BUSINESS WITH PERSONALITY
Issue 1,225 Wednesday 22 September 2010
CABLE WAGES WAR ON
BRITISH BOARDROOMS
■ Business secretary
launches astonishing
attack on capitalism
and the free market
POLITICS
▲
BY DAVID CROW
VINCE Cable will today launch a
scathing attack on British business,
announcing a wide-ranging investiga-
tion into company takeovers, executive
pay and corporate governance.
The business secretary will use a
keynote speech at the Liberal
Democrat conference to wage war on
large companies, promising to “shine
a harsh light into the murky world of
corporate behaviour”.
Cable is also expected to slam so-
called “short-term shareholders” that
buy stock in anticipation of a takeover
offer, as well as investment banks and
others who earn fees by advising on
corporate mergers and acquisitions.
“The principle of responsible own-
ership should apply across the busi-
ness world. Let me be quite clear. The
government’s agenda is not one of lais-
sez-faire. Markets are often irrational
or rigged,” Cable is expected to tell
Liberal Democrat members in
Liverpool.
“Why should good companies be
destroyed by short term investors look-
ing for a speculative killing, while
their accomplices in the City make fat
fees? Why do directors forget their
wider duties when a fat cheque is
waved before them? Capitalism takes
no prisoners and kills competition
where it can.”
FTSE 100 t5,576.19 -26.35 DOW ▲10,7611.03 +7.41
www.cityam.com
■ Outburst comes as
regulators and MPs
step up their assault
on City institutions
The business secretary’s speech takeovers and perceived flaws in cor-
comes as the government prepares to porate governance.
merge the UK Listing Authority (UKLA) Yesterday, the FRC – which will
with the Financial Reporting Council emerge from the shake-up as an organ-
(FRC), creating a “powerful companies isation with significantly more power
regulator” to police big firms. – welcomed Cable’s announcement.
Such a regulator would be housed “We fully support the minister’s focus
under the auspices of Cable’s business on both tackling short-termism and
department, allowing him to crack encouraging shareholder responsibili-
down on executive pay, corporate ty,” said FRC chief executive Stephen
NASDAQ t2,349.35 -6.48 £/$ ▲ 1.56 +0.01 £/¤ t 1.18 -0.04 ¤/$ ▲1.33 +0.02
■ Lib Dem leader Nick
Clegg says it is ethically
wrong to cut tax bills by
using an accountant
Vince Cable is
expected to say
capitalism “kills
competition”
Picture: REUTERS
Haddrill.
But employers’ group the CBI hit
out at the business secretary’s com-
ments, insisting his anti-capitalist
comments were at odds with the gov-
ernment’s oft-stated aim of a private
sector recovery.
Richard Lambert, CBI director-gener-
al, said: “Of course Cable is right to say
that the principle of responsible own-
FREE
ership should apply across the busi-
ness world. But it’s odd that he thinks
it sensible to use such emotional lan-
guage.”
He added: “The case for corporate
takeovers is that they allow control of
poorly run businesses to pass into
more efficient hands. Cable has harsh
things to say about the capitalist sys-
tem: it will be interesting to hear his
ideas for an alternative.”
The business secretary’s comments
came as a raft of politicians and estab-
lishment figures stepped up their war
of words on the City.
Lord Turner, chairman of the
Financial Services Authority, used his
Mansion House speech to claim that
“absurd bonuses for excessive risk tak-
ing” and “an explosion of exotic social-
ly useless product development” were
partly to blame for the economic crisis,
though he was at pains also to blame
bad policies.
And Nick Clegg, the deputy prime
minister, said it was “ethically wrong”
for people to use accountants to cut
their tax bills.
Clegg and Cable also said the gov-
ernment would be willing to impose a
tax on bankers’ bonuses if banks don’t
show “restraint” in the forthcoming
remuneration round, although aides
to the chancellor said there was little
chance of a re-run of Labour’s one-off
bonus tax.
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 2 News
Coalition’s attacks on City must stop
EDITOR’S LETTER
ALLISTER HEATH
PLAIN awful. That is the only way to
describe yesterday’s government bor-
rowing figures, which saw the deficit
jump to another record for August,
dashing hopes the public finances
were improving of their own accord.
Revenue growth was tolerable at 6.3
per cent. What was shocking was that
government current spending
jumped 11 per cent year on year in
August. Yes, that’s right, in the midst
of a supposed period of austerity, the
government has seemingly lost con-
trol of the public finances. In part,
this is because of the higher costs on
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Associate Editor David Crow
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WHAT THE OTHER PAPERS SAY THIS MORNING
MOVES TO WEAKEN YEN NOT OVER,
SAYS KAN
Japan stands ready to intervene again
in foreign exchange markets, but also
plans to put in place broader econom-
ic and monetary policies that will
help to weaken the yen, according to
Naoto Kan, the prime minister. Mr
Kan stressed that Tokyo’s yen-selling
intervention last week was forced by
“drastic” exchange rate moves, a refer-
ence to the 15-year highs Japan’s cur-
rency hit against the dollar following
his victory in a ruling party leader-
ship battle.
LUFTHANSA TO NAME NEW CHIEF
Lufthansa is expected to confirm
today that its deputy chief executive
will take over the top job at the
German airline from Wolfgang
Mayrhuber. Christoph Franz is expect-
ed to be named chief executive of
Europe’s largest airline by revenues
index-linked gilts, pushed up by our
excessively high inflation; but never-
theless these figures smack of a gov-
ernment and civil service which are
failing to get a grip.
Meanwhile, instead of trying to
make the UK a better place for global
firms to invest and base their staff
and operations (and hence pay tax),
and encourage a private-sector based
renaissance, the Lib Dems are not
only banker-bashing again but actual-
ly extending their attack on the
whole of UK Plc. Vince Cable’s speech
tomorrow will be remarkable in its
virulence and disdain for the compa-
nies and entrepreneurs that create all
the revenues the government raises;
the speech could have been made by a
Labour politician of the socialist
1980s. He wants to impose new rules
on corporate pay, make it harder for
firms to be taken over, crack down on
company directors and so on.
Cable, who used to work for the
Labour party in the 1970s, evidently
despises modern capitalism, especial-
Europe facing
pensions crisis
UK ECONOMY
▲
BY MATTHEW WEST
EUROPE faces a pensions time bomb
with the estimated gap between what
people are saving for retirement and
what they will actually need to live
comfortably when they retire estimat-
ed at €1.9 trillion (£1.6 trillion), a
report claims today.
Europe’s annual “pensions gap” is
equivalent to 19 per cent of the
European Union’s (EU) GDP for this
year, according to the report pub-
lished by insurance giant Aviva today.
At a country level the UK, France,
Germany and Spain have the largest
national pensions gaps. The UK’s
annual pension gap was equivalent to
26 per cent of GDP, added Aviva.
Aviva suggests the gap is so severe
that an increase in the state retire-
ment age of up to ten years, working
after a meeting of Lufthansa’s super-
visory board.
NOKIA DELAYS THE LAUNCH OF NEW
HANDSET
Nokia has warned customers of
another delay to its new flagship
smartphone, but denied it marked a
fresh setback in efforts to reclaim lost
ground from Apple and other rivals.
The world’s biggest mobile phone-
maker said it had decided to delay
delivery of the N8 for a few weeks to
allow time for final adjustments.
E-COMMERCE TAKES INSTANT LIKING
TO FACEBOOK’S BUTTON
The Like button feature for websites
unveiled by Facebook in April is fast
gaining traction among e-commerce
and media companies which have
seen spikes in internet traffic and
increases in sales after using it. The
pale blue Like button lets Facebook
users casually signal their affinity for
a brand, item or product and broad-
cast that back to the website.
ly the financial and business services
industry which is London’s biggest
employer. Take this quote: “Why
should good companies be destroyed
by short term investors looking for a
speculative killing, while their accom-
plices in the City make fat fees? Why
do directors forget their wider duties
when a fat cheque is waved before
them? Capitalism takes no prisoners
and kills competition where it can.”
The clear implication is that mergers
and acquisitions are barely legal
(“accomplices”); the argument about
destroying competition is semi-
Marxist (yet, empirically, the biggest
barrier to competition is the govern-
ment); money making is inherently
dodgy; the metaphors are violent. It’s
an ugly speech.
Part of the reason for the rekin-
dling of the war on the City is the con-
tinuing collapse in Lib Dem and Tory
support. YouGov has the
Conservatives and Labour equal on 39
per cent; the pollster reveals a grow-
ing anti-cuts mood, despite the
beyond retirement or a substantial
reduction in living standards may be
inevitable.
The report came as pensions minis-
ter Steve Webb warned there would
be a dramatic rise in the number of
pensioners in 2012, putting even
greater strain on the public finances.
The Department for Work and
Pensions estimates 800,000 people
will reach the national state pension
age in 2012.
The government estimates that
pension spending will increase by
£4bn by 2012
Pensions minister
Steve Webb said that
800,000 people
would reach the state
pension age in 2010
PARIS FORCES BANKS TO DETAIL
CHARGES
French banks will have to include
their total fees in monthly statements
to customers under a package of
measures unveiled by the
Government today in an attempt to
shed light on what critics say is an
impenetrable and costly system. The
move was announced by Christine
Lagarde, the finance minister.
UNIONS THREATEN STRIKE AFTER
SERCO BUYS PATHOLOGY UNIT
The outsourcing group plans to cre-
ate a business with a £1bn-a-year
turnover, from which analysts expect
the company to make about £50m in
profits. The part-privatisation of one
of the world’s premier pathology
units at King’s College Hospital in
London could run into staffing prob-
lems from the outset as unions
opposed to the deal threaten strikes.
deficit. Although 40 per cent of those
polled think the cuts are “good" for
the economy, 43 per cent view them
as “bad”. Only 30 per cent think they
are “fair” against 21 per cent who see
them as “unfair”. At the time of the
emergency budget in June, 45 per
cent thought the spending cuts were
“fair”. The coalition believes that a bit
of populism will help rectify this.
But Cable’s comments will outrage
business leaders, entrepreneurs, the
City and much of the Tory base. Nick
Clegg’s view yesterday that all
accountants and tax lawyers are
engaging in immoral behaviour when
they help their clients legally pay less
tax is an attack on millions of middle-
class folk – including everybody who
puts money in an Isa or a pension.
The coalition’s gratuitous bashing
of business and the City has gone too
far; it is now endangering our reputa-
tion as a place to do business and is
beginning to cost jobs. Enough is
enough.
allister.heath@cityam.com
HSBC chief Michael Geoghegan is hoping to be named chairman
HSBC to pick new chair
BANKING
▲
BY MARION DAKERS
HSBC will choose and announce a
replacement for outgoing chairman
Stephen Green at a board meeting in
Shanghai next Tuesday.
Current chief executive Michael
Geoghegan is understood to be hope-
ful of his imminent appointment,
given the company’s track record of
elevating chief executives to the role
of chairman.
However, former Goldman Sachs
EUROPE’S €440BN RESCUE FUND WINS
AAA JUST IN TIME
Standard & Poor’s and Fitch have both
granted the Eurozone’s rescue fund a
AAA credit rating, clearing the way
for swift action if needed as the
region’s debt crisis threatens to erupt
again. Goldman Sachs warned clients
of a “measurable risk” that both
Ireland and Portugal may have to tap
the €440bn European Financial
Stability Facility (EFSF), though “prob-
ably only early next year” since both
countries have adequate funding for
several months.
PRICE OF CLOTHES SET TO RISE AS
COTTON HITS 15-YEAR HIGH
Clothes prices on the high street
could be set to rise after cotton
futures hit a 15-year high yesterday,
Flooding in Pakistan and China have
sparked concerns about supplies,
sending the price surging.
CITYA.M. 22 SEPTEMBER 2010
Public sector
borrowing hits
record levels
▲
UK ECONOMY
PUBLIC sector net borrowing reached
a record high in August, surprising
analysts who had expected the figure
to have dropped since last year.
The Office of National Statistics
(ONS) said public sector net borrow-
ing stood at £15.9bn in August, up
from £14.1bn in the same month last
year and the highest rate since
records began in 1993. Economists
had expected the figure to be around
£12.5bn.
Public sector net borrowing now
stands at £58.1bn for the financial
year to date, but the figure is down
slightly from £61.9bn for the same
period last year.
The ONS said the rise in borrowing
came as rising inflation meant inter-
est payments rose to £3.8bn last
month, from £1.3bn in August 2009.
Picture: REUTERS
investment banker John Thornton is
also thought to be in the running.
The bank is also considering pro-
moting senior independent director
Sir Simon Robinson to the role on a
temporary basis, with a view to choos-
ing a permanent successor in a few
years’ time, people close to the bank
have said.
It is unclear whether Geoghegan
will stay with the bank if he does not
clinch the job of chairman.
HSBC was unavailable for com-
ment yesterday.
EUROZONE CRISIS ON DEBT IS OVER,
ZAPATERO SAYS
Spanish Prime Minister José Luis
Rodríguez Zapatero declared that the
European debt crisis is over but said
that the governments have to work
better together and with markets to
stave off such events. “I believe that
the debt crisis affecting Spain, and
the Eurozone in general, has passed,”
Zapatero said in an interview with
The Wall Street Journal yesterday.
NEW HEAD INSTALLED AT HACHETTE
Hachette Filipacchi Media US, which
publishes Elle magazine, Women’s
Day and other titles, named publish-
ing-industry veteran Steve Parr as its
new president and chief executive,
marking the latest twist for a compa-
ny wracked by change and uncertain-
ty. Parr succeeds Alain Lemarchand,
who was brought in two years ago to
turn around the business.
CITYA.M. 22 SEPTEMBER 2010
US Fed makes
waves with
hints of QE2
▲
US ECONOMY
BY MARION DAKERS
THE US Federal Reserve suggested it
could enter another round of quantita-
tive easing (QE) yesterday, as its rate-set-
ting panel met in Washington to
decide whether to intervene in the
shaky economy.
The Federal Open Market
Committee (FOMC) departed from pre-
vious language in its monthly state-
ment, saying it “is prepared to provide
additional accommodation if needed
to support the economic recovery and
to return inflation, over time, to levels
consistent with its mandate”.
After its meeting in August, the Fed
had simply said it would “employ its
policy tools as necessary”.
Pressure has been growing on Fed
chairman Ben Bernanke to consider
pouring billions of pounds into the US
economy, described by some as QE2.
Recent figures showed that 9.6 per
cent of the workforce is unemployed,
while growth in the second quarter
slowed to a yearly rate of 1.6 per cent.
“Prior to today’s statement, Fed offi-
cials indicated that the economy
would have to slow further from here
to justify additional easing,” said
Société Générale analyst Aneta
Markowska in a note. “The new lan-
guage implies a potential shift in the
Fed’s reaction function whereby sever-
al quarters of slow growth may be
enough to justify further action.”
The Fed last intervened in 2008,
when it bought $1.7 trillion (£1.06 tril-
lion) in longer-term bonds.
The FOMC decided to hold interest
rates at between zero and 0.25 per
cent, as expected, with only inflation
hawk Thomas Hoenig dissenting.
Hoenig has disagreed with the nine-
strong panel for the last six months,
and explained in the committee’s
statement he believes the continued
low level “will lead to future imbal-
ances that undermine stable long-run
growth”.
US bonds surged following the
meeting yesterday afternoon, with the
yield on the two-year note hitting a
record low, and the dollar fell sharply.
BoA Merrill boss Brian Moynihan is reducing headcount
BoA Merrill investment
bank staff set for job cull
BANKING
▲
BY VICTORIA BATES
ALMOST three per cent of Bank of
America Merrill Lynch’s 13,000 invest-
ment banking staff are set to be
culled in order to improve perform-
ance, including employees in Europe.
Nearly 400 people are due to be
chopped from the global banking and
markets division across all global
regions, though twice that number
have been hired already this year.
Picture: REUTERS
Analysts yesterday said the move
was designed to maximise the per-
formance of the division as revenues
from trading and advisory activities
across the investment banks falters in
a tough environment.
BoA Merrill Lynch’s global banking
and markets arm posted a profit of
$4.1bn (£2.6bn) for the first half of the
year. That was 35 per cent lower than
the first half last year, when the bank
booked a hefty gain on the disposal of
its merchant processing business.
News 3
Deutsche Bank
set for a third
quarter loss
BANKING
▲
DEUTSCHE Bank yesterday said sales
and trading activity during July and
August was weaker than a year ago,
providing a warning shot that third-
quarter investment banking earnings
could be weak across the board.
In a trading update provided as part
of the prospectus for Deutsche Bank’s
planned €10.2bn (£8.6bn) capital
increase, Germany’s flagship lender
said it expects to post a loss during the
third quarter thanks to a one-off
charge and weaker trading.
The main reason for the loss is a
€2.3bn revaluation charge for the
bank’s stake in Deutsche Postbank, but
news of weak trading over the summer
months sent jitters across the sector.
Deutsche Bank shares closed down
4.5 per cent, helping send the Stoxx
Europe 600 banking index down 0.8
per cent lower as Deutsche Bank’s
rivals UBS, Credit Suisse and HSBC
closed down one per cent or more.
Deutsche Bank said sales and trad-
ing revenues at its corporate banking
and securities (CB&S) businesses suf-
fered seasonal reductions in July and
August that were “more marked than
in the comparable third quarter of
2009”.
In the third quarter of 2009
Deutsche Bank had posted a pre-tax
profit of €1.4bn.
 4 Mansion House CITYA.M. 22 SEPTEMBER 2010

Turner warns
Left: FSA chief exec-
utive Hector Sants

Pictures:
Micha Theiner
/City A.M.

over costs of
FSA shake-up Above: FSA chair
▲

REGULATION and supervisory teams and with some Lord Turner

BY DAVID HELLIER
FINANCIAL Services Authority (FSA)
chairman Lord Adair Turner last
night warned there would be transi-
tional problems when the watchdog
is disbanded and replaced.
“All operational demergers entail
some costs as well as benefits, and
some risk to current operations,” he
said at his Mansion House Speech.
Turner assured his audience that
within two years the City will have a
structure that works well.
Chancellor George Osborne
ordered a change in the City’s regula-
tory regime in June, which will see
banks overseen by a new Prudential
Regulatory Authority (PRA) under the
auspices of the Bank of England.
There will also be a Consumer
Protection and Markets Authority
(CPMA) that will take on many of the
former functions of the FSA, which
will be scrapped.
Turner said the FSA starts with
integrated systems, support functions
staff doing both prudential and con-
duct supervision. Right: Close
He said the new structure would Brothers chief
create problems between the PRA executive
and the CPMA in several areas where Preben
the distinction between the two is not Prebensen
clear cut.
But he added there was a “clear Below: Lloyd’s
programme” in place to manage the chairman Lord
process, with ongoing costs expected Levene
to be no higher than for the integrat-
ed FSA.
Turner said the creation of a new Above: Prudential chief executive
Financial Policy Committee (FPC) Tidjane Thiam
would be crucial in spotting credit
bubbles, and tougher capital require-
ments are needed. He said he wanted
even tougher capital requirements
for banks than those set by the new
Basel III committee rules, which call
for capital of at least seven per cent of
their assets.
He added there was a need to move
beyond the “demonisation of over- Above: Bank of England executive director
paid traders” to recognise that bad Andrew Bailey
policies, not just bankers, were to Right: Henderson chief executive Andrew
blame for the financial crisis. Formica

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CITYA.M. 22 SEPTEMBER 2010 News 5

Politicians target the City NEWS | IN BRIEF

Government launches green deal
Energy secretary Chris Huhne yesterday
announced plans to create almost
250,000 jobs in green industries as part
of the coalition’s drive to be “the green-
▲

POLITICS
BY DAVID CROW
FIGURES from across the political
establishment lined up to renew their
attacks on the City yesterday, in a sign
that populist banker bashing is
unlikely to fizzle out any time soon.
Senior Liberal Democrats led the
pack at their conference in Liverpool,
as party leaders tried to convince
members they have not sold out by
sharing power with the Conservatives.
Deputy prime minister and Lib
Dem leader Nick Clegg warned banks
against paying “ludicrously sky-high”
bonuses, and said there would be
“very serious action” if they do.
He added: “If you abuse the generos-
ity of taxpayers then clearly this gov-
ernment won’t be able to stand idly
by.
“The last government imposed a
temporary tax on bonuses. I’m not
going to take any options off the
table.”
However, aides to chancellor George
Osborne yesterday played down sug-
gestions the government would
repeat Labour’s one-off bonus tax,
which did little to restrain pay but did
boost government coffers.
Business secretary Vince Cable said
banks were facing a “potential train
crash” over bonuses, and warned the
government could introduce a tax on
est government ever”. Speaking at the
Liberal Democrat conference in
Liverpool, he said the “green deal” would
lead to thousands of workers mod-
ernising around 26m homes to make
them more energy efficient. CBI direc-
tor-general Richard Lambert said: “We
welcome Huhne's commitment to devel-
oping clean coal and gas through four
carbon capture and storage plants and
his recognition of the important role
new nuclear power will play in a low-
carbon future.” But he said the CBI was
against the idea of raising the EU emis-
(l to r) Nick Clegg, Vince Cable, and Ken Livingstone Pictures: REUTERS sions reduction target to 30 per cent.
profits or transactions.
Meanwhile, Labour mayoral hope-
ful Ken Livingstone suggested the
London mayor should have powers to
raise additional income tax, with the
highest earners possibly paying an
eye-watering rate of 80 per cent.
“The mayor should have an income
tax so you can redistribute wealth.
Mrs Thatcher had a top rate of tax of
60 per cent for the first eight years
and all these bankers were swarming
here,” he said.
“I think it would at least be a 60 per
cent rate for everybody over £200,000.
You might look at an 80 per cent rate
for people earning £1m. These are
exactly the people that have landed us
in this mess.”

Graduate tax will reward

dropouts, say directors
saying they would consider not going
▲

POLITICS
BY STEVE DINNEEN
A COALITION plan to replace upfront
university tuition fees with a gradu-
ate tax has come in for fierce criti-
cism from company directors, who
say it will reward failure.
The Institute of Directors said the
levy, which would be applied to
future earnings, would hit hard work-
ing students and encourage people to
quit the UK to avoid the tax.
A separate survey of graduates also
suggested the proposed tax would hit
student numbers, with 62 per cent
to university if the retrospective tax
was introduced. Around 63 per cent
said they would not go to university if
fees rose to £6,000, rising to 80 per
cent if they were faced with
uncapped fees.
The news will be a bitter blow to
Vince Cable, a champion of the tax, as
he prepares for a speech this after-
noon on funding for higher education.
The government is awaiting a
review by former BP boss Lord Brown,
who is expected to recommend fees
rise by £3,290 to as much as £7,000 a
year.

CITY VIEWS: SHOULD WE REPLACE TUITION FEES

WITH A GRADUATE TAX? Interviews by Alasdair Peoples

SOPHIE BOYD | HISCOX

“If the aim is to make the system fairer, I think that removing
upfront fees might well encourage students from lower
income families to go to university. But ultimately they will
still bear the costs, albeit at a later date.”

MICHAEL GROVES | LLOYDS TSB

“A graduate tax might improve social mobility in making university
more accessible. However, a badly designed graduate tax could
end up meaning people pay a lot more than what universities
currently ask for in tuition fees.”
JAMES BARTHOLEMEW | MODELZONE
“It seems a bit useless to change the system to me – I don’t think it
will make a great deal of improvement so why bother going to
all the effort? I don't see how this is going to plug the high-
er education funding gap.”
 6 News
Sportingbet fined $33m in US
▲
GAMING
BY STEVE DINNEEN
SPORTINGBET, a British online gam-
bling company, has agreed to pay
$33m (£21m) to avoid being prosecut-
ed over an alleged illegal gambling
operation in the US.
US attorney Preet Bharara agreed
not to charge Sportingbet after saying
it broke US law by offering betting on
sports events and casino games
between 1998 and 2006.
Barry Slotnick, a lawyer for
Sportingbet, said the decision was a
“good resolution for all”.
He added: “It has been three-and-a-
BETFAIR | THE RISE OF A GAMING GIANT
● 1999
Company founded by Andrew Black and
Edward Wray, with £60,000 of investment
from the two founders.
● June 2000
Launch of Betting Exchange, the revolution-
ary system that matches punters’ bets with-
out a traditional bookmaker.
● January 2002
Merger with Flutter.com
half years of hostility, anger and ulti-
mate negotiation. We have reached
what we believe to be an extremely
fair resolution that benefits the com-
pany and its shareholders.”
Sportingbet fell foul of a US law
that effectively bans internet gaming.
The US Department of Justice said
Sportingbet deliberately used pay-
ment processing methods that were
designed to deceive credit card
issuers, which bar the use of their
cards for internet gambling, and took
steps to mask payments of winnings
to customers.
Sportingbet had agreed to cooper-
ate with the government probe, and
● May 2004
Launch of Betfair Poker
● October 2006
Launch of Betfair Casino
● February 2008
Launch of Betfair TV
● January 2009
Acquisition of TVG in US
● June 2010
10th anniversary of Betting Exchange
made employees available for inter-
views.
Shares in the firm leapt 16 per cent
yesterday as investors gambled on
takeover offer now the case is effec-
tively over.
Further consolidation in the gam-
ing industry is expected in the wake
of the recent $3.3bn tie up between
rival PartyGaming and Austria’s
Bwin.
Analysts at Altium Securities said:
“With the removal of this major regu-
latory concern, we view Sportingbet
as an ideal takeover target,” adding
the fine was at the bottom end of
their estimate.
Betfair founders Andrew Black (left) and Ed Wray
Betfair founders hit
jackpot with float
GAMING
▲
BY STEVE DINNEEN
BETFAIR yesterday announced a
stock market listing that is expect-
ed to value it at up to £1.5bn, brav-
ing an IPO market that sorely
bruised Ocado earlier this summer.
If successful, the internet betting
firm, which has seen a meteoric
rise since it was launched a decade
ago, would have a higher valuation
than gambling stalwarts Ladbrokes
and William Hill.
Analysts were cautiously opti-
mistic about the float yesterday,
despite founders Andrew Black and
Ed Wray announcing they will
MATTHEW
WESTERMAN
GOLDMAN SACHS
Goldman Sachs and Morgan Stanley
are acting as joint bookrunners on the
float.
Heading up the team for Goldman is
their global head of equity capital mar-
France Telecom looks to
increase Meditel stake
▲
TELECOMS
FRANCE Telecom’s chief executive
Stéphane Richard said yesterday he
aims to increase his company’s newly-
acquired stake in Moroccan telecoms
operator Meditel to 49 per cent by
2015.
Speaking at a news conference in
the Moroccan capital to announce
France Telecom’s acquisition of a 40
per cent stake in Meditel for €640m
(£542m), Richard also said there was a
plan to list Meditel shares on the
ANALYSIS l Group revenues (year ending 30 April)
300
250
200
Revenue (£m)
150
100
50
0
2001
each sell a tenth of their 22.5 per
cent stake in the business. If the
firm reaches the £1.5bn valuation
this will give them a paper windfall
of £17m each – not bad for an ini-
tial investment of just £60,000
between them.
Around half of Betfair’s 14 major
investors will sell some of their
stake, with a minimum of 10 per
cent of the company on offer.
Chief financial officer Stephen
Morana told City A.M. the firm will
not experience the same difficul-
ties as online grocer Ocado, which
was forced to slash its valuation at
the eleventh hour to rescue its IPO.
He said: “We’re putting up a
kets Matthew Westerman. He
joined Goldman in 2000 as a man-
aging director and was promoted
to partner in 2002. Prior to joining
the firm, he worked at NM
Rothschild, where he was a manag-
ing director and joint chief execu-
tive of ABN Amro Rothschild for
four years. He also worked in the
equity capital markets department
of CSFB. He graduated from Oxford
University with a history degree in
1986.
Also on the Goldman team are
CITYA.M. 22 SEPTEMBER 2010
Casablanca stock exchange next year.
Anas Alami, chief executive of
Moroccan state investment vehicle
and Meditel shareholder CDG, said
details of the listing would depend on
market conditions.
The deal is the first acquisition
since Stéphane Richard took over as
chief executive of the company in
March and puts France Telecom in
direct competition with Vivendi, its
domestic rival, which owns 51 per
cent of Maroc Telecom – Morocco’s
largest provider.
Source: Betfair
2002 2003 2004 2005 2006 2007 2008 2009
small percentage of the business.
Our stakeholders are committed,
they are selling to help the busi-
ness expand. There is no indication
that they are selling to crystallise
their investment.”
Morana denied the IPO could be
derailed if analysts turn on the
float: “Analysts have an influence
over these things but investors
need to make up their own minds.”
The firm also announced its full
year results, which saw revenue
rise 13 per cent to £341m but profit
slide to just £17.8m. The firm said
investment in IT and a big market-
ing spend for the World Cup hit its
margins. THE CAPITALIST: P8
Anthony Gutman, a star banker
enticed from Citigroup, and Nick
Harper.
On the Morgan Stanley side the
team is headed up by Henry
Stewart, the head of consumer
M&A who was a key adviser for
Cadbury in the lead-up to its sale to
Kraft. Also advising for Morgan
Stanley is highly respected manag-
ing director Peter Moorhouse and
Anthony Kokinakis.
Barclays Capital and Numis are
co-lead managers.
 The Capitalist
8 CITYA.M. 22 SEPTEMBER 2010
BETFAIR FOUNDER MULLS PUTTING
HIS WINDFALL MILLIONS TO STUD
NEWS that Betfair’s founders Ed Wray
and Andrew Black are set to net a
potential windfall of £17m apiece
from cashing in a tenth of their com-
bined 22.5 per cent stake at the com-
pany’s IPO got The Capitalist to
thinking yesterday – how might they
put that money to good use?
In Black’s case, at least, a few ideas
spring to mind. Currently a non-exec-
utive director at the company, Black’s
intention to retire from the board
next month was buried in among the
small details of Betfair’s statement
yesterday. While several reasons have
been mooted for his decision (cold
feet about the float’s chances of suc-
cess, perhaps?), The Capitalist reckons
Black may well just fancy a bit more
free time to concentrate on his other
passion in life – horseracing.
Alongside his interests in Betfair,
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
Black – who’s known to friends as
“Bert” – co-owns a racehorse training
stables in Cheshire with footballer
Michael Owen, and he’s also current-
ly in the middle of trying to build up
a 300-acre stud farm in Surrey.
The former, Manor House Stables,
has big plans to become the “most
successful flat training yard in the
country”, according to its website –
with work on the next phase of devel-
Michael Owen co-owns racehorse training stables with Betfair’s Andrew Black Picture: PA
opment (a horse swimming pool, vet-
erinary centre and additional barns)
well underway. With that, plus the
stud farm – where Black earlier this
month moved back into his family
farmhouse after an extensive year-
long refurbishment – a handy £17m
could probably go a long way indeed.
DADDY COOL
Warren Buffett has street cred. That’s
not something that can often be said
of a financier, no matter how success-
ful (actually, usually the opposite rule
applies), but it’s official.
Stateside, the blogosphere is alight
with talk of a dinner last week
Jay-Z is now officially a Buffett enthusiast
between Buffett and hip-hopper Jay-Z,
which was apparently organised by
Forbes magazine in advance of its
publication of the world’s 400 richest
people (no, we’re not sure why either).
The visit to Omaha is said to have
included a visit to the HQ of Buffett’s
Berkshire Hathaway and a trip to the
local Hollywood Diner, and it’s cer-
tainly impressed Jay-Z’s army of fans.
“I just can’t say how proud and
honoured I am as being a hustler
myself and seeing are [sic] role model
up there,” shouts one on a fan web-
site, Jay-zJournal.com. “This is so BIG!
There is no limit for Jay…”
ART ATTACK
Busy times for collectors of Lehman
memorabilia, with two separate auc-
tions of the failed bank’s corporate
art collection
scheduled
for the next
week or so.
First up is
an auction
of 160 works at
Sotheby’s in New York this
Saturday, where pieces by the
likes of Damien Hirst, Andy
Warhol, John Baldessari and
Richard Prince are up for grabs,
as well as a painting by Julie Mehretu,
who was recently commissioned by
Goldman to paint a mural for its new
headquarters in Manhattan.
A Christie’s auction in London fol-
lows on Wednesday next week, where
lots include the plaques and signs
which adorned Lehman’s walls before
its demise.
The proceeds of both are set to go to
creditors, though the expected hauls
of $10m and £2m respectively aren’t
likely to make much of a dent in the
hundreds of billions still owing.
NOTE OF CAUTION
An unprecedented level of honesty in
the corporate world, courtesy of prop-
erty investment group New Europe
Property Investments (NEPI). The
Capitalist was yesterday somewhat
bemused to be confronted with an
RNS statement from the firm entitled
“Cautionary Announcement”.
In fact, NEPI’s caution turned out
to be on behalf of shareholders, who
the company warned of its intention
to undertake a €40m rights issue to
fund potential acquisitions.
“If successfully concluded, the
negotiations may have a material
effect on the price of NEPI’s securi-
ties,” it continued, without a hint of
the usual lengthy spiel extolling the
virtues of the management’s strategic
vision. “Accordingly, shareholders of
the company are advised to exercise
caution when dealing in NEPI’s secu-
rities until a further announcement
is made…”
THREE PEAKS
Congratulations to the intrepid team
from Deloitte, led by Janice Wong,
who at the weekend took first place in
the annual CARE 3 Peaks Challenge,
in association with City A.M.
Deloitte joined six other City teams
to scale the three highest peaks in the
UK – Ben Nevis, Scafell Pike and
Snowdon – in one day and night, rais-
ing £40,000 to support the charity’s
work helping poverty-stricken people
around the world.
FLYING HIGH
Luxury hotel group Von Essen yester-
day launched its latest property in
London – Hotel Verta, which
is located on the
Thames at
Battersea and boasts
somet hing
of an
unusual
accolade – it’s the
only hotel in Europe
adjoined to a heli-
port. More proof that
the good times are finally making a
comeback.
 10 News
AIG chief Robert Benmosche will have shares trading in Hong Kong
UK wary on
EU plan for
derivatives
▲
REGULATION
BY HARRY BANKS
BRITAIN gave only a partial thumbs-
up yesterday to a draft European
Union law aimed at cracking down
on the opaque $600 trillion deriva-
tives sector, warning against rushing
to push all trading onto exchanges.
The draft law was unveiled last
week and implements pledges the
bloc made on the Group of 20 lead-
ing nations level to standardise con-
tracts where possible so trades can
be centrally cleared and reported by
the end of 2012.
The G20 would like transactions to
be made via exchanges where appro-
priate. “The UK welcomes much of
the (European) Commission’s pro-
posal,” Jonathan Taylor, managing
director for financial services and
stability at the Treasury said yester-
day.
He backed the G20 goals for deriv-
atives but said some flexibility
would be needed in dealing with an
obligation to centrally clear transac-
tions.
“We are also aware that forcing
derivatives onto exchanges is not
always appropriate and could, for
example damage liquidity,” Taylor
told a meeting of the International
Swaps and Derivatives Association.
“So we need to think through
what the policy options are for
achieving these policy ambitions for
standardisation without risking
these downsides,” Taylor added.
The law needs approval from the
bloc’s governments and European
Parliament to take effect, and
changes are likely.
It makes no mention of exchange
trading but this will be addressed in
a separate review of EU trading rules
now under way. The United States
has already approved a reform of
Wall Street that will require
exchange trading of some contracts.
3i sells parking enforcement firm to AAC Standard Life closes fund
▲
M&A
BY VICTORIA SCHOLAR
NSL, the UK’s biggest employer of pri-
vate traffic wardens, has set its sights
on further growth after private equity
owner 3i sold the firm to AAC Capital
in a £120m deal.
The firm, which also helps run the
London congestion charge, expects to
make £15m this year, on revenues of
around £155m.
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Senior management, led by chief
executive Mark Underwood, will rein-
vest in the business and Underwood
said he saw “significant opportunity
to expand the business over the next
few years”.
NSL branched out into ambulance
services by buying Patient First earlier
this year, and is part of a scheme to
bring regulated parking to Abu
Dhabi.
The firm provides more than 50
AIA gets OK to list stock
▲
INSURANCE
BY MARION DAKERS
BAILED-OUT insurer AIG has won per-
mission to list shares in its Asian life
insurance unit AIA on the Hong Kong
stock exchange.
AIG is thought to be aiming to
start trading shares on 29 October,
with a view to raising up to $15bn
(£9.6bn).
local authorities with private parking
enforcement officers.
It was previously part of NCP, the
car parks business, which 3i bought
in 2005. The private equity firm then
split the two and sold NCP to
Australian bank Macquarie.
Taken together, the two sales will
yield a return to 3i of about three
times the money it originally invest-
ed, a person familiar with the matter
said.
AIG, which is nearly 80 per cent
owned by the US government, is dis-
posing of assets to repay taxpayers
who committed $182.3bn to prop up
the insurer during the financial cri-
sis.
President and chief executive
Robert Benmosche said last month
when the firm paid back $4bn of US
loans: “AIG is getting stronger every
day. We still have more work to do,
PRIVATE EQUITY
STANDARD Life’s private equity arm
has closed its latest fund of funds on
€700m (£594m), around €200m below
its previous investment vehicle.
SL Capital Partners’ European
Strategic Partners 2008 fund, which
will invest in western European buy-
outs, received €200m more than its
original target.
SL Capital chief executive David
CITYA.M. 22 SEPTEMBER 2010
but we will finish the job and make
sure we repay the American taxpay-
ers.”
AIG declined to comment on the
share listing, while AIA, which is
based in Hong Kong, was not avail-
able for comment yesterday.
The initial public offering (IPO)
comes after AIG tried and failed to
sell the business earlier this year to
Prudential for $35.5bn.
Latest Irish
bond sale
nets €1.5bn
▲
EUROPEAN ECONOMY
BY MARION DAKERS
IRELAND successfully sold €1.5bn
(£1.27bn) of treasury bonds yesterday,
though investors demanded higher
yields to compensate for continued
fears of a sovereign default.
Ireland sold €500m of four-year
bonds with an average yield of 4.77
per cent, up from 3.63 per cent in the
last auction in August. The average
yield on an eight-year bond rose to
6.02 per cent from 5.09 per cent in
June.
But the spread between Irish 10-
year bond yields and the European
benchmark of German Bunds fell to
402 basis points from the euro life-
time high of 425 basis points set on
Monday. The cost of insuring Irish
debt against default also fell.
“People realised that Ireland does
not have a liquidity issue and not
much of a solvency issue either,” said
Brian Devine, economist with NCB
Stockbrokers in Dublin. “People
recognised this is good value at these
yields.”
Spain and Greece also enjoyed
strong sales in their own bond offer-
ings yesterday.
Greece, seen by investors as one of
the riskiest Eurozone economies, saw
the average yield on the 13-week
treasury bills it offered fall to 3.98
percent from 4.05 percent in a previ-
ous sale in July.
The Greek government sold €390m
of bonds, three-quarters of which
were snapped up by foreign investors.
Meanwhile, Spain neared the top
end of its €6bn to €7bn target in its
treasury bill sale, though yields rose
on 12-month and 18-month bonds
after falling in the two previous plac-
ings.
Spanish government bond spreads
over Bunds also narrowed, hitting
172 basis points, its tightest in a
week.
Currie said: “That we have successful-
ly closed ESP 2008 at €700m during
such a turbulent time for global mar-
kets shows the continued strong
appeal of SL Capital’s private equity
fund-of-funds model.”
ESP 2008 is the fifteenth fund for
SL Capital, and has attracted more
than 50 new and returning investors.
The firm has raised €6.2bn to invest
in European and North American
assets since 2000.
 MO
ND
Y AY
DA
TUR
SA

TU
ES
DA
Y
BEFOR
E END
OF DA
Y
BEFOR
E 12P
M
BEFOR
E 9AM

WEDNESDAY
BEFOR
E 9AM
BEFOR
E 12P
M
BEFOR
E END
OF DA
Y

EVERY HEM,
BEAD AND STITCH
IN THE RIGHT
PLACE AT THE
RIGHT TIME.
• • • • • • •

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 12 News
Severstal plans London float
▲
MININGS
BY VICTORIA BATES
RUSSIAN steel group Severstal is
expected to launch a float of its gold
mining division in London later this
year.
Severstal, which owns a portfolio
of gold assets in Russia and west
Africa, is likely to sell off around 30-
35 per cent of the company, retaining
a large controlling stake for itself.
The float is likely to value the compa-
ny at as much as $4bn (£2.56bn.
Canada forces
BHP to extend
Potash offer
▲
M&A
BY VICTORIA BATES
MINER BHP Billiton was yesterday
forced to extend the deadline for its
offer for Canada’s PotashCorp by a
month to comply with regulatory
requests for extra information.
PotashCorp investors now have
until 18 November to accept, though
analysts at Citigroup warned share-
holders may prove unwilling to sell
up unless BHP raises its $130-per-
share offer – a move seen as unlikely
unless a counter-bid emerges.
“The probability of a white knight
[emerging] or of BHP overpaying is
low, in our view, hence we see a risk
the deal may not proceed,” Citi said.
However, BHP first faces the hurdle
of convincing authorities in Canada
and the US of the merits of its bid,
Wellstream confirms takeover bid is
causing shares in the UK to skyrocket
▲
OIL AND GAS
BRITISH oilfield services group
Wellstream Holdings said it had
received several bid approaches, lift-
ing its shares 30 per cent and valuing
the company at over £700m.
Wellstream, which was floated on
the stockmarket in 2007 by British
private equity firm Candover, makes
flexible pipes used by oil companies
Gold companies have been buoyed
recently by a meteoric rise in the
price of the precious metal, which
has gained 25 per cent in the past
year thanks to a declining trend in
production and strong demand.
Prices, currently well above $1,250
an ounce and rising, are widely
expected by the industry to hit
$1,500 an ounce by the end of 2010.
Severstal has already heavily com-
mitted itself to a continued rise in
gold prices, having upped its stake in
Canadian gold miner Crew Gold to
which must be judged of “net benefit
to Canada” before it can proceed.
The Canadian Competition Bureau
issued a supplementary information
request on 20 September, forcing the
extension of the acceptance deadline.
BHP insisted it remains “confident
that the offer will receive all requisite
regulatory approvals in due course”,
though it must also win over the US
Federal Trade Commission, officials
from PotashCorp’s home province of
Saskatchewan and Investment
Canada before it gets the green light.
Liberum Capital’s Dominic O’Kane
said the information request suggest-
ed BHP “remains in the driving seat”
in talks with the regulator, though it
will give counter-bidders extra time.
PotashCorp is currently attempting
to put together a white knight bid
from a consortium in China.
in deep water, an area set for strong
growth due to major finds in Brazil
and the Gulf of Mexico in recent
years.
The firm said it had “received a
number of preliminary approaches
regarding a possible offer for the
company” but there was “no certain-
ty that an acceptable offer will ulti-
mately be made”.
The statement follows a five per
93.4 per cent last week.
News of Severstal’s plans comes
after the flotation of African Barrick
Gold earlier this year by its parent
Barrick Gold, the world’s largest gold
miner. ABG raised over £500m from
selling off a quarter of the company.
Those involved in the current
plans are thought to be confident
that the high gold price will shore up
demand from investors, who have
been wary of other IPOs so far this
year.
Severstal declined to comment.
BHP Billiton chief Marius Kloppers is keen on Potash
cent rise in Wellstream shares on
Monday.
“The possible offers for Wellstream
highlight the M&A potential for the
oil service sector at this stage in the
cyclical recovery,” said Keith Morris,
oil analyst at Evolution Securities.
Wellstream is a frequent subject of
takeover rumours, with market chat-
ter often linking it to Europe’s largest
oil services company, Saipem.
Losses nearly double at Third
Quad after painful restructuring
▲
FINANCIAL SERVICES
THIRD Quad Capital, the latest ven-
ture from former Blue Oar Securities
boss Andrew Monk, has seen losses
almost double over the first half of
the year as it completes a “painful but
necessary” restructuring.
Monk, who was ousted from Blue
Oar when it was taken over by
Edward Vandyk’s Evolve Capital last
year, said the group’s recent acquisi-
tions would enable it to expand in
Picture: Micha Theiner/City A.M.
ANDREW OSBORNE
BANK OF AMERICA
MERRILL LYNCH
Managing director of corporate
broking at Bank of American Merrill
Lynch, Andrew Osborne, is the top
leader on the possible takeover of
Wellstream.
Osborne, who is short-listed for the
City A.M. Dealmaker of The Year
award, is known as the go-to guy for
the mid-cap energy and power sector.
Most notably, Osborne advised
CITYA.M. 22 SEPTEMBER 2010
future with “positive cash balances, a
strong balance sheet, reduced costs
and a determination to grow”.
Last month, the business bought
loss-making corporate finance and
broking house VSA Capital for a nom-
inal sum, as a shell to facilitate
Monk’s return to the broking sector.
Monk, who previously founded
Blue Oar and built Oriel Securities
into a £40m business before selling
up in 2006, said at the time he aimed
to grow VSA rapidly over the year.
NEWS | IN BRIEF
Bids for the Priory disappoint
Royal Bank of Scotland has received
bids for the Priory Group of less than
the £1bn asking price. The bank had
hoped to attract private equity buyers
for the owner of the Priory clinics, but
the first round of bidding last week has
fallen short. Bain Capital, Blackstone,
Cinven and Advent are among the first-
round bidders. RBS inherited the rehab
chain when it took over Dutch bank
ABN Amro in 2007.
Boost for the US housing market
US housing starts increased more than
expected in August to their highest
level in four months, data from the
Commerce Department showed yester-
day. Housing starts rose 10.5 per cent
last month, the largest increase since
November, to a seasonally-adjusted
rate of 598,000 units. Compared to
last year, the figure has risen by 2.2
per cent, suggesting the housing mar-
ket is starting to stabilise following the
end of tax credits for home buyers in
April.
Burberry moves into direct sales
Luxury retailer Burberry has created an
iPad app to allow consumers to view
and buy its latest clothing range live
from the catwalk. Chief executive
Angela Ahrendts would not be drawn on
the potential revenue boost from the
Retail Theatre scheme, but said the con-
cept was part of a move towards the
fashion brand embracing direct sales.
Tullow Oil on its £1bn fundraising to
pay for the buying rights to explo-
ration on the shores of Lake Albert.
The deal, which happened earlier this
year, saw Tullow move into the pre-
mier league of oil explorers.
Osborne cut his teeth at Hoare
Govett but he was poached by Merrill
Lynch in 2004 by then chairman Bob
Wigley.
Other advisers on the Wellstream
deal, include a team from Credit
Suisse which is being led by invest-
ment banking managing director,
John Hannaford.
City law firm Clifford Chance has
taken lead legal role, with London cor-
porate partners David Lewis and Tim
Lewis managing the deal.
CITYA.M. 22 SEPTEMBER 2010 News 13

Mears starts energy scheme Top Obama adviser quits

“It looks to be a strong partnership. the government estimates would
to take up role at Harvard
▲

PROPERTY
As to what it might mean in terms of stimulate about £3.2bn of investment
BY MARION DAKERS revenue or margins, we don't know. It by energy suppliers.
SOCIAL housing repairs company feels as though this is a positioning The deal will also target funding was looking forward to returning to

Mears has paired up with British Gas
to work on carbon cutting schemes,
the firm said yesterday, and is in talks
to take over more of collapsed rival
Connaught’s leftover contracts.
Mears said it will expand into ener-
gy saving for the 500,000 local author-
ity-run homes under its care,
enabling it to tap into government
funds at a time of public sector cuts.
move rather than a ‘we’re going to
upgrade numbers’ move,” Panmure
Gordon analyst Andy Brown said.
The firm will also make joint bids
with British Gas for future social
housing maintenance contracts.
Mears did not provide any financial
figures for the deal, but said it would
seek funding from the Carbon
Emissions Reduction Target, which
from the £350m Community Energy
Savings Programme (CESP).
Mears chairman Bob Holt said on
Monday that talks about adopting
some of Connaught’s social housing
contracts were ongoing and Mears
was “very much on the look out” for
acquisitions.
Shares in Mears climbed 3.4 per
cent to 290p in yesterday’s trading.
▲
US POLITICS
WHITE House economic adviser
Larry Summers has announced
plans to leave his job by the end of
the year, marking a major staff
shake-up as President Barack Obama
struggles to get the economy back on
track.
Summers said in a statement
released by the White House that he
his teaching job at Harvard
University and Obama said he would
continue to seek Summers’' counsel
on an informal basis.
A former Treasury secretary
known for his outspokenness,
Summers brought years of experi-
ence in economic policymaking to
his job as director of the White
House National Economic Council.

Deloitte quits
Deloitte Touche
Tohmatsu Limited,
the new UK private
entity, employs
over 160,000 people
and has operations

its Swiss base

in over 40 coun-
tries.

Picture: PA

for British HQ ARE THERE BENEFITS TO DROPPING THE VEREIN STRUCTURE?

can operate a number of smaller Interviews by Emma Sadowski
▲

ACCOUNTING
arms with separate profit pools and
BY EMMA SADOWSKI
ACCOUNTING giant Deloitte Touche
revenue streams while still sharing a
brand.
RICHARD TURNOR | NEAL TODD |
MAURICE TURNOR GARDNER BERWIN LEIGHTON PAISNER

Tohmatsu has given the UK a vote of
confidence after ditching its Swiss
base and relocating to British shores.
The move comes as part of a radical
legal overhaul of the accountant’s
global structure and sees Deloitte
“ “
The accounting giant said it made
the move after decades of operating
under its previous structure. A state- The advantages are that moving The verein is a useful way to reg-
ment said: “We concluded that,
although the Verein structure had from a verein structure means that the ulate partnerships but moving away from
served us well over the years, we had new entity is probably just as tax effi- that allows partnerships more flexibility

make the UK its new legal home.
As part of the legal overhaul,
Deloitte has moved its global manage-
ment and governance functions from
its previous structure to a newly
established UK private company
” ”
outgrown it.” cient but that there is more flexibility for and management can do as they wish.
It will not deliver any tax benefits
to the Treasury because each region management.
will still pay taxes locally.
The move has been welcomed by
City figures, which said it is a signal RICHARD BARHAM | DENTON WILDE SAPTE

“
called Deloitte Touche Tohmatsu that the UK is still considered as an
Limited. important business centre.
Deloitte has moved away from the “The fact that Deloitte is moving to A Swiss verein works as a co-operative or members' club. Profits are housed in separate enti-

”
Swiss verein structure, commonly the UK shows that [we] remain attrac-
used by accounting and law firms. tive,” commented a partner at a City ties. But the verein should not control its members. Under another structure, the top entity might
Under a verein structure, a company law firm. have greater control to manage and change the shape of the underlying business.

Banks now dominating the mortgage Dallas Mavericks owner

market as building societies lose share accused of insider dealing
increased their share of gross lending He said: “Banks have been able to accused Cuban of acting on non-pub-
▲

FINANCIAL SERVICES US ECONOMY

BANKS are dominating the mortgage
market, findings by Datamonitor
reveal. Outstanding mortgage bal-
ances grew by £145.6bn for banks
while building societies saw balances
shrink by more than £18bn.
Datamonitor’s study of Competitive
Dynamics in the UK Mortgage Market
2010 shows that the top six banks
to 85 per cent. The figures represent
signs of positive growth in the mort-
gage market but indicate a shift in
how difficult it has become for build-
ing societies to compete.
Daoud Fakhri, analyst at
Datamonitor, sees the findings as a
consequence of the government
bailout at the peak of the financial cri-
sis.
borrow from the state at advanta-
geous rates which building societies
haven’t had access to.”
He added: “Most people would have
expected building societies to emerge
from the credit crisis in a stronger
position than banks. It seems that
although they didn’t engage in high-
risk lending which contributed to the
banking crisis they have still suffered.”
A FEDERAL appeals court yesterday
revived the US Securities and
Exchange Commission’s insider trad-
ing lawsuit against Mark Cuban, the
billionaire and owner of the Dallas
Mavericks basketball team.
The US Fifth Circuit Court of
Appeals said a lower court erred in
dismissing the case, in which the SEC
lic information when he sold his
stake in Mamma.com, a Canadian
internet search engine company, to
avoid more than $750,000 (£482,000)
of losses.
The appeals court sent the case
back to the lower court for further
proceedings, which could lead to a
trial. Cuban is worth $2.4bn, Forbes
magazine said in March.
 14 News
Second time lucky for Cairn
as it strikes oil off Greenland
▲
ENERGY
BY MARION DAKERS
OIL explorer Cairn Energy said yester-
day it has hit oil off the coast of
Greenland, sending shares up 2.3 per
cent to 436.5p.
Cairn disappointed investors last
month when its first well in
Greenland produced only a small
amount of gas, but its most recent
work in Baffin Bay has found evi-
dence of a larger area of oil and gas.
“The presence of both oil and gas
confirms an active, working petrole-
um system in the basin and is
extremely encouraging at this very
early stage of our exploration cam-
paign for the Sigguk block,” Cairn
chief executive Bill Gammell said.
The firm is waiting for tests on two
types of oil found in the well before
continuing.
Cairn agreed to sell most of its 62
per cent stake in Cairn India to rival
Vedanta last month, and said it
would reinvest the proceeds in its
exploration of Greenland.
However, its first well has now been
plugged and abandoned, the firm
said yesterday, with costs of $84.2m
(£54.2m) written off.
Research by the US Geological
Society suggests there could be bil-
lions of barrels of oil near Greenland,
though the recent drilling has trig-
gered protests from Greenpeace, who
managed to invade and briefly close
Cairn’s rig in August.
Salmaan Hasan has been forced to fend-off takeover attempts
Minerva back
in black after
values soar
▲
PROPERTY
BY MATTHEW WEST
MINERVA, London’s second largest
property developer, has swung back
into profit following a difficult year in
which it fought off a take-over attempt
by its largest shareholder.
The company – which recently com-
pleted its iconic Walbrook develop-
ment opposite Cannon Street –
announced profit after tax of £69.1m
for the year to 30 June, a massive turn-
around from the £287.1m loss it made
last year.
It said the reason for the change in
fortunes was due to an improvement
in the valuation of its real estate port-
folio. Its net asset value (NAV) – a key
measure of a property developer’s suc-
cess – jumped to 132p by the end of
June, up 29 per cent on December’s
102p.
Last month shareholders rejectd an
attempt by KiFin, Minerva’s largest
Time to find some tenants
TENANTS should be banging
Minerva’s door down. Its futuristic
Walbrook development, which
boasts 440,000 square feet, is one of
the only buildings capable of hous-
ing a large tenant within the Square
Mile. But it has lost out on some
important signings – BlackRock
went to Songbird’s Drapers Gardens
while Macquarie signed a lease at
British Land’s Ropemaker – and
things don’t seem to be improving.
Now it looks like Bloomberg is
close to signing a pre-let at Legal
and General’s Walbrook Square:
another one is about to bite the
dust. Minerva’s silence on prospec-
tive tenants for its largest City devel-
CITYA.M. 22 SEPTEMBER 2010
shareholder, to remove chairman
Oliver Whitehead and chief executive
Salmaan Hasan over a perceived lack
of direction.
KiFin, which is the investment vehi-
cle of South African billionaire Natie
Kirsh, took a 29.5 per cent stake in
Minerva in November 2008 and
attempted a takeover of the property
firm that valued it at 50p a share. That
was rejected by shareholders as under-
valuing the company.
Whitehead said despite the extreme
challenges brought on by the credit
crunch and the dispute with KiFin, the
company had successfully achieved a
number of important milestones.
These included a comprehensive
refinancing of the group’s loan facili-
ties, the sale of its Wigmore Street
building for £40.75m, pre-letting 45
per cent of the total office space at its
St Botolph Building and achieving pre-
sales of £230m at its Lancaster Gate
apartment complex.
opment suggests it will be 2011
before a firm moves in.
An ever longer delay would be
bad for cash flow, which is already a
cause for concern. Cash flow from
operating activity was -£45m in
2010, and an empty Walbrook
would likely mean a further drain
in the region of £10m a year, due to
empty rates and service charges.
Minerva is right to point to the
stellar growth in its net asset value
since. But it doesn’t count for much
if those assets are empty.
BOTTOMLINE
Analysis by David Crow
CITYA.M. 22 SEPTEMBER 2010
Birmingham council
looks to sell assets
PROPRETY
▲
BY MATTHEW WEST
BIRMINGHAM council leaders are
in talks with Middle East sover-
eign funds, hoping to plug a
budget hole by selling a number
of trophy assets owned by the
city.
The council is looking for ways
to fund big capital projects at a
time when the coalition govern-
ment is demanding deep spend-
ing cuts.
Town halls around the country
are currently drawing up propos-
als to cut spending by up to 30
per cent in anticipation of the
government’s comprehensive
spending review next month.
Another Tube strike could hit London if today’s talks fail
Birmingham is now seeking
private investment to complete
its Beorma quarter development,
the latest phase in the regenera-
tion of the city centre, and has
attracted about £200m from
Kuwaiti lead developer Salhia
International Investments.
Plans to knock down and relo-
cate the main library and redevel-
op the site in the heart of the city
have also caught the eye of
Middle Eastern investors.
Among the assets that could be
sold is the National Exhibition
Centre (NEC), as well as the coun-
cil’s 19 per cent stake in
Birmingham Airport and some of
the city’s social housing, valued
at around £2bn.
Picture: REUTERS
News 17
Mike Whitby, Conservative
party leader of Birmingham city
council said he was talking with
the Abu Dhabi government as
well as a number of sovereign
wealth funds.
“We would allow them to be in
partnership with our assets
including the National Indoor
Arena (NIA), the Symphony Hall,
the International Convention
Centre (ICC) and the NEC,”
Whitby said.
The NEC Group, which includes
the NIA and ICC, made a profit of
almost £30m. One Conservative
councillor said the council could
also sell its 19 per cent stake in
Birmingham international air-
port.
Tube unions to
meet with LU
to avert strikes
▲
TRANSPORT
TUBE union bosses are meeting
London Underground (LU) manage-
ment this morning with hopes of put-
ting a bitter dispute over job cuts and
the possibility of another set of strikes
behind them.
RMT and the Transport Salaried
Staffs’ Association (TSSA) will meet LU
at conciliation service Acas in a bid to
halt planned strikes for October and
November that could once again crip-
ple the Underground network.
The unions said they both have a
positive outlook on today’s talks and
have “every intention” of reaching a
deal with LU management over plans
to cut up to 800 station posts.
If the talks fall through, the unions
are set to launch industrial action on
3 October, which will see more than
10,000 Tube workers leave their posts.
Similar action is planned for 2 and
28 November.
CITYA.M. 22 SEPTEMBER 2010
Airlines set for higher profits
AVIATION
▲
BY EMMA SADOWSKI
THE WORLD’S airlines are set to make
an $8.9bn (£5.7bn) profit this year,
according to sharply revised figures
from the International Air Transport
Association (IATA).
Stronger-than-expected recovery
within the commercial aviation sec-
tor has pushed the leading industry
body to up its profits forecast for 2010
from June, when it said the sector
would post just $2.5bn in profits for
the year.
UniCredit CEO
resigns after
Libyan crisis
BANKING
▲
BY HARRY BANKS
UNICREDIT chief executive Alessandro
Profumo resigned yesterday, his high-
flying tenure at Italy’s biggest bank
halted by a row over Libyan sharehold-
ers and lagging results.
Profumo, Europe’s longest-serving
bank chief, had steered UniCredit’s
rise from a regional bank to a pan-
European player with operations in 22
countries.
Analysts say his departure could
leave Italy’s most international bank
rudderless while it struggles to recover
from the financial crisis after several
acquisitions.
Profumo, 53, said he had stepped
down in a letter to the bank’s board
ahead of an emergency meeting on
Libya’s growing investments in
UniCredit. He had been at the helm
since 1997.
“Profumo has resigned. He
announced it in a letter to the board
directors,” a source said, on condition
of anonymity.
Roast New Season Grouse
Justerini & Brooks Red Burgundy
Game dish of
the year
“The industry recovery has been
stronger and faster than anyone pre-
dicted. The profit we are projecting
will start to recoup the nearly $50bn
lost over the previous decade,” said
IATA chief executive and director gen-
eral, Giovanni Bisignani.
But in its first forecast for 2011, IATA
said it expects profits to fall to $5.3bn
as lingering doubts remain over how
long the recovery will last.
The world’s airlines are expected to
post collective revenue of $560bn for
the year, marking a $15bn increase
on what was previously forecasted.
A second source close to the situa-
tion said a shortlist of candidates had
already been drafted to replace the
man Italian media dub “Mr
Arrogance” and “Alessandro the
Great”. The board is understood to
have given chairman Dieter Rampl
three weeks to find a replacement.
Rampl is expected to be named inter-
im boss.
Shareholders and politicians have
accused Profumo of letting Libya
increase its holding in UniCredit, the
Italian bank hardest hit by the finan-
cial crisis.
ANALYSIS l Unicredit
€ 1.91
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Meanwhile, Asia-Pacific airlines
continue to outpace competitors and
are expected to post profits of $5.2bn
as a result of a surge in business trav-
el in the region and a 23.5 per cent
increase in passenger traffic.
According to IATA, European carri-
ers are expected to improve 2010 loss-
es to $1.3bn from the $2.8bn the
industry body forecast in June.
Bisignani said: “There are lingering
doubts over how long this cyclical
upturn will last. Even if it is sustain-
able, the profit margins that we oper-
ate on are razor thin.”
UNICREDIT IN A NUTSHELL | ITALY’S BIGGEST BANK
● UniCredit operates in 22 European
countries and is the biggest lender in
eastern and central Europe. It has a pres-
ence in 50 markets. The bank had 9,600
branches and more than 162,000
employees at 30 June.
● Top shareholders are Italian invest-
ment bank Mediobanca with 5.1 per cent
stake, Abu Dhabi’s Aabar investment
company with 4.9 per cent, Central Bank
of Libya with 4.9 per cent and Italy’s
Others include Italy’s CRT foundation at
3.3 per cent, the Libyan Investment
Authority with 2.59 per cent, and
German insurer Allianz with 2 per cent.
with a glass of
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Industry: Network Rail
needs to be split and sold
▲
TRANSPORT
NETWORK RAIL should be split up
and sold off to help raise cash for the
Treasury, while train operators
should be handed more power,
according to new proposals by an
industry body.
A paper issued by the Association
of Train Operating Companies (ATOC)
to Sir Roy McNulty, who is conducting
a value for money review of the rail
UniCredit chief
Allesandro
Profumo has
resigned
Picture: GETTY
● Tracing its roots back to a 15th centu-
ry municipal pawn shop in Bologna, the
modern bank was created in 1997 from
the state-owned Credito Italiano.
● In 2005, UniCredit made its first big
cross-border move buying Germany’s
HVB Group. In 2007, it bought Capitalia.
● In the first half, net profit was €669m
(£567m) and operating income €13.3bn.
Total assets at end of June were €955bn.
● The bank has boosted its capital in the
last two years, tapping shareholders for
€3bn in early 2009 and for another
€4bn in January 2010.
News 19
network, said the moves would save
the government up to £500m.
It recommends splitting Network
Rail, the owner of British tracks and
stations, into regional parts and then
selling them.
ATOC is also suggesting that train
operators should be handed more
power to ensure better alignment of
track and train and to put opera-
tional decision making in one place.
McNulty’s report is due next year.
Gold could
hit $1,500
by year end
▲
MARKETS
GOLD prices could reach a record
$1,500 an ounce by the end of the
year, analysts predict.
“With the break of the previous all-
time high at $1,265 last week the next
target looks set to be the $1,300 level,
and given the fact that demand is set
to remain pretty robust a move
towards $1,500 by the end of the year
is by no means out of the question,”
said Michael Hewson, of CMC
Markets.
“Much will depend on how the
market perceives the actions of the
Federal Reserve... but any indications
that further stimulus is on the cards
will continue to buoy the gold price.”
With investors worried about cur-
rency devaluations in the face of a
double dip, gold has been popular.
But after hitting record highs for
three days, the price dipped yesterday
as a report showing signs of stability
in the US housing market prompted
bullion investors to take profits.
Traders said the gold market was
nervous about the Federal Reserve’s
policy meeting. Broker Tom Pawlicki,
of MF Global, said gold could fall if
the Fed “stayed away from comment-
ing on new measures to spur the
economy”.
 20 News
JD Sports eyes acquisitions
▲
CONSUMER
BY HARRY BANKS
Clothing and footwear retailer JD
Sports Fashion said it would consider
buying distressed brands or compa-
nies both in the UK and overseas as it
posted a 37 per cent rise in first-half
profit.
“The financial pressures that cer-
tain brands or companies in the sec-
tor are suffering provides potential
opportunity,” executive chairman
Peter Cowgill said.
Italy, Spain and Germany were “on
the radar"”as well as further deals in
Britain.
Rents in New
Bond Street
top euro list
▲
RETAIL
BY VICTORIA SCHOLAR
NEW Bond Street has taken over from
the Champs-Elysées as the most
expensive shopping location in
Europe, according to a survey.
Rents also grew faster there over
the last year than on any other shop-
ping street in the world.
They soared 19.4 per cent to £536
($836) per square foot over the last 12
months, the figures from retail estate
agent Cushman & Wakefield showed
yesterday.
That compares with the world's
most expensive shopping street, New
York’s Fifth Avenue, where rents rose
by 8.8 per cent to $1850 a square foot.
Cartier, Chanel and Louis Vuitton
all have stores in New Bond Street,
which has outstripped Champs-
Elysees in Paris as the continent's
dearest shopping space per square
foot.
Peter Mace, head of Central London
Retail at Cushman & Wakefield, said:
“New Bond Street remains one of the
most sought after locations in the
world for luxury brands and, due to
the significant imbalance between
supply and demand, it continues to
witness significant rental growth.
Baltic Exchange presses ahead with a Serious Fraud Office to
plan for a central derivatives screen widen Weavering probe
▲
MARKETS
BY HARRY BANKS
THE Baltic Exchange is pressing
ahead with launching a central
screen as soon as it can to trade dry
bulk freight derivatives despite bro-
ker worries over current proposals
and a potential challenge from a sep-
arate platform.
In May the Baltic Exchange said it
had applied for multilateral trading
facility (MTF) status with the UK’s
Financial Services Authority (FSA) for
“What we are finding is that we are
being approached by a number of
overseas operators and we’re really
just assessing those,” said Cowgill.
The group, which trades as JD
Sports, Chausport, Size, Bank and
Scotts from 530 stores, has scope for
further acquisitions with its net cash
of £34.5m at the half-year end fore-
cast by analysts to rise to about £90m
by end-January 2011.
Prior to yesterday’s update shares
in JD Sports had increased by nearly a
third over the last year.
Some 57 per cent of the shares are
owned by sportswear company
“The recent letting of 169 New
Bond Street to Piaget represented a
record rent for the street with the
new tenant also contributing a signif-
icant premium to secure vacant pos-
session.
There were four under-bidders for
the store.
“This trend is likely to continue for
the foreseeable future on the basis
that there are still a large number of
retail requirements that remain
unsatisfied.”
Champs-Élysées rents actually fell
9.5 per cent over the last year to the
equivalent of $793 a square foot. But
agents believe it could be in for a
revival with H&M, Abercrombie &
Fitch and Tommy Hilfiger all plan-
ning to open there and space begin-
ning to dry up.
South Korea’s Myeongdong in
Seoul jumped three places this year
from eleventh to eighth, their strong
performance down to demand from
international retailers and strong
tourism with their export market up
7.2 per cent in the second quarter of
2010.
Meanwhile retail rents have revert-
ed back to their pre-credit crunch
strength averaging a 17 per cent
increase in prime areas.
BaltEx which it expected would go
live by the end of 2010, aiming to
boost market activity.
But freight derivatives brokers,
fearing a loss of commission business
in this niche market, have objected to
an FSA regulatory requirement which
would take away the compulsory
nomination of brokers in every trade.
The FSA declined to comment.
“We are still working to get things
ready as soon as we can,” said Baltic
Exchange chief executive Jeremy
Penn.
Pentland, while Mike Ashley’s Sports
Direct owns 12 percent,
JD Sports made an underlying pre-
tax profit of £19.4m in the six months
to 31 July, up from £14.2m in the
same period last year. Revenue
increased 18.5 per cent to £383.9m,
helped by the stimulus to trade from
the run-up to the World Cup. Sales at
UK and Ireland stores open at least a
year increased 2.8 per cent over the
half and were up 2.7 per cent for the
four weeks to 28 August.
The interim dividend was raised
15.2 per cent to 3.8 pence. Cowgill
added that December and January
would be key months.
THE HOTTEST AREAS FOR SHOPS
4. NEW BOND STREET
THE WORLD’S MOST EXPENSIVE SHOP RENTS IN THE WORLD
Rank Rank Country Cities
2010 2009
1 1 USA New York
2 2 Hong Kong Hong Kong
3 5 Japan Tokyo
4 6 UK London
5 3 France Paris Avenue des Champs Elysées -2
Freight forward agreements (FFAs),
which allow a buyer to take a position
on where freight rates will stand at a
point in the future, are not traded on
an exchange.
Dorian Benson, chairman of the
FFABA, an association which repre-
sents the views of freight derivatives
brokers, said its relationship with the
Baltic Exchange and the FMIUG
freight users’ body remained “very
amicable” with all sides working to
find a suitable product for traders
and brokers.
CITYA.M. 22 SEPTEMBER 2010
Experian buys US peer
Mighty Net for $208m
the US.
▲
FINANCIAL SERVICES
The company, whose brands
BRITISH credit information company include the CreditReport.com,
Experian has bought US peer Mighty CreditScore.com as well as the
Net for $207.5m (£133m), in a deal MyCreditScore.com websites, had
which Experian said would consoli- 2009 revenues of $115m and earnings
date its market leading position in before interest and tax (EBIT) of $28m.
the United States. Experian said it expected to
Mighty Net, which was founded in increase the revenue per member
1996, provides online services to US among Mighty Net’s subscriber base
consumers interested in managing and was targeting savings of around
their credit behaviour. $4m from the deal in the year to
As of 30 June 2010, Mighty Net had March 2012 and savings of $5-6m in
approximately 680,000 subscribers in the following year.
India is in
Blackberry
1. 5TH AVENUE email talks
▲
TECHNOLOGY
INDIA is in talks with Research In
Motion (RIM) to gain access to
BlackBerry corporate e-mails after
securing access to instant messages
sent via the devices, a senior govern-
2. CAUSEWAY BAY ment source said yesterday.
India, which along with several
other countries has expressed con-
cerns that BlackBerry services could
be used to stir political or social insta-
bility, had threatened RIM with a ban
if it were denied access to data.
A spokeswoman for RIM, which has
never commented on whether the
Indian government has access to
BlackBerry services, was not immedi-
3. GINZA ately available for comment.
The Indian interior ministry said
on 30 August that the Canadian firm
had offered several ways to allow
authorities to monitor BlackBerry
communications.
The government said it would
check their feasibility over the next
60 days.
Saudi Arabia, fretful over services
5. CHAMPS-ÉLYSÉES such as online pornography, has
reached a deal with RIM on access to
the BlackBerry Messenger instant
messaging service, a consumer prod-
Location Change US$/sq ft/
uct that operates outside of the
in Rank year secure corporate domain, according
5th Avenue - 1,850 to government sources.
Causeway Bay - 1,664 Meanwhile, both Kuwait and the
Ginza 2 877 United Arab Emirates have raised
New Bond Street 2 836 similar concerns, with the UAE set-
793 ting an October 11 deadline for RIM.
“They’re carrying out interviews of
▲
REGULATION
Weavering staff, they’re liaising with
THE Serious Fraud Office (SFO) has the administrators of Weavering and
widened its long-running investiga- creditors in the UK and abroad, and
tion into hedge fund Weavering they’ve met the Swedish economic
Capital, drawing in Swedish investiga- crime authority,” the source said.
tors and overseas creditors, said a The widening of the probe into
source familiar with the matter. Weavering, founded by Swedish chief
The SFO, which launched its probe executive Magnus Peterson, comes
last year into Weavering’s use of inter- after the SFO ended investigations
est rate swaps and last May made two into hedge fund manager Dynamic
arrests, has met with Sweden’s eco- Decisions, AIG Financial Products’ UK
nomic crime unit as well as creditors operations and US fraudster Bernard
in the UK and abroad, the source said. Madoff’s UK firm.
CITYA.M. 22 SEPTEMBER 2010
Asda unveils
£100m brand
make-over
New boss Andy Clarke
reveals his vision for the
company to John Dunne
at his first major launch
T
HE unveiling of Asda’s Chosen
By You range saw chief execu-
tive Andy Clarke take centre
stage as he claimed the £100m
project would be “game changing”
because it was the first time a super-
market had put so much time and
money into updating its mid-range
products.
More than 40,000 consumers
across the UK took part in taste test-
ing as the supermarket giant sought
to add some extra flavour to its own
label food and drink brand of 3,500
products.
The current range is worth sales of
around £9bn a year already but the
top brass at Asda believes it has more
potential and was in need a of a mas-
sive overhaul.
After a nine month project, the
company gave birth to 500 new prod-
ucts as well as recipe tweaks to others
and a re-think on packaging which
saw an army of designers trying to
make the range as attention grabbing
as possible.
“This is a game changing imprint
because it gives our customers con-
trol,” Clarke said at the launch in
Marylebone.
“Customers said they tasted the dif-
ference. This is a real watershed.”
“No other retailer has moved so
aggressively to seek not just the coun-
sel but the consent of the very people
who buy and eat their products.”
Clarke, who took up his post in
May, described how the taste tests had
been held up and down the land –
including in church halls – as he
sought to emphasise the family
nature of the company’s dealings.
He repeatedly mentioned the word
“quality” and said that it was just as
important as keeping prices as low as
Chief executive
Andy Clarke out-
lined his plans to
transform Asda’s
own brand range
possible.
Clarke, formerly chief operating
officer at the company, said Asda’s
own brand, sandwiched as it is
between the cheaper Smart Price
brand and the more expensive Extra
Special items, was losing its identity,
despite still flying off the shelves.
The company gave no projections
on how many extra sales they hoped
to generate through the re-launch
Focus on Asda 21
Asda’s Chosen by You range (above) has
involved taste testing with more than 40,000
consumers, and surprising finds like toffee
(top) being more popular than chocolate
but said the taste tests had revealed a ting the people of Britain at the cen-
wealth of information about UK con- tre of this.” The Chosen by You range
sumers – including the fact they like hit the shelves in Asda’s 377 stores
toffee rather than chocolate in their yesterday. While one executive said
desserts and that spicy jalapeno hum- the project was aimed at resurrecting
mus is not to the liking of most shop- an “invisible brand”.
pers. A massive TV advertising Clarke will be hoping the chain can
campaign is due to start next week, turn the re-branding into something
but will not feature any famous faces. that can keep the tills ringing as well
That is in-keeping with Clarke’s as being given plaudits for quality,
constant refrain that: “We are put- which he also seeks.
 22 News
Ed Miliband just beating David in Labour race
are within two points of each other,
with Ed Miliband narrowly ahead.
YouGov asked people their first
preference, their second preference,
and then who they would prefer
between the two frontrunners.
Samples of party members and mem-
bers of Labour-affiliated trade unions
BRANDINDEX were polled, and MPs’ preferences
STEPHAN SHAKESPEARE were based upon research by the web-
site Left Foot Forward.
The main movement since July is
O
UR latest YouGov/Sunday Times amongst Trade Unionists. In the
poll of Labour’s leadership elec- Trade Union section of the college
tion college shows the race is there has been a large movement, in
neck and neck. Six weeks ago July we found a lead of 12 points for
David Miliband was leading his broth- David amongst eligible trade union-
er by eight points. Our poll on 7-9 ists. Since then there has been a huge
September shows the two brothers shift, and Ed now leads David in that
Biggest bank
in Japan eyes
overseas buys
▲
BANKING
expansion in the face of weak
BY HARRY BANKS growth prospects at home.
MITSUBISHI UFJ Financial Group Japanese banks emerged from the
(MUFG), Japan’s biggest bank by global financial crisis less scathed
assets, is looking to buy a 15 to 20 than some of their western rivals,
per cent stake in a bank in South but their main lending activities
Korea, Australia or Indonesia to tap remain sluggish as businesses and
the region’s growing economy, a sen- households curtail spending amid
ior executive has revealed. economic uncertainty.
Tatsuo Tanaka, chief executive of Earlier this month, Mizuho,
global banking at Bank of Tokyo- Japan’s second-largest bank, said it
Mitsubishi UFJ, the firm’s core bank- was looking to acquire commercial
ing unit, said yesterday that the banks in Asia to expand in the fast-
bank was also eyeing five to seven growing region, while expressing lit-
midsize and 10-20 small US banks for tle interest in buying a US bank.
possible acquisitions. Tanaka, 61, joined the Bank of
He added that the bank would Tokyo in 1973, rising through the
wait for more clarity on Basel III cap- ranks of corporate finance and over-
ital rules before it goes after a bigger seas operations, including a stint in
bank. Hong Kong.
“In Asia, we are always looking for MUFG is one of Japan’s most active
a target. Not necessarily to acquire lenders in overseas expansion with a
but to take a stake,” Tanaka said. “We sizable presence in the United States.
want to build relationships first as It bought out UnionBanCal, a
we search for a target.” holding company of California-based
MUFG and its domestic rivals Union Bank, in 2008 and spent $9bn
Mizuho Financial Group and (£5.8bn) for a 21 per cent stake in
Sumitomo Mitsui Financial Group Morgan Stanley at the height of the
have been stepping up their overseas financial crisis.
CITY MOVES | WHO’S SWITCHING JOBS
Advent International
The private equity firm has appointed Marcello
Bottoli, the ex-chief executive of Samsonite, as
an adviser focusing on opportunities in the
retail and consumer sectors, especially branded
consumer products, fashion and luxury goods.
Bottoli led Samsonite for five years up until
January 2009, during which time he turned
around the firm and oversaw its sale for $1.7bn.
Prior to that, he was chairman and chief
executive at Louis Vuitton Malletier.
Office of Fair Trading appointment of new executive directors
The OFT has finalised its new senior Clive Maxwell and Robert Laslett in
management line-up, following the June.
To appear in CITYMOVES please email your career
updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
section by 57 per cent to 43 per cent.
At first sight, it would appear that the
big trade unions’ endorsements of Ed
Miliband had a decisive effect.
Putting all three parts of the col-
lege together this leaves Ed two
points ahead, 51 per cent to 49 per
cent. David Miliband is still ahead
amongst MPs, but not enough to beat
Ed Miliband’s lead among members
and trade unionists. A key unknown
is turnout, but notably over 40 per
cent of those polled said they had
already voted, and these respondents
were more likely to back Ed Miliband.
Amongst both Labour members
and trade unionists David Miliband is
still seen as the candidate who would
be most likely to win the next elec-
BEST OF THE BROKERS
ANALYSIS l Barclays
360
340
p 311.60
21 Sep
320
300
280
260
30 Jun 29 Jul 27 Aug
BARCLAYS
Royal Bank of Scotland (RBS) expects that
negative operating trends will reverse and
a ‘new world’ Barclays is set to deliver. The
broker reiterates a “buy” rating for the
bank with a 410p price target. Gradual
profit and loss momentum, fluidity and exe-
cution of group strategy are key to a sus-
tained re-rating, according to the broker.
UBS forming global family office group
▲
BANKING
UBS is forming a new global group for
super-rich clients that will draw on
expertise from its wealth manage-
ment and investment banking arms,
Switzerland’s biggest bank said in a
memo yesterday.
The new Global Family Office Group
(GFO) will give the wealthiest private
banking clients direct access to invest-
ment banking services, the world’s sec-
Edited by Victoria Bates
Sonya Branch, previously senior
director for goods, has now returned
from maternity leave as senior director
for services, while former director of
communications Barney Wyld has now
become senior director for strategy and
communications.
Of the executive directors, Maxwell
takes responsibility for mergers, goods
and services; Laslett for cartels and
criminal enforcement, infrastructure
and consumer markets; and Vivienne
Dews for corporate services.
Barclays Wealth
The wealth manager has appointed
Nigel Riley as head of Barclays Wealth
tion, and most likely to make a good
Prime Minister. This would suggest
that members and trade unionists are
backing the candidate best reflecting
ANALYSIS l Leadership poll figures for Ed and David Milliband
50
40
30
20
10
0
Party Members TU members
ANALYSIS l Tullow Oil
1,350
1,300
p 1,295.00
21 Sep
1,200
1,100
1,000
30 Jun 29 Jul 27 Aug
TULLOW OIL
Killik & Co has initiated coverage of Tullow
Oil with a “buy” recommendation. The bro-
ker says, so far this year, Tullow’s stock has
underperformed the sector in spite of the
robust oil price and positive exploration
newsflow. The broker believes the recent
uncertainty emanating from Uganda pro-
vides buying opportunity.
To appear in Best of the Brokers email your research to notes@cityam.com
ond-largest wealth manager said.
The competition among the world’s
top wealth managers is heating up for
such clients, who have increasingly
complex needs often requiring tailor-
made services. The new unit will be
led by Joe Stadler, head of UBS’s Global
Ultra High Net Worth (UHNW) unit,
and Jerry Wattenberg, who joins UBS
Investment Bank from JTW
International, a boutique firm he
founded to offer independent invest-
in association with
International Direct. Riley has for the
past five years worked for RBS
International, the bank’s offshore arm,
heading up international affluent teams
and most recently holding the position
of head of strategy.
He is due to take up his new role at
Barclays in January next year.
BTG Mesirow
The financial consulting firm, a joint
venture between Begbies Traynor and
Mesirow Financial Consulting, has hired
Alain Le Berre as head of European
restructuring.
Le Berre has over 20 years of experi-
ence and joins from Huron Consulting
CITYA.M. 22 SEPTEMBER 2010
their views, rather than the candidate
they see as most likely to win.
Stephan Shakespeare is founder and chief
executive of YouGov.
D Miliband
E Miliband
MPs and MEPs Overall Electoral College
ANALYSIS l Diageo
1,160 p 1,095.00
21 Sep
1,120
1,080
1,040
30 Jun 29 Jul 27 Aug
DIAGEO
Diageo has started the year strongly in
Asia, says Evolution Securities, which reit-
erates a “buy” stance for the group. The
broker says Diageo is gaining share in most
markets, and its Chinese business is strong.
With the first quarter trading likely to be
strong, earnings risks are set to skew to
the upside, says the broker.
ment advice to super-rich individuals
and families.
“We have set up GFO to focus prima-
rily on our up to 250 largest institu-
tional-like or professional family office
prospects and clients, who represent
around two per cent of our total
UHNW client base around the world,”
said the memo from Joerg Zeltner,
UBS CEO Wealth Management, and
Investment Bank Co-CEOs Carsten
Kengeter and Alex Wilmot-Sitwel.
Group, where he was European practice
leader for restructuring and turn-
around.
Grosvenor Fund Management
The real estate fund manager has hired
Jeffrey Weingarten as its new non-
executive chairman.
Weingarten has been a consultant to
the Grosvenor Fund Management board
for the past two years. He also has sev-
eral academic interests and is on the
board of the advisory committee of the
Wharton School, the university of
Pennsylvania and the School of
Languages, Cultures and World Affairs
at the College of Charleston.
+44 (0)20 7557 7245
morganmckinley.com
 LLET’S
LETTT’SS
TTALK
TA
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ALLK
FOREX
+2!.ƫ.!'"/0ċ

Join Allister
Allister Heath
Heath, editor of City AM as he welcomes Boris Schlossberg
Schlossberg,
Director of Currency Research at GFT for an ‘all-things-forex’ seminar.

Thursday, 23 September | 8:00 am – 10:00 am | The Grange Hotel, St Paul’s Register online
at gftuk.com//ccityam
gftuk.com/cityam

During this seminarr, you will learn:

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 24 News
Future growth needs freedom now
A new league table
shows why the UK
must rediscover
the rich benefits of
economic liberty
RICHARD WELLINGS
DEPUTY EDITORIAL DIRECTOR, IEA
W
HEN the Soviet Union col-
lapsed it seemed obvious
that economic freedom was
essential if individuals and
societies were to thrive. But in the 20
years since, the enemies of liberty
have fought back. The vested interests
and bureaucracies that rely on big
government have increasingly used
environmental objectives and notions
of social inclusion and fairness to jus-
tify imposing new taxes and controls
on business activities.
The recent recession has provided
opponents of economic freedom with
still more ammunition. A slump
caused primarily by loose monetary
policy, ill-conceived regulations and
flawed US housing policies has been
widely misrepresented as an example
of market failure. In this context, the
latest edition of Economic Freedom of
the World is depressing reading.
This year’s report includes data
from 2008, when the slowdown really
kicked in. It shows the first decline in
global economic freedom for decades,
as governments responded to the cri-
sis by ratcheting up the level of state
intervention with bank bailouts,
tighter financial regulations and
Keynesian stimulus measures.
The UK is no exception to the nega-
tive global trend, but there is one big
difference. Economic freedom in
Britain began to be eroded at the end
of the 1990s, well before the credit
crunch hit. In the last decade the
country’s rank has fallen from sixth
Global indexes offer the UK cold comfort
Economic Freedom of the World is just
one of the measures that shows the UK
slipping lower in the world’s estimation
MARC SIDWELL
BUSINESS FEATURES EDITOR
I
N FEBRUARY this year, George
Osborne gave a speech in which
he vowed “to improve Britain’s
global rankings for tax competi-
freest to 10th freest. The UK may well
drop out of the top 10 next year.
This trend is very worrying. There
is a strong long-term correlation
between economic freedom and eco-
nomic growth. Low taxes and light-
touch regulation provide an
environment in which entrepreneurs
can flourish and generate the wealth
that lifts people out of poverty. Yet
Britain’s policymakers appear to have
lost sight of this key lesson. Prosperity
has been taken for granted and
resources have increasingly been
transferred from productive business-
es to non-productive government
spending in order to pursue social
objectives and satisfy vocal interest
groups.
Such policies have helped create
record peacetime budget deficits and
are no longer sustainable. British pol-
icymakers therefore need to rediscov-
tiveness and business regulation”. At
least the Chancellor understands the
problem. As discussed above, the lat-
est Economic Freedom of the World
report show Britain’s economic free-
dom declining from 2007 to 2008,
only just making the world’s top ten
below Australia and Mauritius. And
as the Institute for Economic Affairs
observes: “It looks certain that our
level of freedom, as measured by the
index, will decrease for at least the
next two years – whatever the coali-
tion does.”
With the hangover from Brown’s
Britain colouring Britain’s standing
in this league table for its next few
er the importance of economic free-
dom. A credible deficit reduction pro-
gramme is a good start. In five years’
time, the government forecasts that
public spending as a share of GDP will
be significantly lower than it is today.
But the coalition needs to go much
further to make the UK once again
one of the world’s most competitive
and dynamic economies. A systematic
programme of deregulation should
be a key priority and the vast majority
of controls imposed in the past
decade should be rescinded. At the
same time, counterproductive tax
rises on high-earners and investors
should be reversed and tax cuts for
wealth creators introduced at the ear-
liest opportunity. This is the best way
to avoid a double-dip recession.
Dr Richard Wellings is deputy editorial
director at the Institute of Economic Affairs
(www.iea.org.uk)
iterations, can we turn elsewhere for
comfort? Unfortunately not. As City
A.M. reported this week, emerging
rivals are snapping at London’s heels
for the top slot among the world’s
financial centres. Hong Kong is close
behind London in the latest Global
Financial Centres Index (GFCI) from
Z/Yen. New York and London still
share the first position in the GFCI,
which is published twice yearly. But
for the last three years Hong Kong
has moved ever closer to the scores of
the world’s top two financial centres.
In March 2007 there were more than
70 points between Hong Kong and
pole position. This time, there were
just 10. The GFCI shows the world’s
growing financial capitals are all
Asian: Singapore, Shanghai,
Shenzhen, Beijing and Seoul. With
Europe threatening to crack down on
the derivatives sector, the City’s
Eastern rivals cannot be ignored.
ANALYSIS l Economic Freedom of the World: Global top 10
Hong Kong 1
Singapore 2
New Zealand 3
Switzerland 4
Chile 5
US 6
Canada 7
Australia 8
Mauritius 9
UK 10
0 2 4 6
That message only becomes clearer
if we look to other important indexes
that measure Britain’s global finan-
cial standing. The World Economic
Forum’s Global Competitiveness
Report 2010-2011 finds the UK’s com-
petitiveness has been falling for a
number of years and despite moving
up one position this year, the UK
remains outside the global top ten
on this measure.
The Heritage Foundation’s Index
of Economic Freedom doesn’t offer
much comfort either. Again it puts
Britain outside the world’s top ten at
number 11. While Business Freedom
is scored at 94.9, well above the glob-
al average of 64.6, the Heritage Index
actually puts Britain below the global
mean on Fiscal Freedom (61.8 in the
UK; global average 75.4) and only just
above it on Fiscal Freedom (73.7 in
the UK; global average 70.6). The
index measures on Financial
CITYA.M. 22 SEPTEMBER 2010
Greater state controls
are counterproductive
for the City.
Picture: Micha
Theiner/ CITY AM
9.05
8.70
8.27
8.08
8.03
7.96
7.95
7.90
7.82
7.81
8 10
Freedom, Property Rights and
Monetary Freedom have all declined
in the UK.
The website summary is damning:
“Dramatic expansion of state owner-
ship has taken place since late 2008.
The government has nationalized or
seized considerable ownership in
some of the major banks.
Deterioration in public finances is
worse than in other leading
economies. Welfare benefits, the
biggest component of government
spending, have been rising. The gov-
ernment deficit is widening rapidly,
and public debt has climbed to
around 60 percent of GDP”.
Britain still has much to offer the
world, but in a competitive market-
place it needs to remember how its
domestic policies play on a global
stage. The coalition have said they
understand this point, but actions
speak louder than words.
 Markets&Investment 25

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .284.50 +1.00 310.00 246.90 Compass . . . . . . . . . . . . . . . . . .542.00 –2.00 574.50 350.10 JPMorgan Emerg Mkts . . . . . . . .584.50 +2.50 587.50 437.10 Sage . . . . . . . . . . . . . . . . . . . . . .255.80 –3.50 262.20 208.20
3i Infrastructure . . . . . . . . . . . . . 114.00 — 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .523.00 +22.00 616.00 347.60 Jupiter Fnd Mgmt . . . . . . . . . . . .240.10 –2.40 256.50 180.00 Sainsbury(J) . . . . . . . . . . . . . . . .391.80 –2.30 394.40 307.60
A.B. Foods . . . . . . . . . . . . . . . .1073.00 –2.00 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1420.00* –6.00 1460.00 637.00 Kazakhmys . . . . . . . . . . . . . . . .1400.00* –2.00 1634.00 955.00 Schroders . . . . . . . . . . . . . . . . .1391.00* –13.00 1450.00 1053.00
Aberdeen Asset Man . . . . . . . . . .150.90 –0.30 155.60 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .506.00 –3.50 539.00 381.00 Kesa Electricals . . . . . . . . . . . . .142.00* — 162.00 98.45 Schroders N/V. . . . . . . . . . . . . . 1143.00* –3.00 1187.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1670.00 –4.00 1686.00 1003.00 Dana Petroleum . . . . . . . . . . . .1792.00 — 1817.00 968.50 .LQJÀVKHU . . . . . . . . . . . . . . . . . .229.60 +0.40 255.00 196.50 Scot. & Sthrn Energy. . . . . . . . . 1132.00* –19.00 1206.00 357.50
Aegis . . . . . . . . . . . . . . . . . . . . .125.40* –0.20 137.30 103.10 Davis Service . . . . . . . . . . . . . . .398.00* +2.30 442.30 356.00 Ladbrokes . . . . . . . . . . . . . . . . .143.70* –0.10 174.29 114.60
Afren . . . . . . . . . . . . . . . . . . . . .106.00 –2.60 111.00 73.00 Debenhams . . . . . . . . . . . . . . . . .66.40 –0.40 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .557.00* –0.50 560.00 416.70 Scottish Mortgage. . . . . . . . . . . .629.50 +4.50 629.50 475.00
African Barr Gold . . . . . . . . . . . .586.50* –12.50 685.00 520.50 Derwent London . . . . . . . . . . . .1508.00 +14.00 1540.00 1174.00 Land Securities . . . . . . . . . . . . . .634.50* +0.50 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .269.80* +0.50 394.90 244.00
Aggreko . . . . . . . . . . . . . . . . . .1570.00 –20.00 1639.00 664.50 Dexion Absolute . . . . . . . . . . . . .141.50 +0.70 148.00 127.60 Legal & General . . . . . . . . . . . . .100.40* –1.20 105.00 69.05 Serco . . . . . . . . . . . . . . . . . . . . .623.00* +3.50 656.50 485.60
Alliance Trust . . . . . . . . . . . . . . .333.00 +0.40 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . .1095.00* +3.00 1176.00 930.50 Lloyds Banking Gp . . . . . . . . . . . .76.90 –0.51 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1359.00 –15.00 1404.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . . .968.00 +7.00 974.50 724.50 Dimension Data . . . . . . . . . . . . . 119.60 –0.10 125.50 59.30 Logica . . . . . . . . . . . . . . . . . . . .125.20* –0.60 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .429.30 +1.30 446.60 341.70
Amlin . . . . . . . . . . . . . . . . . . . . .399.00* –5.20 437.60 350.80 Dixons Retail . . . . . . . . . . . . . . . .24.49 +0.26 39.75 23.11 London Stk Exchange . . . . . . . . .694.50 +1.50 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1492.00* — 1532.00 999.00
Anglo American . . . . . . . . . . . .2529.50 –17.00 3015.50 1846.50 Domino’s Pizza . . . . . . . . . . . . . .473.00 –3.40 481.10 273.10 Lonmin . . . . . . . . . . . . . . . . . . .1672.00 –18.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .570.00 –2.50 700.50 525.50
Antofagasta . . . . . . . . . . . . . . . 1177.00* –12.00 1199.00 699.50 Drax . . . . . . . . . . . . . . . . . . . . . .398.80 –1.10 482.70 321.50 Man . . . . . . . . . . . . . . . . . . . . . .224.60 –2.70 373.60 199.60 Smiths . . . . . . . . . . . . . . . . . . .1242.00 +22.00 1248.00 814.00
Aquarius Platinum . . . . . . . . . . .325.60* +1.20 490.00 211.50 Dunelm . . . . . . . . . . . . . . . . . . . .391.80 +2.10 438.40 303.00 Marks & Spencer. . . . . . . . . . . . .381.30 –1.00 412.70 321.90 SOCO Intl . . . . . . . . . . . . . . . . . .443.40 –9.40 510.00 380.60
ARM Holdings . . . . . . . . . . . . . . .392.40* –3.30 416.40 134.40 Easyjet . . . . . . . . . . . . . . . . . . . .389.00 +3.30 499.90 339.80 Meggitt . . . . . . . . . . . . . . . . . . . .296.20* +0.20 331.00 220.10 Spectris . . . . . . . . . . . . . . . . . .1018.00 +9.00 1043.00 653.00
Ashmore . . . . . . . . . . . . . . . . . . .324.50 +3.50 336.80 215.00 Edinburgh Inv Tst . . . . . . . . . . . .429.50 –1.60 436.00 338.00 Melrose . . . . . . . . . . . . . . . . . . .267.00* +2.90 275.10 160.00 Spirax-Sarco Eng . . . . . . . . . . .1696.00 +1.00 1736.00 1001.00
Astrazeneca . . . . . . . . . . . . . . .3348.50 +3.50 3389.50 2668.00 Electrocomponents . . . . . . . . . . .233.70 +3.60 246.30 142.90 Mercantile IT . . . . . . . . . . . . . . . .964.00 –9.00 1002.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .737.50* –1.50 801.00 532.50 EnQuest . . . . . . . . . . . . . . . . . . . 118.90 +0.30 125.90 87.35 Michael Page Intl. . . . . . . . . . . . .467.70* +10.80 470.70 314.40 Spirent Comms . . . . . . . . . . . . . .138.30 –1.20 145.10 84.15
Autonomy Corp . . . . . . . . . . . .1829.00 –28.00 2012.00 1278.00 Essar Energy . . . . . . . . . . . . . . .455.90 –2.90 475.90 358.50 Micro Focus . . . . . . . . . . . . . . . .372.90* –0.20 550.00 272.20 Sports Direct Intl . . . . . . . . . . . . .131.00 +4.80 131.60 89.85
Aveva . . . . . . . . . . . . . . . . . . . .1429.00 +10.00 1487.00 856.50 Eurasian Nat Res . . . . . . . . . . . .889.50* –25.00 1276.00 781.00 Millen & Copthorne . . . . . . . . . . .527.00* +4.50 547.00 321.40 SSL Intl . . . . . . . . . . . . . . . . . . . 1158.00 — 1190.00 596.50
Aviva . . . . . . . . . . . . . . . . . . . . .417.00 –6.50 474.00 290.20 Euromoney Inst Inv . . . . . . . . . . .584.50 –9.50 630.00 300.20 Misys . . . . . . . . . . . . . . . . . . . . .286.50 –5.70 295.80 192.10 St James’s Place . . . . . . . . . . . . .283.00 –4.20 296.90 203.40
Babcock International . . . . . . . . .556.50 –4.00 660.50 489.00 Experian . . . . . . . . . . . . . . . . . . .668.50 –3.00 683.00 509.50 Mitchells & Butlers . . . . . . . . . . .291.00 –5.90 343.90 228.30 Stagecoach. . . . . . . . . . . . . . . . .185.80 –0.70 204.90 137.00
BAE Systems . . . . . . . . . . . . . . .334.40 +0.60 389.90 288.10 Ferrexpo . . . . . . . . . . . . . . . . . . .299.90 –4.10 396.20 138.00 MITIE . . . . . . . . . . . . . . . . . . . . .199.10 +1.20 258.00 187.80 Standard Chartered . . . . . . . . . .1884.00* –14.00 1946.00 1366.50
Balfour Beatty . . . . . . . . . . . . . . .268.60 +1.70 310.30 228.60 FirstGroup . . . . . . . . . . . . . . . . .351.40 +1.40 443.90 331.20 Mondi . . . . . . . . . . . . . . . . . . . . .500.50 –10.50 519.00 300.70 Standard Life . . . . . . . . . . . . . . .229.70* +2.20 237.00 170.00
Barclays . . . . . . . . . . . . . . . . . . . 311.60 –1.75 394.25 253.40 Foreign & Col Inv Tst. . . . . . . . . .286.60 –0.50 297.20 242.70 Monks Inv Tst . . . . . . . . . . . . . . .322.20 –1.70 324.00 265.00 SuperGrp . . . . . . . . . . . . . . . . .1292.00 +2.00 1312.00 499.00
Barratt Development . . . . . . . . . .103.70 — 184.92 89.10 Fresnillo . . . . . . . . . . . . . . . . . . 1196.00 +15.00 1203.00 647.00 Morrison Wm . . . . . . . . . . . . . . .304.50 –1.80 307.10 255.00 TalkTalk . . . . . . . . . . . . . . . . . . .139.30 +0.80 147.10 106.60
BBA Aviation . . . . . . . . . . . . . . .195.80* –0.80 220.00 145.90 G4S . . . . . . . . . . . . . . . . . . . . . .255.90* +3.90 285.70 217.70 Murray Intl Tst . . . . . . . . . . . . . . .887.00 –4.50 907.50 719.00 Talvivaara Mining . . . . . . . . . . . .446.60 –2.20 501.50 341.40
Bellway. . . . . . . . . . . . . . . . . . . .594.50 –5.00 927.50 510.00 Genesis Emerging Mkts Fd . . . . .507.00 +1.50 509.50 370.00 National Express. . . . . . . . . . . . .239.80 –0.20 258.60 155.86 Tate & Lyle . . . . . . . . . . . . . . . . .467.00 –4.50 509.00 388.00
Berkeley . . . . . . . . . . . . . . . . . . .828.00 –9.50 949.50 735.00 GKN . . . . . . . . . . . . . . . . . . . . . .167.60* –0.80 172.40 100.40 National Grid . . . . . . . . . . . . . . .551.00 –3.50 607.65 474.80 Taylor Wimpey . . . . . . . . . . . . . . .29.30 –0.12 46.34 24.29
BG . . . . . . . . . . . . . . . . . . . . . . 1125.50 +11.50 1248.00 966.90 GlaxoSmithKline . . . . . . . . . . . .1282.00* –8.00 1347.00 1088.00 Next . . . . . . . . . . . . . . . . . . . . .2200.00 –3.00 2360.00 1726.00
BHP Billiton . . . . . . . . . . . . . . .1959.00* –21.00 2346.00 1583.50 Great Portland Estates . . . . . . . .334.20 –0.80 335.00 236.60 Northumbrian Water . . . . . . . . . .338.10 –6.10 353.00 225.20 Telecity . . . . . . . . . . . . . . . . . . . .515.00 — 542.50 311.30
BlackRock Mining . . . . . . . . . . . .624.50 –2.50 654.50 474.00 Greene King . . . . . . . . . . . . . . . .423.20 –6.20 484.00 372.50 Ocado Grp . . . . . . . . . . . . . . . . .142.80 –0.20 169.00 132.00 Templeton Emrg Mkts . . . . . . . . .603.50 +3.50 604.50 446.90
BlueBay . . . . . . . . . . . . . . . . . . .347.10 –3.40 393.00 251.00 Halfords . . . . . . . . . . . . . . . . . . .438.20 –2.80 562.50 330.00 Old Mutual . . . . . . . . . . . . . . . . .137.30 –1.20 140.50 94.75 Tesco . . . . . . . . . . . . . . . . . . . . .433.00 –4.50 454.90 368.40
Bluecrest Allblue GBP . . . . . . . . .166.40 –0.10 169.00 143.20 Halma . . . . . . . . . . . . . . . . . . . . .310.00 –2.20 320.50 199.00 Partygaming . . . . . . . . . . . . . . . .292.70 –1.40 339.70 205.80 Thomas Cook . . . . . . . . . . . . . . .189.60* –1.00 277.20 172.30
Booker . . . . . . . . . . . . . . . . . . . . .48.75 –0.25 49.99 37.50 Hammerson . . . . . . . . . . . . . . . .396.30* +1.00 460.30 332.20 Pearson . . . . . . . . . . . . . . . . . .1015.00 –7.00 1069.00 751.50 Tomkins . . . . . . . . . . . . . . . . . . .324.10 –0.30 325.70 155.00
BP . . . . . . . . . . . . . . . . . . . . . . .414.80 +3.45 658.20 296.00 Hargreaves Lansdown . . . . . . . .442.00* –5.30 478.00 259.40 Pennon . . . . . . . . . . . . . . . . . . . .587.50* –10.00 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .843.00 +19.00 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1017.00 –11.00 1045.00 709.00 Hays . . . . . . . . . . . . . . . . . . . . . . 114.30 +1.70 119.00 82.50 Persimmon . . . . . . . . . . . . . . . . .406.60 +2.80 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .223.60* +3.10 313.90 189.20
British Airways . . . . . . . . . . . . . .242.80 +0.70 255.80 172.40 Henderson . . . . . . . . . . . . . . . . .131.50* –2.40 157.80 112.10 Petrofac . . . . . . . . . . . . . . . . . .1408.00 +1.00 1446.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .398.00 –0.90 436.20 261.20
British Amer. Tob . . . . . . . . . . .2398.50* –5.00 2418.50 1832.00 Heritage Oil. . . . . . . . . . . . . . . . .310.50 –5.60 585.00 298.20 Petropavlovsk . . . . . . . . . . . . . . 1193.00 –27.00 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1293.00 +14.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .459.00 +1.50 467.90 338.50 Hikma Pharma . . . . . . . . . . . . . .717.50* –8.50 813.00 443.00 Phoenix Group . . . . . . . . . . . . . .710.00* –4.00 775.00 550.50 UK Commercial Prop. . . . . . . . . . .81.50 –0.15 84.90 69.10
British Land . . . . . . . . . . . . . . . .471.30 –4.80 531.00 416.00 Hiscox . . . . . . . . . . . . . . . . . . . .360.40* –3.60 371.10 299.60 Premier Farnell . . . . . . . . . . . . . .267.00 +4.00 272.60 140.60 Ultra Electronics . . . . . . . . . . . .1667.00* –50.00 1774.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .473.40 –8.00 518.00 340.00 Hochschild Mining . . . . . . . . . . .424.80* –2.80 432.70 220.00 Premier Oil . . . . . . . . . . . . . . . .1670.00 –13.00 1703.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1801.00 –2.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .237.40 +1.40 284.30 204.80 Home Retail . . . . . . . . . . . . . . . .212.30 –1.80 326.30 208.50 Provident Financial . . . . . . . . . . .834.50 –10.00 986.00 795.00
BSkyB . . . . . . . . . . . . . . . . . . . .706.50 –1.50 732.00 521.00 Homeserve . . . . . . . . . . . . . . . . .465.70 –6.20 502.00 435.40 Prudential . . . . . . . . . . . . . . . . . .619.00* –7.00 665.00 475.70 United Utilities . . . . . . . . . . . . . .577.50 –6.00 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .141.10 –1.00 151.00 108.40 HSBC Hldgs . . . . . . . . . . . . . . . .671.00* –8.60 766.80 595.20 PZ Cussons . . . . . . . . . . . . . . . .382.20* +35.10 382.70 226.50 Utd Business Media . . . . . . . . . .635.00* –1.50 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .771.00 +8.50 784.50 613.50 Hunting . . . . . . . . . . . . . . . . . . .641.50 +19.00 659.50 429.10 Qinetiq . . . . . . . . . . . . . . . . . . . . 110.10 –0.50 179.10 103.50 Vedanta Resources . . . . . . . . . .2202.00 +49.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . . .953.00 +11.00 958.50 467.20 ICAP . . . . . . . . . . . . . . . . . . . . . .432.30 –6.80 478.30 291.70 Randgold Resources. . . . . . . . .6310.00 –125.00 6600.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1200.00 –16.00 1320.00 726.50
Cable & Wire Comms . . . . . . . . . .60.50 –0.60 150.00 53.00 IG . . . . . . . . . . . . . . . . . . . . . . . .509.50* +8.00 532.00 291.00 Reckitt Benckiser . . . . . . . . . . .3466.00* –34.00 3667.00 2938.00 Vodafone . . . . . . . . . . . . . . . . . .163.05 –0.95 164.95 126.50
Cable & Wire Wwide . . . . . . . . . . .77.20 –0.10 94.80 60.05 Imagination Tech Gp . . . . . . . . . .367.10 –2.00 385.00 154.00 Reed Elsevier . . . . . . . . . . . . . . .547.00 –5.00 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1440.00 +6.00 1459.00 635.00
Cairn Energy. . . . . . . . . . . . . . . .436.50 +9.70 497.60 306.80 IMI . . . . . . . . . . . . . . . . . . . . . . .759.00* +12.00 786.00 410.00 Regus . . . . . . . . . . . . . . . . . . . . . .76.00* –0.35 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .785.00* +176.00 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1640.00 +10.00 1759.00 1496.00 Imperial Tobacco. . . . . . . . . . . .1893.00 –25.00 2159.00 1728.00 Renishaw . . . . . . . . . . . . . . . . .1024.00* +23.00 1031.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .446.90 +0.90 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .771.00* –4.00 829.50 693.00 Inchcape. . . . . . . . . . . . . . . . . . .304.00 +10.30 347.00 235.00 Rentokil Initial . . . . . . . . . . . . . . .104.00 –0.40 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1607.00 –6.00 1645.00 1141.00
Capital & Counties . . . . . . . . . . .137.50 +4.10 137.50 99.60 Informa . . . . . . . . . . . . . . . . . . . .412.10 –15.40 439.40 263.30 Resolution . . . . . . . . . . . . . . . . .238.10* –5.10 264.80 220.10 William Hill . . . . . . . . . . . . . . . . .181.40 –2.10 217.80 160.50
Capital Shopping Centres . . . . . .369.50 +0.20 568.50 300.10 Inmarsat . . . . . . . . . . . . . . . . . . .713.00 +1.00 831.00 526.00 Rexam . . . . . . . . . . . . . . . . . . . .313.00* –0.80 348.80 253.40 Witan Inv Tst . . . . . . . . . . . . . . . .467.50 +0.40 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .315.00* –1.10 361.90 263.90 Intercontl Hotels . . . . . . . . . . . . 1142.00* +9.00 1244.00 762.50 Rightmove . . . . . . . . . . . . . . . . .732.00 –0.50 796.50 456.90
Carnival . . . . . . . . . . . . . . . . . .2507.00 +18.00 2937.00 1876.00 Intermediate Capital . . . . . . . . . .293.00 +0.50 320.00 233.50 Rio Tinto . . . . . . . . . . . . . . . . . .3570.00 –34.00 4104.00 2435.00 Wolseley . . . . . . . . . . . . . . . . . .1498.00 +29.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .340.40* +2.50 394.60 303.20 Intertek . . . . . . . . . . . . . . . . . . .1846.00 –7.00 1863.00 1136.00 RIT Capital Partners . . . . . . . . . 1135.00 — 1215.00 940.00 Wood Group (John). . . . . . . . . . .416.20* +25.60 419.90 279.60
Centamin Egypt . . . . . . . . . . . . .184.70 –8.80 194.40 92.00 Intl Personal Fin . . . . . . . . . . . . .266.00* –1.40 283.00 135.30 Rolls Royce . . . . . . . . . . . . . . . .588.50 –2.50 631.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .729.50 +0.50 744.00 520.50
Centrica . . . . . . . . . . . . . . . . . . .334.00 –7.00 347.00 236.30 Intl Power . . . . . . . . . . . . . . . . . .388.60 +1.80 396.80 248.20 Rotork . . . . . . . . . . . . . . . . . . .1672.00* –12.00 1712.00 1088.00 Xstrata . . . . . . . . . . . . . . . . . . . 1167.50* –23.50 1344.50 815.00
Charter Intl . . . . . . . . . . . . . . . . .665.00 +5.00 855.50 563.50 Invensys . . . . . . . . . . . . . . . . . . .291.30 +3.60 350.30 224.90 Royal Bank Of Scot . . . . . . . . . . . .48.58 –0.44 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .3002.00 +25.00 3711.00 2363.00 Investec . . . . . . . . . . . . . . . . . . .498.00 –1.80 565.00 411.50 Royal Dutch Shell A . . . . . . . . .1895.00 –8.00 2068.50 1621.00
Close Bros . . . . . . . . . . . . . . . . .720.00 +2.00 806.50 657.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .58.50 +0.75 71.75 41.04 Royal Dutch Shell B . . . . . . . . .1846.50 –5.50 1997.50 1550.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .238.70 +1.80 278.60 205.50 Jardine Lloyd Thompson. . . . . . .582.50* –17.50 604.50 420.70 RSA Insurance . . . . . . . . . . . . . .132.00* +0.80 142.00 114.10
COLT Group . . . . . . . . . . . . . . . .123.20 +0.50 144.20 107.70 Johnson Matthey . . . . . . . . . . .1770.00 –12.00 1814.00 1302.00 SABMiller . . . . . . . . . . . . . . . . .2007.50 –7.00 2090.00 1450.00 www.interactivedata.com

Banks and Fed remarks

miners pull THE QUINTESSENTIAL RANGE OF MADE TO MEASURE SUITS
fail to boost
FTSE lower )"-'
13*$& US stocks
MADE TO MEASURE SUITS
THELONDON THENEW YORK
REPORT /08
‚ REPORT
B ‚
ritain’s leading shares faltered
03*(*/"--:

U
by yesterday’s close as S stocks ended flat to lower in
investors lost their nerve an erratic session yesterday
ahead of news from the US

3&(&/5
45

„

-*7&3100-
45

„

106-53:

„

$"/"3:
8)"3'

„
'&/$)63$)
45

after the Federal Reserve
Federal Reserve, with banks and min- inched closer to further steps
ers the biggest fallers. */
4503&4
/"5*0/8*%&

'*/%
:063
/&"3&45
4503&
"5
888"645*/3&&%$06, designed to support the recovery.
The Fed appears set to debate *Terms & Conditions apply, see in store for details. Offer not valid online. Stocks initially popped higher but
pumping billions of dollars more into gave back those gains quickly.
the sluggish US economy, but is likely Investors had hoped that with recent
to hold off any action while it takes improvements in economic data, the
further readings on the health of the Royal Bank of Scotland, HSBC and Monday, fell along with base metal Mid-cap peers in the sector John Fed would issue a more upbeat out-
recovery. Lloyds Banking Group shed 0.7 to 1.3 prices. Wood Group and Hunting climbed look or clarify the measures it would
The FTSE 100 closed down 26.35 per cent. Kazakh miner ENRC was the 6.6 and 3.1 per cent respectively. take to stimulate demand.
points, or 0.5 per cent, at 5,576.19, “It’s understandable to see biggest decliner in the sector, down The Dow Jones industrial average
well off the session high of 5,635.72. It investors being reluctant to continue 2.7 per cent as it spent $670m to ANALYSIS l FTSE rose 8.55 points, or 0.08 per cent, to
had gained 1.7 per cent on Monday, buying stock that might lose value expand its presence in Brazilian iron 5,576.19 end at 10,762.17. The Standard &
5,600 21Sep
when the index closed at its highest overnight if the U.S. markets get a ore and further diversify into another Poor’s 500 Index was down 2.77
level since late April. nasty surprise and drop dramatical- emerging market, Latin America. 5,400 points, or 0.24 per cent, at 1,139.94.
FTSE volumes were light, however, ly,” Angus Campbell, head of sales at Oil service companies were heavily The Nasdaq Composite Index was
at just 70 per cent of their holiday- Capital Spreads, said. sought after FTSE 250 firm 5,200 down 6.48 points, or 0.28 per cent, at
thinned 90-day average. US residential construction rose Wellstream Holdings said it had 2,349.35.
Banks, which enjoyed good gains in more than expected in August to a received several bid approaches. 5,000 Volume was still light, with 8.03bn
the previous session, edged back as four-month high, suggesting the Blue-chip players AMEC and shares traded on the New York Stock
4,800
investors became jittery awaiting the embattled housing market was start- Petrofac gained 0.8 per cent, while Exchange, the American Stock
outcome of the Fed policy-setting ing to stabilise. Wellstream shares jumped more 4,600 Exchange and Nasdaq. Last year’s
meeting. Miners, which had also bounced on than 28 per cent. 21 Jun 9 Jul 29 Jul 18 Aug 8 Sep daily average was 9.65bn shares.
 26 Investment | Foreign Exchange CITYA.M. 22 SEPTEMBER 2010

AUSSIE AND
SWISSIE ARE
GOOD HEDGES
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT

A
S WE approach the end of the year in the
currency markets, perhaps the only thing
traders are certain of is that we are facing
a period of great uncertainty. Although the
global economy appears to have dodged the sec-
ond Great Depression, markets continue to be con-
cerned about the possibility of a double-dip
recession, especially in the UK and the US where
the recovery has been lacklustre at best and con-
sumers remained hobbled by depressed asset val-
ues and listless labour markets. Carry trading extends to South Korea. Picture: GETTY
In contrast to the troubled Anglo-Saxon
economies of the West, the Asia-Pacific region

The carry trade evolves

continues to boom. So much so, that the Reserve
Bank of Australia (RBA) governor Glenn Stevens
surprised the market this week by making a decid-
edly hawkish speech in which he stated that
Australia is experiencing “the largest minerals and
energy boom since the late 19th century," noting
that controlling this boom will “fall to monetary
policy”.
Meanwhile in Europe, concerns about the sol-
Buy EM currencies High FX reserves held by emerging coun-
tries have increased policy credibility. As
Korea, India, Indonesia, Philippines and
Taiwan before the end of the year.
vency of the periphery economies in the region
continue to plague euro-dollar. Last week rumours as well as the Aussie, private sector investment into emerging
markets has risen the capital inflows have
There is certainly further upside to
emerging market FX, says Societe
of a possible IMF rescue of Ireland roiled the cred-
it markets and sent the single currency tumbling writes Jessica Mead put upward pressure on currencies.”
“Moreover, it can be expensive to hedge
Generale strategist Benoit Anne, who
believes that EM currencies are still quite
despite denials from all officials involved. underlying investments in these markets undervalued. He is positive on the

So what’s a trader to do amid this confusion
where each G20 economy appears to follow its
own path? One possibility is to not guess the near-
term direction of the market and instead to put on
a “risk straddle” trade by getting long both the
Australian dollar and the Swiss franc. If the global
economy does indeed pick up as the year comes to
a close, the Aussie will be the prime beneficiary of
this trend, especially if the RBA continues to raise
short term rates.
On the other hand if risk aversion returns with a
vengeance, the Swissie which is the closest thing
in the currency market to sound money should
appreciate more as investors turn sour on the bal-
ance sheet risk of both US and Europe. I will dis-
I
N A world where quantitative easing
remains firmly on the agenda and
investors are going after any yield
available, the carry trade remains
alive and well. Further accommodative
monetary policy in Japan has driven the
resurgence of the yen carry trade – where-
by investors fund higher-yielding asset
purchases with low-yielding yen.
Furthermore, the latest weakening in the
US dollar over recent months, coupled
with market speculation that the Federal
Reserve will resume QE in November, has
kept the dollar-funded carry trade going.
The original carry trade was to sell
and this has had a positive impact on cur-
rencies. Domestic investors also now have
greater faith in domestic macro conditions
and their own currencies,” he adds.
Rising interest rates to combat infla-
tionary pressures should also contribute
to the positive interest rate differential
between emerging market currencies and
the developed world. Rate hikes in both
India and Chile have confirmed this trend
and analysts expect the cost of borrowing
to rise further in countries such as South
ANALYSIS l Many EM currencies are still trading below their pre - crisis level
ZAR
Mexican peso, which is down almost 20
per cent on its pre-crisis level, despite the
risks related to the US macro conditions,
and on the South Korean won, owing to
the country’s strong macro performance.
FX traders should not dismiss the con-
tinuing value of the carry trade,
especially when developed market
central banks such as the Federal Reserve,
the Bank of Japan and even the Bank of
England are actively considering further
asset purchases.

Source: Datastream, SG Cross Asset Research, BLOOMBERG

THB
cuss this idea in more detail at my seminar with Japanese yen and buy Aussie dollars. The CLP
Allister Heath this Thursday at the Grange Hotel Aussie, thanks to its commodity character- COP
MYR
from 8am to 10am. Hope to see you there. istics and relatively high interest rates, IDR
PHP
retains its appeal. But currency traders’ SGD
Boris Schlossberg and Kathy Lien are directors of search for FX alpha has widened out CNY
HKD
currency research at GFT. Read commentary at beyond the G10 putting the spotlight on TWD
www.GFTUK.com/commentary or e-mail emerging currencies like the Brazilian INR
EGP
borisandkathy@gftuk.com. real that also offers the combination of BRL
KRW
relative yield and commodity characteris- ILS
tics, says Philip Poole, global head of TRY
MXN
macro and investment strategy at HSBC CZK
Global Asset Management. ARS
RUB
Poole does not see this shift as tempo- RON
rary: “There is more to this than short- PLN
HUF % change on 1 July 2008
term carry-related return characteristics. -35.0 -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0

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CD03UK.113.073010
CITYA.M. 22 SEPTEMBER 2010 Investment | Foreign Exchange 27

THE
Expect to see a TIPSTER
FOR NOW,
MARKETS
widening gulf BACK EURO

F
OLLOWING yesterday’s successful bond
auctions in Greece, Spain and Ireland,

in the Eurozone fears have – at least for now – subsided

and the euro enjoyed an early rally. It met
resistance at $1.3150 and if this price is
breached the recent downward trend may be
reversed. Cantor Index offers daily rolling euro-
dollar at $1.31367–$1.31377.
Likewise, the break through the 84p level on
A short-term rally does not mean that the euro-sterling this week opens up the risk of
further euro gains. The pair has spent the last
euro is in the clear, writes Juliet Samuel four months essentially trading in a band
between 80p and 85p. We're once again
approaching the upper end of the range and

S
TERLING plunged against the euro
yesterday as worse-than-expected UK
deficit figures exacerbated what was
already a strong rally from the single
currency. Coupled with solid demand at
Spanish, Greek and Irish government bond
auctions, this was enough to send sterling-
euro down to a three-month low, with the
euro also gaining a cent against the dollar.
But do these moves herald the start of a
comeback for the troubled euro? Both ana-
lysts and traders are divided. Stephen
Hughes of forex broker Currencies.co.uk
says that yesterday saw as much sterling-
euro trading as during the entire previous
week, with many piling in to sell euros. But
others are taking it as a sign that there will
be better euro-selling levels to come: “For
those who need to change euros into dol-
lars it’s a good opportunity,” says Hughes.
“The question is how long that window is
resilience, there is still strong scepticism
about the health of its periphery: Ireland
had to promise an average yield of 4.77 per
cent on four-year bonds, sharply up from
last month’s average four-year note yield of
3.63 per cent.
Moreover, many suspect the European
Central Bank of propping up demand by
buying bonds – as it has done in the past
(see chart). Lombard Street Research’s
Stefano Di Domizio commented: “The auc-
tion is nothing to get excited about.”
So in spite of this rally, there are still per-
sistent worries about the future of the sin-
gle currency. Even if fears over sovereign
debt can be allayed smoothly, there is still
the potential problem of a widening gap in
economic growth between the core and
periphery of the Eurozone: while Germany
and France recorded second quarter 2010
GDP growth of 2.2 per cent and 0.6 per cent
Source: Datastream, SG Cross Asset Research
with Eurozone sovereign debt issues on the
backburner for now, a breakout driven by fun-
damentals could follow. Today’s Eurozone con-
sumer confidence reading may well end up as
the trigger to really shift sentiment here. Look
to buy dips back towards 84.1p. Current IG
Index price on euro-sterling is 84.51p-84.53p
while CMC Markets spread is 84.5p-84.52p.
Following the recent Japanese intervention
to sell yen and weaken its currency, the dollar-
yen has been hovering around the ¥85 mark.
These interventions are usually followed by a
second round, so there could be further down-
or the US, the euro could continue to be The Eurozone is home side for the yen against the greenback. Capital
the best of a bad bunch for some time. At to a widening gulf in Spreads offers a price of ¥85.35-¥85.37.
some point, however, the Eurozone – and economic health. Recent strength in commodities and US dol-
the markets – will have to face its internal lar weakness has driven Aussie dollar-US dol-
contradictions. Picture: GETTY lar to 26-month highs yesterday, taking out a
large option at the 95 US cents level. The fun-
ANALYSIS l Eurosystem purchases of bonds under the securities damentals look strong for the pair, but now
markets program (€ bn) 70 that this level has been taken out, bearing in

open for given the vast number of different
economic releases in the Eurozone.”
With markets so sensitive and quantita-
tive easing (QE) back on the agenda, traders
should keep an eye on major data releases –
not least the Bank of England’s minutes
this morning – to take advantage of move-
ments. Investec’s Lee McDarby says: “This is
an opportunity to see what the UK is think-
ing about QE and that will really throw
sterling around a little bit.”
But despite the Eurozone’s seeming
16
respectively, Spain grew just 0.2 per cent mind the Bloomberg report that said the Aussie
14 60
and Greece shrank 1.5 per cent over the is 27 per cent overvalued, we could see some
same period. Di Domizio says: “Eventually 12 weekly purchases (lhs) 50 retracement back towards the 92 US cents
you will have the peripheral countries 10
total bought (rhs) level. Spread Co offer a spread on Australian
40
deflating with high, positive real interest dollar-US dollar of 94.88 cents–94.9 cents.
rates, whereas the core countries whose 8 30 Meanwhile, gold, the world’s favoured cur-
economies are doing relatively better will 6 rency at present, continues to push higher on
20
have negative interest rates – effectively the 4 fears about further stimulus as well as demand
opposite of what should happen. In a situa- 2 10 out of India ahead of Diwali. Look to buy any
tion like that there is no exogenous adjust- dips back towards $1,200 for a move through
0 0
ment that can repair things.” 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 $1,300. CMC Markets’ spread on gold is
It is possible that with more QE in the UK Weeks since launch of the securities markets program $1,277.00-$1,277.40.

FOREX ANALYST PICKS

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

My pick: Short Aussie dollar-US dollar below $0.9300
Expertise: Combining fundamental and technical analysis
Average time frame of trades: 1 day-1 week
Taking a short sterling-dollar and long euro-dollar position last week off-
set my risk but the lack of a clear trend is still preventing truly sizeable
moves. However, it is in this choppy fundamental situation where we can
see unusual developments clearly. At the top of my list is Aussie dollar-
US dollar’s unflappable run. A reversal from new highs exposes a poten-
tially rapid move. I will sell below US$0.93 with a 200 point stop and
first target.
My pick: Short euro-US dollar pending market moves My pick: Buy euro-Aussie dollar at Au$1.4000
Expertise: Global macro, classic technical analysis Expertise: Classic technical analysis
Average time frame of trades: 1 week-6 months Average time frame of trades: 1 week-6 months
Euro-dollar has put in a bearish shooting star candlestick formation below The market is currently at the bottom of a multi-year range base, with
the $1.31 figure following a retest of support-turned-resistance at a rising the price dropping sharply by well over 30 per cent over the past sev-
trend line established from the swing bottom in early June that was initially eral months, suggesting that we could be on the verge of a major
broken to the downside on 20 August. This has been followed by a Doji can- shift in the structure. While there is no specific evidence just yet for a
dle, pointing to indecision and falling short of offering enough confirmation bullish reversal, daily Relative Strength Index (RSI) studies are trad-
to sell the pair. I will look for a daily close below $1.3047 to go short, target- ing well below 30 to further reaffirm likelihood of major upside
ing $1.2643 with a stop to be triggered on a daily close above $1.3163. ahead. Target Au$1.50 with a stop at Au$1.35.
 28 Investment | Fund Management
Fund managers are seeking
Brazilian market exposure
Growing demand
from Brazil’s middle
classes will make
investing appealing,
says Donata Huggins
A
RE CIVITS the new BRICs? The
emerging market acronym – BRICs
– standing for Brazil, Russia, India
and China has been cast aside for
CIVITS, the latest buzzword for China,
India, Vietnam, Indonesia, Turkey and
South Africa. But rather than get excited
by the new entries, some fund managers
are chasing after the developing middle
class markets of those countries that CIV-
ITS leaves out. Witness Allianz Global
Investors and the new Brazil Fund it is
launching in three weeks.
The new Brazil Fund claims to be the
first ever UK-authorised, actively managed
Brazil Open Ended Investment Company. It
is looking to capitalise on what mid- and
small- sized companies have to offer.
Previous Brazilian investments have been
pinned to the MSCI Brazil Index, which is
heavily biased towards large-cap material
and energy stocks. This results in large caps
such as Petrobras and Vale taking up
almost 50 per cent of the index. Allianz says
using this index limits exposure to the
emerging middle class markets that the
changing demographic of Brazil promises.
Rising employment, wages and aspira-
tions have produced a buoyant Brazilian
middle class ripe for investment. Will
Landers, a fund manager for BlackRock
Latin America Fund, says: “There is huge
pent up demand from this burgeoning
middle class. Approximately 30 million
people are now more economically active
and not only seeking credit and housing
but also becoming less restrictive with their
spending habits.”
Brazil has made impressive progress.
Significant restructuring of public finances
and monetary policy has led to investment
grade status, lower inflation rates and
much lower interest rates. This has
shielded Brazil from much of the pain of
austerity measures being experienced else-
where. Michael Konstantinov, manager of
Allianz’s RCM Brazil Fund says that a wider
Latin American fund was not pursued part-
ly because they were concerned about
exposing themselves to Mexico, which is
heavily dependent on the US economy.
Latin America is a more diversified investment
Jessica Mead takes a look at three
funds with regional mandates
L
ATIN AMERICAN funds provide an
alternative to investors who are
tempted by Brazil but who are wor-
ried about single country exposure.
They are available to UK investors in the
form of investment trusts, open-ended
investment companies (OEICs) and
SICAVs. These funds are weighted heavily
towards Brazil – the MSCI EM Latin
America net benchmark has 68.1 per cent
exposure to the country – but they also
invest in Mexico, Peru and Chile. Here we
look at three Latin America funds.
STANDARD &
POOR’S AWARDED
BRAZIL INVESTMENT
GRADE STATUS IN
2008
(SOURCE: BLOOMBERG)
BRAZIL’S GDP IS
PREDICTED TO
GROW
4.1
PER CENT IN 2011
Investment can be a Domestic demand is up in Brazil.
cause for celebration. Purchasing power has risen 35 per cent
since 2003. BlackRock predict that the low
Picture: REX rate environment will give birth to rapid
growth in financial services such as 10 per
cent growth in the mortgage market over
the next five years. This is likely to have a
positive impact on the banks,
homebuilders and companies associated
with these industries.
Allianz’s Konstantinov says that the
political risks are far lower than people
might think: “We already have the most
left-wing government in place, which was
previously unthinkable in Brazil, and it has
actually done quite a good job. So if the
Presidential candidate of the current
President Lula is going to win, we pretty
much have the status quo; if the candidate
from the conservative party is going to win,
we might actually see an acceleration in
economic reform which will be even more
positive.”
BGF LATIN AMERICAN SICAV FUND
Managed by Will Landers since September 2002,
this Luxembourg-domiciled fund was launched in
January 1997 and now has £6.98bn in assets under
management. The fund outperformed between
2005 and 2007 and again in 2009 but fell more
sharply than the benchmark in 2008. It has an
annual management fee of 1.75 per cent and an ini-
tial charge of 5 per cent.
Morningstar, which rates the fund as superior, says
it has a high opinion of the fund and the team but
says that the fund’s size may make it difficult to fully
exploit opportunities in less liquid areas of the mar-
ket in the future.
CITYA.M. 22 SEPTEMBER 2010
FUND
MANAGEMENT
NEWS
BY JESSICA MEAD
IN BRAZIL
66.8%
OF THE POPULATION
IS WORKING AGE Three Gorges Dam Project Picture: REUTERS
(SOURCE: THE ECONOMIST)
NEW CHINESE ESG INDEX LAUNCHED
Provider of sustainability ratings and indexing
solutions ECP International has teamed up
with China Securities Index to create the CSI
ECPI China Environmental and Social
Governance 40 Equity Index. The first of its
kind, the index identifies the 40 highest ESG-
rated companies amongst the Chinese SSE180
Corporate Governance Index and will allow
market participants to track the performance
of China’s sustainable companies.
Sustainability disclosures are becoming essen-
tial to funds’ decisions. ECP International’s
Paolo Sardi said: “The index is not only a tool
for investors looking for opportunities to invest
in China, but will also encourage Chinese com-
panies to raise their ESG benchmark.”
NEWHAM SIGNS UP TO PROPERTY FUND
The London Borough of Newham Pension Fund
yesterday announced it had signed up to the
Mill Group’s Investors in Housing Fund, which
provides institutions with a low-risk way of
investing in the residential property sector. The
fund is scheduled to be launched in the first
quarter of next year and will concentrate ini-
tially on London and the South East. It will
give prospective homebuyers access to the
capital needed to purchase their house through
a process of co-investment.
So investment in Brazil could soon be
better targeted, reap bigger rewards and THREADNEEDLE TOP SRI FUND MANAGER
provide better insulation against down- Threadneedle Asset Management has been
turns elsewhere. named the leading fund management firm for
SRI in the annual Thomson Reuters
ANALYSIS l Brazil’s outperformance Extel/UKSIF Socially Responsible Investing &
%
since 2000 Sustainability Survey, published last Friday. It
pipped Aviva Global Investors and BlackRock
500
Investment Management. French banks were
BRAZIL
the leading brokerage firms for SRI research
Market ex Brazil
Global Emerging
400 with Societe Generale holding onto its top spot
followed by CA Cheuvreux.
300
EMERGING MARKET BOND FUNDS IN FAVOUR
Emerging market bond fund assets have
200 grown by 53 per cent over the first seven
months of the year in Europe reaching
100 €96.4bn by the end of July, data from Lipper
showed yesterday. Emerging market products
UK
US
account for 29 per cent of all flows into bond
0
funds from European investors in 2010 so far.
Source RCM/Mellon Analytical However, bond funds restricted to Eastern
-100 as at 31.08.2010 in GBP Europe have fared comparatively less well.
TEMPLETON LATIN AMERICA SICAV FUND THREADNEEDLE LATIN AMERICA OEIC
Launched in May 2001, this fund has been overseen The performance of the fund has improved consider-
by lead manager Mark Mobius but the day-to-day run- ably since April 2009 when Julian Thompson, head of
ning of the £3.25bn in assets is down to the four local- the emerging markets team, took over as fund manag-
ly-based LatAm managers. It has an annual charge of er, says S&P Fund Management Rating, which awards
1.9 per cent and an initial charge of 5 per cent. It is it an A. It was launched in November 1997 and now
rated AA by S&P Fund Management Rating, which has $1.1bn in assets under management. Only
says that over the past five years, cumulatively, it Thompson focuses on the region, Threadneedle’s equi-
ranks in the top decile. S&P notes that cash was a ty teams offset the absence of a specialist Latin
drag on performance in the second half of 2009. America team. Since Thompson took over the daily
Sharp inflows at this time, when the team was finding running of the fund, it has outperformed both the
it increasingly difficult to identify appropriately val- peer median and benchmark, driven mainly by stock
ued high-conviction ideas, meant the speed of cash selection. For institutional investors, there is no initial
deployment into the fund was somewhat slow. charge and the annual fee is 1 per cent.
 City Focus THE SEXIEST 29
SALOON CAR
| Accounting SEE LIFESTYLE,
PAGE 31

A tricky balancing act on tax reform

The coalition has a
chance to forge a
lasting legacy for the
better, writes Chas
Roy-Chowdhury

C
ONFERENCE season is upon us and
the next few weeks will be the first
time the parties have had since May
to slow down and take stock of this
brave new post-coalition political world.
Given the breakneck speed at which the
coalition has been implementing its poli-
cies so far, the conference pause is also a
useful time for others to assess their
progress.
One area that is certainly worth look-
ing at is tax policy. The coalition has
announced several new taxes and tax
changes in the last few months – but the
record has been mixed.

MIXED SUCCESSES
There have been positive moves: the cre-
ation of the Office of Tax Simplification
(OTS) is one of the most noticeable. An
independent body that advises the gov-
ernment on tax has long been a glaring
absence from the UK’s tax system, and the
OTS should be capable of filling at least
part of the hole.
Given that the OTS is a new body it has-
n’t really had the time to make much of
an impact. But, if the OTS can ensure tax
policy becomes more consistent and that
“simplification” doesn’t just mean scrap-
ping tax breaks then it should be consid-
ered a success in the longer term. If it
does what it is supposed to, the OTS could
be one of the coalition’s longest-lasting
legacies.
There are also many strong, progressive
tax measures proposed by the coalition –
including the rise in the personal income
allowance, tax credit changes, and freezes
in council tax rises. Alongside these posi-
tive changes, business-owners will also
welcome the cut in small firms’ corpora-
tion tax, extensions to the enterprise
finance guarantee (EFG) and entrepre-
neurs’ relief on capital gains tax (CGT). A are at least in part laudable, others have The push-me pull-you behind some of the changes, but the ALL CHANGE?
permanent extension of the EFG would be few redeeming features. The attempt to approach has brought coalition needs to be very careful with So our new government’s tax record has
even better. recognise the “value” of marriage mixed results so far. how revenue-raising taxes are handled. As been patchy; who said a coalition would
However, many of the coalition’s posi- through the tax system, for example, may a regressive charge, VAT should certainly be different? Ideally, some of the more
tive tax moves lose their lustre when be well-intentioned but will cost an awful not be raised above its new 20 per cent damaging changes such as the rise in VAT
looked at in context. For example, while lot of money when the country is in aus- rate; even if this is helpful for the public and CGT would be reversed as soon as
small businesses (SMEs) and those lower terity mode and will add unnecessary purse, further rises would be counter-pro- public finances allow. But there are wel-
down the income scale will appreciate complexity to the tax system. Besides, ductive to the image of the UK as a com- come changes – including the effort to
the changes outlined above, the rise in there’s no evidence to suggest that money petitive tax jurisdiction. Likewise, any simplify the tax system – that may bal-
VAT to 20 per cent will balance some of the coalition plans to offer couples will proposed bank levy – of which we have ance many of their unhelpful counter-
these out. Meanwhile, small firms will encourage them to get, or stay, married. yet to hear the details – must be imple- parts. The key test, as ever, will be in the
also find themselves dealing with rises in The changes to capital gains tax (CGT) mented with international coordination implementation of these measures and
insurance premium taxes and the region- are a cause for concern too. Long-term or it could undermine the UK’s position their effect in the long-term.
alisation of national insurance contribu- capital assets need long-term certainty as a financial centre. And there is a real
tions, a move that will heap even more and the changes announced in the last danger that a balance sheet levy will Chas Roy-Chowdhury is head of tax at the
administrative work on already over-bur- budget (raising the rate to 28 per cent for incentivise banks to find ways to hide Association of Chartered Certified Accountants
dened SMEs. higher earners) come only two years after assets, increasing not decreasing risk in (ACCA).
The cut in the headline rate of corpora- the last changes, creating an atmosphere the financial system.
tion tax is another case where there is of uncertainty among wealth-creators.
more to it than meets the eye. While cut- The Chancellor might view the change as
ting the rate to 24 per cent is a step in the “permanent”, but after 2015, there’s the FOCUS | WHAT IS THE OFFICE OF TAX SIMPLIFICATION?
right direction for attracting business to possibility that a new government could
Britain, headline rates are but one tool change the rate again. The new rate also
amongst a whole range of tools that can puts the UK out of line with many of its Launched on 20 July by the coalition would help reduce the complexity of leg-
be used to adjust the overall tax environ- peers in the developed world, which have government, the Office of Tax islation; simplify the drafting and lan-
ment. Fixating on the headline rate can either a lower or zero CGT rate.
lead to other factors affecting business Tight public finances and a desire to Simplication (OTS) is designed to be an guage of existing legislation; review the
decisions – including the total tax cost cut the deficit may well be the reason independent body tasked with advising existing legislation from a structural per-
(i.e. VAT) or the treatment of cross-border on how best to simplify the UK’s tax spective; engage in pre-legislative scruti-
transactions – being neglected. Cutting
corporation tax then is a positive, compet- Despite some progressive changes, many of system. ny, leading to more considered
itive move, but it’s one that could distract Two reviews were set up on the OTS’s legislation – specifically, the requirement
from others. the coalition’s positive tax measures lose their creation: one on tax reliefs and one on for an annual Finance Bill should be
WRONG TURNS lustre when looked at in a broader context small businesses. An effective OTS removed.
While some of the coalition’s tax changes
 30 City Focus | Law
Privacy laws offer City folk protection
The courts can prevent private
matters becoming the stuff of
public rumour and conjecture
DAVINA HAY
SCHILLINGS
W
ARREN Buffet once said: “It
takes 20 years to build a reputa-
tion and five minutes to ruin it.
If you think about that, you’ll do
things differently”. A professional reputa-
tion, much like a brand or business repu-
tation, also takes many years to build and
demands considerable further investment
to nurture and grow. Such a reputation, if
damaged, will be costly, and in some cases,
virtually impossible to restore.
A company or individual is entitled to
construct and project a public image.
Equally, the business or person in ques-
tion is justified in drawing a clear line
between what is private or confidential
and what is not. This is increasingly hap-
pening to City workers and we are now
experiencing a rise in the unwitting City
celebrity – the banker or fund manager
who has found himself caught in the
glare of the public eye. It is becoming
increasingly common to see a photograph
of the house or even the children of a pre-
viously anonymous City worker published
alongside a story about his bonus, or acri-
monious divorce. Fred Goodwin and
Adam Applegarth are just two examples.
No doubt we will see more as this year’s
bonuses are announced.
City folk might feel that they are unpro-
tected, that only film stars and singers
can use the law to protect their privacy.
But that is not so. Intrusions – as well as
being actionable – are a breach of the
media’s own code of conduct. In practice,
the ever expanding law of privacy and
confidence means that obtaining injunc-
tions to restrain the publication of private
The appeals of age
shouldn’t be ignored
A 42-year-old who sued for age discrimination is
more than a case of political correctness gone mad
GARETH BRAHAMS
STEWARTS LAW
L
AST month the Canadian Imperial
Bank of Commerce appealed
against an employment tribunal’s
ruling that it had discriminated
There’s nothing
wrong with secrets.
Picture: GETTY
information is increasingly common-
place.
Perhaps the cases where businesspeo-
ple have most obviously faced media
interest are divorce cases. You cannot fail
to have stumbled across lurid details of
the lives of Lisa Tchenguiz and property
magnate Vivian Imerman, for example, as
they work through their divorce. This
interest has been further fuelled by the
opening of the family courts in April
2009. Historically, such hearings were
held in private, a luxury that couples can
no longer enjoy as a matter of course.
Many people are now unaware that jour-
nalists can legitimately attend the hear-
ings and that unless prevented from doing
so, freely publish information gleaned in
these courts – anything from finances
(income, spending, debts and liabilities), to
allegations made about the parties’ con-
duct during the marriage, including sensi-
tive details of a personal nature.
In a bid to prevent this intrusion, those
in the know are seeking ways of resolving
relationship breakdowns without
recourse to legal proceedings. There has
been a significant increase in couples
entering into pre-nuptial or post-nuptial
agreements to settle financial arrange-
against its 42-year-old European head of
derivatives marketing, Achim Beck, by
allowing a 35 year-old manager to oust
him after putting out a search brief
explicitly seeking to replace him with
someone younger.
The bank lost. There should have been
nothing surprising about that. After all,
had a black employee been sacked and
the search brief for his replacement
indicated the bank was looking for
someone who was “white”, nobody
would have questioned the decision.
However, the Beck case somehow still
seems remarkable to some and contin-
ues to attract publicity.
ments in advance – however it is worth
bearing in mind that pre-nups are not
currently legally binding in this country.
It is likely that a forthcoming Supreme
Court judgment in the case of German
heiress Katrin Radmacher will clarify
England’s position on the pre and post-
nup agreements and the prevailing pre-
diction is that this ruling will, at the very
least, make them more persuasive.
Pre-nups, if prepared properly and with
sound advice, do provide an opportunity
to tackle potential privacy issues head on,
through the inclusion of confidentiality
clauses – a tactic that Lisa Tchenguiz and
Vivian Imerman may now wish they had
deployed. In addition to entering into a
pre-nuptial agreement, couples can also
resolve disputes privately, outside of the
court arena, by employing structured,
confidential negotiations, mediation or
binding arbitration and by using court-
assisted conciliation hearings (which are
closed to the media) if court assistance is
required. Pre-nups can provide a way to tackle privacy
Where possible, if court hearings are
unavoidable, media targets should obtain matters head on, by resolving to deal with
an order excluding the media. If there is
media interest or a threat of publication, private matters outside the court arena
swift preventative action is needed and a
It is as if there is an underlying cur-
rent that says it is troubling enough
that people can claim age discrimina-
tion but when a 42-year-old does it and
wins, it is “political correctness gone
mad”.
Why is that the case? It may be that
while age discrimination has been
unlawful for four years it is still taking
time for people to adjust to this new
reality after centuries of age discrimina-
tion being legal and commonplace.
(Think again about those jokey birthday
cards you read in the shops – one would
not see racial stereotypes played on so
glibly).
That could well be part of it. When
discrimination of any type has been
sanctioned for so long, it is unrealistic
to expect the way people think to
change overnight.
Even the law treats age discrimina-
tion less seriously than other forms
because it allows it to be justified more
easily and even permits mandatory
retirement at 65, though this is likely to
change from October 2011.
That is a move which one commenta-
tor has described as the loss of “one of
the few flexible mechanisms left to
employers”.
With hindsight, the comment could
read as if the same could be said of
being able to fire women when they
became pregnant or married (also flexi-
bilities for the employer but not ones
CITYA.M. 22 SEPTEMBER 2010
privacy injunction can be obtained.
However, judges must walk the tightrope
of balancing the right to publish such
information – though personal – if it is in
the public interest, against an individual’s
right to privacy as enshrined in article 8 of
the European Convention on Human
Rights. Arguably, since the media now has
a clear right to attend court hearings, this
balancing act is all the more challenging
in the context of matrimonial proceed-
ings that unfold in the family division.
Whatever the context of the invasion of
privacy, be it via the divorce courts, or
simply as a result of the backlash against
bankers and their salaries, publicly
known figures who wish to preserve their
reputations and privacy do, in the main,
have the law on their side. In fact, the law
of privacy has never been stronger. People
simply need to be more aware of how to
use it.
that a tolerant society should permit).
Perhaps it is because there is a belief
that age discrimination is the last
refuge of the “stale pale male” (the tired
executive in his 50s who cannot bring a
race or a sex case). But why should this
group not have the protection of the law
if age is the reason for discrimination?
Employees can no more help their age
than their gender or race.
In the City the situation is even more
pronounced. As Trevor Phillips, chair-
man of the Equality and Human Rights
Commission, observed “the culture of
the [financial services] industry effec-
tively says that, after 40, you haven’t got
anything to contribute”.
In our society the population is age-
ing rapidly, the public finances are in
meltdown and people need to work
longer. To chuck people on the
scrapheap at such a young age simply
makes no sense.
It is not “political correctness gone
mad” when a 42-year-old man sues for
age discrimination and wins. It is socie-
ty that has lost its perspective if it has
so internalised a culture where people
are “all washed up at 42” that it neither
celebrates the courage of an employee
prepared to take on this pernicious
practice nor the clear thinking of the
tribunal for making the decision, but
instead questions the wisdom of the
law and the system that has outlawed
that behaviour.
 Lifestyle
31

| Motors WORDS BY
RYAN BORROFF

How to make a saloon car sexy

THE FACTS:
MITSUBISHI ASX
PRICE: £18,549
0-60MPH: 9.7secs
TOP SPEED: 124mph
CO2 G/KM: 145g/km
MPG COMBINED: 51.4mpg

THE VERDICT:
DESIGN hhhii
PERFORMANCE hhhii
PRACTICALITY hhhii
VALUE FOR MONEY hhhii

with the seats folded down, is 1,193 litres,

which should be enough to minimise
stress at Ikea (give or take a torrent of
expletives as you get to the end of its retail
maze only to find that a crucial part of the
Snork “system” that you planned to buy is
sold out.)
On the minus side, step inside and leave
too quick – to sprint back into the house
for your Ray Bans, say – and you’ll set off a
Philip Glass-style symphony of bleeps and
bells. We never worked out what any of
them meant in our short affair with this
car, but it didn’t stop us from doing any-
thing or going anywhere so we didn’t real-
ly worry about it. It’s a chatty, affable,
Mitsubishi’s crossover is just affectionate car – when it suspects
that you’ve parked up and are plan-
the way to move around central ning to leave, it flashes up a cheer-
ful “See you” on the display in
London (and beyond) in style the instrument cluster.
Performance-wise, the ASX is
really surprising. It’s a comfort-
able ride, perhaps a little noisy

F
ORGET large SUVs. This is the
Mitsubishi ASX crossover and it is the
future of family SUVs – well, as far as
Mitsubishi is concerned.
Now that driving a proper 4x4 through
the boroughs of Islington or Wandsworth
is such a complete no-no, thank goodness
that the car manufacturers have come up
with an alternative for the new London
family car. It’s the crossover, a car for peo-
ple for whom estate cars bring to mind the
car sickness of long journeys on family
holidays in the early 80s, or who think
estate cars are about as much fun to drive
as a fridge. The ASX is essentially a cross
between a small SUV and a family saloon
but with the practicality of a larger car
and the economy of a small one. So it’s
adios to the gaz guzzler SUVs we’ve come
to love (to hate).
We’re driving the ASX 3 1.8 Diesel 2WD
and although there is a 1.6 litre petrol-
engined version available, this will likely
be the better seller in the UK. Though
there’s no four wheel drive on this test
model, there is a 4WD version available
with this engine. Our 1.8-litre turbodiesel
is fitted with Mitsubishi’s ClearTec low
emissions package, which includes its
automatic Stop & Go technology.
For some reason, the trademark
Mitsubishi square bonnet – so familiar on
the Evo – looks particularly canine on the
ASX. The car appears higher than it is
thanks to its tall beltline and it looks as if
its got attitude, even if it’s not out and out
aggressive. around town. But it’s the accel-
Visually, it eration that really wows. The
could be the car feels genuinely quick thanks
automotive to its turbocharger, which makes
answer to a a satisfying whistling noise.
labrador – a sen- Steering is accurate too.
sible choice, It doesn’t have a particularly fancy
dependable, endear- interior or a prestige badge. But the ASX
ing, occasionally slightly is a sensible choice for someone living in
menacing to a dinner guest sporting a town who wants a car that looks a bit
beard. 4x4ish but doesn’t really need the four-
Inside, the car is undoubtedly let down wheel drive (Mitsubishi expects to sell
by a very plasticky interior. Really, it’s the mainly 2WDs) and doesn’t want to pay full
only area where the car disappoints, as the whack for a system they won’t get the use
cockpit just seems a little out of date for a out of. What’s more, thanks to some clever
car that is otherwise so thoroughly con- engine tech and impressive weight saving
temporary. Having said that, the measures (the car has plastic front wings) it’s
Bluetooth system is excellent. And space, a spirited drive and super-economical too.

CAR TALK BY RYAN BORROFF

The facts:
you can afford a Mercedes
The figures:
mercedes-benz.co.uk/offers
For more information on our tailor-made
packages or to book a test drive, visit us online.

MASERATI’S WILD SIDE UNVEILED
The fastest, lightest and most powerful
Maserati yet is to debut at the Paris Auto
Show at the end of the month. When it goes
on sale in the spring next year, the 450hp
Maserati GranTurismo MC Stradale will be
capable of over 300km/h (186mph) but will
offer the same fuel consumption as a stan-
dard GranTurismo. It’s inspired by the Trofeo
GranTurismo MC and GT4 motorsport racers.
CITROEN DESIGNED BY LACOSTE
Usually cars that are “designed” by fashion
brands are a question of weaving a logo into a
headrest and stamping the marque on the
back, but occasionally the fashionistas are let
loose with the CAD (computer-aided design).
Thus this fairly daft Citroen buggy was con-
ceived with tennis wear icon Lacoste, and
includes a windscreen that can be lowered
and has no doors. It will be at Paris.
SAAB GETS IN ON ZERO-EMISSIONS
Saab is developing an all-electric vehicle
that it claims will offer a zero-emission
driving range greater than any other EV
currently in production. Called the Saab 9-
3 ePower, the car has a projected driving
range of 124 miles and is powered by a
184hp electric motor of 35.5kw/h lithium-
ion battery cells, capable of reaching
62mph in just 8.5 seconds.
 32 Lifestyle | TV& Games CITYA.M. 22 SEPTEMBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
6.55pm Party
Political Broadcast
7pm The One Show
7.30pm Bang Goes the Theory
8pm CHOICE Waterloo Road
9pm Lost Land of the Tiger
10pm BBC News
10.25pm Regional News
10.35pm The National
Lottery Draws
10.45pm The Science of The Young
Ones: Michael Mosley presents.
11.30pm The League Cup Show
12.35am Sign Zone: Dragons’ Den
1.35am Bang Goes the Theory
2.05am Watchdog 3.05am
Britain’s Empty Homes
3.35am-6am BBC News
6pm Eggheads 6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm Climbing 6.30pm ITV News 6.30pm Hollyoaks 6.25pm Live from Studio Five
Great Buildings 6.55pm Party 7pm Channel 4 News 7pm Five News at 7
7pm Live Snooker: Political Broadcast 7.55pm 4thought.tv 7.30pm Michaela’s Zoo Babies;
The World Open. 7pm Emmerdale 8pm Food: What Five News Update
8pm Battle of Britain: The Real 7.30pm The Unforgettable Goes in Your Basket? 8pm Cowboy Builders;
Story: James Holland explores Terry Scott 9pm Grand Designs Five News at 9
the Battle of Britain from the 8pm Midsomer Murders 10pm Seven Days 9pm NCIS
German point of view. 10pm ITV News at Ten 11.05pm Ramsay’s Best 10pm CHOICE
9pm CHOICE Britain’s 10.30pm London News Restaurant Law & Order: Criminal Intent
Youngest Boarders 10.35pm FILM The Whole Ten 12.10am Music on 4: On Track 10.55pm Law & Order WATERLOO ROAD
10pm Grumpy Old Women Yards: Comedy sequel, starring 12.25am Manic Street Preachers BBC1, 8PM
12.55am The Album Chart Show 11.55pm Cricket on Five
10.30pm Newsnight; Weather Matthew Perry. 2004. 12.50am SuperCasino Tom is worried that Josh cannot
Introduces Hurts 1.10am The
11.20pm Today at Conference 12.25am The Zone; Album Chart Show Spotlight 4.05am Chinese Food in Minutes defend himself when he sees Finn
11.50pm Snooker: ITV News Headlines 1.25am Hung 2.10am Afterworld 4.30am House Doctor 4.55am picking on him and urges him to take
The World Open. 2.25am FILM Timecop: The Berlin 2.35am Slow Joe 2.40am FILM Rough Guide to Short Breaks up self-defence lessons.
12.40am Snooker Extra Decision. 3.50am The Jeremy Kyle Blackball 2003. 4.15am Age of Love 5.10am The New Tomorrow
2.40am BBC News Show 4.40am-5.30am 5am Countdown 5.45am- 5.35am-6am Michaela’s Wild
3.35am-6am Close ITV Nightscreen 6.10am Yo Gabba Gabba Challenge

SKY SPORTS 1 2am Inside the PGA Tour LIVING E4 3.50am Clash of the Dinosaurs
SATELLITE & CABLE

2pm Live International Cricket
10.30pm Total Rugby
11pm Manchester United
Premier Cup 12am Carling Cup
Football 1.30am Spanish
Football 3.30am FIFA Futbol
Mundial 4am Manchester
United Premier Cup 5am
FIFA Futbol Mundial
5.30am-6am Total Rugby
SKY SPORTS 2
6.30pm Manchester United
Premier Cup 7.30pm Live
Carling Cup Football 10pm
You’re on Sky Sports! 11.30pm
International Cricket 1.30am
Transworld Sport 2.30am
Rallyzone 3am Poker Million
5am-6am British Motocross
Championship
SKY SPORTS 3
6.55pm Live Spanish Football
11pm Cage Fighting 12.30am
Golfing World 1.30am
European Tour Weekly
2.30am PGA EuroPro Tour
Golf 4.30am-5.30am Max
Power
BRITISH EUROSPORT
7pm Live Snooker 10pm
Eurosport for the Planet
10.30pm Sport Traveller
10.45pm Olympic Magazine
11.30pm-12.30am
Weightlifting
ESPN
6.30pm VW Scirocco Cup
7.30pm ESPN Serie A Kicks
7.45pm Live Serie A Football:
Lazio v AC Milan (Kick-off
7.45pm). 9.45pm ESPN Kicks
Extra 10pm 30 for 30 11pm
UFC 119: Countdown Show
12am Late Night Poker
1am Press Pass 2010
1.30am AFL Review Show
2.30am DTM Motor Racing
3.30am F3 Euroseries Review
Show 4.30am-5.30am
VW Scirocco Cup
7pm Four Weddings US 8pm
Psychic Sally: On the Road
9pm Ghost Whisperer 10pm
CSI: Miami 11pm Criminal
Minds 12am CSI: Crime Scene
Investigation 2am Medium
3am Charmed 3.50am Girls of
the Playboy Mansion 4.40am
The Jerry Springer Show
5.30am-6am Home Shopping
BBC THREE
7pm The Real Hustle: Celebrity
Scammers 8pm Don’t Tell the
Bride 9pm FILM Ace Ventura:
When Nature Calls 1995.
10.30pm Family Guy 11.10pm
American Dad! 11.35pm One
Non Blonde 12.05am Ideal
12.35am Him and Her 1.05am
The Real Hustle: Celebrity
Scammers 2.05am One Non
Blonde 2.35am Ideal 3.05am
Great TV Mistakes 3.35am
Him and Her 4.05am-5.05am
Don’t Tell the Bride
7pm Hollyoaks 7.30pm Friends 4.40am Unsolved History
9pm Ugly Betty 10pm FILM 5.30am-6am How Does That
Dreamgirls 2006. 12.30am Work?
RuPaul’s Drag Race 1.30am
Scrubs 2.20am Joan of
DISCOVERY HOME &
BRITAIN’S YOUNGEST BOARDERS
Arcadia 3.45am RuPaul’s Drag HEALTH
Race 4.25am The Hills 7pm From Here to Maternity BBC2, 9PM
4.50am-6am Switched 8pm Sex Change 9pm Hospital A look behind the scenes at
Sydney 10pm Untold Stories of Sunningdale, a prestigious preparatory
HISTORY the ER 11pm The Trauma Team boarding school that takes boys from
7pm How the Earth Was Made 12am Hospital Sydney 1am the age of seven.
8pm Mega Movers 9pm Ax Untold Stories of the ER 2am
Men 10pm Sliced 11pm Mega The Trauma Team 3am Sex
Disasters 12am Ax Men 1am Change 4am A Baby Story
The Lost Evidence 2am How 5am-6am Bringing Home Baby
the Earth Was Made 3am The
Cosmos: A Beginner’s Guide SKY1
8pm Vet Adventures: Luke
4am-5am Clash of the Gods
Gamble’s final stop is Uganda.
DISCOVERY Last in the series. 9pm Must
8pm How Do They Do It? Be the Music 11pm FILM
8.30pm How It’s Made 9pm Lethal Weapon 2 1989. 1.10am LAW & ORDER: CRIMINAL INTENT
Nostradamus Decoded 11pm Road Wars 2.05am Night Cops CH FIVE, 10PM
Two Weeks in Hell 1am Bear 3.05am Oops TV 3.30am The Goren infiltrates the psychiatric ward
Grylls: Born Survivor 2am 4400 4.20am Crash Test of a New York jail to investigate
Chris Barrie’s Massive Dummies 5.10am-6am Sell Me allegations by his inmate nephew that
Machines 3am Top Tens the Answer prisoners are being tortured.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
44 5 12 9 10 12
6 19
17 29 13   
45
Place the numbers from 1 to 9 in each empty cell so that each 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 4 23
12 36 5
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 14 8 3
   
above or to the left of it. 3 11
You can only use the digits 1-9 15 9
    and you must not use the
17
14 11     
same digit twice in a block. 16 27
  The same digit may occur 16 35 
18
    more than once in a row or
column, but it must be in a
15
10 7
11 4
 
7 14
  separate block.
17 16 12 6
45
  24 22
 

  ACROSS DOWN
1 Garments of a 1 Perceived (7)
   
  WORDWHEEL A L
jockey (5)
4 Scene of action (5)
2 Heaps (5)
3 Grin (5)
Using only the letters in the Wordwheel, you have 7 Free (6)
    ten minutes to find as many words as possible,
R E 5 Pulpit (7)
9 Crease (4)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters Y 10 Departed, went (4)
6 Approaches (5)
8 Retainer (7)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
O W 11 Sample (6)
12 Clinging part of
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
M F 13 Break (4) a plant (7)
15 Repair a worn hole, 14 Acrobat’s swing (7)
QUICK CROSSWORD 7 1 9 3 5 1 3 especially in a sock (4)
6 7 9 / , 1 . 6
8 2 6 1 3 4 7 SUDOKU         
17 Fleet of warships (6)
16 Hawaiian greeting (5)
7 2 5 3 ( ' 2 2 +
9 3 7 4 7 6 8 9          18 Harnesses (5)
4 9 8 2 1 20 Hill of sand (4)
2 , 7 6 2 (         
& 2 0 0 2 1 6 ( 1 6 ( 5 1 2 4 8 9 19 Humble (5)
        
. ( 8 1 7 7 6 8 2 5 9 3 4 1 21 Male hog (4)
        
9
3 $ 5
,
7 5 , '
6 2
* (
5
5 8
7
6 9 8
9 1
5
2 3
WORDWHEEL          22 Rant (6)
( $ 5 7 + ( 1 : $ 5 (         
1 , , ( 1 $ 8 4 9 5 7 1 7 9 The nine-letter word 23 In a poor way (5)
5 1 4 9 8 8 6         
8 / 6 ( $ : ( ( '
was PACKHORSE
6 ( / / 6 7 : < 7 2 3 6 2 9 8          24 Root vegetable (5)
 Sport
33
NASRI AT THE DOUBLE AS
SPURS PAY THE PENALTY
ARSENAL BEAT RIVALS 4-1 IN
EXTRA-TIME THRILLER: PAGE 35

Games crisis
Dozens of work-
men were hurt
when a bridge
collapsed outside
the stadium, the
latest in a series

after British
of setbacks to hit
the Games, which
will now not fea-
ture triple-jump
star Idowu (left).

stars pull out

Picture: REUTERS

Commonwealths facing withdrawals, after Olympic

400m champion Ohuruogu
axe after bridge accident led the way, blaming a long-
standing injury.
Triple jump world champi-
and facilities outcry. on Idowu, right, did not give a
reason, but is thought to be
By Frank Dalleres concerned at preparations,
while 1500m runner Lisa
Dobriskey also pulled out citing

B
RITISH track stars Phillips
Idowu and Christine Ohuruogu
pulled out of the
Commonwealth Games last
night amid growing fears the event in
Delhi will have to be cancelled.
In a disastrous 24 hours for organis-
ers, already fraught preparations
were plunged into crisis when a
bridge outside the stadium collapsed,
injuring 23, and a row erupted over
the state of the athletes’ village.
Now they are braced for a rash of
injury.
The trio were among around
7,000 competitors who are due
to start arriving this week for the
event, which is scheduled to
begin on 3 October.
But team chiefs have warned
that the situation is so dire that
the Games, which have been beset
by health, security and construction
setbacks, may have to be shelved.
“The reality is that if the village is
not ready and athletes can’t come,
the implications are
that it’s not going to
happen,” said New
Zealand’s chef de
mission Dave
Currie.
Commonwealth Games
England said in a statement:
“There is a lot still to be done
in the village and this needs to
be done with some urgency so
that it is ready for the arrival of
our first athletes on Friday.”
Five workmen were critically
injured, and 23 hurt in total, when a
bridge outside the Nehru Stadium,
the centrepiece of the Games, col-
lapsed. Officials said the 164-ft long
bridge’s steel arch crumpled while
concrete was being applied.
The athletes’ village, meanwhile,
has been portrayed as unfit for
human habitation.
Toilets are blocked and leaking,
power erratic or non-existent, and
bedrooms and bathrooms piled high
with rubble in the bulk of residences.
Commonwealth Games president
Michael Fennell: “Many nations made
it abundantly clear that, as of
[Monday] the Commonwealth Games
village is seriously compromised.”
Indian officials have played down
the furore, with urban development
minister Jaipal Reddy saying: “These
are all minor hiccups. The athletes
have not arrived yet and by the time
that they come in a couple of days, all
concerns will be addressed.”

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 34 Sport | Cricket CITYA.M. 22 SEPTEMBER 2010

Results
CARLING CUP THIRD ROUND
Birmingham................(3) 3 Milton Keynes Dons...(0) 1
Hleb 24 Wilbraham 80
ICC should step in now and
ban Pakistan for five years
Zigic 26
Gardner 28 Att: 9,450
Brentford......................(1) 1 Everton.................................(1) 1
Alexander 41 Coleman 6
Att: 8,960
AET: Score after 90 mins 1-1. Brentford win 4-3 on penalties.
Burnley ...........................(1) 1 Bolton...................................(0) 0
Elliott 45 Att: 17,602
Millwall..........................(0) 1 Ipswich ...............................(2) 2
Morison 62 Priskin 23
Att: 5,070 McAuley 45
Peterboro......................(1) 1 Swansea .............................(2) 3
Mackail-Smith 7 Sinclair 5, 41, 78
Att: 4,164
Portsmouth ................(0) 1 Leicester.............................(2) 2
Lawrence 82 Morrison 3
Att: 8,327 Dyer 43
Stoke................................(1) 2 Fulham .................................(0) 0
Higginbotham 23
Jones 79 Att: 12,778
Sunderland..................(1) 1 West Ham...........................(1) 2 AT THE CREASE WITH
Gyan 41
Att: 21,907
Piquionne 35
Obinna 59
Tottenham...................(0) 1 Arsenal.................................(1) 4
ANDY LLOYD
Keane 49 Lansbury 15

S
Nasri 92 (pen), 96 (pen) O, members of the ICC, it’s all
Att: 35,883 Arshavin 105 up to you, but, surely now
AET: Score after 90 mins 1-1. enough is enough. Absurd accu-
Wolverhampton......(0) 4 Notts County...................(0) 2 sations that England players
Milijas 83 (pen) Hughes 57
Fletcher 92 Smith 114 were involved in match fixing weren’t
Doyle 105, 119 Att: 11,516 just the comments of an excitable
AET: Score after 90 mins 1-1. journalist, they were made by Ijaz
NPOWER LEAGUE 1 Butt, the chairman of the Pakistan
Dag & Red.....................(0) 1 Exeter....................................(1) 1 Cricket Board, for goodness sake.
Vincelot 71 Logan 5 I believe I am balanced enough to
Att: 2,005 criticise the performance of the
Plymouth......................(0) 0 Brighton..............................(2) 2 England players when necessary, but
Elphick 22
Att: 7,079 Barnes 42 not for one moment do I believe that
any member of that team would
CO-OPERATIVE INSURANCE CUP
THIRD ROUND
throw a match. Why would they?
Brechin...........................(0) 0 Motherwell.......................(1) 2
It is inconceivable to think that this
Falkirk.............................(2) 4 Hearts ..................................(0) 3 guy can make such unsubstianted
Rangers..........................(3) 7 Dunfermline......................(1) 2 claims and get away with it. It can go
St Johnstne................(0) 3 Queen of South..............(0) 0 on no longer, we’ve had enough.
BLUE SQUARE BET PREMIER For me, Pakistan should be sus-
Altrincham..................(0) 2 Barrow ................................(0) 0 pended from international cricket for
Cambridge Utd.........(0) 3 Kettering ...........................(0) 0 five years.
Darlington ....................(1) 2 Luton......................................(1) 2 In that time, the ICC should keep a
Fleetwood Town ......(1) 1 Kidderminster................(0) 1
Forest Green...............(3) 3 Eastbourne B...................(3) 4
close eye on the PCB operation as a
Gateshead....................(0) 0 Grimsby...............................(0) 0 whole and make sure that they sort
Hayes & Yeading ......(1) 1 Newport County...........(0) 2 themselves out 100 per cent before
Mansfield......................(1) 5 York........................................(0) 0 they return.
Rushden & D...............(0) 2 Histon ...................................(0) 0 Every time Pakistan come over here
Tamworth.....................(1) 2 Bath City ............................(2) 2 there seems to be an issue. This has to
Wrexham......................(2) 2 Southport..........................(0) 1
be the final straw. They seem to
attract controversy wherever they
TODAY’S DIARY turn and it’s high time the ICC took
(7.45pm unless stated)
action. the ECB, will be playing their part in mine is a loyal member of the MCC. they are to their cricket board and the
Carling Cup Third Round
Aston Villa v Blackburn............................................................................................ My good mate Bob Woolmer lost his ensuring English cricket does not get He went to the fourth one-dayer at fans in general.
Chelsea v Newcastle .................................................................................................. life in the hands of Pakistan cricket caught up in this again. Lord’s on Monday and he told me Also, I wouldn’t mind betting that,
Liverpool v Northampton (8pm) .......................................................................... and although I’m in no way appor- They welcomed Pakistan to play he’d never felt less enthused about a privately, ECB pair David Collier and
Scunthorpe v Man Utd.............................................................................................. tioning blame for Bob’s death in any their home matches in this country day watching international cricket. Giles Clarke would also end the series
West Brom v Man City (8pm)................................................................................ particular direction, it’s another this summer, and this is the thanks That speaks volumes. now if they could. There is so much
Wigan v Preston.......................................................................................................... example of how Pakistani cricket in they get. I think it’s fair to say that Andrew Strauss and his players only good about English cricket right now,
Co-operative Insurance Cup Third Round
Aberdeen v Raith ........................................................................................................
general needs to get its house in order. invitation won’t be extended into agreed to play the remaining two it doesn’t need this controversy and it
Celtic v Inverness CT ................................................................................................ As we all know, the power in world next summer as originally scheduled. matches before hearing Ijaz Butt’s doesn’t need Pakistan.
Kilmarnock v Hibernian ............................................................................................ cricket lies in Asia, so it will be inter- comments on Monday morning. In summary, the board, the play-
Ross County v Dundee Utd...................................................................................... esting to see what they do. PACK THEIR BAGS But I’d bet my bottom dollar they ers, will be delighted to see the back
The ball is entirely in the ICC’s As a result of this furore, the nation would go back on that decision now if of Pakistan as they prepare for the
SPORTS EDITOR JON COUCH court right now, but you can rest has completely lost interest in the cur- they could. Indeed, the fact they are Ashes series this winter – I’m sure
email sport@cityam.com assured that our own governing body, rent one-day series. A good friend of still playing shows what a huge credit they’d even pack their bags for them.

Row won’t damage political

relations, says top diplomat
the row with the England and Wales ing row would not have a wider polit-
▲

FIXING ROW
BY JON COUCH
PAKISTAN’S high commissioner last
night defended Ijaz Butt’s allegations
against England’s cricketers – but
insisted they would not affect political
relations between the countries.
Wajid Shamsul Hasan said Paksitan
Cricket Board chairman Butt made “a
very innocent argument” when accus-
ing England players of taking a bribe
to lose the third one-day international
at The Oval last Friday.
Pakistan’s tour of England ends
with the final one-dayer at the Rose
Bowl today. But tensions between the
Wajid Shamsul Hasan has defended PCB chairman Ijaz Butt. Picture: ACTION IMAGES two sides have become fraught amid
Cricket Board threatening legal action
and Jonathan Trott and Wahab Riaz
scuffling prior to the fourth one-dayer
at Lord’s on Monday.
On attempting to play down Butt’s
comments and defusing the situation
yesterday, Hasan said: “Mr Butt made
a very innocent argument.
“He said it’s very strange that,
when Pakistan loses a match, people
describe it as spot-fixing or fixing of
the match. When Pakistan win the
match, the same allegations are lev-
elled against it.” He added: “Our boys
are innocent. I still maintain until
proven guilty, they are innocent.”
But Hasan insisted that the escalat-
ical impact in relations between the
countries.
“Will this row sour our relation-
ship? My answer is certainly no,” he
added. “This is a separate matter. Our
relationship with the UK was not
made overnight. It has its roots in the
past. It is on solid ground.”
Strauss, meanwhile, was standing
firm on his viewpoint, and insists
England were making no idle threat
when they suggested the possibility of
legal action against Butt over his slur.
“Absolutely, we are going to explore
every avenue available to us to make
sure our names aren’t sullied in this
manner,” the England captain said.
CITYA.M. 22 SEPTEMBER 2010
Cup shock as Toffees come unstuck at Brentford
BRENTFORD
EVERTON
4-3 on pens; 1-1 after 90 mins
CARLING CUP ROUND-UP
▲
LEAGUE ONE Brentford caused a
huge shock last night when they
dumped Premier League heavy-
weights Everton out on penalties at a
delirious Griffin Park. Striker
Spot-on Nasri
fires Gunners
past Spurs
TOTTENHAM
ARSENAL
AET, 1-1 after 90 mins
▲
CARLING CUP
BY FRANK DALLERES
ARSENAL schemer Samir Nasri con-
quered his spot-kick superstition to
smash two extra-time penalties and
earn the Gunners cup revenge over
bitter rivals Tottenham.
Nasri’s double within five minutes
proved the killer blow long before
Andrey Arshavin’s fourth, after
Robbie Keane had dragged Spurs back
into contention by cancelling out
Henri Lansbury’s opener.
But the Frenchman only agreed to
take the first penalty after manager
Arsene Wenger told him to abandon
his habit of refusing to take spot-kicks
that he had earned himself.
“He had a superstition to think
that when a penalty is made on you
not to take it,” said Wenger. “But I
tried to prove to him that that’s solely
Liverpool chiefs know nothing
about football, blasts Benitez
▲
PREMIER LEAGUE
BY JON COUCH
FORMER Liverpool boss Rafael
Benitez has launched a scathing
attack on his previous employers,
claiming they “understood nothing
about football”.
The Spaniard, right, had a strained
relationship with American co-own-
ers Tom Hicks and George Gillett
before leaving the club in the sum-
mer after six years to join Inter Milan.
Now Benitez has lifted the lid on
the boardroom infighting at the club
by insisting it is easier to work with a
more knowledgeable boss in current
president Massimo Moratti.
Jermaine Beckford and defender Phil
1 Jagielka, right, missed from the spot
as the Toffees lost the shootout 4-3,
having drawn 1-1 after 120 minutes.
1 There had been no sign of an upset
when Seamus Coleman slotted the
visitors in front after just six minutes,
but Gary Alexander hauled the
underdogs level before half-time with
a powerful header.
Charlie MacDonald missed a
chance to win it for the home team in
90 minutes from the penalty spot,
but recovered his composure to score
based on fear. He realises now that it
1 was a bad superstition.”
The Gunners dropped two valuable
points at Sunderland after Tomas
4 Rosicky missed a penalty that Nasri
had won but declined to take.
“I provoked the foul and then I did-
n’t take the penalty,” Nasri recalled.
“But after I talked with the boss and
said, ‘Next time I will take the penal-
ty’, and I scored.”
Tottenham manager Harry
Redknapp accused Nasri of diving for
the spot-kick, which came in the first
minute of extra-time after a challenge
from Sebastien Bassong. “I thought
the first one was harsh,” said the
Spurs boss. “He fell over. Really I think
he dived for the first penalty.”
Wenger, who watched the third-
round clash from the stands after
accepting a one-match ban for
improper conduct, showed a rare
appetite for the competition by nam-
ing a strong side. It paid off, as a cal-
low Spurs side tired and allowed
Arsenal to avenge the 5-1 Carling Cup
thrashing they received at White Hart
Lane three seasons ago.
An injury to Kieran Gibbs was the
“In my last year at Liverpool I had
directors who knew nothing about
soccer and you couldn’t talk about
football with them,” he said.
“You can with Moratti. My
relationship with [Inter Milan]
president Massimo Moratti is
good, he is a man who
knows his football.”
Benitez led Liverpool to
Champions League glory
in 2005 and an FA Cup
victory in 2006, but soon
became frustrated with the
lack of funds made available
to him after Hicks and Gillett
brought the club for £218.9m
in February 2007. Just prior
in the shoot-out as ecstatic Brentford
fans swarmed onto the pitch to cele-
brate. Defeat adds to Everton boss
David Moyes’s woes, having taken just
two points from their first five league
matches.
On-loan striker Victor Obinna
struck his first West Ham goal as
under-fire Avram Grant earned a
morale-boosting 2-1 victory at
Sunderland.
Nigerian Obinna, who arrived from
Inter Milan in the summer, set up
Frederic Piquionne to put the
only negative for Wenger, who
revealed the young left-back had hurt
a metatarsal, sparking a fears of a
repeat of the foot problem that side-
lined him for most of last season.
Youth team product Lansbury, the
to Benitez heading to Italy, Hicks and
Gillett announced they had put the
club up for sale and hired British
Airways chairman Martin Broughton
to oversee the project.
Benitez left this summer
to replace Jose Mourinho
at Inter and his team have
made a steady start to the
season, lying second in the
table, unbeaten after
three games.
Under new boss
Roy Hodgson, howev-
er, Liverpool current-
ly lie fifth from
bottom in the
Premier League.
Sport | Football
Hammers ahead after 35 min-
utes.
Sunderland levelled before
half-time when Ghanaian
World Cup star Asamoah Gyan
pounced at the near post to
head home a Jordan
Henderson corner. But
Obinna sent the visi-
tors into the
fourth round and
earned a first
win over top-
flight opposi-
only reserve in Wenger’s starting line-
up, met a fizzing low cross from the
superb Jack Wilshere to slide the first
on 15 minutes. Just after half-time
substitute Keane escaped the offside
flag to gather a Kyle Naughton pass
CARLING CUP | IN BRIEF
Drogba eyes Chelsea quadruple
CHELSEA striker Didier Drogba believes
the double winners could go even better
this season and achieve an unprecedent-
ed quadruple.
Ahead of tonight’s third round visit of
Newcastle, the Ivory Coast international
said: “Why not? If we do it, it will be an
amazing season. I think to keep the title
will be difficult, even if people see us as
one of the best teams with Manchester
United, Arsenal and Liverpool.”
Given will cost you, says Mancini
MANCHESTER CITY boss Roberto
Mancini has warned Shay Given’s suitors
that the out-of-favour goalkeeper will not
be allowed to leave cheaply in January.
“Shay is an important player and he
will cost someone a lot of money,” said
Mancini, whose team travel to West
Brom this evening.
The Italian also dismissed claims of a
bust-up with striker Emmanuel Adebayor
as “false”, adding: “We discussed his situ-
ation, that is all.”
35
tion of the season just before the
hour when he finished a neat
passing move.
In another all-Premier League
tie, Fulham’s hopes of a cup run
were dashed by a 2-0 defeat at
Stoke. Defender Danny
Higginbotham nodded in a
Matthew Etherington cor-
ner to put the home side
in front and striker
Kenwyne Jones headed a
late second from Rory
Delap’s throw-in.
Samir Nasri scored
two penalties in
extra-time.
Picture:
ACTION IMAGES
and slot an equaliser past Lukasz
Fabianski, who ought to have saved.
But Nasri’s brace dealt Spurs a blow
they never recovered from and
Arshavin rifled a smart fourth after a
quick free-kick.
Bebe set for first United steps
MANCHESTER UNITED summer signing
Bebe is set to make his long-awaited
first-team debut in tonight’s third-round
trip to Scunthorpe.
The Portugal Under-21 forward, who
was playing in his native country’s third
division last season, has only appeared
for United’s reserves since his £7.4m
move. Critics are already queuing up to
write off a player who United manager
Sir Alex Ferguson admits he signed with-
out ever having seen in action.
Houllier urges Villa patience
ASTON VILLA manager Gerard Houllier
has warned fans not to expect an imme-
diate turnaround in fortunes as he pre-
pares for his first match in charge.
The former Liverpool boss hosts
Blackburn in the third round, having been
appointed Martin O’Neill’s permanent
successor earlier this month.
“It will take time,” he said. “You come
with philosophies and beliefs and need to
convince the players to do them.”
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