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you, day in and day out.

It also emerged over the weekend

that Barclays is making preparations
to withdraw from the panel that sets
another similar rate, the UAEs
Emirates interbank offers rate
Emails accuse Lloyds of rate fixing US planning criminal prosecutions BoE governor told of fix in 2008
Alpha-beta. Active-passive. Style-judgement. Core-satellite.
Master the language, seize the opportunity.
Narayan Naik, Professor of Finance
Investment Management Evening Programmes
Equity Portfolio Management programme starts 25 September 2012
Visit | Email | Call +44 (0)20 7000 7397 Leading Financial Thinking
Recently released emails show Timothy Geithner (left) and Sir Mervyn King (right) discussed their concerns over Libor submissions as early as 2008
LLOYDS became the latest UK bank
to be dragged into the ongoing Libor
scandal over the weekend, after the
New York Fed made public emails
sent by Barclays staff to the US
authorities that accuse Lloyds of
entering false Libor submissions in
A swathe of previously unseen doc-
uments also show Bank of England
governor Sir Mervyn King and US
Treasury secretary Tim Geithner dis-
cussed problems in the way Libor
was set in early 2008, and that there
was widespread concern over the
lack of effective control exercised by
the British Banking Association over
the key interbank rate.
At the time, Geithner was presi-
dent of the New York Fed.
Meanwhile Barclays has told its
staff that the reputational damage
suffered by the bank will be put in
perspective when other banks
actions are made public indicating
it believes other institutions behaved
as badly or even worse than the bat-
tered financial giant.
And the New York Times has
revealed that the US Justice
Department is building criminal
cases against several financial insti-
tutions and their employees related
to the manipulation of interest rates.
The scandal widened dramatically
with the publication of an email
sent by a Barclays staff member to
the New York Fed on 28 August 2007
which warned that the days US dol-
lar Libor readings look too low.
The informant pointed to Lloyds
submission of 5.48 per cent for three
month borrowing, and argued
probably the lowest rate you could
attract liquidity in threes would be
5.55 per cent suggesting the bank
was also entering falsely low read-
Draw your own conclusions about
why people are going for unrealisti-
cally low libors, the Barclays worker
Other emails sent during the early
months of the financial crisis show
regular and growing concern that
several banks were entering incor-
rect readings.
We are not going to comment on
speculation by traders at other
banks, said a Lloyds spokeswoman
in a written statement.
In 2007, Lloyds was one of the
highest rated banks in the world,
with a triple-A rating and was in a
strong position in relation to fund-
ing itself in the markets, compared
to some other banks.
The Fed has also released corre-
spondence between US and UK regu-
lators, showing concern over the way
in which Libor was set in the early
months of 2008.
Tim Geithner suggested a list of
ways in which the Libor-setting
process could be strengthened,
including by adding more US banks
to the panel and enhancing trans-
parency in the system proposals
that Mervyn King described as sen-
sible, adding that he would ask the
BBA to study the ideas.
Meanwhile an internal Barclays
memo to staff, leaked to Sky News,
shows the bank firmly expects other
firms to be engulfed in the crisis.
As other banks settle with author-
ities, and their details become pub-
lic, and various governments
inquiries shed more light, our situa-
tion will eventually be put in per-
spective, said the note, co-written by
executive chairman Marcus Agius.
Meanwhile Agius also wrote to cus-
tomers to apologise again for the
scandal, promising that we will not
allow ourselves to be distracted from
what really matters delivering for
FTSE 100 5,663.13 +57.88 DOW 12,777.09 +203.82 NASDAQ 2,908.47 +42.28 /$ 1.56 +0.02 / 1.27 +0.01 /$ 1.22 unc
MORE: Pages 2,4

Leading Financial
days to go
See interview: Page 18
See Forum: Page 16
Certified Distribution
28/05/2012 till 01/07/2012 is 132,857
LIBOR recommendations
Timothy Geithner to: mervyn.king
Sent by: Marlene Williams
Cc: Paul.Tucker
Bcc: Michael Silva
06/01/2008 05:00 PM
1. Strengthen governance and
establish a credible reporting
2. Increase the size and broaden the
composition of the USD panel
3. Add a second USD LIBOR fixing
for the U.S. market
4. Specify transaction size
5. Only report the LIBOR
maturities for which there is a net
6. Eliminate incentive to misreport
Barclays workers email to the NY Fed
Todays USD libors have come out
and they look too low to me.
Lloyds for instance has printed
5.48% for 3 months. Probably the
lowest rate you could attract
liquidity in threes would be 5.55%
and I am not too sure how much
you would get at that level.
Follow me on Twitter: @allisterheath
JERRY del Missier, the Barclays exec-
utive who instructed traders to
reduce the banks Libor rate sub-
missions, will today attempt to
explain his actions to MPs.
He will be joined in front of the
House of Commons Treasury select
committee by three leading offi-
cials at the Financial Services
Authority (FSA), including Lord
Turner, who raised concerns about
Barclays aggressive interpreta-
tion of regulations in April this year.
It will be del Missiers first public
appearance since he resigned as
chief operating officer on 3 July,
taking responsibility for his role in
a scandal that has cost
Barclays 290m in
fines and caused its
share price to
He had only
been in the job
for 11 days.
A close associ-
ate of former
chief executive
Bob Diamond, del
Missier was previ-
ously co-head of
Barclays investment
Europes banks face tougher demands
The head of Europes top banking
regulator has raised the bar for lenders
capital requirements, insisting that the
nine per cent capital ratio they had to hit
as a temporary buffer by June is to
become permanent. The key thing will
be capital conservation, Mr Enria told the
Financial Times. We dont want the
capital to be released.
Oil and gas have most bribery cases
The oil and gas industry was subject to
the most prosecutions for bribery and
graft in the UK of any sector over the past
four years. The study by Ernst & Young
found that of 26 completed cases since
2008, oil and gas made up nearly one-
fifth of prosecutions. Most of them
involved payments made abroad, or
kickbacks to foreign government officials.
Women on boards boosts headhunters
City headhunters have enjoyed a boom in
board-level recruitment mandates in the
past year following new rules that
encouraged firms to appoint more female
directors. Companies used headhunters
rather than the old boys network.
Gatwick airport aims to double in size
Gatwick is set to publish an expansion
plan that is likely to state its existing two
terminals and one runway are capable of
handling 12m more passengers a year this
decade but a second runway would let it
double in size to handle 70m passengers.
Tablets could conquer smartphones
A Deloitte report argues that the smart-
phone has the most to lose from the prolif-
eration of tablet computers, as internet
browsing was likely to move from the small
screen to the (slightly) larger one.
Was the petrol price rigged too?
Motorists may have been paying too much
for their petrol because traders are likely
to have tried to manipulate oil prices in the
same way they rigged interest rates. A
report for the G20 found the market is
wide open to manipulation and traders
have an incentive to distort it.
Hospedias first buy is Extramed
Hospedia, the firm formed from controversial
telephone provider Patientline, is to buy
Extramed, a provider of patient flow and bed
management services to 22 hospitals.
Slate of deals to test market
This week will show whether some
sought-after US IPOs can shine despite
less-than-stellar market conditions. They
include computer security firm Palo Alto
Networks, search engine Kayak Software,
guitar maker Fender and discount retailer
Five Below.
France aims to support car industry
Frances government will unveil a plan to
support the country's automotive
industry on 25 July, including measures
designed to boost spending on cars.
LONDON will gain an electrified
railway service to Sheffield and
plans to reopen the line between
Oxford and Cambridge will take a
step forward as part of a 9bn rail
funding package that the
government is expected to
announce today.
Transport secretary Justine
Greening will unveil a UK rail
investment plan for 2014-2019 that
includes a commitment to provide
faster and more efficient electric
trains on the Midland Main Line to
Leicester, Derby and South
Funding will also be provided to
reopen part of the Varsity Line,
which ran between Oxford and
Cambridge until 1967. This should
enable services between Oxford and
Milton Keynes to resume by 2017,
with the intention of restoring the
entire route in the future.
Previously announced plans to
electrify the Great Western Main
Line from London to Cardiff will
now be extended to Swansea, while
bottlenecks on the East Coast Main
Line will also be removed.
Around 5bn of the total
investment is earmarked for
completing existing projects such
as Thameslink and Crossrail, with
4bn reserved for new plans.
The programme is part of the
governments plan to boost the
economy through construction
projects, though passengers could
face higher fares as a result.
To contact the newsdesk email
IRST, the good news: the housing
market is becoming less
unaffordable for young people
across the UK. The average price
paid by a first-time buyer in June was
affordable for someone on average
earnings in 54 per cent of all UK local
authority districts, the highest
proportion for 10 years, according to
the Halifax. At the peak of the
madness in 2007, this was only true
of seven per cent of districts.
A home is deemed affordable if it is
worth no more than four times the
gross income of someone on average
earnings in the area; the housing
market is gradually moving more into
sync with earnings.
But its not all good news. Just nine
per cent of all affordable areas were in
southern UK even though that is
where so many of the jobs are. First
time buyers in London had to put
London homes still horribly expensive for first time buyers
down the largest deposit (59,221) to
secure a property, followed by the
South East (34,843). It was just
16,753 in the North of England.
London accounts for nine of the 10
least affordable districts (Oxford is the
second worst); the worst is Brent,
where first time buyers prices are 8.8
times gross earnings in the area. The
next most expensive London district
for first-timers is Harrow, followed by
Hammersmith and Fulham, Hackney,
Haringey, Camden, Ealing, Hillingdon
and Hounslow in 10th position.
There is only one solution: the gov-
ernment needs to liberalise the law to
allow far more private homes to be
built, in London itself but also in com-
mutable reach. First time buyers need
thousands more homes in many
cases family houses, not just tiny
flats. The present, scandalous lack of
supply is a blight on modern Britain.
IT is pleasing to see that G4S looks as
if it will be paying for its pathetic and
inexcusable Olympic incompetence.
Its share price is down, it is being hit
by penalty fees and will make a loss of
35-50m on the 284m contract. Its
CEO could be on the way out and the
firms reputation has suffered a
major blow. The government did
recently renegotiate its contract, mas-
sively increasing its order for security
reason for this is that the public sec-
tor is deemed to be nobler than the
private sector, presumably because
the former is not for profit and the
latter is profit seeking. That, of
course, is nonsense: what counts is
what works. In this case, G4S hasnt
worked and is rightly being held
accountable, by the customer for
whom it failed to deliver, by the
media but also by the City. One key
force for accountability is the stock
market: there is nothing that angers
investors more, and that encourages
them to scrutinise their CEOs
actions, than a tumbling share price.
The public sector doesnt have such
an inbuilt alarm bell and that is yet
another reason why it tends to
respond so slowly to failure.
staff, but G4S should have said so at
the time if it felt it couldnt deliver on
the new terms. G4S the company
once known as Group 4 Security, a
brand sullied by prisoners escapes
has also damaged itself with its woe-
ful communications effort.
The whole point of governments hir-
ing private contractors is not only to
save money but also because those
that fail can be penalised or fired.
When a public sector body fails as
they do frequently they cant mean-
ingfully be fined (its already the tax-
payers money) and it is much harder
or entirely impossible to fire them.
It is also interesting that public sec-
tor failure tends to be rationalised
away as caused by under-funding
but the failure of a private sector con-
tractor even though they tend to
operate on smaller, leaner budgets
are greeted much more harshly. One
Jerry del Missier spent 15
years at Barclays.
The new jobs website for London professionals
Why did Jerry del Missier instruct
Barclays employees to fix Libor?
Barclays has said that del Missier
misinterpreted an account of a
2008 phone call between his fellow
executive Bob Diamond and a Bank
of England official. MPs will want to
know how he came to the wrong
Did del Missier discuss Libor-rigging with
any other executives?
Regulators in the US and UK say
Diamond did not think Barclays
had been told to fix Libor. So why did
del Missier not double-
check before telling
traders to lower their submissions
and did he discuss his actions with
others at any point?
How soon did the FSA know about Libor-
rigging and how did it respond?
US regulators had concerns about
the interest rate in 2007 so why
did the FSA not intervene earlier?
And if the organisation knew about
del Missiers involvement, why did it
allow him to be promoted to chief
operating officer in June?
What MPs will be asking today
Justine Greenings plan means all five major UK Main Lines are set to be electrified
Barclays director who led
Libor fixing to face MPs
banking arm.
Lord Turner will be asked why
his organisation only began
investigating abuse of the
Libor rate in 2009, despite
the New York Federal
Reserve learning in 2007
that Barclays underreport-
ed its submissions.
He will be joined in
front of MPs by Andrew
Bailey, the FSAs head of
banking supervision,
and Tracey
t h e
FSAs acting director of enforce-
The hearings were arranged in a
hurry, with MPs on the committee
keen to hear as much evidence as
possible before parliament rises for
the summer recess tomorrow.
But on Friday it was announced
that the new parliamentary
inquiry into Libor-fixing would not
include several of the Treasury
select committees more outspoken
members such as Conservative
Andrea Leadsom and Labours John
Mann, who had been fiercely criti-
cal of Bob Diamond.
Government to announce
9bn railway scheme
CULTURE secretary Jeremy Hunt yes-
terday voiced his support for embat-
tled Olympics contractor G4S, saying
the firm had been quite honourable
in admitting it could not supply
enough security staff just two weeks
before the Games begin a failure he
branded completely normal.
They put their hands up. Nick
Buckles, the chief executive, has said
you know they got it wrong. Theyve
apologised, theyre going to cover all
the costs, Hunt, whose department is
responsible for overseeing the
Olympics, told the BBC Andrew Marr
I think its completely normal that
youre going to find some contractors
on a project of this size who arent
able to deliver what they promise, he
But he distanced the coalition from
the companys blunders, saying:
[W]hat youve got to do as a minister
is make sure that youve got contin-
gency plans in place so that the over-
all project is not at risk, and thats
what weve done.
He did not rule out the prospect of
sending further troops to man the
Olympic sites, if more staffing short-
falls emerge, noting we have contin-
gency plans for all eventualities.
G4S failure was
expected, says
Jeremy Hunt
Meanwhile Buckles, who said over
the weekend he would consider
resigning over the debacle, is due to
appear before the home affairs select
committee tomorrow.
His company signed a 284m con-
tract to provide 13,700 security guards
for the Games, but the army was last
week drafted in when G4S admitted
just 4,000 staff were trained up and
around 9,000 more were in the
pipeline. The army has pledged 3,500
extra troops to fill the gap.
Buckles told the Sunday Telegraph
that he feels accountable, but not
responsible for the fiasco, which G4S
said at the weekend will cost it
between 35m and 50m.
Preparations for the sporting event
are entering the final stretch, with the
first Olympic rings roads set aside for
official Games use opening today on
the M4.
G4S boss Nick Buckles is coming under pressure after the Olympics staffing blunder
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295 p
DIRECT Line could see plans for a
flotation dashed by two takeover
bids, just weeks before its owner
Royal Bank of Scotland is expected
to file for the 3.2bn listing.
American private equity firms
Blackstone and Bain Capital are
preparing a joint bid while a
consortium of Kohlberg Kravis
Roberts, Apax and BC Partners is
also planning an offer, The Sunday
Times reported yesterday. The
Takeover offers threaten to hit
Direct Line plans for flotation
takeover offers are due to be made
by the end of the month.
A Direct Line spokesman told
City A.M. yesterday that it is still
targeting an initial public offering
in the second half of the year,
which remains the top priority.
The EU has ordered RBS to sell
Direct Line, the UKs largest car
insurer, as a condition of the
banks 45bn bailout in 2008.
RBS needs to boost funds before
the government can sell its 83 per
cent holding in the bank.
HEN I interviewed Mark
Hamilton, G4Ss managing
director of security services
for London 2012, this
January, he admitted that becoming
the official security provider to this
summers Olympics blended risk
with reward. The consequences for
failure, even for something that
wasnt the firms fault, were very
high, and had been weighed
carefully by G4S against the rewards
of being seen to succeed.
The worlds largest security
solutions provider must be wishing
right now that it had weighed things
up rather differently.
That said, the risks that G4S had to
weigh up have proved not to be
exactly what it anticipated. Rather
than the danger of a security breach,
it was the tendency of Olympic
requirements to swell beyond initial
estimates that has damaged its
reputation. Fulfilling its initial 2010
contract to provide 2,000 security
guards would have been far easier.
Meeting the organising committees
increased request for more than
10,000 guards made in December
last year was apparently not.
Yet G4S is the largest employer
listed on the London Stock Exchange,
with over 657,000 employees across
125 countries. If any firm had the
experience, scale and resource to
manage the Olympian task it should
have been this one.
A public failure is also a public
opportunity to make amends. The
company needs to explain its
inability to supply at such short
notice. Being the security provider
for an event that effectively paints a
giant bullseye on London was never
going to be an enviable task. But by
winning the right to publicise its
role, G4S painted a second bullseye
on its brand.
Marc Sidwell is City A.M.s managing
Weighed up and found wanting
THE NEW funding for lending
scheme (FLS) has received only a cau-
tious welcome from economists, ana-
lysts and banks, with many worrying
that there is insufficient demand for
credit for the plan to make much of a
difference to the economy.
The scheme will see the Bank of
England take illiquid assets off banks
in exchange for government bills,
allowing them to increase lending.
This cheap source of funding will be
a huge help to families and firms,
said chancellor George Osborne.
But analysts are sceptical.
The success of the scheme is likely
to hinge largely on whether there is
sufficient demand for additional
lending and the position here is far
from clear, said RBSs Ross Walker.
Given that large UK corporations
Analysts fear
new loans plan
cannot succeed
with ample holdings of cash continue
to hold back from significant capex,
there are grounds for caution.
The scheme was dealt a major blow
almost immediately, with HSBC refus-
ing to take the support, instead aim-
ing to fund through deposits.
Use of previous state-sponsored
schemes have been routinely encour-
aged then thrown back in the face of
participating institutions as demon-
strating the tax-payer subsidy they
benefit from that is then used as an
excuse to raise taxes and regulatory
hurdles, said Nomuras Philip Rush.
RBS and Lloyds will be strongly
encouraged to use it though, so we do
expect the FLS to get used.
We just do not expect it to get the
widespread usage that the govern-
ment and BoE are hoping for, nor do
we expect it to have much of an
impact on net lending.
Coalition needs to do more to
kick-start ailing property sector
Countrywide said yesterday the
ongoing overhaul of planning laws
alongside a raft of other measures is
sorely needed to kick-start the
construction and property sectors.
The firm also wants banks that
receive money from the
governments direct lending scheme
to be forced to lend out more in
More appropriate credit is
urgently required in the housing
market, but lending volumes for
house purchases are only one third
of what they were five years ago,
said chief executive Grenville Turner.
Previous government initiatives to
get banks to pass on improved rates
to retail customers, including Project
Merlin, have fallen short of
Countrywide also suggested
yesterday removing outdated and
prohibitive stamp duty on
properties worth less than 250,000,
which it said would remove barriers
to entry for first-time buyers while
having only a small impact on tax
receipts. It also called for a housing
policy that, by stabilising supply,
reduces house price volatility.

NAGUIB Kheraj could be in the running to take the top job at Barclays, it emerged over the
weekend. The former finance director joins former JP Morgan boss Bill Winters, corporate
and investment banking head Rich Ricci and Lloyds deputy chairman David Roberts as a
frontrunner in the search, which is being conducted by executive chairman Marcus Agius.
GOLDMAN Sachs is set to record
another downbeat set of results
tomorrow, a top analyst has
warned, with poor profits driven by
the weak economic outlook.
Barclays Roger Freeman believes
the banking giants second quarter
profits will be down 23 per cent
compared with the same quarter of
2011. In a research note Freeman
warned profits are likely to come in
Goldman Sachs profits set to
disappoint as trading slows
BY CITY A.M. REPORTER at $839m (539m), down from
$1.09bn in the same three month
period last year.
In part, that is due to slower
trading conditions as the sovereign
debt crisis intensified and the gains
from the flood of cheap cash from
the European Central Bank faded.
The decline is expected to be
broad-based, Freeman said, with
falls predicted from areas
including equities, currencies,
fixed income and commodities.
BRITAINS planning and property
tax laws should be ripped up and
banks should be forced to offer
more mortgages in order to boost
the countrys moribund real estate
market, the countrys largest
property services group argued
The number of house sales
remains near historic lows, with
figures from LSL suggesting June
was the second worst month by
volume since 1995, when Land
Registry records were digitised.
HEALTH and safety regulation is due
to be cut back and simplified, the
governments safety regulator has
pledged, following warnings that
business is being stifled by red tape.
Judith Hackitt, the chairman of the
Health and Safety Executive (HSE),
said that workplace regulation has
become a burden of bureaucracy
and promised to confront a com-
pensation culture.
She said that small businesses were
often advised to be risk averse, and
that insurance firms needed to
be bolder in fighting spuri-
ous claims.
You do unfortunately
get a whole host of spu-
rious claims made by
people who essentially
jump on the bandwag-
on, Hackitt told The
Sunday Telegraph. We
want to take away that
burden of bureaucracy
that seems to get
in peoples
Earlier this
year, David
Camer on
Red tape to be
cut says health
and safety boss
called health and safety rules a mon-
ster that damages the economy, and
said the government needs to kill off
the culture for good.
The HSE is reviewing health and
safety laws after an independent
report recommended scrapping sev-
eral measures including the principle
of strict liability, which holds
employers responsible for accidents
regardless of the steps they take to
prevent them. Several regulations are
due to be scrapped in October.
Hackitts comments would be wel-
comed by many businesses, the
Confederation of British Industry
(CBI) said yesterday. Over the years,
the principles of good health and
safety have been made more
complex by a culture of over-
compliance, which puts having
the right paperwork above see-
ing the right behaviours on the
ground, Neil Carberry, the
CBIs director for employment
and skills, told City A.M.
Hackitt pledged to get rid of red
tape without affecting the level
of protection provided
by HSE laws.
Ofgem set to give National Grid
go ahead on 44bn investment
NATIONAL Grids plans to invest as
much as 44bn in the UKs energy
infrastructure are set to be approved
by Ofgem, although it could have to
fund the spending by selling off
assets or cutting dividends.
The energy regulator is expected
to give National Grid the green light
this morning when it announces its
initial decision on the companys
plans, the Sunday Telegraph
reported yesterday.
National Grid plans to invest
more than 21bn in links between
new electricity plants in England
and Wales over the next eight years,
as well as spending 9bn on gas
pipelines and 13.5bn on gas
distribution networks.
Last week analysts said they
believe Ofgem will not allow
National Grid to significantly raise
its prices, meaning that the
investment will have to be paid for
by selling assets, raising capital or
decreasing its dividends.
The company has indicated its
preferred fundraising measure
would be selling off assets, with
chief executive Steve Holliday keen
to keep investors happy after
criticism over the way he handled a
surprise 3.2bn rights issue in 2010.
Holliday was accused of misleading
shareholders about the companys
cash reserves.
National Grid has said bills could
increase by up to 20, but the energy
regulator is expected to demand
stricter terms under its new price
control system, which aims to keep
prices down. Ofgem will announce
its initial proposals this morning
and make a decision later this year.
National Grid and Ofgem did not
comment on the plans yesterday. National Grid CEO Steve Holliday wants to keep investors happy after past criticism
Judith Hackitt promised to
fight workplace regulation
CHANCELLOR Angela Merkel last
night announced she was
confident that a majority of
German lawmakers would back aid
for Spains ailing banking sector in
a Bundestag vote this Thursday.
Eurozone finance ministers
agreed last Monday on a rescue
package of up to 100bn (78.8bn)
for Spanish banks, which have
been crippled by a burst housing
But Merkels government needs
a green light from the parliament
before finance minister Wolfgang
Merkel confident of German
backing for Spanish bank aid
Schaeuble can commit to paying
out Germanys share of the bailout
at a meeting of Eurozone finance
ministers on Friday.
Although some coalition
lawmakers voted against the
bailout fund and EU budget rules,
Merkel insisted in a television
interview that we always get the
majority we need.
Michael Grosse-Boehmer, chief
whip of Merkels conservatives and
Volker Kauder, the conservatives
parliamentary leader, both said
they were confident Merkel would
get a majority, even if it was not
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iPhone 4S
AIRLINE owners are known for being
colourful characters. They have to be,
given the lengths they go to make
money from air travel amid surging
costs, awkward regulations and fears
about damaging the planet.
In the current climate, the same
could be said about bank owners. But
Sir Richard Branson is excited at the
prospect. He warns rivals that Virgin
Moneys current account, created on
the back of the firms Northern Rock
acquisition in January, will give a
scare to discredited retail banks
when it launches in the autumn.
Virgin Money is going down a
storm. Weve had about 400,000 peo-
ple switch over in the last four or five
months and I think when the current
account comes out in about three
months time the amount of business
is really going to explode, the Virgin
founder tells City A.M. during his air-
lines inaugural trip to Cancun.
Adding that our products general-
ly, theyre not the absolute best, but as
a package theyre very good value,
Branson says Virgin Money will be
making moves that will impress peo-
ple over the next six months.
The bigger banks are discredited, or
a lot of them are, so I think people
seem to want to change.
But Branson was still saddened to
see Barclays chief executive
Bob Diamond step down
after the banks Libor rig-
ging, though its good
that people still do that
at a company.
He confesses to not
closely following
the scandal
e ng ul f i ng
Barclays and
his other
soon- to- be
Branson is
also unfamil-
Virgin is ready
to take on high
street banks
iar with fellow airline tycoon Sir
Stelios Haji-Ioannous attempts to fol-
low in Virgins ill-fated footsteps by set-
ting up a new airline in Africa. He
jokes, however, that he would be very
happy to have a discussion with him,
tell him what to watch out for.
Virgin Atlantic chief executive Steve
Ridgway, on the other hand, has the
details of his firms doomed attempts
to crack the Nigerian market in the
2000s at his fingertips.
We put together a very good air-
line the first airline in west Africa
that was ever IOSA [IATA Operational
Safety Audit] accredited but unfortu-
nately it got tied down in the politics.
Ridgway, who has led the airline for
11 years, is at his most talkative when
railing against politicians, watchdogs
and rivals. Like Virgin Money, the air-
line started life as an underdog to
long-established players.
His latest ire is directed at nemesis
British Airways takeover of smaller
carrier BMI, resulting in the sale of 12
coveted landing slots at Heathrow at
the behest of competition bodies.
It would be a gift to BA, wouldnt it,
to find that the miserable number of
slots gets divided up among a number
of carriers, Ridgway says, urging regu-
lators to allow Virgin to buy the slots.
A long-standing critic of Britains
meandering aviation policy, Ridgway
hopes the current review marks a
seminal moment for Britain. To
believe you can just put the whole of
aviation back in the box is just crazy, at
a time when the governments desper-
ate for growth, to create jobs.
Weve still got some great compa-
nies in this country and we need to
make sure that its very easy to fly in
and out of the UK, its very easy to set
up headquarters, its very easy to keep
your headquarters in the UK.
With fights in so many corners, the
61-year-old rolls his eyes when asked
about his rumoured plans to retire at
60. I dont know, I guess you
always set yourself targets and
theyre always blown off course
by events, but I try to keep
myself young and agile. Im not
too decrepit yet, am I?
Universal set to spin off label to
meet EU rules in EMI takeover
UNIVERSAL Music is planning to sell
British label Virgin Records in order
to comply with EU regulations
following the music publishers
1.2bn deal to buy record label EMI.
Virgin, which has been owned by
EMI since Sir Richard Branson sold
the record company for 560m in
1992, is included in the takeover
agreement, but competition
concerns have forced Universal to
spin off the label.
The European Commission said
Universals purchase of EMI
threatens to reduce competition in
the recorded music market.
Universal, the worlds biggest
record label, would control 40 per
cent of the European music market
in Europe if the deal goes through,
a level considered anti-competitive.
The business, owned by French
media conglomerate Vivendi, won
the bid for EMI last year but last
week Brussels warned that a
takeover could be vetoed if a
solution is not offered.
Universal will present its
proposals later this week before the
EU makes its decision on 8 August.
The label needs the deal to go
through because it has already
agreed to pay 1.2bn to EMIs owner
Citigroup, whether or not the
purchase is approved.
If the acquisition is scuppered
and EMI is sold for less to another
bidder, Universal will have to make
up the difference.
Virgin Records was formed by
Branson in 1972, and now operates
as Virgin Music in many countries
including France, Germany and
Britain. Artists on the label include
Joss Stone and Bryan Ferry.
Universal did not comment.
Sir Richard Branson says Virgin Money will profit from other banks discredit
Virgin Atlantics chief
executive Steve Ridgway
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Virgin bosses talk
industry rivalries
with Marion Dakers
MANCHESTER United is struggling to
find supporters for its initial public
offering in the US, with potential
investors put off by the huge cost of
paying players and the clubs debt
The club revealed its float earli-
er this month, but fund man-
agers who have looked at its
preliminary prospectus have
been either negative or luke-
warm on the prospect of
buying shares in the club,
which is controlled by the
Glazer family.
They say Manchester
United faces signifi-
cant financial risks
given its 423m of
debt, and the
structure puts its
fans at odds
with investors.
With a sports
franchise, its a
constant tug of war
between player
salaries cost and the rest of the opera-
tion, said Wallace Weitz, president
and portfolio manager at Weitz Funds.
Manchester United, which shelved a
Hong Kong listing last year, declined to
comment and the Glazers could not
be reached.
The Glazers plans for a dual share
structure allow them to retain almost
complete control even after selling a
large stake. It also makes a dividend
payout unlikely.
A dual class structure is definite-
ly a red flag, said Mohannad
Aama, senior portfolio manager at
Beam Capital Management.
The deal is a strong vanity
play in terms of being part
of a winning franchise
but whether or not that
mystique around the
team translates to money
for shareholders I doubt
it, said Jeff Sica, chief
investment officer of Sica
Wealth Management.
Malcolm Glazer has not yet
revealed the size of the IPO
PHARMA group GlaxoSmithKline
is hoping to secure the takeover
of Human Genome Sciences (HGS)
in the coming days, after last-
minute talks over the weekend.
HGS, which spurned Glaxos
$2.6bn (1.67bn) offer in April,
has set a deadline of today for
alternative suitors to come
But executives from Glaxo,
whose $13 per share bid expires
on Thursday, are understood to
have met with HGS in recent days
to try and seal a deal after a
Glaxo closes in on deal to buy
American pharma rival HGS
BY MARION DAKERS three-month stalemate over
A spokesperson for Glaxo
declined to comment, while
officials at Human Genome were
not immediately available.
The UK drugs firm already has
close ties to HGS, having jointly
worked on lupus drug Benlysta,
which won approval last year.
The companies also
collaborating on two other
experimental drugs in late-stage
trials for heart disease and
diabetes, where Glaxo owns a
large majority of the economic
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US funds not
impressed with
Man Utds float
AFTER the recent non-appearance of
Britains barbecue summer, who
could be lower in the nations
estimation than weather
forecasters? According to XLN
Business Services, small business
owners still trust predictions about
whether to expect rain or shine over
the models of economists.
Some 700 small firms were asked
to rate a number of professions in
terms of how good each was at
predicting the future.
Politicians scored
even worse
but did rate
higher than
fortune tellers
and astrologers.
Crystal balls go
cloudy for UK
No fear of dead cat bounces here
EARLY risers were greeted yesterday
by a bungee ballet over the Thames.
At 7.30am, 16 performers leapt from
the Millennium Bridge to touch the
water before flying back up.
Inspired by a Latin American rite of
passage, this hair-raising spectacle
was the opening act in a whole day
of gravity-defying action commis-
sioned by the Mayor of London and
the London 2012 Festival.
Quick-witted Twitter followers
could then track the performers to
dry land, for a sky walk running
down the side of City Hall. At
lunchtime, a giant wheel appeared
in Paternoster Square, with dancers
spinning their way around its rotat-
ing frame against the backdrop of St
Pauls Cathedral.
The dancers moved to Trafalgar
Square in the afternoon, which
became the stage set for an endless
climb on a spinning ladder.
Apparently the ever-revolving
Sisyphean ascent to the unreachable
top of the ladder was a metaphor,
though not necessarily for City
That said, the unlucky recent fate
of some who had climbed to the top
of the ladder at Barclays could have
inspired the following act, as
Human Fountain saw a series of
gymnasts thrown down from high
Surprises:STREB was a one-off cre-
ation by the Brooklyn choreographer
Elizabeth Streb, staged as part of this
years London International Festival
of Theatre.
Got A Story? Email
FUTURES firms who pride
themselves on keeping their eye
on the ball should get in training for
the third annual Futures Fives football
tournament. Taking place on 3
September at Powerleague
Docklands, the contest will see some
of the biggest banks, hedge funds,
and brokerage houses competing to
help raise money for Futures for Kids
To sign up, contact Deborah.Fisher@
The new
jobs website
for London
A team of daredevil gymnasts brought art to unexpected corners of the City on Sunday

VISA, Mastercard and banks that
issue their credit cards have agreed to
a historic $7.25bn (4.65bn) settle-
ment with US retailers in a lawsuit
over the fixing of credit and debit
card fees.
The settlement agreed over the
weekend, if approved by a judge,
would be the largest antitrust settle-
ment in American history and resolve
dozens of cases filed by retailers in
The card companies and banks
would also allow shops to start charg-
ing customers extra for using certain
credit cards in an effort to steer them
toward cheaper forms of payment.
Swipe fees charges to cover pro-
cessing credit and debit payments
are set by the card companies and
deducted from the transaction by the
banks that issue the cards, passing on
the cost to merchants, the lawsuits
The proposed settlement involves a
payment to a class of retailers of $6bn
from Visa, Mastercard and more than
a dozen of Americas largest banks
who issue the companies cards.
The card companies have also
agreed to reduce swipe fees by the
Mastercard and
Visa settle $7bn
retailer lawsuit
equivalent of 10 basis points for eight
months for a total consideration to
stores valued at about $1.2bn, accord-
ing to lawyers for the plaintiffs.
The settlement will help shift the
competitive balance from one former-
ly dominated by the banks which con-
trolled the card networks to the side
of merchants and consumers, said
Craig Wildfang, who represented the
Noah Hanft, general counsel for
Mastercard, said the company believed
its interests were best served by an
amicable resolution of the case.
Visa chief executive Joseph Saunders
said the settlement was in the best
interest of all parties and did not
expect the settlement to impact its
current guidance.
Visa Inc
13Jul 9Jul 10Jul 11 Jul 12Jul
124 $
CHINESE premier Wen Jiabao
warned yesterday that the
countrys economic growth was
likely to remain slow for some
time, but was still within
At present, our countrys
economic growth rate remains
within the target range set earlier
this year and we are seeing the
effectiveness of stabilisation
policies, he said, speaking at a
conference in Chengdu.
Chinas latest GDP figures,
released on Friday, showed the
China warns growth slowdown
will linger as it cuts foreign tax
slowest rate of growth since the
first quarter of 2009, with the
economy expanding by 7.6 per
cent in the three months to June.
A leaked government circular
yesterday suggested that China is
planning to encourage foreign
investment in the country by
cutting taxes applied to the
profits of overseas companies by
up to half.
Jiabao also promised that the
government will step up efforts in
the second half of the year to
increase policy effectiveness and
DEBATE: Page 17


IVE years on from the start
of the financial crisis, have
markets become immune
to central bank action?
Three recently unveiled
another batch of stimulus: the
Bank of England increased its
asset purchase programme by
50bn; the European Central
Bank cut its marginal lending
rate, cut interest rates by 25
basis points and, perhaps most
importantly, cut its deposit rate
to zero per cent; and the
Peoples Bank of China stepped
in to cut rates too. What did
markets do? Nothing.
Focus has now turned to the
Federal Reserve but minutes
from its last meeting show that
while Americas central bank is open
to buying more Treasury bonds, its
not ready yet. Fed chairman Ben
Bernanke testifies to the House
Financial Services Committee this
week, but just expect him to repeat
QE3 is on the cards if the data
continue to weaken.
Not that the Fed has been inactive
it has bought a total of $2.3 trillion
(1.48 trillion) in state and
mortgage related debt so far.
We are facing synchronised
global weakening, and neither
the US nor China can come to
the rescue. China announced
7.6 per cent growth for the
second quarter of the year, the
slowest expansion in three
years. Meanwhile the US
economy is expected to
weaken to around two per cent
this year, and Strategy
Economics says the Eurozone
is set to contract 0.7 per cent.
Today the economic focus is
on the US Empire State
manufacturing survey and US
retail sales, ahead of the Philly
Fed on Thursday. We also get
US housing starts and building
permits for June (Wednesday),
along with US existing home
sales (Thursday) good gauges
for the real economy.
In Europe, its the German
ZEW survey and UK June
inflation data on Tuesday,
with UK unemployment and
MPC minutes on Wednesday.
Have MPC members started to
question how effective
quantitative easing really is?
Are they looking into other
options? We shall see.
Louisa Bojesen is anchor of CNBCs
European Closing Bell.
Twitter: @louisabojesen
Returns diminish as central banks act
BLACKBERRY maker Research in
Motion (RIM) has said it will fight an
order to pay $147.2m (94.6m) in
damages for using patented technol-
ogy in its smartphones.
RIM was last week ordered to pay
software firm Mformation
Technologies the fee $8 for each of
the 18.4m BlackBerrys sold in the US
since claims were filed in 2008
after a San Francisco jury upheld the
The technology allows companies
to access their employees phones
remotely for upgrades or password
RIM said it was disappointed by
the outcome and does not believe
the patent in question is valid.
The company said it would decide
whether to appeal after the judge
has decided certain legal issues that
might impact the verdict.
The payment order is the latest
blow to RIMs fortunes after it was
RIM pledges to
appeal $147.2m
damages order
BY JAMES TITCOMB forced to cut 5,000 jobs a third of its
workforce after reporting a $192m
loss for the three months to June. It
has also delayed its next generation
of handsets until next year.
We believe [the patents have] been
fundamental to the success of RIM,
said Mformations lawyer Amar
Shares in RIM, which has seen its
market share hit by Apples iPhone
and handsets running Googles
Android software, fell to their lowest
level since 2003 last week.
Premier to develop Iraq oil block
n Premier Oil is teaming up with
Russia's Bashneft to develop Iraq's oil
block 12, an Iraqi oil official said
yesterday. Last month Iraq awarded
Bashneft rights to develop the field.
Bashneft has now chosen Premier Oil as
a partner, Abdul-Mahdy al-Ameedi,
head of the oil ministrys contracts and
licencing directorate, told reporters.
Bashneft will hold 70 per cent and
Premier Oil 30 per cent in the project,
he said.
Nokia slashes smartphone price
n Nokia has cut the US price of its
flagship smartphone in half, barely three
months after its launch, in an effort to
staunch losses in market share to rivals
such as Apple and Samsung Electronics.
The cost of the Lumia 900 Windows
phone has been reduced to $49.99 from
$99 with a two-year agreement, Nokia
spokesman Keith Nowak said yesterday.
Nowak said the price cut is part of our
ongoing lifecycle management, which is
jointly done between Nokia and carrier
Airbus boss sees Boeing price war
n The chief executive of Airbus said US
rival Boeing has slashed the prices of
Boeing 737 Max aircraft in a bid to grab
market share from Airbus A320neo, a
German newspaper reported yesterday.
Boeing is desperately trying now to
boost the market share of B737 Max.
They are very aggressive when it comes
to pricing, Fabrice Bregier said in an
interview with Welt am Sonntag. For
the full year, Boeing will likely
announce a higher level of new orders
for the whole group than Airbus, he
Galliford Try to develop St Clements
n Construction firm Galliford Try has
been selected as the preferred
developer to build more than 200
homes at the former St Clements
hospital site in Mile End, Tower
Hamlets. Mayor of London Boris
Johnson will this morning announce
that the company had been chosen to
develop the capitals first community
land trust. The development will see the
freehold of the entire site being held in
trust for the local community. Some
homes will be directly owned by the
East London Community Land Trust and
residents will be involved in managing
the future neighbourhood.
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13Jul 9Jul 10Jul 11 Jul 12Jul
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Brought to you by
City A.M. is measuring the relative Olympic
media buzz around the London 2012
Olympic and Paralympic Games partners,
week by week. The leaderboard, right,
reflects their ranking over the past week, in
this case from Wednesday 4 July to
Wednesday 11 July.
Samsung has been picking up coverage for
its Galaxy S3 smartphone promotion. This is
partly because David Beckham appears in
the campaign, but also due to the launch of
its London 2012 Olympic app. Otherwise,
Samsung has been running a series of Take
Part events across the country, aimed at
reaching 1m people. The events are linked to
social networks, and users are encouraged
to tag themselves in crowd photos.
Brand Position change
McDonalds -
Coca-Cola 1
Samsung -1
Visa -
British Airways 2
BP -
Adidas -2
Atos 9
BT -

National News
PLANS to vary public sector wages by
region could hurt both jobs and
output, the Trades Union Congress
(TUC) and New Economics
Foundation (NEF) have claimed
The rationale for the plan is that
wages and the cost of living vary
widely across the country the
familiar London weighting is a blunt
example of the basic idea in action.
These variations in wages and
prices mean not only that real wages
are higher for public sector workers
in low-cost areas, but also that public
jobs crowd out private employment,
as workers hold out for attractive
jobs on the state payroll.
But the NEF and TUC believe that
the hit to purchasing power will
harm consumption and thus the
economy as a whole, reducing
output by nearly 10bn and
potentially leading to some 110,000
net job losses.
Tim Worstall at the Adam Smith
Institute argued that even if true,
this was inconsequential.
We know very well that national
pay scales harm people in high wage
areas, he said.
The idea and aim of having
regional or local pay scales is not to
reduce wages in cheap areas it is to
increase them in expensive ones.
claims on local
pay criticised
HOUSE PRICES dived in July, after a
double hit from bad weather and
sporting distractions, according to
Rightmoves July House Price Index
released today.
The average property asking price
was 242,097 in July, 1.7 per cent
lower than the 246,235 recorded in
June. However this average was still
2.3 per cent up on the year, and 97 per
cent above the prices recorded back in
January 2002.
Those keen to sell this summer
have the challenging confluence of
miserable viewing weather, the con-
tinuing credit-crunch, plus a sporting
distraction of Olympic proportions,
said Rightmoves director Miles
A shock revelation was that Greater
London actually led the decline, with
a 3.6 per cent fall on the month
though prices are still 6.4 per cent up
compared to last year.
While new listings over the last year
were on average 102,121 a month,
London leads
July drop-off
in house prices
BY BEN SOUTHWOOD average sales completions were just
above half that, at 56,220 a month.
Stock levels have grown for five consec-
utive months, so that there are now 75
unsold properties per estate agent.
Even though the supply of new
properties remains constrained com-
pared to pre-credit-crunch levels, seller
levels substantially outnumber those
of buyers, Shipside went on to say.
The report also revealed that buyers
spend minimal time looking at sum-
mary adverts before deciding whether
to follow them up or move on.
As a seller your property advert has
less than three seconds to make a pos-
itive impression with a potential
buyer, Shipside warned, Making an
immediate impression is more impor-
tant than ever, and this means finding
the perfect combination of attractive
price, compelling photographs and
alluring description.
The data comes from 107,915 asking
prices, representing about 90 per cent
of the UK market, put on Rightmoves
website by estate agents between 10
June and 7 July.
GROWTH should return to the
economy over the next six months,
according to forecasts out today
from the Ernst and Young Item
Club, but the pace will be so slow
that unemployment will get worse
before it gets better.
The squeeze on household
incomes should slow as consumer
price inflation falls to 1.7 per cent
by the end of the year, allowing the
economy to expand through the rest
of the year, the group forecast.
That will leave GDP unchanged
for 2012 as a whole, with growth of
1.6 per cent in 2013 and 2.6 per
cent in both 2014
and 2015.
But poor
growth in the
year so far means
spending is soaring
while revenues are
disappointingly slow,
the economists warned.
Central government
spending was 7.9 per cent
higher than a year earlier
in May, the strongest
growth in eighteen
months, said the report.
Revenue growth has
weakened significantly
in recent months and in May central
government receipts were up just 1.6
per cent on a year earlier, well short
of the OBR full year forecast of four
per cent.
And despite the projected
growth for the rest of 2012, the
forecast still sees
unemployment rising in the
coming months, from 8.2
per cent in the three
months to April to 8.6 per
cent by the end of the
year and peaking at 8.7
per cent in early 2013.

Share of private sector gross value added
1990 1994 2002 2009
Total investmentintensity
ITALYS government will revise its
forecasts to predict an even deeper
recession, when it updates its
official estimates in September,
new economy minister Vittorio
Grilli said in an interview
published yesterday.
The government will forecast a
contraction of just under 1.9 per
cent in 2012, deeper than the 1.2
per cent previously forecast.
That brings it close to the Bank
of Italys estimate of a two per
cent contraction but more
optimistic than the employers
lobby Confindustrias prediction
of a contraction of more than 2.4
per cent.
Grilli said the Italian government
Italy faces harsher contraction
this year as austerity kicks in
was wrestling with the question of
how to reduce its debt. Italys
borrowing costs were still too high,
he said, but short-term rates had
fallen from a year ago when
financial market pressure
eventually led to the toppling of
former Prime Minister Silvio
Berlusconis government last
Grilli said markets had not yet
recognised the full effect of the
governments deficit-reduction
measures and structural changes to
labour and pension laws. He said
that 40 per cent of Italys debt is in
foreign hands.
Grilli said in the interview that
most feasible path to debt
reduction is a multi-year plan to
reduce Italys debt pile.
UKs lost decade for innovation
as focus is on bricks and mortar
THE UK has undergone a lost
decade of investment into
innovation, instead piling into
cash and concrete, said charity
Nesta today.
Between 2008 and 2011
innovation investment collapsed
by over 24bn, according to their
survey of 1,200 businesses a fall
equivalent to five times the
governments budget for science
and technology research.
This was made up of a seven per
cent fall between 2008 and 2009,
and a further 14 per cent collapse
between 2009 and 2011.
Everyone agrees that
innovation is the only route to
long term growth, claimed Geoff
Mulgan, chief executive of Nesta.
The concern is that todays
report and investment index show
that investment didnt just fall
during the immediate aftermath
of the financial crisis, but
continued falling as the economy
appeared to stabilise, Mulgan
Nesta believe that more
innovation is necessary for
continued sustainable growth,
arguing for the implementation of
its Plan I, which aims at
innovation led growth, and whose
details they will release over the
coming months.
SAVINGS have been increasingly
squeezed over the last year,
households are having a tougher
time making ends meet and more
people have been forced to borrow
from their families, according to
research published by Scottish
Widows today.
In a survey of 1,500 adults aged
18 and over, 54 per cent of women
and 45 per cent of men reported
having less money at the end of the
month than they did last year.
Thirty per cent of men and 37
per cent of women say they have
had to stop regularly saving, while
26 per cent of women and 17 per
cent of men said theyd been forced
People borrowing more from
their family during recession
to sell items online to raise cash.
There was also a gender divide in
reports of borrowing from families,
where nearly a quarter of women
but only 14 per cent of men
reported being forced to borrow.
We know that women are more
likely to worry about financial
issues, claimed panel member Liz
Fraser, However, women are being
hit hard by the current recession
many have part-time jobs to fit
around their children, and these
tend to be the first jobs to go in a
But both genders were being
hammered by financial challenges,
with 42 per cent of men, and 48 per
cent of women seeing them as the
biggest issues facing their families.
Monthly averages of transactions and new property listings
Mar12 Mar11 Mar10 Mar09 Mar08 Mar07
Time on market indicator
Jun May Apr Mar Feb Jan Dec Nov Oct Sep Aug Jul Jun
2012 2011
London leads monthly house price slump, bucking long-term recovery
George Osborne is battling
to bring spending down
Economists warn slow recovery
will lead to unemployment rise
The Supreme Court
The UKs final court of appeal for
civil cases has announced that
Lord Neuberger of Abbotsbury
will become Britains top judge
from October when he takes up
the role of president of the
Supreme Court. Our story on
Friday 13 July contained an
incorrect photograph, for which
we apologise.
Norton Rose
The law firm has appointed Simon Lew as a shipping
partner in its London banking practice. Lew has been a
partner in Clifford Chances banking and finance practice for
the past 16 years, and has headed its ship finance practice
for the last five years. He specialises in structured finance,
leasing and restructuring.
Towers Watson
Ross Howard has been appointed global leader for the
professional services firms insurance and reinsurance
brokerage business. He has over 35 years experience in the
industry, and joined Towers Watson in 2002 after its
acquisition of M Clayton & Co.
SNR Denton
The law firm has announced three senior hires into its
banking and finance division. John Stansfield will join its
Moscow office. Qasim Aslam joins the Dubai office. Jean-
Norbert Pontier joins the firms Paris office.
Perella Weinberg Partners
Nick Johnston has been appointed managing director in
the financial services firms London-based healthcare
sector advisory group. He was most recently an executive
director in JP Morgans healthcare investment banking
One Media
The music and visual rights acquisition firm has appointed
Julian Wall as managing director of its One Media
Publishing subsidiary. He is currently director of
independent member services and international events at
the BPI, the music industrys trade federation.
The law firm has announced three new partner hires in its
London office, effective September 2012. Peter Castellon
joins from Citigroup, where he is currently deputy general
counsel, banking and capital markets. Katherine Mulhern
joins from Kaye Scholer and Roberto Bruno joins from
Cravath Swaine & Moore.
Liberty Global
Nick Marchant has been appointed managing director and
treasurer of the international cable company. He joins from
JP Morgan. Marchant replaces Dennis Okhuijsen.
+44 (0)20 7092 0053
UK firms set to
update market
in busy week
SLEW of company results this
week culminates with a busy
Thursday, when retail giant
Sports Direct, Halfords,
Kingfisher and Mothercare are all set
to update the market.
Accountancy software maker Sage is
set to give an interim management
statement today, which will be fol-
lowed with a Capital Market Day for
investors tomorrow.
Panmure Gordon says todays update
is likely to be hampered by the grim
state of affairs in Europe and has
reduced its earnings forecast from
19.9p to 19.3p a share.
Tomorrows economic news includes
details of the Consumer Price Index
and Retail Price Index. IG Group will
also give its full-year report.
On Wednesday, the minutes from
the July meeting of the Bank of
Englands Monetary Policy Committee
will be published, where the major
point of interest will be the vote on the
decision to beef up the banks asset
purchase programme. The unemploy-
ment rate is also set to be announced.
Cable and Wireless Worldwide will
host its annual general meeting while
Ebay and Ericsson are set to give sec-
ond quarter updates.
On Thursday DIY retailer Kingfisher
is forecast to give a solid second quar-
ter update, despite the poor weather
recently. Broker Jefferies predicts the
firms second quarter earnings before
interest and tax to be broadly
Sports Direct is set to give a final
report, while Britvic, Halfords and
Imperial Tobacco will give interim
management statements and
Mothercare will also deliver a trading
Gulf Keystone, JJB Sports, Land
Securities and Mothercare will have
their annual general meetings.
Technical companies updating the
market include Microsoft, Nokia and
In economic news, the EU will
announce its balance of payments.
Meanwhile the UKs retail and inter-
net sales figures for June will be
released, with investors hoping for a
spike from Jubilee celebrations.
On Friday, mobile phone networks
giant Vodafone will give a first quarter
update. Nomura predicts the group
will deliver year-on-year organic
growth of 0.7 per cent, down from 2.3
per cent
AGMS include CWW, Mulberry,
Homeserve and Walker Crips.
NVESTORS are looking at an onslaught
this week. If its not corporate earnings,
its Ben Bernanke talking about
economic issues before Congress.
Recent warnings from a number of com-
panies, including chipmaker Advanced
Micro Devices, helped drag the S&P 500
lower for six straight days before a Friday
The S&P 500 and Dow erased losses for
the week, barely finishing higher by 0.2 per
cent and less than 0.1 per cent, respective-
ly. The Nasdaq composite fell 1 per cent for
the week.
With a slew of companies set to report
results this week, the hope among
investors is that the bad news has been fac-
tored in, but the broader picture remains
lacklustre. That may limit the markets
gains even if companies clear a low bar.
Expectations have been beaten down a
lot, said Robbert Van Batenburg, head of
equity research at Louis Capital in New
York. The problem is were dealing with a
global slowdown, and Im sure thats going
to be reflected in some of the comments
youre going to be hearing.
Data showing slower growth in Europe,
China and the United States has weighed
on the stock market, while US companies
have warned about overseas weakness and
a stronger dollar hurting profits on
The minutes from the Federal Reserves
June meeting suggested it is not ready to
inject more monetary stimulus into the
economy, but traders will be hanging on
Federal Reserve Chairman Bernanke's
every word for mention of such a possibili-
ty and how he views the slowing economy.
This week, dozens of Standard & Poors
500 companies are set to report. From top
technology names including Intel and
Microsoft, to General Electric and Coca-
Earnings estimates have already fallen
sharply. S&P 500 earnings for the second
quarter now are expected to rise just 5 per
cent from a year ago, down from an esti-
mate of 9.2 per cent at the beginning of
April, according to Thomson Reuters data.
Nearly all sectors have seen estimates fall
due in part to weak demand in Europe.
Energy and utilities are expected to be the
weakest performers this quarter after big
declines in energy prices in the second
The fall in estimates could be enough so
that the majority of companies end up
beating expectations, as they typically do,
inspiring a relief rally. That could bolster
the S&P, where trading has narrowed to a
range between 1,310 and 1,370 for most of
a month.
Investors could see some downside sur-
prises in high-end consumer companies,
industrials and financials, said Paul
Mangus, head of equity research and strat-
egy for Wells Fargo Private Bank in
Charlotte, North Carolina.
For example, Bank of America is expect-
ed to report earnings of 15 cents a share on
Wednesday, but Thomson Reuters
StarMines SmartEstimates put expecta-
tions at 13.5 cents per share, or a miss of
about 9 per cent.
The technology sector could be a mixed
bag, Mangus said.
On one hand, there are very good trends
on the software side. (But) there may be
some disappointments among some of the
hardware manufacturers, he said.
Besides Advanced Micro Devices, a weak
forecast was issued by fellow chipmaker
Applied Materials last week, while engine
maker Cummins warned on sales. AMD
reports results on Thursday.
Negative to positive earnings guidance
for the second quarter is 3.3 to 1, the worst
since 2008, Thomson Reuters data showed.
Among other S&P companies scheduled
to report are Goldman Sachs, Citigroup
and Johnson & Johnson.
The final details of a Spanish bank
bailout are expected this week among
developments in the 2 1/2-year old Euro
zone debt crisis.
Bernanke is due to deliver his semi-annu-
al monetary policy report to Senate and
House of Representatives committees
tomorrow and on Wednesday, although
analysts said he is not likely to divulge
plans of further economic stimulus.
Stocks lost ground last week as Federal
Reserve minutes showed further fiscal
stimulus is unlikely for now.
Investors hope for market lift from
company reports and Fed policy
Booker Group PLC
9Jul 10Jul 11Jul 12Jul 13Jul
p 94
13 Jul
Peel Hunt rates the wholesale retailer buy with a target price of 100p
ahead of an interim management statement on Wednesday. The broker is
expecting to see a two per cent rise in like-for-like sales, excluding
tobacco, and sees an opportunity to buy into the shares if the figures end
up disappointing the market. Peel Hunt is particularly keen on buying at
this stage following Bookers 140m purchase of Makro in May.
9Jul 10Jul 11Jul 12Jul 13Jul
13 Jul
To appear in CITYMOVES please email your career updates and pictures to
in association with
Mothercare PLC
9Jul 10Jul 11Jul 12Jul 13Jul
p 196
13 Jul
Seymour Pierce rates the high street chain sell with a target price of
145p. The broker expects the recent miserable weather to have dented
sales at several retailers due to update the market on Thursday,
including Kingfisher, Halfords and Sports Direct. But Seymour Pierce
expects struggling Mothercare to come off worst, with a nine per cent
fall in first quarter UK sales.
Aegis Group PLC
9Jul 10Jul 11Jul 12Jul 13Jul
p 240
13 Jul
UBS has downgraded the media group from buy to neutral and hiked
its target price from 195p to 240p following a 3.15bn takeover offer from
Dentsu. The broker thinks the current bid price of 240p per share appears
to fully value the firm and expects the deal to close in spite of some rival
interest. UBS also points out that, due to very little client and
geographical overlap, the deal is unlikely to have anti-trust problems.
FTER weeks of problems
in the banking sector
making front pages, its
time we start taking steps
to move business back to
where it belongs: the business
sections of our papers (though
that would, of course, be hard in
the case of this newspaper).
Reputation matters and its the
driving force behind any good
business. And a good reputation
is based on trust.
In 1923, the London Stock
Exchange received its own coat of
arms bearing the motto dictum
meum pactum my word is my
bond. The vast majority of
workers in the City of London still
follow this principle closely. It not
O SAY that high-frequency
trading (HFT) is blamed for
every big financial mishap is
to exaggerate but only
slightly. Regardless of the
hard evidence from academics,
exchanges and regulators about the
positive impact of HFT, the critics
continue to dominate headlines.
Its not hard to see why. Innovation
in any industry has always attracted
critics. To compound matters, the
media and policy makers alike are
receptive to anti-HFT rhetoric
because it is anti-financial industry.
But the evidence tells a very differ-
ent story.
Take the May 2010 flash crash.
Again and again the critics cite it as
exhibit A in their indictment of HFT.
Yet a joint report by the Commodity
Futures Trading Commission and
the Securities and Exchange
Commission, the two government
agencies that oversee the US mar-
kets, concluded that HFT wasnt the
cause. Moreover, a report by the
Chicago Mercantile Exchange shows
that far from causing the flash
in association with category sponsors venue sponsor champagne reception sponsor
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Visit: to enter the City A.M. Awards 2012.
Extended deadline: 20 July
Five days left to register.
Transaction costs in
US equities have fallen
by about 60 per cent
in the last 15 years
Twitter: @cityamforum on the web: or by email:
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

High-frequency trading is not the
devil behind every market mishap
crash, high-frequency traders actual-
ly absorbed the initial sell orders.
The latest example of anti-HFT crit-
icism came with the Facebook fias-
co. Once again the critics pointed
their fingers at high-frequency
traders and blamed them for the
bungled offering. This is an absurd
accusation. Nasdaq has acknowl-
edged that its own technical issues
were to blame for the problems that
dogged Facebooks market debut.
Contrary to claims, HFT firms
caused no disruption to Nasdaqs
problems in opening up Facebooks
shares for trading.
Yet the myths persist. Our mission
at the FIA European Principal
Traders Association (EPTA) is to
bring balance to the HFT debate. We
recognise that fact can be less com-
pelling than fiction, and we know
that we often stand in the way of
the medias never-ending search for
a good story for tomorrows paper.
But financial market policy must
not be driven by emotive language,
anecdotes and fabrications.
The great thing about electronic
markets is that there is plenty of
market data available for analysis,
and we think this empirical evi-
dence convincingly demonstrates
the benefits of HFT.
Lets look at some of that evidence.
HFT has substantially reduced fric-
tional costs in the markets and is
therefore of benefit to end-users,
including pensioners. As Vanguard
has stated, transaction costs in US
equities have decreased by about 60
per cent in the last 15 years. These
lower transactions costs will enable
mutual fund investors to expect an
investment balance around 30 per
cent higher than they would have
Equally misguided are assertions
that HFT causes volatility. Much aca-
demic evidence shows that it either
does not affect volatility, or even
reduces it. Volatility is more likely to
be caused by macroeconomic and
financial developments. And rather
than leaving the market at times of
high volatility, as is claimed, the evi-
dence suggests that HFT firms do
the opposite. Our organisations fig-
ures on the amount of trading by
our members shows that our mar-
ket shares peak in periods of volatil-
Then there is the charge that high-
frequency traders provide fake liq-
uidity, withdrawing quotes before
they can be acted upon. This is
impossible. Automated and regulat-
ed exchanges simply do not enable
fake quotes. These markets are not a
cat and mouse game, where the
mouse gets back in its hole as soon
as he sees the cat. In the exchange
traded markets the only way the
mouse knows that there is a cat is
when hes already been eaten. In
addition, in a large amount of the
trades executed on exchanges, our
members are involved on at least
one side of the trade. The liquidity
that we provide is very real and very
Our critics choose to overlook the
value we add to the real economy.
We lower transaction costs and
increase liquidity. As such, we urge
policymakers to weigh up the costs
of regulatory reforms. No one bene-
fits if badly designed regulations
disrupt liquidity and drive up costs
for traders and investors.
Remco Lenterman is chairman of FIA
EPTA. FIA EPTA represents firms that
trade their own capital in the European
exchange-traded markets.
only supports ethical behaviour,
but it makes very good business
sense. Yet although the vast
majority of those who work in the
City had no involvement in, or
even knowledge of, the Libor issue,
we cannot dismiss it as a matter of
one bad apple spoiling the bunch.
The culture and working practices
in some financial institutions were
not acceptable. Should further such
activity be uncovered by
investigators, we expect the
perpetrators to feel the full force of
regulatory action.
This scandal has been damaging
to the City and those who work in
it, so it is important that we start
dealing with the problems at the
heart of this issue. We must also
make sure that we are seen to be
doing so. We must be more active,
receptive to change and firm with
those who have behaved badly.
The depth and breadth of any
problem should not go
unacknowledged. This is not just
about British banks and the City of
London. It is one thing when an
individual bank is implicated in a
scandal like this, but we are
looking at a problem of a whole
different order when
investigations are taking place
into the conduct of over 20 banks
Justice needs to be done, and
swiftly. The reason for this
urgency is because banking on its
own itself just one component of
the financial services industry is
a critical part of our economy. A
successful financial services sector
supports jobs and growth in all
parts of the country. Financial
services contributed 63bn in
annual tax revenues in the year to
March 2011.
Contrary to what the industrys
critics might suggest, changes are
taking place. Investment and retail
banking operations are being
partly separated following the
Vickers report.
There is certainly a need to
review the way Libor is calculated
and mechanisms must be put in
place, such as living wills, to help
ensure that, should banks fail,
there would be no cost to the
We must prove ourselves once
again worthy of the publics trust.
This means putting the wider
public, as well as clients and
shareholders, at the heart of
practice upholding the highest
standards of ethics.
Mark Boleat is policy chairman at
the City of London Corporation.
The whole City must work to rebuild the trust destroyed by a rotten few
General enquires: 020 8267 4043 | | Awards night: Wednesday 17 October.
Health solutions
[Re: Demographic timebomb will force
government to downsize, Friday]
There are plenty of other healthcare models
to explore to avoid the incipient funding
crisis. One is the Singapore model of health
savings accounts, which provides direct
subsidies to the less well-off and
catastrophe insurance to pay for huge one-
off costs. Another is the Dutch social
insurance model, a private insurance
scheme in which everyone pays the same.
Neither of these alternatives is the complete
solution. For that, we need significant
supply-side reform, including in the way we
train doctors. Unfortunately, the British
Medical Associations recent successes over
pay have come at the expense of taxpayers.
Paul Devenish
Generation divide
People are living longer, so we will either
have to work longer, take a smaller pension,
or pay more in contributions. And as a coun-
try, well have to adopt more voluntary and
charitable networks to support our elderly.
Wealthier people should also be encouraged
to use private health insurance. As a young
person, Im disheartened that I pay for such
expensive services, used so liberally.
How many young people can truly say they
can expect the same standard of care in 2040
as the elderly get now, if we keep the same
funding model? Were worrying about the
wrong issues university fees wont seem so
important at 65.
HE so-called shareholder
spring in which
shareholders have been
revolting against the pay of
chief executives of major
corporations like Barclays, Aviva,
and William Hill is gaining
momentum. And activist hedge
funds, which pressure public
companies to make changes to
improve a companys share price,
will increasingly drive this
phenomenon. Many regard hedge
funds as self-serving vultures
but this stereotype is being
Activist funds, a common phe-
nomenon in the US, are spilling
over to the UK. Along with private
and institutional investors, activist
funds are increasingly getting
involved to try and improve share-
holder returns, curb excessive pay
and add their representatives to
boards of directors.
Europes largest activist fund,
Swedish-based Cevian Capital, has
been active in Britain and success-
ful in improving shareholder
returns. Cevian built a stake in
Cookson Group, the British indus-
trial materials supplier, before
almost a third of shareholders
revolted against excessive executive
pay proposals for 2012. The
Childrens Investment Fund
Management (TCI) is a London
based hedge fund known for its
shareholder activism. Most recent-
ly, TCI has been a major sharehold-
er of Deutsche Borse, the German
Stock Exchange, where it forced the
resignation of its chief executive,
who refused to abandon his plan to
take over the London Stock
The recent successes of activist
hedge funds in the US in changing
the management of companies
spearheaded by activist investors
The government gets away too easily with
the current dire situation. Increasing public
spending must be denounced as insane.
I no longer expect this coalition to make the
bold, radical changes Britain so urgently
Are any of the 17 army units cut by the gov-
ernment last week being put on standby this
week for Olympic security?
If its possible to prosecute traders for manip-
ulating Libor, can we prosecute the Bank of
England for manipulating the base rate?
After Chinas growth slowed to 7.6 per cent
last quarter, should we remain optimistic?
Chinas economy slowed in the last six months but, in contrast to the
downturn of 2008, the local jobs market has held up well. Its hard
to be that worried about a country in which the average city-dweller
saw their income rise 13.3 per cent between the first half of this year
and the same period in 2011. A tight labour market will continue to
push up wages, supporting consumption going forward. Meanwhile,
things are beginning to look up in the property market, the main
economic black spot. According to one closely-watched series,
home prices rose in June, for the first time in 10 months.
Government efforts to boost infrastructure investment will also
begin to have an impact in the second half of 2012. Growth is easing
from the boom rates seen in the recent past, but it should remain
strong for many years to come.
Duncan Innes-Ker is China analyst at the Economist Intelligence
Duncan Innes-Ker
Michael Derks
These latest GDP figures out from China simply affirm the
distinct loss of momentum experienced by the Chinese economy
in the first half of this year. Major sectors within the economy,
particularly construction and real estate, heavy industry and
automobile production, have all slowed much more rapidly than
expected. The vast majority of Chinese firms are also reporting
shrinking profit margins and slowing profits growth. Looking
ahead, notwithstanding recent policy initiatives, the pace of
recovery will remain subdued. China is very reliant on global
trade to sustain its domestic growth, and the prognosis for the
former looks subdued at best. We can expect much more from
Chinese policy-makers over coming months in terms of
monetary and fiscal measures, as well as a weaker exchange
Michael Derks is chief strategist at FxPro
like Carl Icahn, Bill Ackman, Dan
Loeb and Nelson Peltz demon-
strates that positive changes can be
carried out without more govern-
ment interventions. In most cases,
intervention by hedge funds result
in management changes, represen-
tation in the board, reduced chief
executive pay, better share per-
formance and dividends, as well as
an increased chance of emerging
from Chapter 11 bankruptcy.
In the past, corporations with a
market capitalisation of $100bn
(64.3bn) or more had the power to
ignore calls from activist funds.
Not anymore. They are now
responding quickly to any fund
that holds below one per cent of
their shares.
Some of the US governments
new regulation has been successful
in empowering shareholders to
vote on executive pay. US share-
holders are now in a position to
regulate major corporations and,
for a change, have public opinion
on their side. It is not clear to what
extent shareholders in the UK will
be as effective as those in the US in
curbing executive pay. British chief
executives are likely to be spared an
annual vote on their bonus and pay
more likely it will be only every
three years. These are early days for
activist funds in the UK.
Gil Shidlo is an academic who has
worked at international organisations.
He contributes to various London School
of Economics publications.
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The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email or comment at
Shareholders can
find a potent ally
in activist funds
T WAS depressing: the
business was making
continual losses. Wed tried
everything we could think of,
but nothing seemed to work.
Wed made many mistakes and
had an unfair share of bad luck.
We reached a decision: find a
buyer and sell it. The business
was fundamentally sound, so in
the right hands it had to have
Things went well and we found
two serious buyers. I was running
the process and got the dream
result, a bidding war. The price
went higher and higher just
what I wanted. I played my hand
badly though and, overconfident,
let one buyer drop out. I was
happy the other would deal at
2m. Then I got the early
morning phone call from the
French buyer. The contract is
ready and all is agreed
exceptwe are changing the
purchase price. Oh really? I
asked. What to? Just a few
seconds pause and he said softly,
Zero. Rien? What do you
mean? Im saying well take it
off your hands for you. I was
probably the rudest Ive ever
been in a business conversation,
and I hope his English was good
enough to understand my
Australian response. I ended up
selling to a third buyer at half a
An unhappy result, but selling
a business is tricky. Even after
things are agreed and contracts
signed, the due diligence can
throw up something the buyer is
unhappy with. That nearly
happened with one tech company
we had when a patent wasnt as
complete as the buyer wanted.
Fortunately, we convinced the
buyers it was sufficient for their
needs and they didnt demand a
price reduction.
Even your own staff can be
tricky. Often the buyer wants key
people to stay with the
business. When a
friend of mine sold a
recruitment company
shed started years
earlier, for a
decent price, she
was amazed when
her top manager
suddenly demanded
about a third of the
The manager was
seen as very
important to the
business, but had
never bought shares
or done the start-up
work. Hed always
been on a good
salary, and was even
due to get a pay rise
after the sale. The
two were good friends but
jealousy, greed and a sense of
entitlement took over. He got his
For another company of mine,
the problem was the bank. Our
business had a lot of debt, but
was profitable and gradually
paying it off. We had been in
slight breach of a few accounting
ratios, but the bank had accepted
this for years without complaint.
It didnt want to lose us as a
customer if we refinanced
elsewhere. Then we hit
gold. The business was to
be sold for a great return.
What did the bank do?
Knowing there was no
point in us changing bank
and that theyd be losing us
as a customer, they started
charging enormous
monthly fees for our
technical breach. I think
they grabbed about thirty-
five grand from us as we
sold. And it wasnt even a
French bank.
Since the mid-1990s Richard Farleigh
has operated as a business angel,
backing more early-stage
companies than anyone else in the
United Kingdom.
Dominique Lazanski talks to Stephen Catlin, founder of the eponymous insurance company
OT MANY outside the
insurance industry know
the name Stephen Catlin.
But he is one of the most
successful UK businessmen.
Over the last 30 years, he has turned
a two person reinsurance company
into a 3.5bn international firm
Catlin Group. The eponymous CEO
was crowned UK winner at the Ernst
& Young World Entrepreneur of the
Year awards last year.
He established Catlin Group back
in 1984 as a two person syndicate of
Lloyds of London. It has since grown
to have 56 offices in 21 countries and
will soon launch an office in Beijing.
Despite this rapid expansion,
Catlin thinks that the insurance
industry is intrinsically really poor
at selling itself. There is no pleasure
in buying insurance because you
only benefit at a loss. People always
tell the bad stories about their poor
As such, he explains that his firm
has a challenge in marketing itself
because its biggest successes come
on the heels of crisis or panic. Catlin
Group prides itself on dealing with
these issues swiftly, in a cost effec-
tive manner and with the utmost
diligence and intelligence. However,
it is hard to capitalise on the nega-
tive situations of others.
Catlin considers hard work to be
the most essential characteristic of
an entrepreneur. He admits that
there were times over the first 10
years when money and clients were
in short supply, and he worried
about paying his mortgage. But the
hard work paid off.
He worries now for the future of
the UK. We live in a global world,
and I deal with products and clients
globally. Part of the problem is that
the government interprets EU rules
too strictly. It is too harsh and restric-
tive, and Catlin keenly believes the
UK now needs a wakeup call. The
UK has a history of legal certainty
and business growth. In London, we
are in the right time zone to work
across the globe. We dont need com-
placency in regulations.
Catlin Group is now looking
beyond the world of insurance. The
most recent project it supports is the
Catlin Seaview Survey. In conjunc-
Decades of hard work
and entrepreneurship
Company Name: Catlin Group
Founded: 1984
Company turnover: $4.5bn (2.8bn)
gross premiums written
Number of staff: Approximately
Job Title: Chief executive
Age: 58
Born: Aldershot, Hampshire
Lives: Bermuda
Studied: Life (did not attend uni-
Drinking: Red wine
Currently reading: Histories of
China and Turkey
Favourite business book: The Big
Short: Inside the Doomsday
Machine, by Michael Lewis
Motto: Build a business for the
Talents: Communication and peo-
ple skills
Hero: My grandfather
First ambition: To make a differ-
Awards: Ernst & Young UK
Entrepreneur of the Year, 2011
Stephen Catlin has grown a two-person insurance syndicate into a 2.8bn giant
Lost in translation: The often tortuous trials of selling-up
tion with Google, Catlin Group is
creating a Street View of reefs near
the Great Barrier Reef and Coral Sea.
Catlin hopes that this work will
help to encourage further study. To
him, the most exciting factor about
a previous Arctic Survey his firm
supported was that the information
it delivered is now available to all
researchers to use and collaborate on.
It provided more accurate measure-
ments of arctic ice, and Catlin hopes
that the Seaview project will open up
similar opportunities for researchers.
As an established chief executive,
Catlin travels for most of the year and
is working hard on expanding his
firm. But attending the World
Entrepreneur of the Year made him
take pause. What can I do to enable
an entrepreneurial environment over
the next 10 years at Catlin? he won-
ders. Given that retaining an entre-
preneurial ethos is the holy grail for
all large firms, it wont just be jour-
nalists waiting to see whether he
manages to pull that one off.
Anti-finance hate
has gone too far
HEN a teacher commits a crime,
people dont question the
legitimacy of education. And
when a doctor breaks the law
and the Hippocratic oath
people dont suggest that there is something
inherently corrupting about giving people
the power to save lives. Yet different
standards are applied to finance. Far too
many commentators take the specific most
recently, the Libor scandal and tar the
whole industry with the brush of criminals.
Finance is more than Libor traders. Taken
as a whole, the industry forms the veins that
keep the global economy pumping.
Entrepreneurs are reliant on the finance
industry to breathe life into their ideas, but
they can also disrupt the industry as
financial service entrepreneurs.
Finance is a hotbed of entrepreneurial
activity. Kickstarter the crowd funding
website for creative projects has
announced its coming to the UK. A recent
Kickstarter project for a hackable Android-
based video gaming device raised over $3m
it passed $1m in just 8 hours and 22
minutes. Its as though companies are going
public on launch. The UK has its own
innovative lending companies, like Funding
Circle, which was set up by Samir Desai,
James Meekings and Andrew Mullinger in
2010. It has already lent 38m and is
currently lending more than 1m per week.
At the recent European showcase for the
Society for Worldwide Interbank Financial
Telecommunication, Digital Shadows, a UK
company, was named top start-up. Digital
Shadows offers a cyber monitoring service
that protects organisations from the risks to
their security and reputation posed by the
information they expose online. It goes on
to compete for the global prize in Osaka.
Innocent innovators and workers in
financial services are making a huge
contribution. Those who tar all of finance
with the same brush are making a terrible
mistake. Twitter: @Philip_Salter
Pisco Sour, Perus national drink

F ALL the things one might
expect to find at the bottom of
a steep dell in the Peruvian
rainforest, the rusted iron hulk
of an ancient steamboat would not be
high on the list. And yet Im looking at
just that scene: decades after the boat
somehow came to rest here, its old
funnel still points upwards to the tree
canopy while its hull has half sunk
into the mouldering soil of the forest
I nursed a hope that perhaps this
wreck was left behind by the makers of
Fitzcarraldo, Werner Herzogs epic
1982 flick that was filmed around
here. It concerned a nutty, turn-of-the-
century businessman who did indeed
haul a steamboat through the
Peruvian jungle, in an effort to reach
distant forests of rubber trees. In fact
the wrecked boat once toured the near-
by Madre de Dios river, bringing
healthcare and education to local pop-
ulations. In the 1950s it became stuck
in a creek that has since dried out, and
there it has remained. The jungle
appears to be gradually swallowing it
up, bit by bit.
Indeed: this corner of the Amazon
basin is just a little more welcoming
than when Herzog was here filming
his movie, a shoot famously beset by
pestilence, disease, hostile local tribes
and the deaths of crew-members.
The boats muddy ditch now falls
within the 800 hectares of unfettered
jungle belonging to Hacienda
Concepcion, a hotel lodge sitting in a
forest clearing not far from the great
river. Opened late last year, it is the
fifth property of Inkaterra, a not-for-
profit company running a handful of
eco-friendly, smartly designed hotels in
locations around Peru.
The original Inkaterra estate, the
more expensive and extensive Reserva
Amazonica, is a few kilometres along
the river (Hacienda Concepcion, small-
er and a little more basic in its offering
and setting, falls under the companys
brand for reasonably priced hospitality,
ByInkaterra). Both properties lie on the
edge of the Tambopata National Park, a
protected region in southern Peru that
runs up to the Bolivian and Brazilian
borders, notable for the particular
diversity of its ecosystems. For nature
enthusiasts, or anyone wanting to
experience the profound, eerie beauty
and drama of the Amazon wilderness,
its a magnificent place to discover.
Getting here is a job in itself though.
From the Peruvian capital Lima we
first flew to Cuzco, the great city of the
Incas high in the Andes. From there, an
hours plane journey to the remote,
dusty town of Puerto Maldonado.
As the intense, damp heat of the
Amazon region closed around us, we
hopped aboard a rickety open-top bus
(laid on by Inkaterra) that wobbled its
way to the bank of the Madre de
Dios river, a great water-
way that eventually
joins with huge tribu-
taries flowing into the
Amazon itself. Then a
boat journey along the
tea-coloured waters of
the Madre de Dios finally
deposited us on a muddy
bank leading up to
Hacienda Concepcion. After
such a journey, the Pisco
Sour cocktail prepared on
arrival was heavenly.
The brilliance of the
Inkaterra concept is to bring you
right in amongst the dramatic wild-
ness of the rainforest, but to cosset you
with just enough comfort, security and
style that you never feel youre rough-
ing it.
The Hacienda lies on the site of a for-
mer Christian mission that closed in
the 1970s. You cant help thinking that
the missionaries would have
been rather jealous of
Inkaterras contem-
porary comforts,
including a cocktail
bar, top-grade fresh
linen and hand-
carved wooden furni-
Both Hacienda
Concepcion and Reserva
Amazonica are based
around a central lodge
that serves as relaxation
lounge and restaurant the
Peruvian dishes prepared here, from
fresh ceviche of Amazonian river fish
to spicy grilled dishes and concoctions
drawing on the vibrant ingredients of
the rainforest, are memorably superb
with spacious outlying cabins where
you sleep. These each have bathrooms,
large beds under mosquito nets, and
hammocks that swing above decking
terraces. A few also have their own
plunge pool.
Every structure is sealed with thick
netting to keep out unwelcome visi-
tors. While its nevertheless worth cak-
ing yourself in mosquito repellent
whenever youre moving around out-
side, you can take comfort in the fact
that this area is officially malaria-free.
From these bases you can launch
yourself into the many excursions and
guided activities Inkaterra organises to
allow you to experience the rainforest
in all its magnificence. That doesnt
just mean by day. Dusk comes early in
these parts, and a night-time trek into
the jungle offers an opportunity to spy
some of its nocturnal inhabitants by
torchlight. We also ventured out for a
late-night cruise on the Madre de Dios,
a searchlight trained on the shore
revealing caimans slithering by and
capybara, Perus dog-sized rodents, lol-
loping awkwardly along the banks.
There are short or full-day excursions
into the rainforest, all led by
Inkaterras expert guides. The attitude
here is very much towards conserva-
tion and sustainability, with visitors
not merely entertained but also edu-
Lake Sandoval, an isolated and quite
remarkable ox-bow lake deep in thick
jungle, is an essential visit. We walked
for an hour and a half along a simple
jungle trail to get there, arriving at a
swampy inlet where we clambered into
a boat powered only by a large oar
wielded by our guide, who told us
about the snakes, electric eels, anacon-
das, caimans and water termites that
live in the water any thoughts of tak-
ing a quick dip were swiftly dispatched.
As we glided onwards the surrounding
trees echoed with strange calls
howler monkeys, our guide explained,
telling us to keep our distance.
Eventually we turned a corner and
found ourselves on the glassy surface
of the huge lake, where the placid
water presented a perfect mirror
image of the trees that rose above its
shores. Sleeping bats clung upside
down to the trunks of coconut palms;
swarms of white butterflies flitted
madly over lilies; and a brown, long-
necked stork sat lazily in a clump of
reeds. High up in the trees, a flash of
bright blue and gold turned out to be
trio of rare macaw in unison they
swooped away in slow formation. A
rare and privileged sighting of such
noble birds in their natural habitat
one we were able to toast with a wel-
come Pisco Sour after our return to the
quiet comforts of our base.
Roughing it in style in Peru
nInkaterra Reserva
Amazonica: prices from
around 415 for a double
superior cabin for three
night/four day programme.
nByInkaterra Hacienda
Concepcion: prices from
around 290 for a double
cabin for three night/four
day programme.
Prices include round trip
transportation, programmed
excursions, full board.
Other Inkaterra properties:
nLa Casona - 11-suite
boutique hotel in Cusco, the
historic capital city of the
Inca civilisation, the only
Relais & Chateaux hotel in
nMachu Picchu Pueblo
Hotel high-luxury hotel
resort in the Andes
nEl MaPi affordable
boutique hotel at Machu
Picchu (under the
ByInkaterra brand)
Inkaterra Experiences by
Inkaterra offers completely
personalized travel
itineraries through Peru. For
more information visit
Timothy Barbers internal
flights, rail transfers and
overnight stay at Costa del
Sol Ramada Hotel in Lima
were sponsored by
PromPERU, the Commission
for the Promotion of Peru.
For more information visit
Timothy Barber visits the Amazon and enjoys its wildness...with a nice dose of luxury
A room in Hacienda Concepcion. Below left: an ancient
steamboat that once brough healthcare and education
to locals. Below right: Lake Sandoval.
4.30pmLive ECB 40 League
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Sports Unlimited 3amFIFA
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Day Cricket 10.30pmNASCAR
11.30pmBritish Miler 12am
European Tour Golf 1amPGA
Tour Golf 2amWonderful World
of Golf 3.30am-4.30amPGA
Tour Classic
7pmWWE: Smackdown 9pm
WWE: Money in the Bank 12am
WWE: NXT 1amWWE Vintage
Collection 2amLive WWE: Late
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7pmAthletics 8pmSnooker
9.30pmMotoGP 11pmCycling:
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6pmLive Football 8pmBrazilian
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12amSerie A 12.30am
SportsNation 1amLive
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Racing 5am-6amNHRA Drag
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1amAmericas Next Top
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2.40amCSI: Miami 3.30am
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Is Football Racist? 10pm
EastEnders 10.30pmSnog,
Marry, Avoid? 11pmFamily Guy
11.45pmAmerican Dad!
12.30amIs Football Racist?
1.30amSnog, Marry, Avoid? 2am
Coming Here Soon 3amDont Tell
the Bride 4amBritish Olympic
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Marry, Avoid?
7pmHollyoaks 7.30pmHow I
Met Your Mother 8pmThe Big
Bang Theory 8.30pmNew Girl
9pmRevenge 10pmThe
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Tube 12.10amThe Big Bang
Theory 1.10amScrubs 1.35am
How I Met Your Mother 2amThe
War at Home 2.20amRules of
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7pmStorage Wars 7.30pm
Pawn Stars 9.30pmAmerican
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3amSwamp People 4amThe
Last Days of World War Two
5amPawn Stars 5.30am-6am
American Restoration
7pmBear Grylls: Born Survivor
8pmNasas Unexplained Files
9pmBear Grylls: Born Survivor
10pmSons of Guns 11pmFinding
Bigfoot 12amBear Grylls:
Born Survivor 1amSons of
Guns 2amAuction Kings
3amAmerican Chopper 3.50am
Ice Pilots 4.40amBear Grylls:
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Destroyed in Seconds
8pmI Didnt Know I Was
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3amWife Swap 4amBirth
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7pmThe Simpsons 8pmA
League of Their Own 8.30pmSpy
9pmCop Squad 10pmSpartacus:
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Back: Project Dawn 12.15am
Costa Del Street Crime 1.45am
My Pet Shame 2.45amIts Me or
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Me the Answer
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FILMLife: Prison comedy, starring
Eddie Murphy. 1999. 1.20am
Weatherview1.25amSign Zone:
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4.40am-6amBBC News
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7pmBabies in the Office: Part
one of two. A company allows
workers to bring their babies
to work.
8pmUniversity Challenge
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4.35am-5.30amThe Jeremy
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8.30pmJamies Summer Food
Rave Up
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Thelmas Gypsy Girls 11.05pm
Coming Up 11.40pmFILMThe
Odyssey 2012. 12.15amRandomActs
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Southland 4.25amSt Elsewhere
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11pmFILMCandyman 3: Day
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12.45amForensic Files
1.15am SuperCasino 4amNicks
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4.45amWildlife SOS 5.10am
House Doctor 5.35am-6am
House Doctor
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd,
1 2 3 4 5
8 9 10 11
12 13
15 16 17 18
19 20
8 6 7
13 34
12 11
9 3 17
15 12 8
9 8
15 5
23 17 16
1 Several parallel layers
of material (6)
6 Necktie (6)
7 Continent (4)
8 Acute and highly
contagious viral
disease (7)
12 Lightweight cord (5)
13 Lift (5)
14 Falsehood (3)
15 Rascal (5)
18 Group of elite
soldiers (1-4)
19 Hang freely (7)
21 Live-action lm
about a piglet (4)
22 Area set back or
indented (6)
23 Arouse or elicit
a feeling (6)
1 First courses (8)
2 Barrier consisting
of horizontal bars
and supports (8)
3 Pinnacle (4)
4 Lariat (5)
5 Projecting edge
of a roof (5)
8 Confused scufe (5)
9 Having the leading
position (5)
10 Learned people (8)
11 Wild headlong
rush of frightened
animals (8)
16 Located
externally (5)
17 Increased, raised (5)
20 Olfactory organ (4)


6 8 9 7 3 8 6 9
4 7 8 2 1 7 2 3
3 5 4 1 2 9 8 7
1 6 7 8 3 1 2
2 9 9 7 5 6 4 8
4 8 9 1 3
5 4 1 6 3 2 9 5
8 9 1 5 9 8 6
7 3 1 6 2 5 4 1
9 2 4 5 8 7 6 2
4 1 2 3 9 8 7 3
The nine-letter word was
As Bevans life hangs in the balance,
Daniel digs deeper into the cover-up
and finally learns more leaving him
facing a stark dilemma.
Michael Buerk and Bettany Hughes
are joined by guest presenters to
count down the 50 greatest artefacts
discovered by the public.
Rick and Shane argue over how to
deal with Randall, and Andrea helps
Hershels youngest daughter make
a crucial decision.
MANCHESTER United star Rio
Ferdinand has attempted to quell
accusations of racism after he
referred to Chelseas Ashley Cole as a
choc ice, insisting he was merely
calling his England colleague fake.
Ferdinand made the controversial
comments on Twitter on Saturday,
24 hours after Coles Chelsea
colleague Terry was acquitted of
racially abusing Rios brother Anton,
of QPR, during a match in October.
Cole, who is mixed race, appeared
in court as a witness for Terrys legal
team. Choc ice can be used as
shorthand for black on the outside,
white on the inside, and Ferdinands
use of the phrase provoked outcry.
But he replied on Sunday: What I
wrote yesterday was not a racist
term. Its a type of slang/term used
by many for someone who is being
fake. So there.
Terry may yet face a Football
Association charge for his remarks
towards Anton Ferdinand.
Rio: Choc ice
jibe isnt racist
BRITAINS top boxing promoter
Frank Warren has threatened to over-
haul the sport in this country after
revealing he will consider prolong-
ing his partnership with the contro-
versial Luxembourg Boxing
Federation (FLB).
David Hayes clinical fifth-round
stoppage of the durable Dereck
Chisora on Saturday night concluded
an acrimonious six-month period in
which a press conference brawl
between the two fighters resulted in
the latter having his boxing licence
withdrawn by the British Boxing
Board of Control (BBBofC).
In an unprecendented move, both
fighters were thereafter licensed by
the FLB in order to allow their
grudge match to take place and now
Warren, having witnessed the con-
siderable success of that particular
show, is admitting he may in future
seek to do the same.
The situation with the board is
that people forget its not a govern-
ment represented body, Warren last
night told City A.M. Theyre a limited
company. Its run by a small group of
stewards of two or three guys who
drive all the policies. There are 2,500
licence holders who arent allowed to
vote on anything.
The fact of the matter is the
board mishandled the whole Haye
and Chisora thing and as a so-called
body of sport, to send out statements
saying if anyone participates in this
fight theyll be deemed to have hand-
ed in their licences, and stuff like
that, and to have to retract that,
tells you theyre not taking proper
legal advice.
From my point of view, I
think do we support this govern-
ing body in its present state, or
not?, and Im really in two minds
now about where I go with this.
I dont want to see the
Boxing faces shake up as Warren
considers licensing breakaway
end of the Boxing Board of Control,
Im against [president and chairman]
Charlie Giles and [steward] John Rees,
and a couple of other stewards. There
are some good stewards there whose
heart and soul is in boxing, but unfor-
tunately the other guys have
the power.
Warrens next promotion is
scheduled for 22 September,
when Dagenhams Kevin
Mitchell challenges Ricky
Burns for the World Boxing
Organisations lightweight
title, and though both fighters
remain fully licensed by
the BBBofC, the pro-
moter admits that the
ESSEXS Ravi Bopara was yesterday
rewarded for his sparkling
one-day form for England with a
call- up to the squad for the opening
Test against South Africa, starting
on Thursday at the Oval.
Bopara excelled with both bat
and ball during the one-day
international series against
Australia that ended last week,
averaging over 45 runs per innings
and claiming four wickets across
the four days.
Having shrugged off injury
concerns from earlier in the year,
Bopara comes into the 13-man
squad at the expense of
Jonny Bairstow, who failed
to impress selectors during
the early summers Tests
against West Indies.
Bairstow was given a
surprise opportunity
during the series,
which England won 2-0,
yet scored only 38 runs.
Selector Geoff Miller
yesterday hailed Boparas
diligence ahead of his
potential return to the Test
side. Ravi has worked hard
to regain his place in the
Test squad following some
injury concerns earlier in
the season and is the only player
included who is yet to play a Test
match this summer, Miller said.
The squad also includes five
fast bowlers James
Anderson, Stuart Broad,
Tim Bresnan, Steven Finn
and Graham Onions.
South Africa yesterday
drew their warm up tour
match against Kent. The
visitors made 314 runs in their
first innings at Canterbury, yet
could not bowl out the hosts twice
before the day came to a close.
Tweet could land Rio Ferdinand in trouble
THE SCOTTISH Open was won by
Jeev Milkha Singh last night, a result
that sees the Indian qualify for the
Open at Royal Lytham, which
commences on Thursday.
Singh forced his way to a play-off
with Francesco Molinari, who had
led overnight, before beating the
Italian on the first extra hole with a
12-foot birdie.
British hopeful Marc Warren blew
a three-shot lead with four holes to
go, double-bogeying the 15th and
stuttering to bogeys on the 16th and
17th holes.
It was in my hands with four
holes to go, it was up to me but I
didnt finish it off, a downbeat
Warren said.
It was all a bit disappointing.
Singh clinches
Scottish Open
FORMER Olympic champion
Jonathan Edwards has defended the
decision of London 2012 medal hope
Phillips Idowu to withdraw from the
weekends Aviva London Grand Prix
and argued he also would not have
wished to compete.
Concerns remain over triple
jumper Idowus physical condition
given that he has participated in
competitions just three times this
year and withdrew only 25 minutes
before events began at Crystal Palace
because of what he called a slight
bit of muscle tightness.
Edwards witnessed the wet
conditions that may also have
deterred Idowu and admitted that,
particularly with the Olympics so
close, he too would have withdrawn
had he still been competing.
When I turned up at the track
this morning, I asked myself Would
I have wanted to jump today? and
the answer was no, said Edwards,
the one-time world record holder.
Phillips probably didnt fancy it,
but there is nothing to worry about.
Its cold, damp and he doesnt want
to take any risks. We will forgive
him everything if he jumps well
in London.
Edwards backs
Idowu decision
to withdraw
Ravi Bopara has played in a dozen Test
matches for England so far in his career
Frank Warren is Britains
leading fight promoter
FLB may yet sanction their showdown
in a move that would further under-
mine the BBBofCs authority.
Im actually debating it, said
Warren. Im actually thinking about
where to go with [Mitchell
versus Burns].
We did save money [using the FLB].
Their sanctioning fees are nowhere
near [the same as the BBBofCs], and it
opened my eyes. I thought wow, Ive
never thought about this side of it.
And the boxers also saved money as
far as sanctioning fees are concerned,
so it makes you wonder.
The BBBofC declined to comment
when contacted, but any controversy
was regardless largely forgotten
about after Saturdays fight when
Haye and Chisora shared both mutu-
al respect and an embrace and it is
this that Warren believes strongly vin-
dicates those who argued that the
fight should be allowed to take place.
The crowd there really enjoyed the
show. The important thing is they set-
tled their differences in the ring and
even more importantly, after the
fight, they were very friendly arms
around each other, and thats the end
of that. Everything that happened in
Germany just got buried it was a
good night for boxing.
Its moronic [for anybody to say the
press conference fight was staged]. Its
moronic for anyone to think that.
Bopara named in Englands Test
squad ahead of South Africa tie
Former world heavyweight champion David Haye (right) stopped Dereck Chisora in the fifth round of their fight at Upton Park
Liverpool decline Toon Carroll bid
nNewcastle United have had a loan
bid for their former centre forward
Andy Carroll turned down by
Liverpool. The Magpies hoped to sign
Carroll on a season-long loan with the
option of a permanent transfer next
summer, but will have to table an
improved offer if they want to sign the
England striker.
Lorenzo stretches MotoGP lead
nJorge Lorenzo won yesterdays
MotoGP at Mugello, Italy, to extend his
lead at the top of the overall rankings.
BRITISH hopeful Bradley Wiggins led
a magnanimous stance among
cyclists at the Tour de France
yesterday, slowing down the leading
pack after the race was sabotaged by
nails spread on the track.
Wigginss close rival Cadel Evans
was one of around 30 riders to suffer
punctures, becoming stranded
near the summit of the Mur de
Peguere mountain.
Yet the peloton, encouraged by
Wiggins, allowed the Australian to
catch up and remain just three
minutes and 19 seconds behind the
events yellow jersey holder in the
overall standings.
There were so many punctures at
once that it was obvious that
something had happened Waiting
seemed the honourable thing to do,
Wiggins said after the race.
Personally I wouldnt want to
benefit from something like that. I
thought the best thing to do is to
wait. If you cant gain times on the
climbs, then you dont do it when
someones punctured.
Cyclists have been known to slow
down for accident-afflicted rivals as
part of the sports ethos.
Outraged authorities at the Tour
are demanding police assistance in
investigating how tacks were placed
across at least one section of the
road, yet Wiggins said that cyclists
are particularly prone to such antics.
Theres nothing stopping more of
that sort of stuff happening. Its sad.
These are the type of things we have
to put up with as cyclists, he said.
The stage was won by Spains Luis-
Leon Sanchez, yet the situation at
the top of the overall rankings
remains unchanged. Wiggins leads
Sky team-mate Chris Froome by two
minutes and five seconds. Vincenzo
Nibali remains two minutes and 23
seconds behind, in third, ahead of
Evans. Stage 15 will be raced today,
with a rest day tomorrow.
Thursday 19th July
Enjoy a great evenings racing followed by one of our fantastic outdoor concerts.
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Bradley Wiggins wants to become the first British winner of the Tour de France
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Its a write-off for him. Khans been knocked out by someone who is not
touted for the top level. Its very damaging. Id retire if that happened to me.

IBF super middleweight champion Carl Froch on Amir Khans stoppage defeat to Americas Danny Garcia
Wiggins holds back
with Tour sabotaged
by nails on the road