the back foot. It argues that affirmed the UK’s government’s AAA higher than official forecasts by the
the economy is too weak to withstand credit rating and upgraded its outlook Office of Budgetary Responsibility
Osborne’s austerity measures, but from negative to stable. The ratings (OBR) that the deficit will narrow to
strong growth numbers blunt that agency cited George Osborne’s spend- 2.2 per cent by 2014.
line of attack. ing review as the main reason for the This difference is in part because
“There’s no sign yet in the private upgrade, in particular the coalition’s S&P thinks the OBR’s average GDP
sector of the kind of momentum we “high degree of cohesion in putting growth figure of 2.4 per cent is overly
need to create jobs to replace the mil- the UK’s finance onto a more sustain- optimistic. The agency noted that
lion or so that will be lost as a result of able footing”. “rebalancing of the economy will like-
the cuts,” said shadow chancellor Alan It predicts that gross government ly proceed more slowly than the OBR
Johnson. INVESTMENT: P28-30 debt will peak at 84 per cent of GDP assumes”.
+0.6%
Services
+4.0%
Construction
+0.6%
Industry
Quarter-on-quarter growth figures shows that construction led the way in boosting third quarter GDP
ECONOMIST VIEWS: WILL GDP GROWTH HOLD UP DURING THE REST OF 2010?
Interviews by Juliet Samuel
ROSS WALKER | RBS
“
These things are never linear – it’s not unusual to get erratic data at a turning point. We are
”
going to see a rebalancing of the economy, which is an awfully good thing but also involves a bit of
pain.
GRAEME LEACH | INSTITUTE OF DIRECTORS
“
The GDP numbers are better than expected given indicators suggesting a much weaker per-
”
formance. The key question is will it last and that's where I’m more cautious – the economy is about
to sail through choppy waters.
SIMON HAYES | BARCLAYS CAPITAL
“
People aren’t getting too excited about the GDP number because the construction growth is
”
not something we expect to see continue. We’re not inclined to extrapolate forwards from two quar-
ters of above-trend growth.
JONATHAN LOYNES | CAPITAL ECONOMICS
“
These numbers will clearly ease near-term concerns over a possible double-dip in the UK
”
economy and suggest GDP growth this year of over 1.5 per cent, but they don’t transform the
outlook of a pretty weak recovery.
IAN MCCAFFERTY | CBI
“
The timing of the VAT rise in the new year will help to bolster spending over the fourth quar-
”
ter, but this is also likely to slow growth more noticeably through the winter and early next year.
 The Capitalist
12
ROUX BUSY
EXPANDING
WHITEHALL
WAISTLINES
IT’S been a busy few months for master
chef Michel Roux Jr, splitting his time
between fostering his burgeoning TV
career and appointing a new chef for his
latest venture, Roux at Parliament Square.
In addition to his ongoing judge’s spot
on Masterchef, Roux has also been busy
filming a series set to hit our screens next
year – “Michel Roux’s Service”, a BBC pro-
duction where a bunch of youngsters will
fight it out to be trained in the almost-for-
gotten skills of restaurant front of house.
(Roux, of course, is used to nothing but
the best, having worked with the “godfa-
ther” of London maitre d’s, Silvano
Giraldin, for years and years at Le
Gavroche.)
Meanwhile, over at Parliament Square,
The Capitalist hears he’s just installed Toby
Stuart as his new chef, fresh out of his
position as senior sous-chef at the
Michelin-starred Galvin at Windows.
Eagle-eyed spies tell me that Stuart –
who originally sharpened his kitchen
knives at some of the finest eateries in the
world, including The Square, L’Escargot
and Auberge du Lac – has been given
something of a baptism of fire with the
distinguished patrons frequenting the
joint. Just a stone’s throw from the House
of Commons, he’s already cooked for the
likes of defence secretary Liam Fox, shad-
ow chancellor Alan Johnson and chancel-
lor George Osborne – though I’m told PM
David Cameron has yet to make an
appearance…
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Chef Michel Roux has
been filming a new PUBLICITY STUNT TOP MARKS FOR EFFORT
BBC series teaching Todd Combs, the hedge fund manager ele- Where graduates once sweated over
youngsters the art of vated by billionaire investor Warren Buffett
being a maitre d’ to oversee a significant part of his firm
Picture:REX Berkshire Hathaway’s investment portfolio,
might need to get himself a spot of media
training if he’s going to become prime can-
didate to succeed the Sage of Omaha him-
self.
Buffett, speaking to Fortune magazine
about the appointment, described Combs
as an “all-American type” who shuns pub-
licity. That’s hardly a phrase you could use
to describe Buffett himself, who has previ-
ously gone as far as to dress up in a wig
and bandanna and perform as rock star
Axl Rose in a television commercial to pro-
mote one of Berkshire Hathaway’s portfo-
lio companies, Geico – all in the name of
publicity.
CITY EYE
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
“Michel Roux
Jr has been
splitting his
time between
a burgeoning
TV career
and his new
restaurant in
Westminster”
online applications in the elusive search
for that first job, the students of today
have become ever more enterprising.
In the depths of the crisis, we had job-
seekers walking around cities with
billboards around their necks
and one memorable candidate
standing on the Fourth Plinth
at Trafalgar Square advertis-
ing his skills.
That trend continues – one
young chap, Matthew Riley,
tells The Capitalist he plans to
stand outside Bank station
this morning handing out
1,000 copies of his CV to com-
muters, in the hope of land-
ing an internship.
Apparently, the second-
year student is interested in
opportunities in investor
relations or client manage-
ment – and not so long ago
tried a similar stunt at
Canary Wharf, when the
distribution of less than
half that number of CVs landed
him an interview at Shell.
PARADISE FOUND
Tempting stuff, this, at a time
when uncertainty is rife and
CITYA.M. 27 OCTOBER 2010
Fancy a year of waking up to this?
many jobs in the financial services sector
are looking less than 100 per cent secure.
Escape The City – the website set up by
two former management consultants dur-
ing the economic crisis, in order to help
workers pursue their dream careers – has
teamed up with holiday group Paradise
Hunter to launch a competition to land
the job of a lifetime.
Said job involves being paid $60,000
(£37,900) to travel around the world for 52
weeks, presenting a TV series for Paradise
Hunter – taking in the sights and culture
of no fewer than 12 countries, including
Belize, Costa Rica, the British Virgin
Islands, New Zealand, Thailand and
India, along the way.
What’s more, the successful “job”
applicant will be given a property
worth up to $150,000 at the end of the
year in their favourite “paradise”
country. Are they for real?
LEADING LIGHT
Well-deserved kudos yester-
day for Morgan Stanley’s
international treasurer David
Buckley, who was honoured
with the Walker Award for
Commitment to Diversity in
Financial Services – an
award established in memo-
ry of Tory peer and former
chairman of Kleinwort
Benson Lord Walker, a com-
mitted campaigner for greater
diversity for the City, who died
earlier this year.
The award was set up by an
organisation called The City
Fellowships in Financial Services,
founded to help American minor-
ity financiers living in London,
which applauded Buckley’s “career-
long dedication and outstanding
commitment to the empowerment
of women and ethnic minorities in
the City”. Hear, hear.
The lights of Canary
Wharf’s skyscrapers
glow against the
evening skyline, seen
from the cabin of a
boat chugging along
the Thames
Picture:
Micha Theiner
/City A.M.
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 14 News
ArcelorMittal
warns of low
steel demand
▲
COMMODITIES
BY MARION DAKERS
STEEL giant ArcelorMittal said muted
demand for steel will continue to the
end of the year, following a weak third
quarter for the firm.
ArcelorMittal, the world’s largest
steelmaker, also warned yesterday that
government austerity measures and
energy conservation plans continue to
hit global steel production.
“Clearly this is the big news of this
call, how the demand remains muted
into the fourth quarter of this year,”
chief financial officer Aditya Mittal
said yesterday on a conference call.
ArcelorMittal said pre-tax profit for
the three months to 30 September was
$1.35bn (£851m) compared to $910m
in the same quarter of 2009. Sales rose
to $21bn from $16.17bn last year.
The firm said underlying earnings
will be between $1.5bn and $1.9bn
over the next three months, on the
back of a drop in average steel selling
prices. This would be a 25 per cent fall
on the third quarter, and lower than
consensus estimates of $2.4bn.
“While we are confident that the
underlying recovery is real and will
continue, uncertainty has meant that
demand conditions are tough,” said
chairman and chief executive Lakshmi
Mittal.
He added that states should step in
to kickstart the world economy: “I still
don’t see any really positive trends in
the world economy and I think this
provides some evidence that further
action by governments is necessary.”
Mittal also said government plans to
reduce energy consumption have also
dented production, with the company
estimates putting the likely impact at
20m tonnes of steel, or three per cent
of total output.
FAST FACTS | ARCELORMITTAL
● Founded by Lakshmi Mittal in 1994, the firm
is now the world’s largest steelmaker, making
up six per cent of global production.
● The company has branches working on iron
ore mining, real estate and car manufacturing.
ArcelorMittal boss Lakshmi Mittal expects muted demand for steel Picture: REUTERS
LAKSHMI MITTAL Formula 1 boss Bernie Ecclestone
£70m for the 12-bedroom property in
ARCELORMITTAL 2003), a 20 per cent stake in QPR
CHAIRMAN AND football club, and the world’s biggest
CHIEF EXECUTIVE steelmaker.
Since branching out from the family
business in 1994, Mittal has steadily
bought up steel plants around the
world, culminating in a £22bn merger
LAKSHMI Mittal answered the age- with Luxembourg-based steelmaker
old question of what to buy the man Arcelor in 2006. His son Aditya, aged
who has everything in April, when he 34, is the firm’s chief financial officer.
spent £16m on a 400-foot high, bright Before the recession, Mittal was the
red steel sculpture named Orbit. third richest man in the world, behind
Mittal, chief executive and chairman of Microsoft’s Bill Gates and hedge fund
ArcelorMittal and the UK’s richest tycoon Warren Buffett. Though tum-
man for the last five years, funded the bling steel prices knocked billions off
artwork to commemorate the 2012 his fortune, he has nevertheless spent
London Olympics. five years at the top of the Sunday
Mittal has little else to spend his Times UK Rich List, which estimated
money on – he already owns Britain’s his personal wealth in March at
most expensive house (having paid £22.45bn.
CITYA.M. 27 OCTOBER 2010
PM condemns
firemen Bonfire
Night strike plan
PUBLIC SECTOR
▲
LONDON’S 5,600 firefighters have
been heavily criticised for their plans
to walk out on strike on Bonfire Night
next Friday.
Fire Brigades Union (FBU) members
are set to stage a 47 hour strike from 5
to 7 November unless the London Fire
Brigade (LFB) withdraws what the
union has described as a “sacking let-
ter” sent to all staff.
However, the Prime Minister’s
spokesman yesterday described the
strike plans as reckless, adding: “The
public would not think this is a
responsible way of conducting indus-
trial action to choose this particular
day for a strike.”
LFB chairman Brian Coleman dis-
puted the union’s claims, saying yes-
terday: “There are no cuts, no job
losses, this is about reducing a 15 hour
night shift, adding those hours to the
day shift and doing more community
safety work and firefighter training.”
FBU general secretary Matt Wrack
said workers had no choice but to
strike, and added in a statement:
“There’s still nearly two weeks for the
London Fire Brigade to get this right.
Show a little respect for your firefight-
ers.”
London mayor Boris Johnson said
there are contingency plans in place to
deal with further strikes.
 ”With Zurich’s help we’ve
prevented over 24,000 lost
work days. Because, like us,
they believe one injured
colleague is one too many.”
Robert Milligan, TRW Automotive,
Director of Risk Management

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 16 News
Go-Ahead in
bullish mood
as defies cuts
▲
TRANSPORT
BY PHILIP WALLER
TRANSPORT group Go-Ahead report-
ed a good performance in rail despite
economic woes and indicated fare
hikes and cost cuts should protect it
from public spending reductions.
Go-Ahead, which runs the
Southeastern, Southern and London
Midland rail franchises and buses in
the UK, said train passengers and rev-
enue increased despite the tough
economy between July and October.
Revenue at Southern rose more
than six per cent, London Midland
lifted over seven per cent and
Southeastern got a boost of more
than a tenth against last year.
The government last week unveiled
rises of inflation plus three per cent
in regulated fares for three years from
2012, with fares in January also set to
rise above inflation, but ministers
confirmed plans for projects includ-
ing London’s Crossrail.
Go-Ahead expects to meet annual
profit expectations and said the
spending review should not directly
affect the group this year.
Finance director Nick Swift said it
would manage a planned 20 per cent
fall in government support for buses
by better buying of parts and fuel.
He said the firm, which shed about
100 jobs from Southeastern about 18
months ago, was not replacing staff
who leave, but big job cuts were
unlikely. “It’s not as bad as some
investors feared. Clearly (fare rises)
are not fantastic if you’re a com-
muter, but the government needs to
save some money.”
ANALYSIS l Go-Ahead
p recovery had failed to follow a lift in
1,250 1,358.00
26 Oct
1,200
1,150
1,100
26 Jul 13 Aug 3 Sep 23 Sep
CITYA.M. 27 OCTOBER 2010
Air travel picks
ANALYSIS l September traffic: Strong
20 %
15
passenger, weak freight
Freight
traffic
19.0
up but cargo
growth slips
Passanger 14.8
traffic
10
10.5
5 6.5
AVIATION
▲
0
Sep 2010 Aug 2010 Sep 2010 Aug 2010 THE recovery in the global air travel
market gathered pace last month, but
falling freight has sparked concern
about the impact on the economic
recovery of spending cuts.
Passenger numbers rose 10.5 per
cent year-on-year in September, signif-
icantly stronger than the 6.5 per cent
increase in August, according to fig-
ures from the International Air
Transport Association (IATA).
IATA said the better passenger
growth could be due to normal travel
volatility boosted by factors such as
the religious festival of Ramadan.
Freight traffic rose 14.8 per cent,
down from the 19 per cent in August
and a larger fall than expected.
IATA voiced concern about the
drop in freight, saying consumer and
business confidence was weak in
many parts of the world.
Spending to boost the economic
cargo earlier this year.
IATA director general Giovanni
Bisignani said the passenger recovery
was good news, but the freight num-
bers were worrying.
“Freight activity has fallen six per
cent since May’s post-crisis peak.
What we see in air cargo markets is
inevitably reflected in the broader
13 Oct The global air travel recovery is taking off Picture: REUTERS economy,” he said.
CITYA.M. 27 OCTOBER 2010 Focus on Prosperity Index 17

PERSONAL FREEDOM
SAFETY & SECURITY
ENTREPRENEURSHIP
UK 13th in Prosperity Index

SOCIAL CAPITAL
& OPPORTUNITY

GOVERNANCE

EDUCATION
ECONOMY

HEALTH
OVERALL COUNTRY
RANK

The UK was buoyed by strong results Zimbabwe finished bottom of the 1 Norway 1 6 12 4 4 2 2 1
▲

WORLD ECONOMY
in the entrepreneurship (ranked fifth), poll, with Pakistan in penultimate
THE UK finished a miserable 13th in governance (ranked ninth) and social place after a year dominated by ter- 2 Denmark 4 1 2 5 17 6 6 2
the latest Prosperity Index, trailing capital categories. However, of the 110 rorist attacks and natural disasters. 3 Finland 9 4 7 3 10 3 12 7
behind even beleaguered Iceland and countries covered by the survey, it The US clung to a top ten placing
Ireland. ranks a staggering 101st on public con- despite ranking poorly in the econo- 4 Australia 8 13 8 2 15 13 4 4
The Legatum Institute table was fidence in financial institutions, 98th my and safety categories. However, 5 New Zealand 17 14 4 1 19 7 3 3
dominated by Scandinavian coun- on optimism about job prospects and the poll seems to favour small coun-
tries, with Norway, Denmark and 93rd on expectations of future eco- tries, with the US the only superpow- 6 Sweden 7 2 6 10 9 8 5 11
Finland taking the top three slots. nomic performance – the kind of rat- er to make the top 10. 7 Canada 5 10 5 12 11 16 1 8
Sweden finished sixth in the poll, ings usually found in the world’s Former Labour business secretary
which measures wealth and prosperi- poorest countries. Peter Mandelson defended Labour’s 8 Switzerland 2 11 1 29 3 12 19 6
ty, taking into account factors includ- The Antipodean nations both legacy, saying the data was collected
9 Netherlands 3 12 10 13 13 18 13 5
ing health care, wealth, freedom and ranked highly, with Australia in at the onset of the financial crisis and
social capital. fourth place and New Zealand fifth. was disproportionately gloomy. 10 United States 14 3 3 9 1 25 9 12

Health, schools and security keep UK down

ten countries. To do better, the UK
must continue to improve not just its
economy, but also its performance on
health, education and security.
The Legatum index is unique,
because it provides the only global
assessment of national prosperity
based on both wealth and wellbeing.
CITY COMMENT It examines over 90 per cent of the
world’s population and gives each
ASHLEY LENIHAN country an overall prosperity rank-
ing. This ranking is calculated from
opportunity, education, governance,
health, safety and security, personal
freedom, and social capital.
The UK’s position was static this
year: in 13th place it remains just out
of reach of a top ten position. The
good news is that the UK does very
well on entrepreneurship and oppor-
tunity, where it ranks fifth globally,
as well as in the areas of governance
and social capital where it ranks
ninth on both. This is crucial because
for entrepreneurship. However, the
government will need to work hard to
improve confidence: in 2009 only 67
per cent of Britons said they believe
the entrepreneurial environment is
strong, and just 78 per cent believed
that hard work will get them ahead
in life, below the global average.
The sobering news is that if the UK
wishes to better its ranking, and keep
pace with its European peers, it will
need to improve heavily in areas
economic fundamentals such as low
inflation rates, only 36.6 per cent of
British citizens in 2009 had confi-
dence in financial institutions – the
ninth lowest rate in the index. If
trends indicated by Tuesday’s GDP
data are any indication, confidence in
the UK financial sector should
improve over the next year. In the
areas of health and education, howev-
er, decent levels of citizen satisfaction
belie relatively low enrolment and

T
HERE is a simple reason why
the UK has not performed bet-
ter in the 2010 Legatum
Prosperity Index published yes-
terday, failing to break into the top
the average of that country’s scores
across eight different sub-indexes –
each of which represents a funda-
mental pillar of prosperity: the econo-
my, entrepreneurship and
the data from the index shows that
overall prosperity is more closely cor-
related to entrepreneurship and
opportunity than to any other pillar.
The UK has a strong infrastructure
including the economy, where it
ranks 18th, health (20th), education
(22nd), and safety and security (23rd).
For the economy, confidence is again
key. Despite relatively strong objective
immunisation rates. If the UK is to
surpass its peers, it will need to solve
these underappreciated problems.
Ashley Lenihan is senior fellow of the
Legatum Institute
CITYA.M. 27 OCTOBER 2010
US recovery still
fragile as house
prices fall again
US ECONOMY
▲
BY MATTHEW WEST
THE US economic recovery is still frag-
ile, according to data published yester-
day, which showed house prices fell for
the second consecutive month and
consumer confidence remained weak.
The Standard & Poor’s (S&P)/Case
Shiller index of US 20 cities showed
property prices fell 0.3 per cent in
August. The dip followed a decline of
0.2 per cent in July. S&P put the fall in
house prices down to the withdrawal
of the government backed homebuy-
er tax credit in April.
Property prices in the 20 cities
index were 1.7 per cent higher than a
year before but this figure also
showed house price growth had
almost halved in one month – the
annual increase in property prices in
July had been 3.2 per cent.
CBI urges Osborne
to focus on growth
UK ECONOMY
▲
BY VICTORIA BATE
BUSINESS lobby group the CBI has
written to chancellor George
Osborne and business secretary
Vince Cable to call for further
action to stimulate short term eco-
nomic growth, in order to offset
the effects of the government’s
£80bn spending cuts.
CBI director-general Richard
Lambert said the UK economy
needs a “fundamental rebalanc-
ing” in order to achieve that
growth, with exports and invest-
ment playing a greater part than in
the past.
He identified four separate
potential sources of growth in the
letter.
Ireland doubles its budget target to
€15bn as outlines push for austerity
▲
WORLD ECONOMY
THE Irish government has doubled
the amount of money it reckons is
needed to bring the country’s
deficit under control to €15bn
(£13.1bn) over the next four years.
That is twice the level outlined
in last year’s budget.
“The key reasons for the signifi-
cant increase from the figure
announced in the 2010 budget are
lower growth prospects both at
home and abroad and higher debt
interest costs,” the government
said in a statement sent via e-mail
David Blitzer, chairman of the
index committee at S&P said 17 of the
20 cities in the index saw a fall in
property prices compared to July.
“Over the last four months both
the 10 and 20 city composites show
slowing growth, after sustaining con-
sistent gains since their April 2009
troughs,” he said.
Meanwhile, the Conference Board’s
index of US consumer confidence
showed a slight increase in sentiment
to 50.2 in October from a revised 48.6
in September. But confidence was
still at historically low levels.
Lynn Franco, director of the
Conference Board’s consumer confi-
dence centre said: “Consumers’
assessment of the current state of the
economy is relatively unchanged, pri-
marily because labour market condi-
tions have yet to significantly
improve.”
These included supporting
vibrant and growing SMEs by
extending the Enterprise Finance
Guarantee scheme and promoting
non-bank and equity financing to
the sector with support services
refocused.
Lambert said the government
should also make it easier for busi-
nesses to export their goods and
services, including by providing
information, contacts and finan-
cial backing and removing con-
CBI director-general
Richard lambert says
the UK needs more
measures to spur
short-term growth
yesterday.
The announcement followed
two days of cabinet discussions on
how Ireland can get the worst
budget shortfall in Europe back
within a limit of three per cent of
gross domestic product (GDP) by
2014. Further details will be set out
in a four-year plan next month.
Speaking to national broadcaster
RTE, Minister for Justice Dermort
Ahern said the €15bn figure was
based on a projection of average
growth of 2.75 per cent per year
over the next four years.
“It’s based on the fact growth
Economic News 19
David Frost
stands down as
head of BCC
REGULATION
▲
DAVID Frost, director general of the
British Chambers of Commerce (BCC),
announced yesterday that he intends
step down in 2011, after eight years in
the role.
Frost said he was leaving the BCC in
better shape that he had found it say-
ing he was brought in to raise the
organisation’s profile and level of
influence, a job he said he felt was
now done.
“I have developed relationships
with the new government and the
long awaited spending review has
now been delivered – a long-term
road map for re-balancing the UK
economy,” he said.
Frost added he had agreed with the
board of the BCC to leave in the sec-
ond half of 2011. They will begin the
search for his replacement in the
coming months.
Prior to taking the helm at the BCC
Frost was chief executive of Coventry
and Warwickshire Chamber of
David Frost will step down as head of the BCC next year Commerce and Business Link.
straints to trade.
Lambert’s third suggestion was
exploiting pent-up demand for cru-
cial domestic infrastructure proj-
ects, particularly where the private
sector sees opportunities in areas
such as energy, transport, waste
and water.
Lambert also called for the
reform of public service delivery
by increasing competition among
providers.
“There is a need for a policy
focus on those measures that can
have the greatest impact on growth
performance in a relatively short
timeframe,” Lambert says in the
letter.
The CBI’s submission comes
ahead of the publication of a gov-
ernment white paper on growth.
both internationally and domesti-
cally is no longer going to be as
good as what we expected this time
last year,” he said.
Finance minister Brian Lenihan
forecast growth of 3.3 per cent for
2011 when he unveiled the 2010
budget. But economists polled by
Reuters expect 2.8 per cent and the
central bank has said its forecast of
just 2.4 per cent is in danger of
being trimmed.
Ahern said the government has
yet to decide what proportion of
the cuts would be front-loaded into
2011.
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CITYA.M. 27 OCTOBER 2010 News 21

Credit card use up, despite healthy accounts

are increasingly being used more like
debit cards to pay for everyday items,
and not just for goods and services
requiring credit.
ONE THIRD USE CREDIT EACH WEEK
This is seen clearly in the high fre-
quency with which cards are used:
BRANDINDEX over one-third of credit card holders
(35 per cent) use them at least once a
STEPHAN SHAKESPEARE week, and another 17 per cent use
them two to three times per month.
affluent and in good financial health.
Further consumer data provided by
YouGov SixthSense suggests that up
to 9.6m credit card holders have
changed the nature of their credit
card usage in the past two years. This
group can be broken down into two
further categories: firstly, the 2.2m
who have moved from a position of
owing money on their credit card to
not owing anything on their card;
and 7.4m who have reduced their
have an effect on the way providers ANALYSIS l The frequency of using
currently operate; operators must credit cards
explore non-interest methods of gen- 5 3
erating revenue from customers, and 25
keeping them satisfied. But this may 16
%
not be straightforward as changing
terms and conditions over the past
few years have unsettled customers. 9 10
Data from the Financial Services
Authority indicates that total com-
plaints received about credit cards are 15 17
rising rapidly. Between 2006 and

T
HE days when credit cards were
used solely for “big ticket” or
major purchases are long past. A
new report from YouGov
SixthSense indicates that credit cards
However, the tendency to use cards
for everyday spending is not related
to users’ financial difficulties or the
need for short-term credit. In fact,
high frequency users are generally
credit card debt during the recession.
CREDIT AND DEBIT USAGE BLURRED
This blurring of the lines between
credit and debit card usage is sure to
2010, the number of complaints rose More than once a week Once ever 3 months
by 172 per cent, despite the number Once a week Less than once every 3 months
of cards in issue falling. 2-3 times a month Never
Stephan Shakespeare is chief executive
Once a month Not stated
and co-founder of YouGov.

NEWS | IN BRIEF
Sony launch VAT back scheme
Sony will tomorrow launch the UK’s first
consumer electronics VAT-back scheme. The
firm will allow customers shopping between
now and Christmas to claim back the VAT
from products across its range, including
cameras, e-Readers and Blu-ray players. The
firm hopes the deal will convince customers
to make big money purchases in the run-up
to Christmas.
BHP’s Potash bid hearing on 8 Nov
Saskatchewan’s securities regulator will hear
BHP Billiton’s challenge to Potash Corp’s
shareholder rights plan on 8-9 November,
assuming the federal government allows
BHP’s $39bn bid to proceed. In documents
filed with the Saskatchewan Financial
Services Commission, BHP seeks to suspend
the rights plan, an anti-takeover defense
known as a “poison pill”.

TNK-BP chief financial officer Jonathan Muir said costs were up 18 per cent in the third quarter Picture: GETTY

TNK-BP profit down

as Rosneft prospers
ENERGY $2.57bn from $1.16bn last year. TNK-BP, which agreed to buy
▲

BY HARRY BANKS
RUSSIAN oil company TNK-BP, a
joint venture that makes up more
than a quarter of BP’s reserves, said
yesterday its third-quarter net prof-
it fell as transportation and other
costs rose.
The company generated net prof-
it of $1.45bn (£913m) on revenues
of $11.4bn. A year earlier TNK-BP
earned $1.68bn on revenues of
$10.26bn.
Meanwhile, its largest rival,
Rosneft, yesterday reported third-
quarter earnings that had more
than doubled year-on-year, from
That was above the $2.46bn ana-
lysts had predicted. The govern-
ment is looking to privatise 15 per
cent in coming years. Crude output
rose 5.3 per cent to 2.33m barrels
per day (bpd) from 2.214m bpd in
the same period last year.
In dollar terms, costs at TNK-BP,
Russia’s third-biggest oil company,
half owned by the British-based
major, rose 18 per cent, it said yes-
terday. Transportation tariffs –
mainly the cost of shipping oil
through the Transneft state
pipeline system – rose 19 per cent.
Forex effects amounted to
$200m, TNK-BP said.
BP’s Venezuelan and Vietnamese
assets for $1.8bn as the British
major raises funds to pay for the
Gulf of Mexico oil spill, is also at an
“initial point” in talks for its
Algerian assets, said chief financial
officer Jonathan Muir.
Muir also said Indian oil compa-
ny ONGC had right of first refusal
on BP’s Vietnam assets and had
about six weeks to exercise them.
Aside from acquisitions, Muir
said, TNK-BP cut its plans for capi-
tal expenditure to $4bn from a
planned $4.4bn. It plans to keep
capex steady around $4bn in com-
ing years.

Unicredit reshuffle sees Ermotti quit

.com
▲

BANKING
UNICREDIT SpA’s top investment
banker Sergio Ermotti will leave
the bank after being passed over in
a management reshuffle, the first
casualty of a revamp that followed
the appointment of a new chief
executive.
UniCredit’s board yesterday named
retail chief Roberto Nicastro as sole
general manager at Italy’s largest
bank – a move which paved the
way for the departure of Ermotti, a
former Merrill Lynch executive
well known in international finan-
cial circles.
The revamp is the first key decision
for new chief executive Federico
Ghizzoni, appointed last month
after former boss Alessandro
Profumo quit in a row with
investors. Nicastro, 45, had headed
UniCredit’s vast retail network
since 2007.
 22 Consumer News
Tesco launches barcode app
▲
RETAIL
BY HARRY BANKS
TESCO has added a barcode reader to
its Groceries iPhone app that can add
items to a customer’s online home
delivery order.
Customers can scan any grocery
item and add it to a home delivery
order instantly.
The barcode reader, which was
added to the existing Tesco Groceries
app available on the iPhone yesterday,
is being targeted at busy parents and
HMV pins its
hopes on DVD
Xmas sales
▲
RETAIL
BY HARRY BANKS
MUSIC, games and books retailer
HMV says releases of films such as Sex
and the City 2 and Toy Story 3 will
help its key Christmas period as it
tries to bounce back from a disap-
pointing start to the year.
“All I can say about Christmas is
that the release schedule in particu-
lar is looking healthy,” chief executive
Simon Fox said on the sidelines of the
World Retail Congress in Berlin. Our
like-for-likes were very disappointing
in the first 18 weeks. It’s a tough year
for us.”
HMV, which also owns live music
venues, in September reported a
worse than expected 15 per cent drop
in first-quarter sales in Britain and
Ireland.
CITY VIEWS: WILL THE ONE NEW CHANGE SHOPPING CENTRE ATTRACT SHOPPERS TO THE CITY?
HARRIETTE DERBYSHIRE |
HAMPTONS INTERNATIONAL
“I think it will be good for workers in
the City - it’s quite close by and it
gives us something to do in our
lunch breaks. It also means we can
shop during the week, so the week-
ends are free for other things. I’m not
sure people will come in at the
weekend specifically to shop. It
might be good for people who
live nearby.”
time-poor professionals who want to Tesco.com and Tesco Direct, said:
be able to add specific items to their “We’re always looking for ways to
online shopping basket at any time. make life easier for customers and for
Tesco envisages that it will be par- busy mums in particular.
ticularly useful for those times when “The barcode scanner will make
a customer tries a new food at a online ordering much quicker for
friend’s house that they want to buy those that have an iPhone.
or a child has finished the last of “Customers can simply scan the
their favourite yoghurt while out and barcode of grocery products stocked
about – a quick scan will see the item by Tesco whilst on the go.”
added to a shopping basket where it The supermarket chain already has
will remain until the customer is Clubcard, Store Finder and Wine
ready to checkout. Finder apps in an attempt to pull in
Laura Wade-Gery, chief executive of more customers.
Fox said live music bookings at its
venues for the period up to Christmas
were also looking healthy and that its
foray into clothing sales had started
well.
“So far, so good, but it’s early days,”
he said, pointing out that the line
was only launched in September. He
declined to comment on the outlook ANALYSIS l HMV Group
for 2011 although was looking for- p per cent in the third quarter, while sales in
70
ward to the launch of Nintendo’s
D’Alema player, which he said would 65 46.25
26 Oct
be a “huge product”.
Nintendo had said last month that
it was putting the Japan launch date 55
for the product, which can be used
without special glasses, back to late
February from November, close to the 45
US March launch date. However, Fox
said: “As far as I am concerned they 26 Jul 13 Aug 3 Sep 23 Sep 13 Oct
did not delay the launch. We always
expected an Easter launch.” HMV is relying on film releases to boost its Xmas period
MARIA BERNARDI |
GROCERS’ COMPANY
“I think it will be good for the area,
although people generally are still quite
reluctant to spend as much as they used
to. Retailers are probably going to find it
hard this Christmas. I think tourists will
bring in a lot of money, especially at
the weekends. I probably
wouldn’t travel into the City
to shop, as there are good
places near where I live.”
CITYA.M. 27 OCTOBER 2010
Rigby & Peller slides into the red
as Brits cut back on luxury items
er. Sales slipped one per cent to
▲
RETAIL
£9.8m, despite the opening of a new
CORSET-MAKER to the Queen, Rigby store. In accounts just filed at
& Peller has become the latest lin- Companies House, Rigby & Peller said
gerie chain to be hit by cash-strapped that the results were “disappointing”
Brits reining in their spending. but that it is “well positioned to bene-
The luxury retailer, whose fans fit from an upturn in the overall
include Gwyneth Paltrow, Lady Gaga economy”. Initially, underwear
and Nick Clegg’s wife Miriam brands reported strong trading in the
González Durántez, dived into the recession. Rival Agent Provocateur
red by £214,000 in the 12 months to made a pre-tax loss of £1.1m in the
the end of January, compared with a year to March 2009 as it was also hit
pre-tax profit of £168,000 a year earli- by the downturn.
NEWS | IN BRIEF
Reckitt shares soar on takeover
Shares in Reckitt Benckiser rose 31p to
3,449p at one stage yesterday before
closing 114p lower at 3,436p after EU
competition watchdogs gave the green
light to its takeover of Durex condoms
maker SSL. The Cillit Bang to Nurofen
painkiller group is disposing of SSL’s
brands for mouth pain relief products in
the UK and Ireland to ease regulator
concerns. Reckitt announced the
£2.54bn takeover in July. The decision
to allow the takeover is conditional upon
Reckitt Benckiser’s commitments to
divest SSL’s brands for mouth pain relief
products in the UK and Ireland, where
the merged entity would have had a
very strong market position.
Beer sales drop by 9.7pc
The amount of beer drunk in Britain fell by
9.7 per cent in the last three months,
dashing hopes of a comeback by the
brewing industry. Sales of beer in super-
markets and off-licences were down by 12
pubs dropped by 7.8 per cent. The latest
figures are in stark contrast to those for
the second quarter of 2010, in which sales
rose by 2.9 per cent – their first quarterly
increase for four years. But the latest
results show that the industry is still in
decline and second quarter results were a
blip, caused in part by the World Cup, “As
has occurred after every World Cup, the
beer market hit a bump in the road, not
helped by a wet summer,” said Brigid
Picture: Micha Theiner/ CITY A.M Simmonds, chief executive of the BBPA.
Interviews by Marion Dakers
SPENCER JAMES | GLENCAIRN
“I will probably walk over there in my
lunch break to do a bit of shopping in
the run-up to Christmas, as it’s not that
far to go. I would consider coming
down at the weekend to shop,
although there are places near-
er to where I live. I think
it’s a good idea to open
some more shops in
the City.”
CITYA.M. 27 OCTOBER 2010 Consumer News 23

Upbeat Puma lifts forecast Foster’s places deadline

on its wine unit bidders
▲

RETAIL
(£3.5bn) of sales by 2015 and said it should more than offset the flat per-
BY HARRY BANKS aimed to keep its gross profit mar- formance in the first half of the year,”
GERMAN sporting goods company gin – a measure of profitability -- sta- Puma said in a statement. inadequate”, but said the company

Puma hiked its sales outlook and
posted solid third-quarter profits, fol-
lowing in the footsteps of rivals
Adidas and Nike.
The company said yesterday it
expects the sales outlook to improve
in the fourth quarter as it reported
demand in North America and Latin
America helped boost third-quarter
sales by 6.5 per cent. It forecast €4bn
ble until then.
Puma, which is controlled by
France’s PPR, said it now sees 2010
sales growing by a medium to high
single-digit percentage. It previously
said it saw sales growing by a low to
medium single-digit percentage this
year.
The second half of the year contin-
ues to show solid sales growth which
Sales surged 27 per cent in the
Americas but were broadly flat in
Asia Pacific and Europe, Middle East
and Africa.
The Herzogenaurach, Germany-
based sporting goods company posted
third-quarter net profit of €77.6m up
from €67.9m in the year-earlier peri-
od and broadly in line with €78.7m
forecast in a Reuters poll.
▲
CONSUMER
AUSTRALIAN brewer Foster’s said it
has held no further talks with the pri-
vate equity suitor that made a $2.5bn
offer for its wine business in
September but set an April deadline
on bids.
Chairman David Crawford said yes-
terday that an approach – reportedly
by Cerberus Capital – was “totally
would consider any further offers for
its $3bn wine business. “We have said
from the day we announced the pro-
posal to consider a demerger that we
were still prepared to consider all pos-
sibilities, and that includes considera-
tion of any offers if they are made,”he
said. Crawford told the company’s
annual general meeting that the situ-
ation should be resolved by April.

Cineworld in
Cineworld’s rise in
moviegoers has
been fuelled by 3D
films such as Toy
Story 3.

sales boost
from 3D films ANALYST VIEWS: CAN CINEWORLD MAINTAIN ITS PROGRESS?
SIMON FRENCH | KEITH BOWMAN |
▲

LEISURE
the financial year has a film line-up,
BY JOHN DUNNE

CINEWORLD yesterday reported
booming sales as filmgoers flocked to
see the latest 3D Blockbusters includ-
ing Toy Story 3.
Total sales for the 42 weeks ending
21 October were up 8.5 per cent, com-
pared with the same period the previ-
including Harry Potter and the
Deathly Hallows; Chronicles of
Narnia: Voyage of the Dawn Treader
and Tron. The company added: “The
remaining 2010 film line-up gives us
confidence in delivering continued
growth for the full-year.”
“ “
PANMURE HARGREAVES LANSDOWN
The company is confident of The group’s investment in tech-
delivering continued growth for the full nology, conservative expansion and
year at least in line with expectations. exposure to an improving advertising
We don’t anticipate any change to our market provide potential earnings
numbers at this stage, but clearly the growth ... market consensus opinion

” ”
ous year. Box office takings were ANALYSIS l Cineworld
ahead 8.3 per cent as moviegoers 215 p 218.00 risk to forecasts lies on the currently denotes a ‘strong buy’.
went in their numbers to its 801 26 Oct upside.
screens.
The company’s results for the first
half of 2010 saw revenues up 3.8 per
205 NIGEL PARSON | EVOLUTION SECURITIES

“
cent to £162m and box office takings
up 4.1 per cent to £111.7m. Cineworld 195
said films like Shrek Forever and Toy The slate of films for the next 15 months should continue to draw in the crowds and the con-

”
Story 3 had been hits and that it had tinuing shift to the digital platform should result in further market share gains. We are increasing our
enjoyed “a healthy performance since
the end of June”. The final quarter of 26 Jul 13 Aug 3 Sep 23 Sep 13 Oct target price to 245p from 235p to reflect the upgrade.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Victoria Bates in association with

Lloyds Banking Group
Lloyds TSB Corporate Markets has hired three
new senior members to its global financial insti-
tutions team. Adam Daniels, pictured, joins as
head of specialist finance and intermediaries
from Ernst & Young, where he was an M&A
partner. Mandeep Ahluwalia moves over from
Standard Bank to become managing director of
relationships for the global banks team. Richard
Herder joins the US team from Deutsche Bank
as head of insurance for North America.
The Carlyle Group
The private equity group has appointed
Benjamin Du Boulay as a director in
London, reporting to Robert Hodges
and Mark Harris, managing director
and director respectively of the UK real
estate team.
Du Boulay joins from Invista Real
Estate, where he was a director and
head of the central London offices.
In his new role, he will work across
Carlyle’s UK portfolio, but will hold spe-
cific responsibility for the White Tower
portfolio of six London properties, which
the firm acquired for £671m in July.
HSBC
Anthony Hingley and Hicham Najem
have been appointed as directors of the
London-based investment advisory
group at HSBC’s private banking arm.
Hingley was previously an invest-
ment adviser at HSBC Private Bank in
Doha, Qatar, having joined in 1999.
Najem joins from Tactical Global
Management and has also previously
worked at Brevan Howard.
FiveTen
The recruitment group has hired Aidan
Anglin as the new chief executive of its
European and Middle Eastern opera-
tions, effective from 1 November.
Anglin moves over from Adecco,
where he was managing director of the
group’s technology brands.

To appear in CITYMOVES please email your career

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com morganmckinley.com
 24 News CITYA.M. 27 OCTOBER 2010

Google set to build stronger

controls to safeguard privacy
use of privacy controls made avail- door to new potential probes.
▲

TECHNOLOGY
BY HARRY BANKS
GOOGLE is “building stronger con-
trols” to safeguard privacy, a senior
executive said yesterday after the
search engine giant’s admission to
inadvertently gathering emails and
passwords across the globe.
Peter Fleischer, Google’s global pri-
vacy counsel, told reporters at a con-
ference on Internet security he was
“puzzled” that users had made scant
able on the site months ago, and
Google would try to improve them.
“We are building stronger con-
trols,” Fleischer said, adding that
developers were seeking to construct
a “privacy design document” to bar
any abuses of user information.
Google said in a blog published on
its website on Friday that its “Street
View” cars around the world had acci-
dentally collected more personal data
than previously thought, opening the
The breach had been discovered by
regulators in Germany, and Canada’s
privacy watchdog has also charged
Google with violating the rights of
thousands of Canadians.
In Britain, the Information
Commissioner’s Office ICO pledged
to reinvestigate how much data had
been collected.
Six months ago the ICO was grant-
ed new powers. It can impose fines of
up to £500,000 for privacy breaches.

Chief executive Sir Bill Gammell saw Cairn Energy shares slide yesterday Picture: GETTY

Cairn halts its

Arctic drilling
in the benchmark FTSE 100 index.
▲

ENERGY
BY HARRY BANKS Cairn’s exploration campaign was
the first drilling in a decade in
CAIRN Energy stopped drilling in Greenland, which energy consultancy
Greenland before completing an oil Wood Mackenzie said could have
well after Greenpeace protesters reserves of 20bn barrels.
delayed work, potentially incurring Oil majors including Exxon Mobil
millions of pounds in extra costs and Corp, Chevron Corp and Husky Energy
hitting the explorer’s shares. are queuing up to drill in the Arctic
The Edinburgh-based group yester- territory but, invigorated by the BP oil
day said the Alpha-1S1 well in Baffin spill, environmentalists have vowed to
Bay did not reach the depth it was aim- frustrate them.
ing for before it was forced to halt
drilling by the ending of the narrow ANALYSIS l Cairn
Arctic drilling season. p
470
Activists from environmental group
Greenpeace had in August boarded 382.50
the Stena Don rig which was drilling 450 26 Oct
the well and halted work in the hope
of stopping Cairn from reaching its 430
objective before the end of the season.
Shares in Cairn plunged 8.9 per cent
to 382.5p in early trading, hitting their 410
lowest level since the end of May and
making the company the biggest faller 27 Sep 4 Oct 11 Oct 18 Oct 13 Oct

Greece will have to cut spending

as tax rates peak, says central bank
the tax base and capturing tax eva-
▲

WORLD ECONOMY
GREECE’S effort to cut deficits must
rely on curbing spending, tax evasion
and waste as there is no more room
for higher taxes, the country’s central
bank said in an interim monetary
policy report yesterday.
“There is no more room to raise tax
rates on businesses and individuals
and the spearhead of policy to boost
revenues must aim for a widening of
sion,” the central bank’s report said.
Greece is aiming to cut its budget
shortfall to 7.8 per cent of gross
domestic product (GDP) this year
from 13.8 per cent in 2009, a deficit
that is expected to be revised upwards
by the EU’s statistics body Eurostat.
The overborrowed country must
meet ambitious fiscal adjustment tar-
gets to keep receiving emergency
funding under a €110bn IMF package.
CITYA.M. 27 OCTOBER 2010
Ford motors
to a recovery
as profit rises
▲
AUTOMOTIVE
BY HARRY BANKS
CAR giant Ford yesterday posted a
higher-than-expected quarterly profit
and pulled forward by a year a debt-
reduction forecast seen as key to
returning the automaker to an invest-
ment-grade credit rating.
Ford, which expects to be solidly
profitable this year, said it repaid
$2bn (£1.26bn) of debt in the third
quarter, expects to pay down a debt to
a union retiree healthcare trust fund
on Friday, and has launched a con-
vertible note offering to reduce its
debt.
The automaker said it now expects
cash on hand in its automotive busi-
ness to at least match its debt by the
end of 2010 – a year ahead of a fore-
cast it gave in July.
Ford chief Alan Mulally said that
new cars and aggressive cost-cutting
had helped to boost profits. Ford,
which posted losses totalling $30bn
from 2006 through 2008, borrowed
NOW FLY TO
EVEN MORE
PLACES FROM
THE HEART
OF THE CITY
As the reception sponsor of the
first City AM awards, British Airways
are proud to be spending an evening
with the City’s other high flyers.
$23.5bn in late 2006 to support its
turnaround, leaving it with much
heavier debt loads than rivals General
Motors and Chrysler.
Dearborn, Michigan-based Ford last
had an investment-grade credit rating
in May 2005. It has not been cash flow
positive in its automotive business
since the second quarter of 2008.
Third-quarter net profit rose to
$1.7bn, or 43 cents per share, from
$997m, or 29 cents per share, a year
earlier. Excluding the Volvo unit it
sold in August, revenue rose $1.7bn to
$29bn. Ford reported earnings of 48
cents per share excluding one-time
items. Analysts on average expected
38 cents a share.
FAST FACTS | FORD
● After its fifth consecutive quaterly profit,
Ford now aims to achieve zero net debt by
December.
● Third quarter net profit rose to $1.7bn from
$997m a year earlier – a rise of 68 per cent.
News 25
CIT Group’s
BEST OF THE BROKERS
ANALYSIS l Tullow oil
1,320
p 1,210.00
26 Oct
TULLOW OIL
BNP Paribas has cut its valuation of the oil
group by 10 per cent to a fair value target
bounce-back
1,280
1,240
1,200
price of £11.65, and rates the stock “neu-
tral”. The broker says disappointing drilling
results in Ghana and continuing uncertain-
ty over its Ugandan operations leaves the
company depending on future drilling suc-
accelerates
BANKING
▲
1,160
cess. It adds that Premier Oil is a better bet
in the sector, with further potential in its CIT GROUP, the US commercial
26 Jul 13 Aug 3 Sep 23 Sep 13 Oct
lender that last year emerged from
North Sea portfolio. bankruptcy, reported a forecast-beat-
ing quarterly profit yesterday, and
ANALYSIS l AstraZeneca ASTRAZENECA revised upwards its profit for the
3,400 p 3263.00 Evolution Securities rates the pharmaceuti- first half of the year after an account-
26 Oct cal firm a “sell”, with a target price of ing review.
3,350
£28.05. Evo expects AZ to maintain its The bailed-out US lender said net
3,300
income for the third quarter was
earnings at between $6.35 and $6.55 a $131.5m (£83m), taking the total
3,250 share in its third quarter results on income for the nine months to the
Thursday, as the company gets closer to end of September to £418.3m.
3,200 New York-based CIT lost $1.07bn in
seeing several patents expire in the US. On
the run-up to the bankruptcy and
3,150 the other hand, the broker says there is financial restructuring in the com-
potential for seasonal flu vaccine sales to parable year-earlier period.
26 Jul 13 Aug 3 Sep 23 Sep 13 Oct increase. The company said its latest third-
quarter results reflect increased
ANALYSIS l Daily mail & General trust DAILY MAIL & GENERAL TRUST business activity as funded volume
exceeded $1bn.
540 p 525.50 Numis rates the media group a “buy” with “Our balance sheet remains strong
26 Oct a target price of 707p. The broker believes
and capital ratios rose, as we paid
the media sector has made more opera- down high-cost debt, further opti-
500
tional progress than is reflected in share mised our portfolio and improved
prices, and adds that DMGT can achieve our funding flexibility,” said chief
executive John Thain, who has sold
2011 earnings per share of 58p, rising to
460 off many of the firm’s non-core
80p by 2013. It adds that the firm has sev- assets and cut jobs since joining in
eral growing businesses, though its region- January 2009.
al portfolio is unlikely to regain its historic CIT filed one of the largest bank-
420 ruptcies in US history in November
26 Jul 13 Aug 3 Sep 23 Sep 13 Oct margins.
2009, causing the government to
To appear in Best of the Brokers email your research to notes@cityam.com lose $2.3bn of federal cash used to
bail out the firm in December 2008.
 26 News WORDS BY MARC SIDWELL CITYA.M. 27 OCTOBER 2010

A vintage performer relives a year

when he made £7m in just one day
Greg Dyke explains “I have not
that the BBC has cut grown to
itself a good deal but think well of
the licence fee can’t Blair and
survive much longer Campbell:
authoritarian,
unpleasant
A
S THE wine is poured, Greg Dyke
winces slightly: “just a little for
me”. That’s nothing to do with the political
wine, which is one of the world’s
best – a 1991 Penfolds Grange – but Dyke, thugs”
whose stint as Director-General of the
BBC ended in controversy in 2004 when
he resigned on the publication of the
Hutton Report, is now chair of the British
Film Institute (BFI) and, caught in the
whirl of the London Film Festival, he is
out for premieres and drinks every night.
Still, that doesn’t dent his enthusiasm:
“The film I saw last night, The King’s
Speech, was wonderful, an absolute sen-
sation”. At 63, Dyke still gives off a irre-
pressible and infectious energy, and as he
cheerfully approves the abolition of the
Film Council – “I don’t mourn their pass-
ing – they never funded the BFI properly”
– and reaches for his glass, the note of
caution is swiftly set aside.
We are tasting this very special vintage
– with intense licorice and dark berry
flavours, it also aids the flow of conversa-
tion marvellously – in the sixteenth-cen-
tury wine cellar of the Stafford Hotel,
courtesy of Penfolds. Dyke will be speak-
ing on 2 November at the Hospital club in
Covent Garden, and those attending will
be able to taste the same wine and hear
both from Peter Gago, Penfolds chief
winemaker, and from Dyke about why he
calls 1991 his own vintage year.

VINTAGE YEAR
Educated at Hayes Grammar School and
the University of York, Dyke’s CV is full of
incident, from saving TV-am with Roland
Rat to his battles at the BBC, but in 1991
he pulled off a remarkable coup that
made his personal fortune and showed
his rivals why this amiable businessman
should not be treated lightly. At the time,
Dyke was managing director of London
Weekend Television (LWT).
LWT was faced with a preposterously-
structured blind auction for ITV franchis-
es, which Dyke says was a classic case of
someone coming up with a decent free
market idea and parliament amending it
into a bizarre, unrecognisable mess. But
Dyke rose to the challenge. “A couple of
weeks out, I stopped doing my job and
turned myself into an investigative jour-
nalist. I spoke to everyone, people they’d
almost appointed, found out who was
properly capitalised, found out what
ITN’s bid was going to be. So by the end I
knew as much as I could about everyone
else’s hand.”
Dyke had also read the small print.
Puzzling through the detail of the auc-
tion structure, he realised that a “quality
threshold” allowed him to underbid his
rivals and still win. LWT bid £7m and
won, the competition bid £30m and lost.
Dyke also won against TV-am, the compa-
ny he had once saved and which later
sacked him. “That was one of those cases
of revenge being best delivered cold,” he
smiles. The best revenge of all may have
been the money Dyke made for himself
on the deals – the franchise decisions on
one day in 1991 eventually netted him
£7m. “We had the most amazing party
that night – people were still asleep on
the floor the next morning.”
FUNDING THE BBC
Dyke never had to worry about money
again, which perhaps leaves him now
more willing than most to speak as he
finds. Tony Blair and Alastair Campbell
are dismissed as “unpleasant political
thugs”, the experience of whose authori-
tarian instincts in government will keep
him from ever voting Labour again. His
report on the creative industries for the
Conservatives was handed in but never
published, probably because of his rec-
ommendation that the most sacred of
cows, the BBC’s licence fee, should be
killed off.
“I believe the BBC should be well-fund-
ed. If we’re stuck with a model that
means it won’t be, that ought to change.
The licence fee’s days are numbered; it
can’t be sustained when people can just
watch on the internet now. I saw my kids
at university doing it. Anyway, it’s an
unfair tax: the poor pay the same and the
rich probably use it more. I’d like to see a
hypothecated tax.”
He also drily notes that rumours of the
BBC’s 16 per cent austerity cut are greatly
exaggerated “The BFI would have wel-
comed that deal. You have to remember
household growth of 1 per cent a year
will add to the licence fee income, and
there’s a big chunk only temporarily
Greg Dyke in the wine assigned to digital switchover until 2012. about his return to Channel 5 were “silly”
cellars of the Stafford It’s a good swap for the guarantee that and while there was talk in March this
hotel the licence fee will continue for six more year of Dyke being considered to take
years.” over as editor of the Independent, that
Picture: Alex Ridley/ Dyke’s views on the future of television “didn’t work out”.
CITY A.M deserve attention: he is one of the fathers Dyke doesn’t seem especially sorry.
of Freeview, an idea that he jokes was Living a portfolio life with plenty of holi-
“too good for the public sector”, that days – and excellent wine – Dyke is happy
made free digital television simple to just pass on a little of his advice to the
enough to become mainstream – 11m next generation.
boxes later, it is hard to recall it even had Greg Dyke will give a Penfolds’ Vintage Years
to be invented. speech for budding entrepreneurs on 2nd
Still, for all Dyke’s evident interest in November at The Hospital Club, London, fol-
these questions, he denies any desire to lowed by a Penfolds wine-tasting. Register for a
be back in the driving seat. Rumours ticket at vintageyears@penfolds.com
CV | GREG DYKE
Age: 63 and also guided the creation of Channel 5. Director-
General of the BBC from 2000, Dyke resigned after the
Education: Hayes Grammar School and York University Hutton report in 2004. He is Chair of Brentford FC,
Chair of the BFI and Chancellor of York University
Family: Married with four children
Famous achievements: Put Roland Rat on TV-am; creat-
Career: Dyke began his career as a local newspaper ed Freeview; cut administration costs at the BBC from
journalist. He worked at LWT before becoming editor- 24 per cent to 15 per cent of total income
in-chief of TV-am in 1983. Dyke then moved to TVS and
LWT, after which he became chief executive at Pearson Motto: “Be bold; go for it.”
 Markets&Investment 27

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - 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 Company Name Closing Price Price Change 52wk High 52wk low
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3i . . . . . . . . . . . . . . . . . . . . . . . .295.00 –1.30 306.50 246.90 Cookson . . . . . . . . . . . . . . . . . . .569.00 –9.00 616.00 347.60 Kazakhmys . . . . . . . . . . . . . . . .1391.00 +58.00 1634.00 955.50 Sainsbury(J) . . . . . . . . . . . . . . . .386.40 +1.90 397.00 307.60
3i Infrastructure . . . . . . . . . . . . . 113.70 +0.80 115.00 97.00 Croda Intl . . . . . . . . . . . . . . . . .1496.00 +1.00 1540.00 692.00 Kesa Electricals . . . . . . . . . . . . .161.90 — 172.40 98.45 Schroders . . . . . . . . . . . . . . . . .1507.00 –5.00 1525.00 1056.00
A.B. Foods . . . . . . . . . . . . . . . .1054.00 –7.00 1096.00 790.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .525.50 –0.50 539.00 381.00 Kingfisher . . . . . . . . . . . . . . . . . .245.50* –3.00 255.00 196.50 Schroders N/V. . . . . . . . . . . . . .1216.00 +30.00 1222.00 864.00
Aberdeen Asset Man . . . . . . . . . .174.30 +2.00 174.70 111.00 Dana Petroleum . . . . . . . . . . . .1800.00 +1.00 1817.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .134.80* +0.60 164.60 114.60 Scot. & Sthrn Energy. . . . . . . . .1108.00 –20.00 1206.00 1006.00
Admiral. . . . . . . . . . . . . . . . . . .1617.00 +8.00 1695.00 1003.00 Davis Service . . . . . . . . . . . . . . .416.50 –1.50 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .352.20 –1.90 386.80 157.30 Scottish Mortgage. . . . . . . . . . . .666.50 +4.00 672.50 475.00
Aegis . . . . . . . . . . . . . . . . . . . . .127.40 –0.10 137.30 103.10 Debenhams . . . . . . . . . . . . . . . . .77.40 +2.40 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .578.00 +2.00 583.00 416.70
Afren . . . . . . . . . . . . . . . . . . . . .130.00 –2.00 135.70 76.50 Derwent London . . . . . . . . . . . .1510.00* –16.00 1633.00 1174.00 Land Securities . . . . . . . . . . . . . .677.50* –0.50 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .297.10 +2.20 389.30 244.00
African Barr Gold . . . . . . . . . . . .543.00 –5.00 685.00 520.50 Dexion Absolute . . . . . . . . . . . . .137.30 –0.50 148.00 131.20 Legal & General . . . . . . . . . . . . .101.50 –2.20 107.50 69.05 Serco . . . . . . . . . . . . . . . . . . . . .621.50 +0.50 656.50 491.20
Aggreko . . . . . . . . . . . . . . . . . .1679.00 +1.00 1697.00 727.50 Diageo . . . . . . . . . . . . . . . . . . . 1167.00 –13.00 1240.00 951.50 Lloyds Banking Gp . . . . . . . . . . . .67.99 –3.86 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1359.00 –14.00 1404.00 939.50
Alliance Trust . . . . . . . . . . . . . . .351.70* –1.00 354.70 292.80 Dixons Retail . . . . . . . . . . . . . . . .28.53 +2.13 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .130.10 –1.00 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .437.70 –6.30 465.00 348.00
AMEC . . . . . . . . . . . . . . . . . . . .1053.00 +6.00 1066.00 728.00 Domino’s Pizza . . . . . . . . . . . . . .463.10 +4.10 484.70 278.20 London Stk Exchange . . . . . . . . .735.50 +30.50 938.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1454.00 –28.00 1532.00 1013.00
Amlin . . . . . . . . . . . . . . . . . . . . .401.00 +3.40 437.60 350.80 Drax . . . . . . . . . . . . . . . . . . . . . .374.20 –3.90 478.00 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1800.00 +4.00 2198.00 1344.00 SIG . . . . . . . . . . . . . . . . . . . . . . . 117.60 +6.20 142.10 89.55
Anglo American . . . . . . . . . . . .2930.00 +14.00 3015.50 2153.00 Dunelm . . . . . . . . . . . . . . . . . . . .486.30 –4.20 500.00 319.40 Man . . . . . . . . . . . . . . . . . . . . . .258.30 +1.30 373.60 199.60 Smith & Nephew . . . . . . . . . . . . .575.00* +8.50 700.50 528.50
Antofagasta . . . . . . . . . . . . . . .1301.00 +32.00 1344.00 755.50 Easyjet . . . . . . . . . . . . . . . . . . . .453.60 +0.10 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .426.30 +0.10 428.50 321.90 Smith(Ds) . . . . . . . . . . . . . . . . . .166.80 –0.30 168.20 103.00
Aquarius Platinum . . . . . . . . . . .379.50 +14.50 490.00 211.50 Edinburgh Inv Tst . . . . . . . . . . . .444.50 +3.30 446.40 338.00 Meggitt . . . . . . . . . . . . . . . . . . . .325.60 +8.60 331.00 229.80 Smiths . . . . . . . . . . . . . . . . . . . 1197.00* –7.00 1297.00 885.00
ARM Holdings . . . . . . . . . . . . . . .366.20 –17.30 419.50 143.00 Electrocomponents . . . . . . . . . . .242.50 +0.80 251.00 144.80 Melrose . . . . . . . . . . . . . . . . . . .288.20 –7.80 302.00 160.00 SOCO Intl . . . . . . . . . . . . . . . . . .326.80 +1.20 510.00 323.00
Ashmore . . . . . . . . . . . . . . . . . . .380.30 +1.30 400.50 215.00 EnQuest . . . . . . . . . . . . . . . . . . .131.20 +0.70 133.50 87.35 Mercantile IT . . . . . . . . . . . . . . . .981.50* +1.50 1002.00 822.50 Spectris . . . . . . . . . . . . . . . . . . 1118.00* +10.00 1129.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3263.00 –41.00 3389.50 2668.00 Essar Energy . . . . . . . . . . . . . . .543.00 +4.00 553.50 358.50 Michael Page Intl. . . . . . . . . . . . .479.80 –1.10 495.40 316.70
Atkins(Ws) . . . . . . . . . . . . . . . . .775.00 –10.50 801.00 532.50 Eurasian Nat Res . . . . . . . . . . . .906.00 –1.00 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .390.00 –21.50 550.00 272.20 Spirax-Sarco Eng . . . . . . . . . . .1855.00* +4.00 1888.00 1060.00
Autonomy Corp . . . . . . . . . . . .1463.00 –4.00 2012.00 1278.00 Euromoney Inst Inv . . . . . . . . . . .641.50 +22.50 652.00 372.00 Millen & Copthorne . . . . . . . . . . .555.50 –8.50 574.50 321.40 Spirent Comms . . . . . . . . . . . . . .143.60 +3.80 148.20 86.50
Aveva . . . . . . . . . . . . . . . . . . . .1480.00 +45.00 1504.00 856.50 Experian . . . . . . . . . . . . . . . . . . .724.00 — 728.50 550.00 Misys . . . . . . . . . . . . . . . . . . . . .285.00 +0.30 298.00 196.60 Sports Direct Intl . . . . . . . . . . . . .143.50 –0.20 154.30 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .399.60* –2.80 442.50 290.20 Ferrexpo . . . . . . . . . . . . . . . . . . .340.80 +1.00 396.20 140.70 Mitchells & Butlers . . . . . . . . . . .323.00 +10.40 343.90 228.30 SSL Intl . . . . . . . . . . . . . . . . . . . 1160.00 +1.00 1190.00 616.00
Babcock International . . . . . . . . .593.00 +4.50 660.50 489.00 FirstGroup . . . . . . . . . . . . . . . . .397.40 +1.30 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .213.00 +5.70 248.60 187.60 St James’s Place . . . . . . . . . . . . .279.20 +1.60 298.00 203.40
BAE Systems . . . . . . . . . . . . . . .347.80* –10.60 389.90 288.10 Foreign & Col Inv Tst. . . . . . . . . .296.50 — 299.10 248.70 Mondi . . . . . . . . . . . . . . . . . . . . .539.00 –3.50 562.00 304.70 Stagecoach. . . . . . . . . . . . . . . . .207.50 +1.10 217.00 137.00
Balfour Beatty . . . . . . . . . . . . . . .277.60* +6.30 304.80 228.60 Fresnillo . . . . . . . . . . . . . . . . . .1264.00 +13.00 1333.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .337.00 +1.50 339.30 265.00 Standard Chartered . . . . . . . . . .1789.50 –49.00 1897.44 1316.50
Barclays . . . . . . . . . . . . . . . . . . .277.35 –5.70 394.25 253.40 G4S . . . . . . . . . . . . . . . . . . . . . .269.50 –0.50 285.70 238.70 Morrison Wm . . . . . . . . . . . . . . .295.80* –2.50 307.10 255.00 Standard Life . . . . . . . . . . . . . . .226.30* –3.20 238.00 170.00
Barratt Development . . . . . . . . . . .82.10 +1.90 155.70 80.00 Genesis Emerging Mkts Fd . . . . .530.00 +1.50 540.00 370.00 Murray Intl Tst . . . . . . . . . . . . . . .921.00* –8.50 938.50 720.00 SuperGrp . . . . . . . . . . . . . . . . .1078.00 +22.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .192.40* –5.60 220.00 145.90 GKN . . . . . . . . . . . . . . . . . . . . . .182.40 –0.80 186.70 100.40 National Express. . . . . . . . . . . . .246.90 –0.60 258.60 155.86 TalkTalk . . . . . . . . . . . . . . . . . . .129.00 –2.50 153.80 106.60
Berkeley . . . . . . . . . . . . . . . . . . .841.50 +11.00 923.00 735.00 GlaxoSmithKline . . . . . . . . . . . .1265.00 –15.50 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .586.50 +1.00 607.65 474.80 Talvivaara Mining . . . . . . . . . . . .532.50 +4.50 547.50 341.40
BG . . . . . . . . . . . . . . . . . . . . . . 1193.00 –10.00 1248.00 966.90 Great Portland Estates . . . . . . . .342.00 +2.00 368.60 236.60 Next . . . . . . . . . . . . . . . . . . . . .2306.00 –7.00 2360.00 1733.00 Tate & Lyle . . . . . . . . . . . . . . . . .523.00 +17.00 525.00 388.00
BHP Billiton . . . . . . . . . . . . . . .2196.50 –2.50 2346.00 1618.50 Greene King . . . . . . . . . . . . . . . .415.10 –5.80 484.00 372.50 Northumbrian Water . . . . . . . . . .348.20 +2.30 353.00 225.30
BlackRock Mining . . . . . . . . . . . .682.00 +4.50 695.00 475.00 Halfords . . . . . . . . . . . . . . . . . . .409.60 +5.10 562.50 370.10 Ocado Grp . . . . . . . . . . . . . . . . .148.00 +10.80 169.00 120.90 Taylor Wimpey . . . . . . . . . . . . . . .23.72 +0.59 46.34 22.73
BlueBay . . . . . . . . . . . . . . . . . . .487.50 — 495.00 251.00 Halma . . . . . . . . . . . . . . . . . . . . .331.40 –1.60 345.50 218.40 Old Mutual . . . . . . . . . . . . . . . . .131.10* –3.50 146.90 95.30 Telecity . . . . . . . . . . . . . . . . . . . .482.00 +0.50 546.00 323.50
Bluecrest Allblue GBP . . . . . . . . .172.60 –0.80 174.00 151.00 Hammerson . . . . . . . . . . . . . . . .413.50 +0.90 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .280.90 +9.70 339.70 205.80 Templeton Emrg Mkts . . . . . . . . .661.50 +1.00 671.00 455.00
Booker . . . . . . . . . . . . . . . . . . . . .53.65 +0.05 55.10 37.50 Hargreaves Lansdown . . . . . . . .452.20 +1.20 478.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .966.00 –10.00 1069.00 812.00 Tesco . . . . . . . . . . . . . . . . . . . . .428.95* +0.50 454.90 368.40
BP . . . . . . . . . . . . . . . . . . . . . . .426.35 –2.35 658.20 296.00 Hays . . . . . . . . . . . . . . . . . . . . . . 113.50* +1.20 125.30 82.50 Pennon . . . . . . . . . . . . . . . . . . . .620.50 –5.00 633.50 440.40 Thomas Cook . . . . . . . . . . . . . . .181.00 +0.50 277.20 167.50
Brit Insurance . . . . . . . . . . . . . .1045.00 +21.00 1046.00 709.00 Henderson . . . . . . . . . . . . . . . . .132.00 –1.90 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .357.90 +1.30 520.00 335.90 Travis Perkins . . . . . . . . . . . . . . .867.50* +34.00 915.00 647.50
British Airways . . . . . . . . . . . . . .279.90 –3.50 290.00 172.40 Heritage Oil. . . . . . . . . . . . . . . . .346.00 +1.20 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1461.00 –9.00 1507.00 900.00 TUI Travel . . . . . . . . . . . . . . . . . . 211.80 +0.30 313.90 189.20
British Amer. Tob . . . . . . . . . . .2438.00 –0.50 2490.50 1832.00 Hikma Pharma . . . . . . . . . . . . . .755.00 –1.00 813.00 452.20 Petropavlovsk . . . . . . . . . . . . . . .988.50* –21.50 1370.00 834.00 Tullett Prebon . . . . . . . . . . . . . . .397.10 –2.90 427.00 261.20
British Empire Tst . . . . . . . . . . . .483.00 +4.00 490.60 338.50 Hiscox . . . . . . . . . . . . . . . . . . . .353.80 –0.10 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .670.00 +2.50 775.00 550.50 Tullow Oil . . . . . . . . . . . . . . . . .1210.00* –26.00 1375.00 979.50
British Land . . . . . . . . . . . . . . . .508.50* +1.50 515.00 416.00 Hochschild Mining . . . . . . . . . . .476.50 +11.50 522.00 220.00 Premier Farnell . . . . . . . . . . . . . .283.00 +4.40 284.90 140.60 UK Commercial Prop. . . . . . . . . . .78.95 +0.25 84.90 71.00
Britvic. . . . . . . . . . . . . . . . . . . . .483.00 –10.80 518.00 341.50 Home Retail . . . . . . . . . . . . . . . .219.50 +2.90 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1634.00 +3.00 1717.00 984.00 Ultra Electronics . . . . . . . . . . . .1851.00 –36.00 1895.00 1198.00
Brown(N.) . . . . . . . . . . . . . . . . . .295.70 +3.70 297.90 204.80 Homeserve . . . . . . . . . . . . . . . . .470.00 –5.60 502.00 422.00 Provident Financial . . . . . . . . . . .787.50 –20.50 983.50 763.00 Unilever . . . . . . . . . . . . . . . . . .1812.00 –28.00 2024.00 1662.00
BSkyB . . . . . . . . . . . . . . . . . . . .705.50* +4.00 732.00 521.00 HSBC Hldgs . . . . . . . . . . . . . . . .660.00 –6.80 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .621.50 –19.50 665.00 475.70
BT . . . . . . . . . . . . . . . . . . . . . . .156.50 +1.80 159.00 108.40 Hunting . . . . . . . . . . . . . . . . . . .621.50 +12.00 661.00 429.10 PZ Cussons . . . . . . . . . . . . . . . .390.70 +8.70 395.20 231.70 United Utilities . . . . . . . . . . . . . .598.50 –2.50 620.00 429.20
Bunzl . . . . . . . . . . . . . . . . . . . . .751.50 –5.00 784.50 614.00 ICAP . . . . . . . . . . . . . . . . . . . . . .461.10 –6.30 485.20 291.70 Qinetiq . . . . . . . . . . . . . . . . . . . .106.90 –1.20 179.10 96.00 Utd Business Media . . . . . . . . . .662.50 +5.00 678.00 408.30
Burberry . . . . . . . . . . . . . . . . . .1005.00 +11.00 1065.00 513.00 IG . . . . . . . . . . . . . . . . . . . . . . . .536.00 –15.50 560.00 291.00 Randgold Resources. . . . . . . . .5960.00 –10.00 6755.00 3930.00 Vedanta Resources . . . . . . . . . .2169.00 +12.00 2967.00 1795.00
Cable & Wire Comms . . . . . . . . . .53.90 +0.80 150.00 51.95 Imagination Tech Gp . . . . . . . . . .440.60 +8.60 445.00 193.70 Reckitt Benckiser . . . . . . . . . . .3436.00 +50.00 3667.00 2971.00 Victrex . . . . . . . . . . . . . . . . . . .1330.00 +10.00 1355.00 726.50
Cable & Wire Wwide . . . . . . . . . . .69.15 –0.65 94.80 60.05 IMI . . . . . . . . . . . . . . . . . . . . . . .818.50 +5.00 837.00 410.00 Reed Elsevier . . . . . . . . . . . . . . .544.50 –8.00 566.00 454.60 Vodafone . . . . . . . . . . . . . . . . . .167.40 +0.40 169.10 126.50
Cairn Energy. . . . . . . . . . . . . . . .382.50 –35.10 497.60 306.80 Imperial Tobacco. . . . . . . . . . . .1989.00 –9.00 2159.00 1728.00 Regus . . . . . . . . . . . . . . . . . . . . . .83.10 –1.25 125.50 64.05 Weir . . . . . . . . . . . . . . . . . . . . .1605.00* –3.00 1652.00 639.00
Caledonia Invs . . . . . . . . . . . . .1774.00 –3.00 1797.00 1496.00 Inchcape. . . . . . . . . . . . . . . . . . .350.80 +1.50 358.00 235.00 Renishaw . . . . . . . . . . . . . . . . .1235.00 +3.00 1246.00 479.00 Wellstream Hldgs . . . . . . . . . . . .740.00 — 810.00 429.70
Capita . . . . . . . . . . . . . . . . . . . . .779.50 +1.00 829.50 693.00 Informa . . . . . . . . . . . . . . . . . . . .430.20 +8.40 439.40 263.30 Rentokil Initial . . . . . . . . . . . . . . .102.60 +1.80 140.20 91.15 WH Smith . . . . . . . . . . . . . . . . . .485.60 +1.80 551.00 392.20
Capital & Counties . . . . . . . . . . .149.00* +1.30 150.00 99.60 Inmarsat . . . . . . . . . . . . . . . . . . .633.50* +7.50 831.00 552.00 Resolution . . . . . . . . . . . . . . . . .259.80 +0.40 264.80 220.10 Whitbread . . . . . . . . . . . . . . . . .1729.00 –4.00 1744.00 1215.00
Capital Shopping Centres . . . . . .382.90* –2.60 523.50 300.10 Intercontl Hotels . . . . . . . . . . . .1207.00 –6.00 1244.00 762.50 Rexam . . . . . . . . . . . . . . . . . . . .322.80 –0.90 348.80 271.40 William Hill . . . . . . . . . . . . . . . . .167.70 –2.40 217.80 158.70
Carillion . . . . . . . . . . . . . . . . . . .350.70* –0.40 361.90 272.00 Intermediate Capital . . . . . . . . . .319.40 –2.30 331.50 233.50 Rightmove . . . . . . . . . . . . . . . . .787.50* +6.00 796.50 456.90 Witan Inv Tst . . . . . . . . . . . . . . . .484.60 +0.90 492.00 396.30
Carnival . . . . . . . . . . . . . . . . . .2768.00 +149.00 2937.00 1876.00 Intertek . . . . . . . . . . . . . . . . . . .1880.00 –10.00 1904.00 1136.00 Rio Tinto . . . . . . . . . . . . . . . . . .4159.00 +55.00 4200.00 2631.00
Catlin . . . . . . . . . . . . . . . . . . . . .348.00 +5.40 394.60 303.20 Intl Personal Fin . . . . . . . . . . . . .320.50 +10.00 324.50 181.40 RIT Capital Partners . . . . . . . . .1144.00 –9.00 1215.00 940.00 Wolseley . . . . . . . . . . . . . . . . . .1686.00 +35.00 1742.00 1155.00
Centamin Egypt . . . . . . . . . . . . .176.00 +5.60 194.40 103.50 Intl Power . . . . . . . . . . . . . . . . . .408.80* –0.40 415.40 248.20 Rolls Royce . . . . . . . . . . . . . . . .638.00 –3.50 645.50 434.50 Wood Group (John). . . . . . . . . . .430.00 –0.60 452.90 279.60
Centrica . . . . . . . . . . . . . . . . . . .321.60* –3.90 347.00 238.40 Invensys . . . . . . . . . . . . . . . . . . .310.90 –9.50 350.30 224.90 Rotork . . . . . . . . . . . . . . . . . . . 1711.00 –84.00 1906.00 1101.00 WPP . . . . . . . . . . . . . . . . . . . . . .732.00* –1.50 748.50 528.00
Charter Intl . . . . . . . . . . . . . . . . .776.00 –26.00 855.50 563.50 Investec . . . . . . . . . . . . . . . . . . .502.00 +1.50 565.00 411.50 Royal Bank Of Scot . . . . . . . . . . . .44.78 –1.40 58.95 28.25 Xstrata . . . . . . . . . . . . . . . . . . .1314.50 +25.00 1349.00 832.50
Chemring . . . . . . . . . . . . . . . . .3100.00 –6.00 3711.00 2551.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .67.35 –0.40 71.75 41.04 Royal Dutch Shell A . . . . . . . . .1995.00 –7.00 2068.50 1621.00 LONDON TOP 250 BY MARKET CAPITALISATION
Close Bros . . . . . . . . . . . . . . . . .768.00* –9.00 803.50 657.00 Jardine Lloyd Thompson. . . . . . .584.50 +1.50 604.50 420.70 Royal Dutch Shell B . . . . . . . . .1963.00 +10.00 1997.50 1550.00
Cobham . . . . . . . . . . . . . . . . . . .239.40* –5.60 278.60 205.50 Johnson Matthey . . . . . . . . . . .1931.00 –5.00 1957.00 1397.00 RSA Insurance . . . . . . . . . . . . . .133.10* –0.70 137.40 114.10 * Ex-Dividend † Suspended
COLT Group . . . . . . . . . . . . . . . .122.00 +0.50 144.20 107.70 JPMorgan Emerg Mkts . . . . . . . .605.00* +2.00 618.00 443.00 SABMiller . . . . . . . . . . . . . . . . .2008.00 –47.00 2103.00 1571.00
Compass . . . . . . . . . . . . . . . . . .520.50 –5.50 574.50 382.00 Jupiter Fnd Mgmt . . . . . . . . . . . .282.00 –1.00 294.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .272.40 –2.60 286.80 208.20 www.interactivedata.com

Weak bank US stocks

figures send firm ahead
FTSE lower of elections
THELONDON THENEW YORK
REPORT REPORT
W
EAK banks helped drive

U
Britain’s top share index to S stocks were little changed
a lower close yesterday, with yesterday as investors held
sentiment hit by a loss at steady under a raft of earn-
UBS’s investment bank and as ings in anticipation of next
investors locked in profits after sharp week’s US elections and likely
gains over the last two months. announcement of a new economic
The FTSE 100 closed 44.68 points, or stimulus programme from the
0.8 per cent, lower at 5,707.30, its Federal Reserve.
biggest one-day percentage drop since The broader equities market edged
25 August. The index has risen more most points off the index. BHP Greenland did not result in a com- the positive news that Britain’s econ- lower after weak revenue forecasts
than nine per cent since the start of Billiton, down 2.5 percent, was the mercial discovery, and another failed omy grew twice as fast as expected in from drugmaker Bristol-Myers Squibb
September. biggest laggard in the sector. to reach the target depth before the the third quarter. and chip manufacturer Texas
Banks were out of favour after Insurers fell, hurt by a note from end of the Arctic drilling season. Instruments. Bristol-Myers fell 1.5 per
UBS’s results and as uncertainty on BofA Merrill Lynch which downgrad- ARM Holdings was also on the back ANALYSIS l FTSE 5,707.30
cent to $26.74 and Texas Instruments
the global economic outlook kept ed the sector on valuation grounds foot, down 5.9 per cent, as strong 27 Oct shed 0.4 per cent to 28.86.
5,800
optimism on more cyclical equities in after a strong run over the past few results and a bullish tone from the Losses were curbed after The
check. Barclays and Royal Bank of months. Prudential lost 1.7 per cent. British chip designer were drowned Conference Board’s measure of US
Scotland both fell 1.4 per cent. “The market has had a good run out by a warning of faltering con- 5,600 consumer confidence rose more than
“(The FTSE) is pretty weak... the UBS since late August and it appears to be sumer demand from key customer expected. The Dow Jones industrial
figures have caused a lot of pressure, on an upward, sawtooth trend,” said Texas Instruments. 5,400 average shed 1.86 points, or 0.02 per
which has permeated (the wider mar- Peter Dixon, economist at Cruise company Carnival grabbed cent, to 11,162.19. The Standard &
ket),” said Joe Rundle, head of trading Commerzbank. the top spot on the FTSE 100 leader 5,200 Poor’s 500 Index slipped 0.99 points,
at ETX Capital, said. Cairn Energy topped the blue-chip board, up 4.3 per cent, or 0.08 per cent, to 1,184.63. The
Miners, which notched up good fallers’ list, shedding 7.2 per cent. The Equities showed almost no reaction 5,000
Nasdaq Composite Index gained 7.27
gains in the previous session, took the oil explorer said one of its wells in to data early in the session showing 26 Jul 13 Aug 3 sep 23 Sep 13 Oct points, or 0.29 per cent, to 2,498.12.
 28 Markets & Investment | Foreign Exchange
A BETTER WAY
TO PLAY THE
POUND RALLY
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
Y
ESTERDAY’S UK GDP data must have
impressed even the most ardent cable
bulls after it came in at twice the market
consensus, increasing to 0.8 per cent ver-
sus 0.4 per cent expected. Growth was strong
across the board and overall, the third quarter
GDP grew at 2.8 per cent on an annualised
basis – its strongest in nearly three years. The
news instantly sent sterling higher towards the
$1.5900 figure. The conventional wisdom in the
FX market is that the GDP report will prevent
the Bank of England from even considering any
extra QE for the time being. It is hard to argue
with this and the cap on any further monetary
stimulus should prove supportive for the pound.
Despite the latest optimism, I still believe
the UK economy faces considerable challenges
as we head into the final quarter of the year.
Government austerity measures along with a
moribund housing market are likely to weigh
on consumer sentiment and temper growth
into the year-end. The curious aspect of yes-
terday’s GDP report was how much at odds it
was with other data points on the UK econom-
ic calendar. In October, the economy produced
weak retail sales, trade and sentiment survey
numbers. Therefore, while the pair has scope
to run to $1.6000 I remain sceptical that the
rally can extend much beyond that point.
Nevertheless, the benefit of the doubt must
go to pound longs for now. If UK data shows
further improvement over the coming weeks,
sterling could stage a surprisingly strong rally
forcing a reassessment from longer-term
pound bears such as myself. In the meantime,
a smarter way to play the pound rally may be
through the euro-sterling cross. Having just
returned from the continent I believe the mar-
ket is grossly underestimating the negative
economic impact of the latest political turmoil
in France. As traders begin to appreciate the
cost of last week’s strikes, the euro-sterling
pair should see further downward pressure.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
YOU’RE NO STRANGER TO SPREAD BETS.
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CITYA.M. 27 OCTOBER 2010
It is about time for the
dollar to reverse course
The only way is up
for the greenback,
says Daniel Knowles
T
HE US dollar has been the market’s
whipping boy for some time now.
For the last three months, the
world’s reserve currency has per-
sistently fallen against other currencies
and most commodities, in a pattern
described by one analyst as “everything
up/dollar down”. With yields on dollar-
denominated assets lower than ever
before, lots of traders are holding very
short positions, betting that the carry
trade, where investors borrow from the
US and then invest in higher yielding
assets, will continue.
Some are beginning to question
whether that it can, however. The G20
meeting last weekend initially prompted
further selling of dollar assets as traders
decided that nothing really had changed.
That has, however, now tailed off and the
dollar is now looking rather flat, and
which way it will go is questionable.
According to Adrian Schmidt, an analyst
at Lloyds TSB, the markets are “leaning
towards a weaker dollar” but ultimately,
they are waiting out events.
At the top of the events calendar is the
meeting of the Federal Reserve commit-
tee meeting next Wednesday, followed by
the unemployment data due to be The dollar has taken
released on 5 November and then by the an almighty dive
G20 meeting on 10 November. According
to Schmidt, the biggest fear is that any Picture: GETTY
one of those events will deeply unsettle
markets, leading traders to suddenly
unwind risky carry trades and push the many may reverse course. the signal to eat, and it is due to come
dollar sharply back up again. There were some signs yesterday that next week.
That seems relatively unlikely, howev- that was already starting to happen, with
er. A bigger question is whether the mar- the dollar nudging up and everything ANALYSIS l The trade weighted index for
kets have accurately priced in the effects else nudging back down again. the US dollar over the last three months
of quantitative easing. Michael Hewson, Effectively, the dollar has been acting like 77
of CMC Markets, says that, if anything, a fat kid on a seesaw – as it has fallen, it
markets have probably been too aggres- has pushed everything else up. The other 76
sive in selling the dollar. When a second end of the seesaw has now got quite
75
round of quantitative easing was first heavy, and equities and other currencies
suggested, the euro was at $1.26 – it is may be due for a correction. 74
now at $1.40. This week the yen hit a 15- It would hardly be that surprising. For
year high against the dollar. So far, three months, traders have been very 73
traders have treated the greenback as a bearish on the dollar. They have stacked
particularly bad bet. With a little bit up the short positions like pancakes at 72 Source: Bloomberg
more certainty about monetary policy, breakfast. Now they are just waiting for Jun Jul Aug Sep Oct
Get started at
gftuk.com.
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 30 Investment | Fund Management CITYA.M. 27 OCTOBER 2010

THE
Little steps of TIPSTER
THE AUSSIE

growth should LOOKS LIKE

A GOOD BET

T
HE Australian dollar-US dollar is still
tentatively trading below parity. As one

keep QE at bay of the few advanced economies to avoid

a recession, the Australian economy
should benefit from high demand for raw
materials, especially from China. Bulls expect
the Aussie to break through to parity soon, so
it may be a trade for the optimistic. Capital
Spreads quotes a spread of $0.9892-
The success of sterling will depend on the $0.9894.
Earlier in the week euro-sterling looked
pace of the recovery, writes Donata Huggins ripe for profit taking. After strong UK GDP
figures yesterday, however, sterling is up,
and the euro no longer looks so healthy. Tax

T
HE UK economy had a good day yes-
terday. GDP data came in at double
what the market was expecting and
the rating agency Standard & Poor’s
said we no longer face the risk of a down-
grade. The good news got instant reac-
tions for sterling, gaining one per cent
against the euro and a cent and half
against the dollar. But is this enough to
keep a further round of quantitative eas-
ing (QE) at bay?
Michael Hewson of CMC Markets thinks
so: “QE is certainly less likely in the short-
term. The BoE will be acting prematurely
if they thinks that further QE can be born
out of these growth figures – the figures
are a knock for the doves.”
Pessimists however think that this
quarter’s growth is overly dependent on a
temporary spurt in the construction
industry. Paul Robson of RBS does not
think that the impressive GDP headline
number will be enough to stop the Bank
of England (BoE) opting for more QE: “I
don’t think the construction industry
can sustain the same rate of growth in the
next quarter. The Bank will focus on
things such as the service sector figures
because it is the largest sector in the UK.
So far those figures have been really
weak.”
“The biggest signal for more QE is
going to be the purchasing managers
index (PMI) release ahead of the BoE meet-
ing,” says Robson. He reckons only break-
ing the 53.0 threshold will hold the Bank
off more intervention. RBS Economics
are still calling for QE this November.
“Those calling for QE are doom mer-
chants,” retorts Hewson. “Sure, fourth
quarter predictions point downwards,
but they do everywhere. We’re going to
experience a few more years of sub-par
growth while investors pay down their
debts.”
But both Robson and Hewson agree
that the Eurozone is in for a rough ride
in the next quarter. Indeed, RBS
European Economics expect a meaning-
ful slowdown with a 40 per cent chance
of renewed contraction. “I just don’t
think that Germany can prop up the
periphery for another quarter,” says
Hewson. This could offer sterling a rela-
tive boost. Their target numbers however
vary. Robson thinks sterling will stay clos-
er to £0.90 than £0.88 to the euro, while
Hewson thinks that would be overvalued.
On cable, analysts continue to draw
comparisons between the UK and US situ-
ations. The fundamentals for both are so
alike at moment that they often trade in
tandem versus the rest of the market.
Sterling traders should look for further
small steps towards stability and growth
in the UK regardless of where they sit in
hikes and government cuts are coming
though, so sterling may lose its lustre again.
It would seem wise to get in on the euro
while it’s cheap. IG Index offers a spread of
£0.8780-£0.8782.
For the moment however, the UK econo-
my is bubbling. S&P upgraded their rating on
the economy from negative to stable, boost-
ing the pound. That ought to lead to lever-
aged traders picking up sterling-US dollar
in the hope of further falls in the dollar, so it
may be a wise bet. If sterling gets past
$1.5900, then the next big benchmark is
the BoE debate. These steps will give the A sterling effort $1.6050. Be wary of chasing the dollar too
strongest hints on the likelihood of fur- far down, however. With ongoing uncertain-
ther QE. Should the Eurozone economy Picture: GETTY ty about what the Fed will do next week, it
suffer and economic news from America may yet surprise. ETX Capital quotes a
continue to be bad, sterling could be in spread of $1.5854-$1.5856.
for a rally. Indeed the Fed may do a lot. Yesterday
the dollar staged something of a fight-back,
ANALYSIS l The performance of sterling against the euro this year breaking a month long downwards trend
against the yen to push to a high of ¥81.40.
1.22 € It has also been recovering against the
1.20
Swiss Franc, breaking through a four month
long downwards trend. There is also some
1.18
speculation that the Bank of Japan might try
1.16 to intervene to push up the Yen. The next
1.14 target to look for is SFr0.9950 against the
Swissie and ¥81.65 against the Yen Spread
1.12
Co offers spreads on US dollar-Swiss Franc
1.10 of SFr0.9841 – SFr0.9844 and on US dollar-
1.08 yen of ¥81.265–¥81.295.
Nov 09 Jan 10 Mar 10 May 10 Jul 10 Sep 10 Daniel Knowles

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
JOEL KRUGER JOHN KICKLIGHTER ILYA SPIVAK

My pick: Buy dollar-yen at ¥79.50
Expertise: Classic technical analysis
Average time frame of trades: 1 month-12 months
This market has been under intense pressure over the past few months,
with the price dropping relentlessly to multi-year lows and now quickly
closing in on a retest of the record lows from 1995 at the ¥80.00 level.
Despite the oversold technical studies, we cannot rule out a test and
break below the critical barriers at ¥80.00. At this point, any further
declines should be limited, with the greater risk of a major upside correc-
tion back in favour of the US dollar. Target ¥100 with a stop at ¥73.50.
My pick: Short euro-dollar from $1.3960, long euro-sterling above £0.8935
Expertise: Fundamental and technical analysis with average time
Average time frame of trades: 1 day-1 week
A late entry on euro-dollar encouraged me to hold off on the short I draft-
ed last week. Instead of cancelling my trade on the sharp reversal after
Tuesday, I decided to go short at $1.3960 instead as the reversal momen-
tum cooled, placing a stop at $1.4110. As for my Aussie dollar-New
Zealand dollar reversal, the Aussie dollar’s constant headwinds stopped it
out. Elsewhere, I am looking for a euro-sterling close above £0.8935 for a
long with an initial stop and target of 75 points.
My pick: Short euro-dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 week-6 months
Euro-dollar looks to be carving out a diamond top below the $1.42 figure,
a juncture that has acted as a significant upside and downside barrier
since the second half of 2008. This is a rare bearish reversal formation
that typically precedes a large-scale move lower. Confirmation is still lack-
ing and I look for a daily close below $1.3804 – the 23.6 per cent
Fibonacci retracement of the steep advance from early September – to go
short. I will target resistance-turned-support at $1.33, August’s swing top.
CITYA.M. 27 OCTOBER 2010 Investment | Fund Management 31

Credit where it’s due: a choice asset

class in a low growth environment
The new normal While growth remains
on a precarious path,
will be supportive credit marches higher

for corporate bonds, Picture: GETTY

writes Jessica Mead

C
REDIT is tipped to become one of the
hottest asset classes of the next
decade as the world struggles to
achieve little more than mediocre
economic growth and deals with the
throbbing hangover of the financial crisis.
Fund managers are increasingly opti-
mistic about the long-term outlook for
credit and see a wealth of opportunities in
the asset class – as the baby-boomers hit
retirement, the demand for income will be
higher than ever. In the wake of the finan-
cial crisis and in a low interest rate, low
yield environment, income has become
harder to get from asset classes such as
equities and government bonds.
Speaking at the Thames River and F&C
Investments Annual Conference earlier Liontrust Asset Management’s head of IN FOCUS | FIXED INCOME GLOBAL STERLING BASED SECTOR SOURCE:MORNINGSTAR
this month, Thames River’s head of global fixed income Simon Thorp agrees that the
credit Stephen Drew said credit was one of “new normal” is a conducive environment UK REGISTERED 25/10/07 RANK LATEST DOMICILE PORTFOLIO MANAGEMENT
the few asset classes that will fill this for corporate bonds since deleveraging INVESTMENT FUNDS: – PORTFOLIO MANAGER GROUP
income void. “If investors want high single- caps equities’ upside and investors need FIXED INCOME GLOBAL 25/10/10 SIZE (£M)
to double-digit returns but with relatively the certainty of an income-yielding asset. STERLING BASED % CHG
low risk, that points to credit,” he said. “Companies are in very good financial
TOP 10
In Drew’s opinion, credit will also do shape from a credit point of view. There’s Investec Global Bond A Inc Net GBP 75.66 1 150.13 UK Russell Silberston Investec Fund Mgrs (UK) Ltd
well from corporates returning to the cap- little to worry about; default rates are very Old Mutual Global Strategic Bond Acc 72.94 2 336.71 UK Stewart Cowley Old Mutual Fund Managers Ltd
ital markets rather than seeking financing low.” Thorp says. Default rates are expected M&G International Sovereign Bond A Inc 71.24 3 41.81 UK Mike Riddell M&G Group
from banks as well as the deleveraging of to fall over the next year from 4 per cent
Standard Life Oseas Bd Idx Trk I 63.65 4 N/S UK Standard Life Investments
bank balance sheets, which has been accel- now to just 2 per cent, compared to default
erated recently by Basel III. He also high- rates of close to 13 per cent only a year ago. Newton International Bd GBP 59.25 5 751.54 UK Paul Brain BNY Mellon Asset Management
lights credit’s relative attractiveness in a Thorp believes the biggest set of opportuni- M&G Global Macro Bond X Inc 59.21 6 90.6 UK Jim Leaviss M&G Group
low growth environment: “Credit doesn’t ties lies in financials since the banking sec- SWIP Global Bond Plus A Acc 58.91 7 39.0 UK Guy Skinner Scottish Widows Inv. Partnership Ltd
rely on buoyant growth and does well in a tor will have to recapitalise around $4 Baring Global Bond Trust GBP 58.57 8 177.7 UK Colin Harte Baring Fund Managers Ltd
0-3 per cent global growth environment.” trillion, but he warns that the regulatory Threadneedle Glbl Bd Ret Net GBP 56.99 9 339.2 UK Martin Harvey Threadneedle Investment Services Ltd
Ralph Gasser, senior product specialist goalposts are permanently moving. BlackRock Global Bond A Inc 54.81 10 443.24 UK Andrew Gordon BlackRock Fund Managers Limited
fixed income at Swiss & Global Asset Good short opportunities remain diffi-
Management, agrees: “Unlike equities or cult to unearth says Thorp, but he notes BOTTOM 10
commodities, credit investments are not a that any divergence from the path of frag- Lazard Sterling High Quality Bd Retail 16.21 24 19.91 IRL Thomas Hanson Lazard Fund Managers (Ireland) Ltd
leveraged play on economic expansion. ile recovery could make life difficult for Scottish Widows Cautious A Acc 16.02 25 200.32 UK Roddy MacPherson Scottish Widows Unit Trust
They do not necessarily need strong companies with weak margins and refi-
growth to deliver their full potential.” nancing risk. Credit is asymmetric, it has a Managers Ltd
Although the International Monetary greater response to bad news, he explains. Baring Absolute Return Global Bond A Inc 14.22 26 174.34 UK Colin Harte Baring Fund Managers Ltd
Fund (IMF) currently forecasts world The new normal will characterise the Ashburton Global Sterling Ttl Ret Bd PC 13.03 27 28.01 JER Nick Lee Ashburton (Jersey) Limited
growth to be 4 per cent in 2010 and 4.2 per next decade and against this backdrop of Ashburton Replica Sterling Cash & FI 11.12 28 13.12 JER Nick Lee Ashburton (Jersey) Limited
cent in 2011, activity will expand by just 2.7 low growth and low yields, credit will City Financial Strategic Glbl Bd A Acc 9.34 29 12.27 UK Mark Astley City Financial Unit Trust Managers Ltd
and 2.2 per cent this year and next in the remain an asset class of choice for income-
advanced economies. seeking investors of all sizes. BlackRock International Bond 8.51 30 18.44 IOM Brian Weinstein BlackRock Inv Mngers (CHI)
JPMorgan Global (ex-UK) Bond A Inc 7.57 31 59.54 UK David Tan JPMorgan Asset Management (UK)
ANALYSIS l Investment grade credit: median excess return (quarter-on-quarter annualised) Limited
2.0 % 1 to 2 RWC Cautious Absolute Rate & Ccy A GBP 6.85 32 45.58 LUX Peter Harrison RWC Partners Limited
1.5 2 to 3 CF IM Income A 6.54 33 N/S JER Richard Potts IM Asset Management.    (Capita)
0 to 1 3 to 4
1.0 >5 Mean/Count 37.3 33 658.1
0.5 3 to 4
<-3 -3 to 0
0.0 IN FOCUS | FIXED INCOME GLOBAL STERLING FUNDS
-0.5
-1.0 Real annualised quarterly GDP growth (%) The above table shows the top and bottom 10 funds in the Fixed Income Global Sterling Based sector that have a track
performance record of at least three years. These funds invest at least 90 per cent of their assets in the fixed income sec-
-1.5
tor and have a majority held in investment grade bonds or equivalent. All of the top 10 funds are UK-domiciled. There are
-2.0 33 funds in the sector, which have an average three-year performance of 37.3 per cent and an average fund size of
-2.5 £658.1m. All funds have managed to deliver positive returns over the past three years.
Source: Thames River
-3.0

FUND MANAGEMENT NEWS

BY DANIEL KNOWLES
COMMERZBANK LAUNCHES CHINA FUND
Commerzbank has unveiled a new Chinese
equity fund, designed explicitly to reduce
volatility without minimising returns.
Commerzbank has partnered with China Asset
Management Co to launch the Volatility Target
fund, which will benefit from active manage-
ment by experts on the ground in China.
Structured as a Ucits Sicav, the fund has a tar-
get volatility level of 20 per cent. The bench-
mark is MSCI China and the annual fee for
Chinese equities are less calm Picture: GETTY institutional investors is 1 per cent.
HIGH NET WORTHS REGAIN RISK APPETITE
Private banking clients are investing more in
small and medium enterprises (SMEs),
according to research from Hotbed. Forty-four
per cent of private banks expect to increase
funding to private equity over the next year,
reflecting an increased tolerance for risk.
As the possibility of a double-dip recession
recedes, the low cost of equity in small busi-
nesses makes them relatively more attractive.
Other alternative assets such as hedge funds
and commercial property are also in demand.
OVERLAY AND BNP UNVEIL CURRENCY INDEX
Overlay Asset Management and BNP Paribas
have launched a new index designed to hedge
currency risk and to provide a benchmark for
currency exposure. The index tracks the per-
formance of the 15 largest currencies, with
allocations weighted by GDP adjusted for pur-
chasing power parity. Emerging market cur-
rencies make up 40 per cent of the index,
allowing investors to hedge against strong
growth. Previously, many investors have neg-
lected the currency markets as a hedge.
 City Focus
32
Banks will look more closely
at law firms, post-downturn
After the collapse of
Halliwells, potential
investors demand
more transparency
FERGUS PAYNE
R
ECENT trading results published by
a number of the large law firms
might suggest they have weathered
the economic turmoil pretty well.
However, much of this robust performance
has been achieved through cost-cutting.
This is likely to worry banks and other
potential backers of law firms.
Difficult trading conditions have put
financial management under the spotlight
in the legal sector – fee rates are under
pressure and cash collection is a higher pri-
ority than ever before. The high-profile col-
lapse of Halliwells and accountant Vantis
have heightened worries for lawyers and
bankers. Such scrutiny comes at a time
when we are also witnessing significant
change in the legal marketplace: mid-sized
firms are subject to increasing competi-
tion and the challenge of true differentia-
tion; the problems of the high street firm
are well documented, not least with the
annual renewal of professional indemnity
insurance; and we are less than a year
away from the “big bang“ of the Legal
Services Act, when new investors will be
able to enter the sector and make a play for
an all commoditised legal service.
It is no surprise that rumours continue
to circulate about the number of law firms
in financial difficulty and the level of
scrutiny they are being placed under by
their banks, with talk of some being in
“intensive care”. This leads to the big ques-
tion for many in the legal sector – will
banks become more reluctant to lend to
law firms?
Traditionally, individual partners were
jointly and severally liable for the firm’s
borrowing (and all other liabilities) and
banks had recourse to the personal assets
BRIEFS | LEGAL NEWS
JONES DAY TO BRAZIL
Law firms’ race into the BRICs contin-
ues with the announcement that
Jones Day is to open an office in Sao
Paulo, its second in South America
after Mexico City. The office will
focus on supporting global clients
with inbound investments into
South America and provide legal
counsel to Brazilian companies in
their international operations. The
focus of the work will be cross-border
M&A, private equity, banking and
finance and project finance/infra-
structure transactions in energy and
capital markets.
| Law
of those individuals, with the result that
law firms enjoyed favourable banking
terms. But that was before the advent of
the limited liability partnership (LLP).
Many firms converted to LLP status at a
time when trading conditions were benign
and banks did not typically require securi-
ty from the business or guarantees from
the partners.
Market conditions are no longer so
favourable and, like most other businesses,
many law firms have experienced an
increase in the cost of borrowing and the
introduction of arrangement fees. For
some smaller practices the concern will be
whether unsecured credit will continue to
be available, as banks look to require per-
sonal guarantees from individuals where
the firm has incorporated as an LLP or a
company, or seek security over the firm’s
assets. At the same time, banks are looking
for firms to provide more regular financial
information on their performance and
projections and more protection by way of
financial covenants in their facility
arrangements. Lenders may have expected
that firms will address any hard core debt
and at the same time bring overheads
LINKLATERS IN BP WELLS DEAL
Linklaters’s relationship with BP has
been under much scrutiny in recent
times, with Freshfields and others
taking over some of the oil compa-
ny’s work. But Linklaters seems to be
back in favour, and advised BP on the
recent sale of its interests in four Gulf
of Mexico oil fields to Japanese trad-
ing company Marubeni. The
Linklaters team was led by US corpo-
rate partner Josh Berick in New York,
assisted by US corporate associate
Colin Greenspon, also in New York.
The deal will be completed in early
2011, says BP.
Solicitors will be under much tighter control.
under the magnifying Some firms have a little respite in the
glass. form of an increasing number of alterna-
tive sources of short-term funding for spe-
Picture: ALAMY cific areas such as professional indemnity
insurance, tax and VAT. But the conse-
quences of a tougher attitude from the
banks include the possibility that individ-
uals may be more reluctant to become
partners or join firms where there is any
personal liability for borrowing. It is likely
that all individual partners, and prospec-
tive partners, will become more con-
cerned that they have access to regular
financial information from the firm’s
management team.
The legal sector – and particularly well
managed and profitable firms – is still
attractive to lenders, but it faces chal-
lenges. Having seen a major firm collapse
owing a significant amount to its bankers,
if banks are to be persuaded not to impose
far tougher regimes on law firms, man-
agement teams will have to give greater
priority to internal financial discipline
than ever before.
Fergus Payne is partner and joint head of the
partnerships and LLPs group at Lewis Silkin LLP
CC ELECTION STILL ONGOING
Lawyers at Clifford Chance still
don’t know who their next senior
partner will be after no clear winner
emerged from this week’s first
round of voting. London partner
Malcolm Sweeting, German M&A
partner Daniela Weber-Rey and tax
partner Jonathan Elman all failed to
land 50 the per cent of the votes
required to win the position out-
right. Another round is expected to
take place in the next few days, but
it is unclear yet whether all three
current candidates will stay in the
race.
CITYA.M. 27 OCTOBER 2010
Desperate
partners spell
redundancies
MATTHEW RHODES
M
CGRIGORS, a top Scots law firm,
stunned the profession last week by
announcing the first market-driven
redundancies in the sector in the last
18 months. Some 40 staff – most of them
lawyers – will lose their jobs. McGrigors has
tried pretty much everything to avoid this: pay
cuts, enforced unpaid holiday etc. But there is
still not enough work to meet the wage bill.
McGrigors is not alone in this, and corporate
solicitors throughout the City are worrying
that they will be the next to get the tap on the
shoulder. And with good reason, given the
unprecedented pressure on law firm profits.
Most firms tend to divide their revenue into
one third for lawyers’ salaries, another third
for offices and support staff, and the rest for
the partners. This works very well in a boom
but rather less so in a bust, given that a rela-
tively small fall in turnover can have a cata-
strophic effect on what partners take home.
Corporate boutique SJ Berwin saw its
turnover fall 14 per cent in the midst of the
credit crunch. Given that this was after the
firm’s best year in history, it was hardly a shab-
by result. But it meant a 50 per cent fall in
partner profits, and the firm has been trying to
secure a US merger ever since.
Law firms have done all they can to avoid this
and keep their profits high. Eversheds has gone
through five rounds of redundancies – all bar
one paid at statutory minimum. DLA Piper has
gone through three – again, all at the statutory
minimum. This is a short term fix. Ultimately
there is far less law around, and buyers can
afford to be picky. Top firms and mid-sized
outfits with a USP will be fine, although they
will have to work harder for their wedge. The
mid-market may find itself in dire straits.
Firms have to accept that the days of paying
partners over half a million a year for doing
leases for Boots are gone for good. Partners
will have to get used to their drawings reflect-
ing the value that they add to the deal, and
many will see their pay tumble. But before
they are forced to accept this unpalatable real-
ity they will cut everything possible in a bid to
artificially inflate their profits. McGrigors will
not be the only redundancies this side of
Christmas.
Matthew Rhodes is a director of RollOnFriday
MACFARLANES NUANCES ROLES
City law firm Macfarlanes is to intro-
duce a new job-title of senior associ-
ate for solicitors who are six years or
more qualified who have taken on
some partnership responsibilities.
Partners will recommend associates
for the roles, which the firm insists
are not a “holding pen” for future
partners and that it will still be possi-
ble to go from being an associate to a
partner. Many firms face an increas-
ing problem with a bottleneck at the
top of the firm, with too many associ-
ates fighting for too few partnership
spots.
 Lifestyle
William Asprey:
the luxury king’s
baby turns 10
William & Son’s
owner on a decade of
the finest British trade.
By Zoe Strimpel
I
N A WORLD in which global luxury
giants like LMVH-owned Louis
Vuitton have to close shop an hour
early to preserve stock – so great is
demand – it’s hard to imagine how a sin-
gle family-owned shop in Mayfair can keep
its head above water.
And yet, thanks to the intu-
ition and hard work of its
founder, William Asprey,
William & Son has
shown how it is done.
Now celebrating its
tenth anniversary,
the Mount Street
stalwart – com-
posed of a gun
shop and a luxury
goods store that
sells the finest jew-
elery, silver, glass
and leather – is the
go-to for the King of
Bahrain, Princess Marie-
Chantal of Greece and
almost any oligarch you care
to think of.
William & Son’s secret lies – in part – in
the DNA of Asprey himself. Before it was
sold to Prince Jefri, brother of the Sultan
of Brunei, in 1995 (and then sold
onwards), Asprey was heir to the Asprey
jewellery dynasty, and worked with his
father at Asprey and Garrard’s palatial
Bond Street shop. (He left because he was
“bored and unhappy” after it stopped
being a family business). So not only is he
the would-be inheritor of a long line of
true British luxury (217 years of it to be
precise), his family has been successfully
selling the British dream for centuries – a
knack that not everybody possesses, or has
the credentials to do.
Asprey’s Britishness oozes from his
clipped syllables and understated way
with words, his measured sentiments; but
more importantly, it’s there in his dedica-
tion to homegrown craftwork, his sense of
OUT OF OFFICE: HALLOWEEEEEEEN
ZOE STRIMPEL
personal duty to keeping British manufac-
turing alive. “In this country it’s hard to
find manufacturers full stop – good, bad
or indifferent,” says Asprey, with his trade-
mark frankness. “Over the past few years,
the ones that remain have been pushed
into making goods to a lower price. But
when someone comes in and says: ‘I want
things heavier, better quality’, they’re
taken aback. But they usually rise to the
occasion, especially with our help.” Does it
feel like a one-man battle to keep British
manufacturing alive? “Well, we have to
make sure we keep the ones we need; to
encourage them to take on apprentice-
ships. It is a struggle, though.”
It’s certainly not a struggle Asprey, near-
ly 45, is prepared to stint on. “We’re
virtually the last British-owned
luxury goods company and
we’re very proud of it.
The quality of British
craftsmanship is just
better and this
stands for a lot over- Above: Asprey looks
seas.” bright-eyed ten years
Having reached into William & Son.
the 10-year mark – Left: the shop on
turning a profit Mount Street.
each year – what
does Asprey feel?
Jubilation? Pride?
Surprise? No: rather
it’s that measured
pragmatism again, that
patriotic reserve.
“Hopefully it’s the first of
many. It’s all gone by in a bit of a
blur. But basically it’s business as usual.”
As for what that business is, Asprey
repeats again and again that the constant
challenge he faces is finding the best of
everything. “We’re continually finding
In part, William & Son’s secret lies in the DNA
of Asprey himself – his family has successfully
sold the British dream for centuries
new products and new ideas but it’s a bat-
tle. You really have to keep your eye on the
ball, keep an eye out.”
What about growth? At the moment,
William & Son occupies a handsome dou-
ble frontage on Mount Street – Mayfair’s
most sought after address. It’s currently
Last year, Zippos SPOOKY CINEMA POP-UP IN RICHMOND
Circus popped up on Join the Lexi Cinema at a Zippos Circus tent
Hampstead Heath at the Old Deer Park in Richmond for a show-
with Cinema Paradiso. ing of Edward Scissorhands. Beware of the
super-spooky infestations of creatures on top
of the tent, and gruesome-looking cast of
characters hanging about, including ghouls at
the bar. An Edward Allen Poe poetry booth
will also be provided. Ooh. 31 October in
Richmond Old Deer Park, film at 7:45.
www.wegottickets.com
/event/95972.
IS WEB SEARCH
GETTING TOO FAST?
IN GADGETS,
TOMORROW
ravaged by roadworks, but is home to
Carolina Hererra, Christian Louboutin
and the A-list’s favourite restaurant,
Scott’s. Despite its prime Mayfair spot, one
rather expects Asprey to capitalise on the
Chinese and Indian emergence and head
east, opening shops all over the world.
Again, no. In order to honour the compa-
ny’s USP – intensely high quality and
hand-made goods – it would be impossible
to stock numerous locations. “The prob-
lem with what we do is that it’s small
quantities and high quality. It’s hard to
stock lots of places. But the world has
become much smaller place – people trav-
el and come to us; and we go to them too.
We spend a lot of time visiting potential
clients.” London’s emergence as a centre
of finance has “been very influential in
KING OF LUXURY GOODS | WILLIAM ASPREY’S CV
Born into the Asprey family in 1965. Attended
Monkton Combe, a Christian independent
school for boys in Bath. On leaving with the
ambition to work in hospitality, applied to the
famous Ecole Hôtelière de Lausanne only to find
a nine-year waiting list. Took up a four year
commission in the Army, serving with the Royal
Green Jackets. Joined the family firm, Asprey &
HALLOWEEN IN ST JAMES’S
Festivities will include luxury caterer Peyton
& Byrne farmers’ market from
11am-3pm, pumpkin carving
demonstrations, cake deco-
rating classes and free craft
activities for children. There
will also be a “scariest pump-
kin” competition and a Ghosts
and Legends guided walk. For
timings, see www.royal-
parks.org.uk.
33
bringing in people from abroad.” William
& Son’s clientele are united by a love of
British quality on one hand, and diverse
backgrounds on the other – some are
English to the core, many are not. “Our
clients range from an Algerian dishwasher
[who came in to celebrate his British natu-
ralisation by buying a passport holder] to
heads of state.”
But again, that nagging issue of globali-
sation. What is the future of real British
luxury – is there even one? “I think there
are huge opportunities,” says Asprey.
“People like British goods. At the end of
the day, people like quality. Great quality,
British made – what’s not to like?” Indeed.
Here’s to another ten years. William & Son,
10 Mount St, W1K 2TY. Tel: 020 7493 8385,
www.williamandson.com.
Garrard, but left in 1999 after tiring of the new
management and vision. Started trading under
the name William R Asprey Esq in 2000 but
was taken to court by Asprey & Garrard’s new
owners for copyright infringement. Lost, but on
the upside, William & Son was born and counts
numerous members of Arab royalty among its
most devoted clients.
FORTNUM’S PUMPKIN CONTEST
Fortnum & Mason’s first pumpkin carving com-
petition ever will take place on Friday.
All generations are invited to take
part. Special Halloween prizes
include the Golden Pumpkin Prize:
a £1,000 Fortnum & Mason
hamper, and a unique eau-de-nil
broomstick (with plaque). 4-8pm,
29 Oct. Tickets are limited, so
reserve your place early by calling
0845 300 1707.
 34 Lifestyle
The Dorchester comes to Berkshire
The long-awaited
Coworth Park is
finally open. It
wowed Zoe Strimpel
P
ARK LANE is the anchor of the
Dorchester Collection, which has
outposts in Beverly Hills, Milan, New
York and Paris. The Collection has
steadfastly represented the epitome of city
centre luxury, proudly urban.
Until now. The opening of Coworth Park
is the group’s first foray into the country-
side, and where better than the rolling polo
fields of Berkshire – perfect for the monied,
horsy elite likely to frequent it, perfect for
people who want the country within an
hour of Zone One.
We don’t own a car but felt we ought to
arrive in one befitting our destination, so
we rented a (modest) BMW. Our efforts paid
off: Coworth Park is splendid. The opulence
of the Dorchester and the Plaza Athénée
has been transferred with just a smattering
of contemporary brashness to this new
structure. The “mansion house” looks is
equal parts Bel Air and Berkshire – like a
cartoon fantasy of a great British house.
Inside it’s all airy light, huge windows and
daring sculpture. Reception consists of two
smart ladies behind Macbooks, while
accommodation is a string of stable-style
blocks set away from the house (40 rooms)
and inside the mansion house (30 rooms).
The astonishingly good service began
immediately: we were whisked the short
distance to our split-level suite in the stable
block in a golf buggy, laden with blankets
and umbrellas. It was supremely fun. And
the best part is that the golf buggy is at
your service whenever you want to go any-
where: just call guest services and two min-
utes later, your ride awaits you.
The distances between stables, spa and
mansion house aren’t huge but they aren’t
suitable for those wearing little dresses and
high heels – the dress code I recommend
for dinner or drinks here. Jeremy Kyle and
entourage were on the table next to ours at
dinner, and Cheryl Cole has already dined
(the X factor cast was based here for a
week). The dining room is glam but in that
distinctly new British way. There is a touch,
ever so faint, of the chav – the décor has a
great deal of “wow”, the tasting menus are,
perhaps, over-fussy, though Michelin star-
A home away from home in Poland’s loveliest city
Antique Apartments
made Neda Heath’s
stay in Krakow easy
and comfortable
I
T is a pity that ancient and beautiful
Krakow is no longer the capital of
Poland – sometime towards the 19th
century Polish kings veered towards
Warsaw for business but they always asked
to return to Krakow for their final resting
place, as did many famous Polish saints,
poets and bishops. These days, Krakow is
near enough fully renovated with all its
ancient buildings restored with such beau-
ty as to put many cities in Western Europe
to shame.
As the autumn and winter months
loom, Krakow is a quick and easy city break
that won’t blow your Christmas budget –
winning chef John Campbell has his The back of Coworth
moments of creativity, too. They’re certain- Park’s Mansion House
ly expensive, at £80 a pop. and a bedroom.
The show-stealer is the spa. It is sensa-
tional: atop a hill, full of windows, the large
infinity pool in the basement like a super-
sleek bunker wedged into the hill. I loved
the pool: lit with purple light it made each
splash a movement of colour. Best of all
were the presence of seven or so large slabs
of purple quartz facing the pool, and the
music that was pumped under the water,
audible only to those taking a dive.
The spa offers a full range of treatments
and has the same glamour as the new
Dorchester one: the futuristic sculpture,
dramatic ultraviolet lights, stunning relax-
ation room that’s all about pampering and
style and nothing to do with zen, and the
world’s most comfortable treatment chairs.
My Dr Alkaitis facial involved excellent
products (oats, honey, fruit – all the
unguents are meant to be edible), though
the English therapist seemed a little inex-
perienced and lacked the sure touch of
European and Asian maestros.
A typical kitchen in Easyjet and Ryanair fly several times daily.
one of the spacious But our stay was certainly sweetened by
apartments. our choice of accomodation: the Antique
Apartments – very close to the ancient
market square “rynek” right in the heart
of the old town, with all the main attrac-
We were lucky with the weather: it was
the crisp lovely weekend just past that we
visited. So we took in the full glory of the
grounds, walking around the enormous
tree-lined fields (to be used for polo in
spring and summer) and across the road to
the long paths around Virginia Water Lake
in Windsor Park – King George IV’s royal
playground.
THE RISE OF THE ENGLISH COUNTRY HOTEL | (AN HOUR FROM ZONE ONE)
The triumphant return of the British country
house hotel began in earnest last year with the
opening of the exquisite Lime Wood in the New
Forest. Guests can go foraging, walking and rid-
ing. As with Coworth Park, many rooms are in
cute little stable blocks, only with fireplaces –
they even have fire porters. Also within an hour
of London is the beautiful Grove in Hertfordshire
tions only a short walk away. This is an
opportunity to feel the grandeur of old
Poland before the horrors of the two world
wars.
This grand old building was once the
home of Poland’s high and mighty and it is
now tastefully converted into a variety of
apartments. Starting at €50 per night for
two people in a one-bedroom apartment
you get a nice lounge area, a fully
equipped kitchenette, free wifi, a bedroom
area and generously proportioned bath-
rooms. All this located slap bang in the
prettiest part of the old town, seconds
away from all the action but quietly
tucked away for a restful night’s sleep.
The apartments are generously sized –
for example a two-bed at €75 per night is
advertised to sleep up to 6 people and even
the €50 one-bed can sleep four people.
The range of rooms, from studios to four-
beds, makes it an ideal venue for a corpo-
rate team building event without
upsetting the Finance Director’s budget.
The design is something quite unique –
CITYA.M. 27 OCTOBER 2010
Horseshoes are a recurring motif here,
and indeed horses to play a huge role in
the Coworth Park experience. It has its
own “equestrian centre” – with a large
menu of riding activities – and is the only
hotel in the UK with its own polo fields.
Giddy-up.
Bed and full English breakfast starts from
£235 per night. www.coworthpark.com.
– a favourite of footballers, Wags and golfers (it
has a big golf course); Stoke Park, a luxurious
country club in Buckinghamshire, and The
Vineyard at Stockcross in Berkshire, which has a
gourmet angle. Cliveden House, a National Trust
property of gobsmacking grandeur is also in
Berkshire, and there’s Fawsley Hall, a culinary
hotspot in a grand setting in Northampton.
modern and clean but tastefully honour-
ing the history and character of the build-
ing. We fondly remember the antique
old-fashioned wrought iron lift that is now
fully restored and functioning – it is a real
treat to use it, though you have to remem-
ber to close the doors or the next person
can’t use it.
Another advantage of having an apart-
ment is that you don’t have to have the
same-old hotel breakfast – instead you can
experience the variety of cafes and restau-
rants for breakfast and brunch that serve
delicious unsung Polish food for a very
good price – two people can brunch in
style for about £10-£15. You literally walk
out of the building and there are lovely
cafes and restaurants next door or across
the road. It is extremely convenient, so
even if it is cold or raining, the distances
are very short, so you won’t mind a three-
five minute walk to get somewhere inter-
esting or delicious and sometimes when
you are lucky – both. From €50 per night for a
one-bedroom flat. www.antiqueapartments.com.
CITYA.M. 27 OCTOBER 2010 WORDS BY
RYAN BORROFF
Lifestyle | Motoring 35

Like a regular Mini – except bigger

It’s not entirely clear
what the brand has
achieved with the
chunky Countryman

D
ESPITE the name, it’s clear the
new Mini Countryman is targeted
at city drivers rather than country
folk. Why? Well, to start with, it
doesn’t have a badge anywhere on the
car that says “Countryman”. It seems
unlikely that Mini’s owners BMW forgot
to add it – more likely that it didn’t want
to discourage urban buyers or tarnish
the heralded Mini brand with an out-
moded name that seems incongruous
with the car. Which leads to the obvious
question: why call it Countryman at all?
At first sight it’s bigger, boxier, even
taller that its older sibling – it’s about
the size of a VW Golf – and so therefore a
very maxi Mini and surprisingly large.
The cabin is now confidently able to
transport a family in its five seats and in
some comfort too, something the exist-
ing Mini can’t do unless your family is
very young or very short. What’s more, it
also has full-size doors for rear seat pas-
sengers, which will be a welcome addi-
tion to save Nan’s back, or yours if you’re
lifting baby seats in and out of the rear.

REGULAR MINI
Which is why Mini has developed the
Countryman of course, to capture some
of the car market that caters to growing
families. Yet inevitably one must ques-
tion how successful it has been. Inside, there is nothing to sug-
The boot seems quite small gest that the car has off-
at 350 litres for a car of road capability either,
this size and price, so so think soft road
carrying the usual rather than off-
kid paraphernalia road. In fact, it’s
could be tricky. pretty much all
So maybe, regular Mini –
then, it’s noth- including the
ing to do with oversize retro- Top: the larger-than- their Countrymans with the ability to THE FACTS:
families. Maybe style speedo in expected Mini mount objects along it including an MINI COOPER D COUNTRYMAN
it’s a genuine the middle of Countryman, and the iPod, sunglass holder and
4WD crossover the dash classic interior. cupholder...you get the idea.
ALL4
that Mini has which, with a On the road, the Countryman feels PRICE: £19,875
created in the version of very much like the existing Mini to drive, 0-62MPH: 11.6 secs
Countryman. BMW’s multi- which is a good thing. Even in this itera- TOP SPEED: 112mph
But that’s tenu- media iDrive sys- tion – the Mini Cooper D Countryman
ous too. The car is tem, makes a ALL4 – with its 1.6 litre, 112hp diesel
CO2 G/KM: 129g/km
fitted with an all- strange analogue engine, the car is quicker than I expected MPG COMBINED: 57.6 mpg
wheel drive system and digital combina- and feels very sporty.
that directs all the tion. The hand brake It will be interesting to see if the
THE VERDICT:
power to the rear wheels if lever is so big as to be Countryman attracts new converts to DESIGN hhhii
the front wheels lose grip, but absurd. It’s been designed to the brand. And if you’ve already bought PERFORMANCE hhhii
even Mini doesn’t seem to be suggesting allow clearance for a new Mini centre into it, you’re probably already configur- PRACTICALITY hhiii
the car has any serious off-road abilities. rail that will allow buyers to personalise ing your Mini Countryman online. VALUE FOR MONEY hhiii

CAR TALK BY RYAN BORROFF

REBUILDING SAAB’S BRAND
This is Saab’s new 9-4X, its new crossover car that will be shown at
November’s Los Angeles Auto Show. Size-wise, it will sit between the
existing 9-3 and 9-5 saloons and it’s an important car for Saab as it
rebuilds its brand. With a turbocharged 2.8-litre V6 petrol engine and
four-wheel drive, the 9-4X should reach 62mph time in just 8.4 seconds
and have a top speed of 143mph. It will go on sale in the UK late next year.
NISSAN: NEW AND IMPROVED
Nissan has unveiled its enhanced GT-R for 2011 with more power, better
aerodynamics and an upgraded design. Engine power is now up to 523bhp
and the car has also been bettered aerodynamically with downforce
increased by around 10 per cent. Design-wise, the car’s changes are small,
with redesigned front and rear bumpers. The price is up though: the new
GT-R will cost £69,950 when it goes on sale.
MAYOR SEES SENSE ON CONGESTION CHARGE
Transport for London has announced that all cars which emit less than
100g/km CO2 (and meet the Euro 5 standard for air quality) will be
exempt from the Congestion Charge. Until now, hybrid cars with higher
emissions would get 100 per cent discount while cleaner vehicles, but with
traditional powertrains, still had to pay. The new scheme starts on 4
January 2011 and it costs just £10 to register your car.
 36 Lifestyle | TV& Games CITYA.M. 27 OCTOBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm Helicopter Heroes
8pm Waterloo Road
9pm The Apprentice
10pm BBC News
10.25pm Regional News
10.35pm The National
Lottery Draws
10.45pm Film 2010 with
Claudia Winkleman
11.25pm The League Cup Show
12.20am Sign Zone:
Country Tracks
1.20am Bang Goes the Theory
1.50am Watchdog 2.50am
Restoration Roadshow
3.20am-6am BBC News
6pm Eggheads
6.30pm Strictly Come
Dancing – It Takes Two
7pm Escape to the Country:
A couple searching for
a home in Powys.
8pm MasterChef:
The Professionals:
The semi-final challenge.
9pm CHOICE Wonderland –
Mad Cats and Englishwomen
10pm The Apprentice:
You’re Fired!
10.30pm Newsnight: Weather
11.20pm Whites
11.50pm Harry & Paul
12.20am BBC News
3.20am Close 4am-6am BBC
Learning Zone
6pm London Tonight
6.30pm ITV News
7pm Emmerdale
8pm Agatha Christie’s Poirot:
A Halloween party becomes
the venue for a murder.
10pm ITV News at Ten
10.30pm London News
10.35pm FILM No
Reservations: Premiere.
Romantic comedy, starring
Catherine Zeta-Jones and
Aaron Eckhart. 2007.
12.35am The Zone;
ITV News Headlines
2.35am FILM Shalako: Western,
starring Sean Connery. 1968.
4.30am The Jeremy Kyle Show
5.25am-5.30am ITV Nightscreen
6pm The Simpsons 6pm Home and Away
6.30pm Hollyoaks 6.25pm Live from Studio Five
7pm Channel 4 News 7pm Five News at 7
7.55pm 4thought.tv 7.30pm How Do They Do It?
8pm CHOICE Buried Alive: Five News Update
The Chilean Mine Rescue: The 8pm CHOICE Cowboy Builders:
rescue of the 33 miners trapped Five News at 9
at the San Jose mine in Chile. 9pm NCIS
9pm Grand Designs 10pm Law & Order: Criminal
10pm The Million Intent: Logan and Wheeler
Pound Drop Live hunt an unlikely assassin. WONDERLAND – MAD CATS …
11.05pm The Event 11pm Law & Order BBC2, 9PM
12.05am The Event 11.55pm Poker Documentary following the efforts of
1.05am Music on 4: 4Play: Rumer 12.50am SuperCasino Celia Hammond and 70-year-old Pat,
1.15am The Album Chart Show 4.05am House Doctor 4.25am two women who work round the clock
Spotlight 1.30am We Are Together Brian Sewell’s Grand Tour 5.05am caring for London’s stray cats.
3.05am Brothers & Sisters 3.50am The Family Recipe 5.10am
Hill Street Blues 4.40am ER Michaela’s Wild Challenge
5.25am-6.10am Countdown 5.35am-6am Nick’s Quest

SKY SPORTS 1 10pm European Challenge Tour LIVING E4 1am Deadliest Catch 2am
SATELLITE & CABLE

7pm Sky Sports News at
Seven 7.30pm Soccer Special
10pm You’re on Sky Sports!
11.30pm FIFA Futbol Mundial
12am Carling Cup Football
1.30am Total Rugby 2am FIFA
Futbol Mundial 2.30am You’re
on Sky Sports! 4am Carling
Cup Football 5.30am-6am
FIFA Futbol Mundial
SKY SPORTS 2
7pm Total Rugby 7.30pm Live
Carling Cup Football 10pm
Transworld Sport 11pm
European Seniors Tour Golf
12am Golfing World 1am
Inside the PGA Tour 1.30am
European Tour Weekly 2am
PGA EuroPro Tour Golf 4am
European Challenge Tour Golf
5am-6am European Seniors
Tour Golf
SKY SPORTS 3
7pm Champions Tour Golf
8pm PGA EuroPro Tour Golf
Golf 11pm Watersports World
12am F3 Euroseries 1am Max
Power 2am-4am Poker Million
BRITISH EUROSPORT
2.30pm Live WTA Tennis. Day
two of the WTA Tour
Championship. 8.45pm WTA
Tennis 9.05pm Wednesday
Selection 9.10pm Equestrian
10.10pm Riders Club 10.15pm
European Tour Golf 10.45pm
Golf Club 10.50pm Yacht Club
10.55pm Wednesday Selection
11.15pm Eurogoals Flash
11.25pm-12.30am Strongest
Man
ESPN
6pm Live Eredivisie 10pm 30
for 30 11.30pm Poker
12.30am NBA Basketball 1am
Live NBA Basketball 3.30am
ESPN Kicks Extra 3.45am
Premier League World
4.15am-5.30am Bundesliga
Review Show
7pm Four Weddings 8pm
Psychic Sally: On the Road
9pm Ghost Whisperer 10pm
Make Me a Man 11pm Criminal
Minds 12am CSI: Crime Scene
Investigation 2am Charmed
3am Ghost Whisperer 3.50am
Yvette and Karl: Style Me
4.40am The Jerry Springer
Show 5.30am-6am Home
Shopping
BBC THREE
7pm Great Movie Mistakes
8pm Don’t Tell the Bride 9pm
FILM Deep Impact. Sci-fi
drama, starring Robert Duvall.
1998. 10.50pm Family Guy
11.40pm Lip Service 12.40am
One Non Blonde Down Under
1.10am Russell Howard’s Good
News 1.40am Great Movie
Mistakes 2.35am Lip Service
3.35am One Non Blonde Down
Under 4.05am-5.10am Don’t
Tell the Bride
7pm Friends 8.30pm Hollyoaks Chris Barrie’s Massive Engines
9pm Hollyoaks Later 10pm 3am Weaponology 3.50am
Desperate Housewives 11pm Treasure Quest 4.40am Days
Rude Tube 12.05am Hollyoaks That Shook the World 5.30am-
Later 1.10am RuPaul’s Drag 6am How Does That Work?
Race 1.55am Scrubs 2.40am BURIED ALIVE: THE CHILEAN …
RuPaul’s Drag Race 3.25am Life
DISCOVERY HOME & CHANNEL 4, 8PM
Unexpected 4.05am Switched HEALTH A detailed examination of the rescue
4.30am Accidentally on Purpose 7pm Home Birth Diaries 8pm efforts carried out by the authorities,
4.50am-6am Switched Fat Doctor 9pm A&E 10pm engineers and doctors to free the miners
Hospital Sydney 11pm The trapped at the San Jose mine in Chile.
HISTORY Trauma Team 12am A&E 1am
7pm Lost Ships 8pm Mega Hospital Sydney 2am The
Movers 9pm Ax Men 10pm Trauma Team 3am Fat Doctor
Sex in the Ancient World 11pm 4am Mum’s the Word 5am-
Warriors 12am Ax Men 1am 6am Bringing Home Baby
Barbarians 2am Lost Ships
3am Conquistadors 4am-5am SKY1
UFO Files 7.30pm The Middle 8pm Fat
Families 9pm Bones 10pm Lie
DISCOVERY to Me 11pm FILM Gladiator
8pm How Do They Do It? 2000. 1.55am Street Wars COWBOY BUILDERS
8.30pm How It’s Made 9pm 2.45am Bite Size Brainiac 3am CHANNEL 5, 8PM
Britain’s Greatest Ships 10pm Oops TV 3.30am Lost 4.20am Sheree Murphy and Dominic Littlewood
Trawler Wars 11pm Frontline Tabatha’s Salon Takeover help a single mother from Woking,
Battle Machines with Mike 5.10am-6am Are You Smarter Surrey, whose efforts to accommodate
Brewer 12am Bear Grylls Than a 10 Year Old? a terminally ill friend ended in disarray.

COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
    

SUDOKU KAKURO
35 22 3 20 37 11 27
26 7
13   
15 16
Place the numbers from 1 to 9 in each empty cell so that each 15 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 7 38
37
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 19 28
   
above or to the left of it. 23
You can only use the digits 1-9 11 10
   and you must not use the
18 23
42     
same digit twice in a block. 34
  The same digit may occur 11 9 
12 29
    more than once in a row or
column, but it must be in a
30
14 6
15
 
21 16
    separate block.
12
12 33
  15 10
 

  
 
  WORDWHEEL
 
LAST ISSUE’S
 ACROSS DOWN
1 Concentrate (5) 1 Shrub with showy,
 
T M
4 Part of milk containing
the butterfat (5)
7 Swore (6)
drooping flowers (7)
2 Approximately
(especially of a date) (5)
Using only the letters in the Wordwheel, you have
 ten minutes to find as many words as possible,
T N 9 Partially burn (4) 3 Leather with a
10 Computer storage napped surface (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters T item (4) 5 Childhood disease
caused by deficiency
or more, all must contain the central letter and
letters can only be used once in every word. There
A E 11 Shelters from light (6)
13 If not, then (4)
of vitamin D (7)

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

E S 15 Dull pain (4)
6 Collect or gather,
hoard (5)
17 Division of Ireland (6)
QUICK CROSSWORD 1 7 3 21 3 2 5
8 Destroy the
2 9 4 87 5 8 9 SUDOKU         
20 Male parent (4)
21 Heating elements in
peace of (7)
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 Sport
Manassero as
good as Seve
GOLF COMMENT
SAM TORRANCE
H
E has balls of steel, a wonderful
action and now has a first
European Tour title under his
belt: this week the only man
worth talking about is Matteo
Manassero.
I watched every minute at the
weekend as the 17-year-old made his-
tory by winning the Castello Masters,
and he was absolutely magnificent.
His hero is Seve Ballesteros, but
Manassero is probably better than the
Spaniard was at that age. Seve was
the king; now the Italian has the
chance to emulate him.
In a year he has gone from British
Amateur champion to becoming the
England have right
recipe, says Cook
▲
CRICKET
BY FRANK DALLERES
ENGLAND batsman Alastair Cook
insists there will be no repeat this
winter of the 5-0 drubbing they suf-
fered last time they headed Down
Under for an Ashes series.
Australia enjoyed a whitewash four
years ago when an England side cap-
tained by Andrew Flintoff lost the urn
in spectacular style.
Cook was part of that team and
believes that stronger form and a
more thorough preparation will
ensure the class of 2010 is better
equipped.
“As a side we’re in a better place,
we’re stable and coming off a good 18
months where we’ve played some
great cricket,” said Cook. “The confi-
dence is running throughout the side
and everyone is very trusting of every-
one else in the squad.
SPORT | IN BRIEF
Russia deny criticising England
FOOTBALL: England’s World Cup 2018
bid rivals Russia say they regret any
“misunderstanding” resulting from their
chief executive’s recent comments about
London. Andrei Sorokin denied, however,
that he had criticised England’s bid,
which would have been against the rules.
It comes with the bid process in a state
of turmoil after two members of the
panel set to decide who hosts the compe-
tition were suspended over allegations
they were willing to accept bribes.
37
FROM SWAZILAND TO SPURS
TOTTENHAM SIGN SOUTH AFRICA
DEFENDER KHUMALO: PAGE 39
Manassero, 17,
made history with
victory at the
Castello Masters
last weekend.
Picture: GETTY
FACTFILE | MATTEO MANASSERO
Born 19 April 1993, Negrar, Verona, Italy
Achievements Youngest ever winner of
British Amateur Championship in 2009;
youngest winner on the tour, a truly second youngest European Tour mem-
fantastic follow-up. ber; youngest to make cut at Masters;
youngest to win a European Tour title
EUROPE’S FINEST
He was already a bit of star before his
triumph in Spain and I really think
he is as good as it gets. He has a great
all-round game and, because of his
youth, has no fear. He does not seem
to feel the pressure at all.
It won’t be long now before
Mannasero breaks into the world’s
top 50 either. His current ranking is
88 but you can be sure he’ll shoot up
that table.
While his success is a huge achieve-
TARRANT’S
CHRISTMAS
ment for the youngster, it is also yet
another boost for Italian golf. The
Molinari brothers, Francesco and
Edoardo, have established themselves
among Europe’s finest, and now the
MUSIC
country has another top talent.
Meanwhile, I’ll be back in action
this week at the Seniors Tour
Championship in Spain. I’ve won
every year that I’ve been on the tour,
including at this tournament in 2008,
so I’m hopeful and determined to
keep up that record.
QUIZ
Have a Christmas party
with us – come and join
Chris Tarrant for a fun
¿OOHGHYHQLQJRIPXVLF
PD\KHPDQGVLQJLQJ
“Last time was different. The prepa-
ration time was a lot shorter. The
schedule allowed us to have a bit Tuesday 30 November
more time this year and we’ll benefit
from the three warm-up games we 6.45pm - 11pm
have. We’re very confident we can
play good cricket and I’m confident
we can bring the urn back with us.”
Sporadic form with the bat saw
7KH 1XUVHU\ 3DYLOLRQ
Cook’s place in the Test side come Lord’s Cricket Ground
under pressure over the summer, but
the 25-year-old refuses to counte-
nance losing his spot.
London
He added: “I did struggle for a cou-
ple of matches against Pakistan but in
the last 12 months I’ve scored four
Test hundreds – three in the last eight
7HDP HQWU\ IRU  SHRSOH
games – and hopefully I can go out LV … SHU WHDP LQFOXGLQJ
there and prove a few of them
wrong.”
England play their first Ashes tour
two-course dinner
match, against Western Australia in
Perth, next week, with the first Test
starting on 25 November. 'UHVVWRLPSUHVV
&DOO020 7821 2828 to book tickets
SA beat Pakistan in Abu Dhabi RUHPDLOHYHQWV#ORUGVWDYHUQHUVRUJ
CRICKET: South Africa paceman
Lonwabo Tsotsobe took 3-16 as they
earned an emphatic six-wicket victory
over Pakistan in the first Twenty20 inter-
national in Abu Dhabi. Captain Johan
Botha also claimed three wickets as
Pakistan, technically the home side, were
bowled out for 119, despite Misbah ul-
Haq’s undefeated 27 and Shahid Afridi’s Registered Charity No. 306054
25 off just seven deliveries. JP Duminy
then hit 41 and Colin Ingram 46 not out
as the tourists won in 18.2 overs.
 38 Sport CITYA.M. 27 OCTOBER 2010

Results
CARLING CUP FOURTH ROUND
Birmingham................(0) 1 Brentford...........................(0) 1
Phillips 90 Wood 68
Moody given Lewis Moody has
been been out of
action for three
weeks with an
eye socket injury.

green light to
Att: 15,166
AET - Score after 90 mins 1-1. Birmingham win 4-3 on PICTURE: PA
penalties.
Ipswich..........................(2) 3 Northampton...................(1) 1
Edwards 26 Davis 16
Delaney 44
Priskin 88

play for Bath

Att: 12,929
Leicester.......................(0) 1 West Brom.........................(1) 4
Shorey 53 (og) Cox 21, 90
Tchoyi 62
Reid 79
Att: 16,957
Man Utd.........................(0) 3 Wolverhampton............(0) 2
Bebe 56 Elokobi 60
Park 70 Foley 76
▲

Hernandez 90 Att: 46,083 RUGBY UNION

Wigan..............................(0) 2 Swansea.............................(0) 0 BY JAMES GOLDMAN the knee injury he suffered in last
Boselli 51, Watson 90 (pen) Att: 11,705 season’s Premiership semi-final, but
ENGLAND manager Martin Johnson has been back to his rugged best this
JOHNSTONE'S PAINT TROPHY NORTHERN has opted to release his captain Lewis term.
SECTION SECOND ROUND
Moody for Premiership duty this Saints stars Chris Ashton, Courtney
Tranmere......................(0) 0 Stockport..........................(0) 0
Att: 2,223
weekend but won’t be taking a simi- Lawes and Ben Foden are also very
Tranmere win 4-3 on penalties. lar risk with Toby Flood. much in the England reckoning and
The Leicester fly-half is still work- Hartley would love to represent his
SCOTTISH CUP QUARTER-FINAL
Aberdeen .....................(0) 2 Falkirk...................................(1) 1
ing his way back to full fitness after country alongside his club col-
Hartley 64, 90 (pen) Khalis 33 injuring knee ligaments on the open- leagues.
Att: 6,710 ing weekend of the season and is He said: “It would be a dream start
Motherwell.................(0) 1 Dundee Utd.......................(0) 0 being protected by Johnson ahead of to be playing for England with the
Gow 86 Att: 4,838 the opening autumn international Northampton lads but you can’t look
against New Zealand on 6 November. that far ahead. We’ve got to have a
CRICKET
Flood’s rival for the No10 shirt, solid week training and personally
FIRST TWENTY20 INTERNATIONAL Jonny Wilkinson, is also nursing a I’m happy to just be back in the EPS
Pakistan v South Africa
ABU DHABI: South Africa beat Pakistan by six wickets shoulder injury, which is severe [elite player squad] – even though I
PAKISTAN enough for England to have retained never left it. After the injury I want to
S Hasan c Duminy b Tsotsobe ..................................................................9 the services of Charlie Hodgson. get back to being a regular.”
I Farhat c Smith b Tsotsobe....................................................................10 Johnson has, however, given Moody But the front row forward knows it
M Hafeez c Ingram b Botha ....................................................................13 the green light to play for Bath in this will be a stern challenge after the per-
U Akmal c Botha b J A Morkel ..............................................................14
S Afridi c Bosman b Botha......................................................................25 Sunday’s clash against Harlequins, formance of England’s pack in
Misbah-ul-Haq not out..............................................................................27 despite the flanker having been out Australia and especially the re-emer-
A Razzaq b Botha ..........................................................................................4 of action since the start of this month gence of Steve Thompson as a real
Z Haider c Duminy b M Morkel ................................................................1 with an eye socket injury. contender for the No2 shirt.
U Gul c Smith b Tsotsobe............................................................................0
S Ajmal run out ..............................................................................................4
Meanwhile, Northampton Saints Hartley added: “Steve Thompson
S Akhtar run out ............................................................................................3 skipper Dylan Hartley is relishing the was fantastic in the second Test and
Lb1 w5 nb3 ............................................................................................9 possibility of taking to the field with that is great as it adds competition.
Total (19.5 overs)............................................................................119 a number of his domestic team mates “He’s the man in possession now
Faall: 16, 38, 46, 75, 84, 90, 91, 92, 99. against his native Kiwis at but whenever you’ve got that No2
Bowling: Morkel 4-0-28-1, Tsotsobe 4-0-16-3, Morkel 4-1-18- Twickenham.
1, Theron 3.5-0-25-0, Botha 4-0-31-3.
shirt there are four or five people
SOUTH AFRICA The New Zealand-born hooker after it so you’ve always got to be on
G Smith b Hafeez..........................................................................................13 missed England’s summer tour with top of your game.”
L Bosman c Farhat b Akhtar ....................................................................2
A de Villiers b Akhtar ..................................................................................0

Jenkins backs Henson’s Saracens move

J Duminy c Akmal b Ajmal ......................................................................41
C Ingram not out ........................................................................................46
D Miller not out ............................................................................................13
Lb3 w2 ................................................................................................................5
Total (4 wkts., 18.2 overs) ........................................................120
Fall: 16, 16, 26, 92.
Bowlinng: Akhtar 4-1-29-2, Razzaq 2-0-20-0, Hafeez 3-0-10-1,
Gul 3.2-0-17-0, Ajmal 4-0-18-1, Afridi 2-0-23-0.
Umpires: A Raza & A Rauf.
that seems unlikely, Jenkins hinted moving to the Premiership may hin- him to turn up [for Wales duty].”
▲

RUGBY UNION
TODAY’S DIARY BY FRANK DALLERES
(Football 7.45pm unless stated)
Carling Cup Fourth Round WALES assistant coach Neil Jenkins
Aston Villa v Burnley ................................................................................................ has welcomed the prospect of centre
Newcastle v Arsenal .................................................................................................. Gavin Henson relaunching his stag-
West Ham v Stoke...................................................................................................... nant career at Saracens.
Scottish Cup Quarter-Final Henson has not played competitive-
St Johnstone v Celtic (7.30) .................................................................................. ly for 18 months but is eager to return
Kilmarnock v Rangers ..............................................................................................
to the game and has this week trained
with Sarries with a view to a move
from Ospreys.
SPORTS EDITOR FRANK DALLERES The 28-year-old still harbours hopes
email sport@cityam.com of forcing his way back into the Wales
side for the Six Nations and, while
that Henson would be welcome back
in the national squad.
“Gav is a fantastic player, and get-
ting back involved in the game, good
luck to him,” said Jenkins. “We want
our best players playing, and Gav is
certainly one of those. If he does get
back on the park, good on him, and
hopefully we will see him soon at
some point.”
Wales coach Warren Gatland has
overlooked English-based players for
the upcoming autumn internationals
and Jenkins warned Henson that
der his international prospects.
Henson’s signing is complicated by
his commitments to television show
Strictly Come Dancing and his exist-
ing contract with Ospreys. Saracens
hope he will be able to train in
between practice and filming while
talks have been held with the Welsh
outfit over compensation.
“It is not easy when you are not
playing in Wales,” added Jenkins. “If
he does sign for Saracens I am sure he
will be under a similar contract to all
the other boys, so it won’t be easy for
Meanwhile, Gatland has named
hooker Matthew Rees as captain for
their next Test, against Australia on
Saturday 6 November.
The Scarlets skipper is set to lead
the team for the first time with
Ospreys back-row Ryan Jones the lat-
est player to be ruled out by injury.
Jones has a torn calf muscle and
will be reassessed after the Wallabies
clash but Cardiff Blues back Leigh
Halfpenny has been written off for
the entire autumn campaign after
suffering ankle ligament damage.

Premier League Ballon burst by Fifa nominations

Sunderland’s Asamoah Gyan (below), broadcasting rights relatively simple. ANALYSIS l Drop in number of Premier League players on Ballon d’Or shorlist
▲

FOOTBALL
BY JAMES GOLDMAN whose association with the English Scuadmore has delighted in billing 100
16/ 17/ 15/ 11 / 10/ 3/
%
top-flight is short-lived in any case. the Premier League as the best in
THE NOMINATIONS for this year’s The Premier League has domi- the world but that claim looks 50 50 50 30 30 23
Fifa Ballon d’Or award, announced nated the nominations list – which more spurious in light of this 80
yesterday, provided more ammuni- has been shortened from 50 year’s nominations.
tion for those critics who claim the players in 2005 to 30 in 2008 The complete lack of
Premier League’s stock is on the slide. and again to 23 this year – English players is also 60
Of the 23 players nominated for the in recent seasons. of concern, but some
prestigious title – which has now Since 2005 it has reg- crumbs of comfort can
merged with the Fifa World Player of ularly provided be found in the nomi- 40
32% 34% 36%
the Year award – only three came
from the Premier League.
around a third of the
nominees and had
nees for the Coach of
the Year award, where 30% 30%
Cesc Fabregas of Arsenal and played a part in making chief Sir Alex Ferguson, 20
Chelsea’s Didier Drogba unsurprising- executive Richard Arsene Wenger and Carlo 13%
ly made the cut, but eyebrows were Scudamore’s job of selling Ancelotti represent the
raised at the inclusion of lucrative international Premier League.
2005 2006 2007 2008 2009 2010
CITYA.M. 27 OCTOBER 2010
Indian chicken giant hatches £46m Rovers deal
▲
FOOTBALL
BY FRANK DALLERES
OIL billions may have transformed
Chelsea and Manchester City into
global superpowers but Blackburn
believe they have found a saviour in
an altogether less glamorous indus-
try: chicken.
Indian poultry giant
Venkateshwara Hatcheries Group, or
Venky’s as it is often known, expects
to complete a £46m takeover of the
Hernandez
proves United
saviour again
MANCHESTER UTD 3 “When he gets a chance you know
WOLVES 2 ing and that’s because the training is
▲
FOOTBALL
BY FRANK DALLERES
DELIGHTED Manchester United boss
Sir Alex Ferguson lavished praise on
new hero Javier Hernandez after the
Mexican grabbed the winning goal
for the second time in three days.
The summer signing struck in the
90th minute to book United’s place in
the Carling Cup quarter-finals and
shatter Wolves, who had twice clawed
their way back into the match.
Bebe, another recent arrival, and
then Ji-Sung Park looked to have
earned victory for Ferguson’s men,
only to be pegged back by equalisers
from George Elokobi and Kevin Foley.
“He was absolutely brilliant – it was
a magnificent goal,” said Ferguson of
Hernandez. “He’s shaped to shoot,
dummied the defender and finished
really well. They tend to build heroes
quickly here but he’s justifying the
Khumalo capture will bolster Arsenal gunning for glory
Redknapp’s defensive options on all fronts, says Wenger
▲
FOOTBALL
BY JAMES GOLDMAN
TOTTENHAM manager Harry
Redknapp has moved to ease his
side’s defensive concerns by recruit-
ing South Africa international
Bongani Khumalo.
The 23-year-old will arrive in
January from SuperSport United, sub-
ject to a work permit being granted,
having signed a pre-contract agree-
ment. The transfer fee is thought to
be around £1.5m.
Tottenham’s rearguard has been
beset by injury with Jonathan
Woodgate and Michael Dawson both
long-term absentees, while Ledley
top flight strugglers next month. It
would end the club’s three-year
search for a buyer and make the pur-
chasers the first Indian owners of a
Premier League team.
Venky’s has undertaken due dili-
gence at Ewood Park after several
rounds of talks with Rovers chiefs.
Two previous Indian suitors – Saurin
Shah and Ahsan Ali Syed – looked at
the club but failed to buy.
Anuradha J Desai, Venky’s chairper-
son, said: “We expect to be the first
praise at the moment.
he’s going to take it. His touch, con-
trol of the ball and vision are improv-
intense. We care about it and making
sure the players do improve.”
A drab match exploded into life in
the 56th minute when Bebe, signed
for £7.4m despite Ferguson never hav-
ing seen him play, opened his
account for the club on his first start,
albeit with a cross that took a wicked
deflection off Elokobi.
It took the Wolves defender just
four minutes to undo the damage,
however, Elokobi heading home from
a corner.
The last eight beckoned for United
when Park lashed into the top corner
with 20 minutes left. Again, though,
cup holders United were pegged back,
Foley gathering Steven Fletcher’s neat
flick and firing low past debutant
goalkeeper Ben Amos.
Enter Hernandez, scorer of two
against Stoke on Sunday. With extra-
time looming, the 22-year-old hared
upfield, sent his defender the wrong
and beat Wayne Hennessey for his
fourth goal in four games.
King and William Gallas have also
spent significant periods on the treat-
ment table.
Khumalo had a trial with Spurs ear-
lier this season and impressed
Redknapp, who has been forced to
field 11 different centre-back combi-
nations already this term.
Redknapp said: “He’s not expensive
and we had him over on trial and we
like him.
“He’s got potential and we’ve got a
tie-up with the club SuperSport so
we’ve taken him on.
“It will be a great chance for the
kid. He’s a great lad. He comes from a
poor background and he’s desperate
for a chance.”
Indian company to acquire a Premier
League team and we are particularly
delighted that the team is Blackburn
Rovers, with whom we believe we
have many shared values and ambi-
tions.”
Indian buyers are thought to have
been attracted to Blackburn partly by
the area’s large Asian population.
Blackburn chairman John Williams
said: “Both parties are hopeful that
the transaction will be completed in
November.”
Khumalo started all three of his
nation’s matches at this summer’s
World Cup and scored in the famous
2-1 victory over France.
After the World Cup, Khumalo,
born in Swaziland, said: “I have
always wanted to play in England and
obviously in the Premier League, and
it would be a dream to move to
Tottenham.
“Playing in the Champions League
would be another dream.”
The combative centre-half cap-
tained SuperSport United to a record-
equalling third straight Premier
Soccer League championship, having
become the youngest captain to lift
the trophy last year at the age of 22.
WHO ARE THEY? | VENKY’S GROUP
l Venky’s is Asia’s largest poultry con-
glomerate with a turnover of £1bn and
profits of £118m at the last count
l They don’t just do chicken: Venky’s also
produce eggs, nutritional products and
animal pellet feed
l Venky’s has major contracts with
McDonalds, KFC, Pizza Hut and Dominos
in India
FOOTBALL
▲
ARSENAL manager Arsene Wenger
has reaffirmed his desire to put silver-
wear ahead of plaudits this season
ahead of tonight’s Carling Cup fourth
round tie at Newcastle.
Wenger has often been accused of
treating this competition with dis-
dain in the past by opting to rest his
star players in order to blood some of
the outstanding young talent at his
disposal.
But a five-year trophy drought
appears to have changed Wenger’s
attitude. A relatively full-strength side
crushed Spurs 4-1 in the previous
round and the Frenchman revealed a
similar looking team will be on show
at St James’ Park.
Sport 39
l Dr BV Rao founded the
company with a modest
seven-acre poultry farm in
Hyderabad 39 years ago
l Within a year he and his wife Uttradevi
had amassed a 70 per cent market share
l Dr Rao died in 1996 and the group is
now overseen by his daughter, Anuradha
Desai
Hernandez has scored
four in his last four
games.
Picture: PA
Brave Brentford’s
cup run over after
penalty heartache
BIRMINGHAM’S veteran striker
Kevin Phillips prevented League One
Brentford from claiming another size-
able Premier League scalp in the
Carling Cup.
Andy Scott’s Bees, who edged out
Everton in the previous round, were
moments away from causing another
upset before 37-year-old Phillips
pounced in injury time to cancel out
Sam Wood’s 68th minute effort.
The sides couldn’t be separated in
extra time and with Birmingham 4-3
up in the penalty shootout, Craig
Woodman buckled under the pres-
sure and saw his spot kick saved by
Maik Taylor.
Elsewhere, West Bromwich
Albion’s impressive start to the sea-
son continued with a fine 4-1 win at
Sven-Goran Eriksson’s Leicester City,
while Northampton Town, conquerors
of Liverpool, were unable to repeat
the trick at Portman Road, losing 3-1
at Ipswich.
Finally, Wigan boss Roberto
Martinez was able to celebrate a vic-
tory against his old club Swansea as
the Latics ran out comfortable 2-0
winners against the Welsh outfit,
with record signing Mauro Boselli
finally netting his first goal for the
club.
“I have said we want to go and win
every single trophy this season,” he
confirmed. “We want to go and win
the game and qualify. We will rotate a
bit but we will go with a big core of
the first team.
“You will see Bendtner, Walcott
and Vela who are all back and need
some games to get fit.
“It is a tough draw. It will be heated
and you know it will be a highly moti-
vated atmosphere.”
The likes of Cesc Fabregas, Andrey
Arshavin and Marouane Chamakh
could all feature from the bench, but
highly-rated goalkeeper Wojciech
Szczesny, 20, who recently voiced his
frustration at a lack of first team
opportunities, will get his first start
of the season.
 EUR/USD
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