CITYAM 2012-06-28

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BARCLAYS chief executive Bob Diamond is set to be
hauled before parliament after the bank was fined
£290m for its part in a global conspiracy to fix the
rate at which banks lend to each other.
Diamond will face questions from the Treasury
Select Committee after regulators in Britain and
the US slapped record punishments on
Barclays over its attempts to manipulate
the London interbank offered rate
(Libor) and its European equivalent,
Euribor.
The bank must pay £59.5m to the
Financial Services Authority and a fur-
ther $360m (£231m) to US regulators in
the first major victory for watchdogs over
attempts to rig Libor, which underpins tril-
lions of dollars of derivatives contracts world-
wide and is also widely used as a reference rate for
corporate lending.
Diamond said Barclays had lost sight
of its “culture and values” during
the affair, which occurred between
2005 and 2009, before he was pro-
moted to chief executive.
Barclays will also pay fines of
$200m to the US Commodity
Futures Trading Commission (CFTC)
and $160m to the US Department of
Justice. The bank attempted to
manipulate Libor submissions “some-
times on a daily basis”, according to
the CFTC.
Last night Andrew Tyrie,
chairman of the
Treasury select
committee, told City A.M.: “There has been lying, it is
shocking. The banks were acting in concert, so this is
not the end of the story.”
Chris Leslie, shadow financial secretary to the
Treasury, said: “We now need to know how many
employees were complicit in this process, how many
will be losing their jobs as a result, and whether this
needs to now go beyond the regulators and into a
criminal investigation.”
Regulators around the world, including
the EC and Japan’s Financial Services
Authority, are looking into the manipula-
tion of Libor. Several banks, including
Citigroup, HSBC, Royal Bank of Scotland
and UBS, have been approached but no
criminal charges have been filed.
Yesterday Barclays said Diamond, the chief
executive, as well as finance director Chris
Lucas, corporate and investment banking head
Rich Ricci and chief operating officer Jerry del
Missier said they would not take a bonus.
Diamond said the fines covered “past
actions” when its standards “fell well short”.
“When we identified those issues, we took
prompt action to fix them and co-operated
extensively and proactively with the authori-
ties... I am sorry that some people acted in a
manner not consistent with our culture and
values.”
Tracey McDermott, acting director of
enforcement and financial crime at the FSA,
said: “Barclays’ misconduct was serious,
widespread and extended over a number of
years. The integrity of benchmark ref-
erence rates such as Libor and
Euribor is of fundamental
importance to both UK
and international
financial markets.”
“if you knowhowto keep a secret I’ll bring you in on it […]”
“we’re going to push the cash downwards on the imm day […]”
“if you breathe a word of this I’mnot telling you anything else […]”
“I knowmy treasury’s firepower…which will push the cash
downwards […]”
“please keep it to yourself otherwise it won’t work”
To find out how, join us for our next MBA
Experience Day. Register at www.cassmba.com
Upgrade to Business Cass
www.cassmba.com
Date: 14 July 2012
Time: 10.15 – 15.30
Diamond faces more
questions over Libor
BUSINESS WITH PERSONALITY
LONDON2012
…days to go
WHY THERE’S MORE TO SOCIAL NETWORKING THAN FACEBOOK
See Page 22
HOW CONSUMER DEBT IS STIFLING THE UK RECOVERY
See Forum, 18
29
www.cityam.com FREE ISSUE 1,662 THURSDAY 28 JUNE 2012
BY PETER EDWARDS AND DAVID HELLIER
DIAMOND TO FACE MPS
AFTER LIBOR SCANDAL
Certified Distribution
30/04/12 till 27/05/12 is 132,076
“If it’s not too late low 1m and 3m would be
nice, but please feel free to say
“no”...Coffees will be coming your way
either way, just to say thank you for your
help in the past few weeks”.
7 April 2006: Email
(Trader C requested lowone-month and three-month
US dollar LIBOR submissions)
Trader C:
Submitter:
“Done…for you big boy”.
“If it comes in unchanged I’m a dead man”
26 October 2006: Email
External Trader:
Trader G:
“I’ll have a chat”.
(Barclays submission on that day for three month US
dollar LIBOR was half a basis point lower than the day
before, rather than being unchanged.)
“Dude. I owe you big time! Come over one day
after work and I’m opening a bottle of Bollinger”.
External Trader:
12 February 2007: Instant Messenger
Barclays trader E to various traders at panel banks:
“We’re all rooting for a high LIBOR tomorrow”
26 September 2007: Email
Barclays derivatives Trader:
(The submitter had been made aware by a senior
manager that he should not knowwhat the
derivatives traders’ positions were)
“I reckon you should be about four
to five ticks higher”.
Submitter: 8 October 2008:
Phone call
Submitter: “[Manager E]’s asked me to
put it [Barclays’ Libor submission]
lower than it was yesterday … to send
the message that we’re not in the s**t”.
FTSE 100 5,523.92 +76.96 DOW 12,627.01 +92.34 NASDAQ 2,875.32 +21.26 £/$ 1.56 unc £/€ 1.25 unc €/$ 1.25 unc
NEW FRIEND REQUEST
MORE: Page 2; Page 3

THE EVIDENCE THAT LED TO BARCLAYS’ DOOR
[email protected]
Follow me on Twitter: @allisterheath
IN BRIEF
Kerviel faces five-year sentence
nFormer Societe Generale trader
Jerome Kerviel should serve five years
in prison for his role in France's
biggest-ever rogue trading scandal, a
state prosecutor told a Paris court
yesterday. Kerviel is appealing a
three-year jail sentence handed down
in 2010, as well as an order to repay
SocGen €4.9bn (£3.9bn) lost by the
French bank when it closed the
trader's massive risky bets in 2008.
SEC charges Harbinger’s Falcone
nUS securities regulators yesterday
charged billionaire hedge fund
manager Philip Falcone and his firm
Harbinger Capital Partners with a raft
of illegal actions, including market
manipulation and misappropriating
client assets. The Securities and
Exchange Commission also yesterday
charged Peter Jenson, Harbinger’s
former chief operating officer, with
aiding and abetting the
misappropriations scheme. Harbinger
also settled an action alleging unlawful
trading by agreeing to pay a $428,975
fine, plus $857,950 in disgorgement
and $91,838 in prejudgment interest.
Santander UK rating under review
nCredit rating agency Moody's last
night placed its rating for Santander
UK under review for a possible
downgrade. Moody’s said its review
would focus on “the independence
and resilience of the UK bank’s
franchise and financial strength in the
event that the creditworthiness of the
parent is further affected and its
ratings lowered.”
Hague presses for audit on EU law
William Hague, the foreign secretary,
wants to launch a comprehensive audit of
the impact of European Union law on
Britain this summer, an exercise that
could fuel a Conservative drive to
repatriate powers from Brussels.
4,000 firms under tax investigation
More than 4,000 companies are under
investigation by the tax authorities, senior
officials and Revenue & Customs revealed
as they faced hours of hostile questioning
by MPs over corporate tax avoidance.
Jim Harra, director-general of business
tax at the Revenue, said the authorities
were investigation the tax affairs of “just
over 4,000” companies, although he was
unable to say how many of these were
large corporates.
Bo family in London property deals
The family of the disgraced Chinese
leader Bo Xilai bought luxury London
properties through a front company with
the help of a French architect.
They enlisted the great grandson of the
co-founder of retailer Marks & Spencer to
help sell one of the apartments.
Taxpayer foots bill as RBS stops
hospitality
RBS’ decision to cancel its corporate
hospitality at Wimbledon means that the
taxpayer is paying £260,000 to rent an
empty room.
Barclay brothers tighten hotels grip
The Barclay brothers scored a major
victory in their battle for control three top
London hotels after the Court of Appeal
confirmed their right to own the £660m
of debt held against the properties.
TNK-BP board to meet next month
BP has regained some control over the
running of Russian joint venture TNK-BP,
securing the agreement of its oligarch
partners to meet as a board for the first
time since December.
T-Mobile USA chief Philipp Humm
quits after failed merger
T-Mobile USA chief executive Philipp
Humm resigned on Wednesday, six
months after a planned merger of the
telecom group with AT&T fell apart.
Fiat to Boost Stake in chrysler
Italian auto maker Fiat SpA is expected to
increase its stake in Chrysler Group LLC to
61.9 per cent from 58.5 per cent as early
as next week by purchasing shares held
by a large trust fund that provides health
care for retired union workers.
Comcast Settles FCC Complaint
Comcast agreed to pay $800,000 to
settle a Federal Communications
Commission complaint that it didn't offer
stand-alone Internet service to consumers
as agreed when it acquired NBCUniversal.
WHAT THE OTHER PAPERS SAY THIS MORNING
BANK buyout vehicle NBNK will be
shut down after Lloyds finally agreed
an outline deal to sell 632 branches
to the Co-operative.
Lord Levene’s group said there
were no other assets to target just
hours after it updated the market on
a new offer for the Project Verde
business.
Lloyds yesterday said it had
reached “an understanding” with
the Co-op for the branches, which it
is being forced to offload under EU
state aid rules.
A source said Lloyds and the Co-op
are expected to move to “Heads of
Agreement” in the next few weeks.
Lloyds said the deal would be
based upon it transferring a smaller
balance sheet into the new business
than previously expected, so there
will be no funding gap in terms of
assets and liabilities.
The Co-op Bank will treble in size
and will have a seven per cent
market share. The Verde business has
about five million customers and is
expected to be sold for £1bn to
£1.5bn, below the initial estimate of
up to £2bn.
The Treasury said: “Although the
deal has not been finalised, we
warmly welcome this development
as a positive step in the process of
delivering the Lloyds divestment and
the benefits that will have for
competition and the mutuals sector.”
NBNK will close
as Co-op wins
Lloyds branches
2
NEWS
BY PETER EDWARDS
To contact the newsdesk email [email protected]
W
HAT preposterous emails.
What were these traders
thinking? That they would
get away with it? Barclays
and the entire banking industry have
been badly damaged by the Libor
manipulation scandal – and this time
it is entirely a crisis of their own
making. This is not like some
previous rounds of banker-bashing,
where lenders were wrongly blamed
for developments that were actually
caused by central banks’ cheap
money or regulators’ promotion of
sub-prime. No – this latest fiasco is all
too real and unprovoked. Barclays’
inability to ensure that some of its
staff behaved appropriately was a
major failing of its corporate controls.
People knowingly broke the rules.
Shame on them.
The Libor row will have many other
consequences, none of them positive.
EDITOR’S
LETTER
ALLISTER HEATH
Libor manipulation scandal is a disastrous own goal for City
THURSDAY 28 JUNE 2012
Many will ask why there were no
criminal prosecutions in this case, in
addition to the regulatory settlement.
Once again, many will believe there is
one law for rich rule-breakers – and
another law for poor criminals. This
will help fuel the feeling that “we are
not all in this together” and will trig-
ger demands for retribution, such as
higher taxes, which would be irrele-
vant to the problem at hand and dam-
age the economy.
The view that all of the world’s eco-
nomic problems came out of London
– AIG’s trades, JP Morgan’s recent
problems, now Libor – will continue
to gain ground, propagated by buck-
passing Americans. Needless to say,
the real problems that actually
caused the crisis – sub-prime lending,
the Fed’s madness, huge East-West
imbalances, intellectual errors,
implicit government guarantees –
were largely invented in America, and
AIG and Lehman were US firms. In no
way should the Libor scandal be
downplayed but it wasn’t a contribu-
tor to the recession. But it is true the
UK authorities have discredited them-
selves over Libor. It beggars belief that
this sort of behaviour was tolerated –
the setting of the interbank rates
appeared to have been conducted
under the sort of amateurish club-like
rules that were the norm in the early
1980s. It is truly astonishing.
pay. Such a “reform” would be disas-
trous – banks would become far riski-
er and less able to survive recessions.
I have previously defended banks or
bankers when they were unfairly
attacked. I will do so again when war-
ranted – but not today. This is a clear-
cut case of an industry shooting itself
in the foot. It is good that Barclays has
apologised and that top execs won’t
be taking bonuses. But some other
banks have undoubtedly also misbe-
haved. When they too settle in return
for massive fines, the industry will be
hit by further reputational damage.
Too many people turned a blind eye
to the wrongdoings of too many oth-
ers. The City’s reputation as a trust-
worthy marketplace will take years to
recover.
The fine will also be damaging to
Bob Diamond. He wasn’t the firm’s
boss when the scandal happened,
though he was a top executive. He’s
actually a superb CEO who has built
up a strong investment banking busi-
ness almost from scratch. But this
scandal could yet engulf him, espe-
cially when he is hauled in front of
the House of Commons Treasury
select committee. It also remains to
be seen what happens if the separate
interest rate swap misselling allega-
tions explode in the industry’s face.
The scandal will make it more diffi-
cult to have a sensible debate on levels
of regulatory capital. This will mean
the economy being further squeezed.
It will also make it almost impossible
for anybody to oppose the latest batch
of ridiculous anti-bonus rules from
Brussels, which aim to cap variable
compensation at 100 per cent of base
The new jobs website for London professionals
CITYAMCAREERS.com
Q
What is Libor?
A
The London interbank offered rate
(Libor) is set daily for 10 major
currencies and for 15 borrowing
periods, ranging from overnight
loans to 12 months. It is set by the
British Bankers’ Association, after
speaking to 16 banks and studying
their data on the cost and price of
lending to each other, and then
crunched by Thomson Reuters by
removing the outliers at the top and
bottom of the range. The process
begins at 7am and the rate is flashed
onto traders’ screens at 11.30am.
Q
What were the findings of the Financial
Services Authority?
A
It said Barclays set artificially low
rates during the financial crisis to
make it appear healthier after senior
management concerns over
“negative media comment”
It also took into account requests
from its own interest rate derivatives
traders. They gained from shifts in
Libor.
Barclays also sought to influence
Euribor submissions of other banks
which contributed to the rate-setting
process.
Q
Barclays traders shouted “just tell him to
keep it, to put it low” and similar
comments. What did it do wrong?
A
It broke so-called Chinese Walls,
which were built to avoid a
conflict of interest between the
traders and the “submitters” whose
job it was to report daily rates. The
two sides worked together for years
to make the rates submitted suit the
traders’ and the bank’s purposes.
Barclays also gave a misleading
impression of the cost of bank
borrowing and failed to reflect the
financial stress it faced during the
crisis. In one communication a
trader admitted that borrowing costs
are actually higher than shown by
Libor, saying: The “true cost of
money is anything from five to 15
basis points higher”. A basis point is
equal to 0.01 percentage point.
Q
So has Barclays been referred to the City
of London Police?
A
No, the trades are not covered by
the Financial Services and Markets
Act while the FSA said there was no
evidence of criminal conduct.
Q
Who else is looking at Libor?
A
Barclays will not be prosecuted in
the US but authorities there, as
well as Japan’s Financial Services
Authority and competition bodies in
Switzerland and Canada are looking
at other lenders.
Other major global banks, including
Citigroup, HSBC, Royal Bank of
Scotland and UBS, have been
approached by authorities
investigating how Libor is set. No
bank or trader has been criminally
charged in the Libor probes.
Q
How much does Libor
matter to the markets?
A
It was once dubbed “the most
important number in the world”
because it underpins $10 trillion in
loans to consumers and companies
and another $350 trillion in
derivatives. In the derivatives
market, Libor is used in the pricing
of the interest-rate swaps market,
where two parties swap floating- and
fixed-rate interest payments.
Q
Why does this matter to consumers?
A
Libor is used to help calculate the
interest rates on a range of
products, from mortgages, credit
cards and loans to complex
derivatives. During the crisis people
looked at the rate for a measure on
the confidence of the banking sector.
Q
Has Libor worked well?
A
Doubts about the rates arose at
the crisis peak, when Libor
remained relatively low despite the
fact that the interbank market it is
meant to represent had dried up,
with banks too scared to lend to each
other. Today, vast injections of
liquidity by central banks have also
distorted Libor.
Other rates, such as Eonia and Sonia,
are now also used to set the charges
on overnight unsecured lending in
euros and Sterling. But another
reason why Libor has lost its potency
is the rise of secured interbank
funding
Words by Peter Edwards
Q
A
and Libor: the vital number for every banker
GOOGLE last night unveiled its first
own-branded tablet, putting it in
direct battle with giants Apple,
Amazon and Microsoft.
The Nexus 7, developed with
Taiwanese firm Asus, is a seven-inch
tablet with a front-facing camera
built around Android software.
Google, which is already taking
advance orders for the device, will sell
an 8GB version from mid-July at $199
(£127), pitching it directly against
Amazon’s Kindle Fire.
At the same I/O developers’
conference, Google also showed off its
Google Glass – an eye-glass-computer
that can live-stream events, record,
and perform computing
tasks.
Google takes
on rivals with
Nexus 7 tablet
BY KATIE HOPE
G
E
T
T
Y
GLENCORE’S merger with Xstrata
was on the rocks yesterday as the
two firms scrambled to appease
irate investors over the share ratio
and pay packages linked to the deal.
Mining group Xstrata yesterday
rewrote its bonus rules for top staff
to try and soothe shareholder anger
at a £173m payday if the deal goes
through, following a day of crunch
talks between the boards, advisers
and investors.
Chief executive Mick Davis and 72
other staff will now get their bonus-
es entirely in shares, and only if
they find an extra $300m in cost
savings within two years.
But the firms are yet to improve
the offer of 2.8 new shares for every
Xstrata share, and Glencore last
night postponed a meeting sched-
BY MARION DAKERS
uled for next month to approve the
all-share merger on fears of a share-
holder revolt.
Qatar Investment Authority rattled
the firms late on Tuesday by break-
ing cover to demand 3.25 shares per
Xstrata share. Representatives from
the sovereign wealth fund held talks
in London yesterday aimed at keep-
ing the merger alive.
“Three cheers for the Qataris,” crowed one
Xstrata shareholder yesterday after the Qatar
Investment Authority made a surprise
demand for better terms for its stake in the
mining group.
The Lazard bankers advising the QIA, which
has quietly built up an 11 per cent holding in
Xstrata over recent months, will spend the
coming days shoring up their position at the
crux of this mining mega-merger.
Fighting for a better offer on behalf of the
ADVISERS GLENSTRATA MERGER
LAZARD
NICHOLAS SHOTT
SPIRO YOUAKIM
CHARLIE FOREMAN
SHARES in News Corp continued
to climb yesterday while the
company’s board members
gathered in New York to discuss
plans to separate its publishing
and entertainment divisions.
New Corp’s shares added 2.5 per
cent, after jumping more than
eight per cent on Tuesday when it
emerged that the conglomerate
could finally be about to respond
to investors’ calls to split off its
less profitable newspaper
business.
An official announcement is
expected today, almost exactly one
year after the phone-hacking
scandal at News Corp’s UK
newspapers hit the fan.
Rupert Murdoch is said to have
appointed Goldman Sachs, JP
Morgan and Centerview Partners
to guide his company through the
division process.
Centerview’s Blair Effron and JP
Morgan’s Jimmy Lee advised News
Corp on its 2007 acquisition of
Dow Jones.
It is speculated that Allen & Co
will advise on the deal after one of
its bankers, Stan Shuman, was
spotted having lunch on Tuesday
with News Corp’s chief operating
officer Chase Carey.
BY LAUREN DAVIDSON
BOTTOM
LINE
MARC SIDWELL
Mick Davis will take his retention bonus in shares to try and calm investor anger
THURSDAY 28 JUNE 2012
3
NEWS
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W
HAT are Xstrata’s
shareholders playing at?
The answer seems to be a
game called Ultimatum.
It’s a simple experiment that
shows why shareholders can’t be
relied on to accept that any deal
is better than none.
Here’s how Ultimatum works.
Player G is told he can have £100.
He has the option to give an
amount at his discretion to
player X. Player X then has the
option to accept or reject the
deal. If X says no, nobody gets
any money at all.
Now, the best plan for G seems
to be to give X £1 and keep the
rest, while X should accept any
deal above zero. It’s free money,
after all. But when Ultimatum is
played out experimentally, the
results show that people in X’s
position spike deals that don’t
seem fair, even if it costs them
money. G needs to offer around a
60:40 split to keep anything.
The team behind the Glencore-
Xstrata merger seem to have
forgotten about this basic
principle of human psychology.
First they offered current
Xstrata shareholders a
disappointing multiple of
Glencore shares. Then, with
shareholders’ reservations about
the deal already known, they
revealed an astonishingly
generous pay deal to retain
Xstrata staff without relating it
to their future performance.
Xstrata’s owners certainly have
reasons to feel shortchanged.
The momentum of the
shareholder spring and the
intricacies of the voting
requirements on 12 July have
made the original merger
proposals untenable, with small
minorities of shareholders able
to bring the whole thing down
over either the merger terms or
the pay deal. But it was a bad
move in the first place, and now
Ivan Glasenberg of Glencore and
Mick Davis of Xstrata find
themselves on the wrong end of
a shareholder ultimatum.
BONUSES MANIPULATED LOWER
Barclays bosses didn’t wait to be
told they were in trouble over
Libor manipulation,
announcing that Bob Diamond,
Chris Lucas, Jerry Del Missier
and Rich Ricci would all forgo
annual bonuses.
Despite the legendary scale of
bankers’ bonuses, this gesture
won’t make much of a dent in
the cost of the scandal. Based on
2011 deferred cash and share
bonuses, Diamond and Lucas
would forfeit £2.7m and £1.8m.
Adding in the bonuses of
Barclays’s highest-paid senior
executive officers as a proxy for
Ricci and Del Missier yields a
total for all four of £13.5m, still
less than five per cent of the
total payout.
It’s a hefty blow to them: 43-
69 per cent of their total
remuneration. But it’s hard to
feel sympathy. This scandal is
bad for the industry and the
City. Diamond wasn’t chief exec
at the time, but as head of
corporate and investment
banking he can hardly avoid the
pointing finger.
Marc Sidwell is City A.M.’s
managing editor.
News Corp climbs as board mulls split
Ultimatum is the name of the
game if you aren’t playing fair
Glencore International PLC
27Jun 21 Jun 22Jun 25Jun 26Jun
310
320
290
300
330
340 p
298.30
27Jun
Glencore and
Xstrata race to
repair merger
Qataris are three of Lazard’s most senior
bankers. Charlie Foreman, head of equity
capital markets advisory in London, will be
facing his former client across the board-
room table. During his seven years at
Deutsche Bank, he was one of Xstrata’s reg-
ular advisers. He has proven his credentials
under pressure by working with the UK gov-
ernment as it tried to stabilise the teetering
banking sector in 2008.
Head of UK investment banking Nicholas
Shott also has public sector experience –
the media stalwart wrote a report for culture
secretary Jeremy Hunt on the local television
market in 2010.
Joining them is Spiro Youakim, global head of
metals and mining. He has a formidable track
record in the sector, with Anglo American and
Arcelor Mittal among his past clients.
Google’s
Hugo Barra
shows off
the Nexus 7
GERMAN Chancellor Angela Merkel
joined French President Francois
Hollande for dinner in Paris last
night, in a bid to patch up relations
ahead of today’s crunch EU summit
over the future of the Eurozone.
Merkel has appeared at loggerheads
with some Eurozone leaders, includ-
ing Hollande, who are more keen to
introduce debt sharing measures to
mitigate the growing crisis.
German MPs from Merkel’s coali-
tion had been assured this week
that their leader would prevent
the formation of eurobonds – one
form of debt sharing – for as long
as she lives.
But last night Merkel and
Hollande put on a show of
friendship for the cam-
eras. “I say we need
more Europe and I
think we are in agree-
ment there,” Merkel
said.
“We need a Europe
that functions effec-
tively, markets are
looking for this, and
a Europe where
Merkel acts out
charm offensive
with Hollande
BY JULIAN HARRIS
countries help each other.”
Hollande added to the cordial tone
by highlighting that both he and
Merkel are seeking deeper monetary
union in Europe.
Nonetheless, earlier in the day the
German chancellor had again
seemed stubborn over the proposals,
when addressing parliament in
Berlin.
“I fear that at the summit we will
talk too much about all these ideas
for joint liability and too little about
improved controls and structur-
al measures,” Merkel said,
insisting that she will not
lumber German taxpayers
with an even greater burden
of responsibility for the
euro’s troubled mem-
ber states.
But EU economic
and monetary affairs
commissioner Olli
Rehn yesterday said
that short-term res-
cue measures would
be necessary.
IN BRIEF
Monte dei Paschi details aid plan
n Banca Monte dei Paschi di Siena laid
out a painful restructuring plan yesterday,
a day after the world’s oldest bank was
forced to take state aid, and said it would
be looking to new investors in seeking to
raise up to €1bn in new equity capital over
the next five years. Under the plan the
Italian lender said it aims to slash its loan
book, close 400 branches and cut 4,600
jobs, and also estimated it would sell
€1.5bn of new bonds to the Italian
treasury, against a maximum of €2bn
approved by the government on Tuesday.
Second Greek minister resigns
n The chairman of Greece's privatisation
agency, Ioannis Koukiadis, resigned for
“strictly personal” reasons, a statement
by the agency said yesterday. Ioannis
Koukiadis, a professor of law at
Thessaloniki's Aristotelio University, had
been appointed to head the Hellenic
Republic Asset Development Fund in July
2011.
EU regulators clear Bankia state aid
nSpanish lender Bankia gained
temporary approval yesterday for its state
bailout, but Spanish authorities will need
to present a restructuring plan within six
months to offset this support, the
European Commission said. The EU
executive said the state aid included a
conversion of existing state-owned
preference shares of €4.465bn into
equity and a liquidity guarantee
amounting to €19bn in favour of the
Spanish BFA group and its Bankia unit,
but does not cover a request for a further
€19bn capital injection.
Angela Merkel will resist
more debt sharing moves
ITALY’S six-month borrowing costs
neared three per cent at auction
yesterday, their highest since
December, piling pressure on the
government as it pushes for steps
to ease market tensions at an EU
summit starting today.
Italy sold €9bn of six-month bills
at an average 2.96 per cent yield, up
from 2.10 per cent it paid only a
month ago. The Treasury faces a
tougher market test today when it
offers up to €5.5bn in five- and 10-
year debt.
On Tuesday, Spain paid 3.24 per
cent to sell six-month bills. Madrid
is seen at risk of having to ask for
Italian debt costs keep rising
ahead of crucial EU summit
BY CITY A.M. REPORTER
more aid after formally requesting
a European rescue for its banks this
week. But doubts are also growing
on Italy’s ability to keep funding its
€1.95 trillion debt, which makes it
the world’s fourth-largest sovereign
debtor.
Yesterday’s sale was covered 1.6
times, in line with a month ago,
with demand helped by €9.9bn of
maturing bills. Domestic appetite
has so far allowed the Treasury to
complete 56 per cent of its €445bn
annual funding plan.
With its benchmark 10-year
yields above six per cent, Italy is
calling for the Eurozone’s rescue
funds to be used to ease pressure
on its bonds.
THURSDAY 28 JUNE 2012
4
EUROZONE CRISIS
cityam.com
10
The history of Europes 10-year bond yields
30
28
26
24
22
20
18
16
14
12
8
6
4
2
0
Mar
2012
May
2011
Jul
2010
Sep
2009
Nov
2008
Jan
2008
Mar
2007
May
2006
Jul
2005
Sep
2004
Nov
2003
Jan
2003
Mar
2002
May
2001
Jul
2000
Sep
1999
Nov
1998
Jan
1998
Mar
1997
May
1995
Jul
1995
Sep
1994
Nov
1993
Jan
1993
%
L
o
n
g
-
t
e
r
m
in
t
e
r
e
s
t
r
a
t
e
f
o
r
c
o
n
v
e
r
g
e
n
c
e
p
u
r
p
o
s
e
s
Euro introduced
Source: World Economics
Lehman collapse
Greek bailout
Irish bailout
Portuguese bailout
Greece Portugal Ireland Italy
Spain France UK Germany
G
E
T
T
Y
THE EUROZONE is set for years of stag-
nation and slow growth, according to
Ernst & Young research published this
morning.
Even the best case scenario is “mild
recession in 2012, depicted by the
Eurozone shrinking 0.6 per cent, with
a weak recovery of 0.4 per cent in
2013,” according to the latest forecast
from the accountancy firm.
By 2014, it expects Eurozone growth
of 1.7 per cent, with two per cent
growth in 2015 and 2016.
Its forecast is based on the assump-
tion that Greece will proceed with
austerity, while Spain and Italy will
avoid further significant financial
crises.
The forecast also warns that the
high levels of youth unemployment
in Spain and Greece could threaten
the stability of their societies.
Consumer spending is predicted to
stagnate or fall in much of the
Eurozone in 2012, though France and
Germany will achieve small increases
of 0.2 per cent and 0.9 per cent,
according to the report.
By 2013 consumer spending is
Slow growth to
haunt Eurozone
for next 2 years
BY BEN SOUTHWOOD
expected to regain momentum in the
core, but fall further in the periphery,
only bottoming out by 2014, it pre-
dicts.
One way in which Ernst & Young
thinks it may be possible to achieve
real growth is through a trade strategy
focused on emerging markets –
though recent data suggests the possi-
bility of a Chinese slowdown.
Marie Diron, senior economic advis-
er at Ernst & Young, predicts that “a
failure to save Greece would under-
mine market confidence, lead to fur-
ther capital flight from Spain, Italy
and Portugal, and a collapse of the sin-
gle currency, with devastating eco-
nomic and social impacts.”
Mark Otty, Ernst & Young’s manag-
ing partner for Europe, contends that,
“any kind of recovery is dependent on
Eurozone political leaders seizing the
initiative over the next few weeks –
they cannot ‘kick the can down the
road’.”
Meanwhile, Ernst & Young’s Thus
Diron argues that “the time for debate
is over -- the EU needs action.”
He says that sustained stability will
require a “deep and prolonged restruc-
turing, curtailing the availability of
credit for some time.”
Economic data offers a glimmer
of hope for Germany and Italy
ECONOMIC data published yesterday
offered a glimmer of hope for the
embattled Eurozone countries.
Germany, Europe’s largest
economy, saw its consumer price
inflation ease by more than
expected reflecting a sharp drop in
oil prices, while Italy said confidence
among its businesses had improved
unexpectedly in June.
The only downbeat note came
from Spain which suffered its 23rd
consecutive month of falling retail
sales, according to official data.
BY KATIE HOPE
Germany’s consumer price
inflation eased to 1.7 per cent year-
on-year in June, from 1.9 per cent in
May, according to preliminary data
released yesterday by the Federal
Statistics Office.
The easing in inflation should give
a boost to consumers, whose
spending is expected to be the
German economy’s saving grace this
year as the crisis starts to hit home.
Analysts said the reduction would
also give the European Central Bank
more scope to loosen policy as the
Eurozone debt crisis worsens.
Meanwhile, in Italy the seasonally
adjusted confidence index for the
manufacturing sector improved to
88.9 in June from 86.6 in May, data
from the statistical office Istat
showed yesterday. The composite
business climate index was almost
steady at 75.4 during the month
compared to 75.5 in May.
In Spain, however the mood
remained downbeat with retail sales
down 4.9 per cent year-on-year in May
on a seasonally adjusted basis, data
from the National Statistics Institute
showed.
This follows a revised fall of 10 per
cent in April.
BOTH Spain and Cyprus had their
bailout requests formally accepted
by Eurozone finance ministers
yesterday.
In a statement, the Eurogroup
estimated that Spain, which
officially asked for access to the
€100bn (£80bn) offered by Brussels
to shore up its debt-laden banks
on Monday, would need between
€51bn and €62bn. It said it would
provide an additional “safety
margin” on top of this, but
insisted that the final amount
would be “well within” the €100bn
Europe’s finance ministers detail
rescue plan for Spain and Cyprus
BY KATIE HOPE
limit originally set.
The Eurogroup emphasised that
Spain would be “fully liable” for
the assistance provided to its
banks, and said the country would
be expected to honor its reform
and deficit target commitments.
In a separate statement, the
Eurogroup accepted Cyprus’s aid
request which is expected to total
€10bn. It said it would receive the
cash, once an assesment of its
needs was complete.
Cyprus will have to commit to
budget cuts and reforms, as well as
strengthen its financial sector in
exchange for the aid.
THURSDAY 28 JUNE 2012
5
EUROZONE CRISIS
cityam.com
Eurogroup head Jean-Claude Juncker said Spain would be “fully liable” for its banks’ aid

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© UBS 2012. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.
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R
E
U
T
E
R
S
THE COALITION is facing a bloody
battle with backbench Conservative
MPs and the Labour party following
yesterday’s publication of plans to
reform the House of Lords.
Lib Dem leader Nick Clegg is the
driving force behind the bill, which
would replace the current mix of 826
hereditary and life peers with a
chamber of around 450 members,
most of whom would be elected.
But Conservative rebels said the
reforms would threaten the superior-
ity of the lower chamber.
Ministerial aide Conor Burns said
he is willing to resign his post in
order to vote against the government
on the issue.
“If I lose my job for something that
was a mainstream view within the
conservative party within the last
parliament, which serving cabinet
ministers held as their view, so
be it,” he said.
Tory MP Eleanor Laing
echoed his view: “There is no
reasonable question to
which 450 extra politicians
is the answer.”
Coalition faces
rebellion over
Lords reform
BY JAMES WATERSON
Labour said it supports the bill but
will join Tory rebels to vote against a
motion that would accelerate its pas-
sage through parliament. The party
claims the government has failed to
provide enough time to debate the
legislation and may seek a national
referendum on the issue.
However, Prime Minister David
Cameron called Labour’s position
“hopeless” and said he was confident
that the bill would progress with the
backing of cross-party support.
“We have been discussing this issue
for 100 years, and it
really is time to
make progress.
However, if those
who support Lords
reform do not get
out there and back
it, it will not hap-
pen.”
The government
aims to have
the bill on
the statute
book by early
2013, ahead
of the first
House of
Lords elec-
tion in 2015.
THElast dayof
theQueen's
visit toNorthern
Irelandwas
markedbya
historic
handshake.
Her Majestyand
former IRA
commander
Martin
McGuinness
shookhandsfor
thefirst time.
Themeeting
came33years
after the
Queen’scousin
Louis
Mountbatten
diedinanIRA
bombblast.
QUEEN AND MCGUINNESS SHAKE HANDS
Nick Clegg said MPs should
“get on with this”
THURSDAY 28 JUNE 2012
7
NEWS
cityam.com
Wall Street initiates coverage of
Facebook with low expectations
FACEBOOK was greeted half-hearted-
ly yesterday when Wall Street ana-
lysts initiated coverage of the
overhyped stock 40 days after its
Nasdaq debut.
Morgan Stanley, the lead
investment bank on Facebook’s
flotation, rated the social network’s
stock as “overweight”, even though
the shares are currently trading at
13 per cent below their IPO price.
The bank, whose investment arm
guided Facebook to its $38 per
BY LAUREN DAVIDSON
share float price, gave the stock a
12-month price target of $38,
implying little hope that the shares
have much to gain.
“Our base case scenario assumes
that Facebook’s revenue growth
moderates as it takes a measured
approach to increasing mobile ad
load while engagement increasingly
shifts to mobile devices,” Morgan
Stanley wrote in a note.
JP Morgan, the second bank on
the deal, also initiated coverage
with an “overweight rating”,
although it held more hope for
growth than Morgan Stanley, giving
Facebook a price target of $45.
Goldman Sachs, however,
recommended that investors buy
Facebook shares, as did a handful of
other analysts including Nomura,
Topeka Capital and Needham & Co.
The naysayers included BMO
Capital and Sanford Bernstein,
which both rated the stock as
“underperform” and gave it a price
target of $25.
Facebook’s shares, which had
climbed over the past few days, sank
2.63 per cent to $32.23 yesterday.
Q
Why is reform of the House of Lords so
important to Nick Clegg?
A
The Lib Dem leader is keen to
show his party has benefited from
the coalition government.
Democratising the upper chamber is
a totemic issue for Lib Dems and it
could be Clegg’s lasting legacy.
Q
What could the make-up of the new
House of Lords look like?
A
There would be 450 members, of
which 360 will be elected. A non-
party committee would appoint the
remaining 90 peers and all members
would serve a single 15-year term. In
addition, 12 Church of England
bishops would retain their positions.
Q
How would House of
Lords elections work?
A
Votes would occur on the same
day as elections to the Commons.
90 peers would be elected at each
election cycle using the party list
system – a form of proportional
representation. The Lords would use
the same regional constituencies
used by the European Parliament.
Q
Does an elected upper house threaten the
supremacy of the House of Commons?
A
The Bill says it would not alter the
current relationship between the
Houses. But many MPs fear a new
class of politician with a 15-year
mandate would create conflict.
Q
A
and
What next for the House of Lords?
G
E
T
T
Y
8
NEWS
cityam.com
Relatively upbeat pre-close statement given recently weakening macro
environment, re-iterating guidance for full year growth in revenue and earnings
per share of over 10 per cent with good revenues and cost control offset-
ting some minor increase in loan loss provisions.
ANALYST VIEWS


Standard Chartered remains a very strong bank with good liquidity,
strong capital ratios, no exposure to European sovereign issuers and no material
structured credit book. Were we to see another macro-driven, risk-off
period in markets, the bank would be likely to outperform.

The company has confirmed double digit income growth is expected in
a number of regions, including Europe, the Americas and, crucially, China. The
company’s reputation for delivering consistent growth has resulted in a
share price which for some investors is full enough.

WHAT DO YOU THINK OF
STANCHART’S UPDATE?
By Marion Dakers
CORMAC LEECH LIBERUM CAPITAL

GARETH HUNT CANACCORD GENUITY

RICHARD HUNTER HARGREAVES LANSDOWN
STANDARD Chartered said yesterday
it expects pre-tax profit in the first
half of this year to grow by less than
10 per cent, slowing from previous
years as growth in Asia eases and
local currencies weaken against the
dollar.
Income growth in January to June
was also expected to slow to below 10
per cent, it said in a filing to the
Hong Kong bourse.
“Local currency weakness is expect-
ed to drag group income by over two
per cent, with the Indian rupee being
the major contributor,” Standard
Chartered said in the statement.
Standard Chartered conducts most
of its business in local currencies but
reports its earnings in dollars. As
such, weakening Asian currencies
would mean it needed more Indian
rupees or Singapore dollars to get the
same amount of US currency.
Staff numbers are largely flat at the
Growth slow as
StanChart is hit
by weak dollar
BY HARRY BANKS end of May from the end of 2011,
Standard Chartered said. The bank
employed about 85,000 people at the
end of last year, it said in March.
The filing did not provide any exact
numbers as Standard Chartered only
issues half-year and full-year earnings
reports. Profits in India, once the
bank’s biggest market, continued to
be weak, while growth in the Asian
financial hubs of Singapore and Hong
Kong also slowed.
Standard Chartered PLC
27Jun 21 Jun 22Jun 25Jun 26Jun
1,380
1,400
1,340
1,360
1,420
1,440 p
1,371.50
27Jun
PRUDENTIAL chief executive Tidjane Thiam will become chairman of the Association of
British Insurers next month, taking over from Legal & General boss Tim Breedon. Thiam,
who has led Prudential for almost three years, yesterday said the industry needs to
support its customers “in a time of unprecedented austerity”.
INSURANCE BODY HIRES MAN FROM THE PRU
MORE businesses must support head
teachers to develop staff leadership
skills if they are to produce the
workforce of the future, the business
charity Business in the Community
told a conference hosted by Goldman
Sachs yesterday.
Goldman Sachs International co-CEO
Michael Sherwood said his bank was
pleased to offer its support as a nation-
al champion of the charity’s Business
Class initiative, which brings business
and schools together.
“We recognise the importance of
developing a skills system able to
respond to the needs of individuals,
communities and a dynamic – and
changing – economy,” he said. “I know
I speak on behalf of everyone involved
when I say that we take our
responsibility for making
‘Business Class’ a resound-
ing – and ongoing – suc-
cess very seriously.”
Schools need
business help,
says charity
BY DAVID HELLIER
PLANS to make investment platforms
more transparent are set to cost
investment firms millions, though
companies said yesterday they are pre-
pared for the upheaval.
The Financial Services Authority
(FSA) wants to ban providers from pay-
ing to have their products included
on platforms, meaning investors
would pay fees directly.
The rules would mean the end of
cash rebates for investors, but the FSA
said they will encourage competition.
“Investors are increasingly using
platforms as a convenient ‘one stop
shop’ for their investments, but at the
moment many investors have no idea
what they are paying for this service,”
said FSA director of conduct policy
Sheila Nicoll. The watchdog has
Fund platforms
hit by FSA plan
to ban rebates
BY MARION DAKERS
opened a consultation and hopes to
bring in new rules at the end of 2013.
Deloitte said in a report commis-
sioned by the FSA that each firm in
the £229bn platform industry will
need to spend between £0.2m and
£20m to implement the changes.
But while firms had lobbied the FSA
to soften its plan to ban cash rebates,
the industry claimed to be ready for
the crackdown yesterday.
Hargreaves Lansdown, operator of
one of the biggest platforms, said it
was already making plans for a “no
payments to platforms outcome”.
Charlotte Hill, head of financial reg-
ulation and compliance at law firm
Stephenson Harwood, added: “There
was a feeling in the market that this
was coming. Rebates will come
through additional investments
rather than cash.”
Commerzbank exits shipping
finance and property lending
COMMERZBANK, Germany’s
second largest lender, is to pull
out of shipping finance and
commercial property lending as
stricter liquidity requirements
force it to cut back on capital
intensive activities, it has
revealed.
The bank, which has twice been
bailed out by German taxpayers,
said the decision marks the first
step in a “rigorous” review of all
its businesses, with more details
to be announced later this year.
Shipping and property were
two of the worst hit sectors during
the crisis, forcing Commerzbank
to scale back the size of its
lending and reduce its exposure.
The move marks a U-turn on
decisions outlined by the bank in
March to merge the two sectors
into a joint real-estate and ship-
BY KASMIRA JEFFORD finance division.
Commerzbank’s Eurohypo was
one of the biggest commercial
property lenders in the years up to
the financial crisis but the unit’s
European government bond
holdings have since saddled
Commerzbank with losses amid
the sovereign-debt crisis.
The bank had initially been
ordered by the European
Commission to sell Eurohypo by
2014 as a pre-condition for
approving an €18bn bailout in the
financial crisis. But volatile market
conditions and a crisis in real
estate financing left
Commerzbank unable to find a
buyer for the loss-making lender.
The agreement was revised in
March to wind down Eurohypo
instead while retaining a smaller
real estate lending business, which
would have €5bn a year to lend in
four countries; Germany, the UK,
Poland and France.
•Separately, Commerzbank said
yesterday it would sell 128.3m of
new shares in order to pay staff
bonuses worth more than €150m.
Around 60 per cent of the
employees have decided they
would not keep the shares but
would instead sell them
immediately to institutional
investors, with Commerzbank
itself and Deutsche Bank AG
acting as bookrunners.
VIRGIN Money made a £44.16m
underlying pre-tax profit in the
year leading up to its purchase of
Northern Rock – while the bailed-
out building society lost £110.9m.
Virgin, which spent £747m
buying Northern Rock from the
government in November, said
profits rose 41 per cent in 2011,
with its credit card venture with
Bank of America “a significant
driver of profitability”.
The firm’s mortgage portfolio
fell slightly to £17.9m as it
restricted lending ahead of the
Northern Rock acquisition.
BY MARION DAKERS
Meanwhile, Newcastle-based
Northern Rock increased mortgage
lending almost 17 per cent to
£4.9bn, as its losses narrowed from
£188.3m in 2010 to £110.9m.
Excluding asset sales and
restructuring costs, the firm
announced statutory losses of
£18m.
Virgin said that since the merger
and subsequent advertising
campaign, the enlarged group has
attracted 400,000 new customers,
taking its total beyond 4m. “This
acquisition represents an
important and exciting moment in
the history of both companies,”
Virgin said in a statement.
Hargreaves Lansdown, led by Ian Gorham, said it is preparing for the overhaul
COMMERZBANK AG
27Jun 21 Jun 22Jun 25Jun 26Jun
1.42
1.44
1.38
1.40
1.36
1.34
1.46
1.48 €
1.36
27Jun
Goldman’s Sherwood
wants to help teachers
Virgin Money profits rose ahead
of its Northern Rock acquisition
FINANCIAL adviser and
broker FinnCap said yesterday
it had increased market share
in the past 12 months, but
saw profits before tax (PBT)
fall from last year.
The firm’s PBT, excluding a
share-based payment charge,
fell to £0.2m from £1.7m in
2011, on revenues of £9.1m.
FinnCap also said it is now
the fifth largest adviser by
number of clients on the LSE,
and has the second largest
number of AIM-listed firms.
In total it advises 98 clients.
FinnCap ups
market share
BY CITY A.M. REPORTER
THURSDAY 28 JUNE 2012
9
NEWS
cityam.com


Keeping the Lights On – The Role
of Gas in the Energy Mix
Thursday 12 July 2012 | 8.00am - 10.00am
The Royal Bank of Scotland, 280 Bishopsgate, London, EC2M 4RB
The UK's energy strategy is under intense pressure to adapt to
current circumstances to renew and replace infrastructure in an
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ƚĂƌŐĞƚƐ͘ MĂƐƐŝǀĞ ŝŶǀĞƐƚŵĞŶƚ ŝƐ ŶĞĞĚĞĚ Ăƚ Ă ƟŵĞ ǁŚĞŶ ŵĂŶLJ
ŝŶǀĞƐƚŽƌƐ ĂƌĞ ƐŽƌĞůLJ ĐŽŶƐƚƌĂŝŶĞĚ ĮŶĂŶĐŝĂůůLJ ďĞĐĂƵƐĞ ŽĨ ƚŚĞ
economic downturn.
uĂǀŝĚ CŽdž͕ ŵĂŶĂŐŝŶŐ ĚŝƌĞĐƚŽƌ ŽĨ Η1ŚĞ CĂƐ lŽƌƵŵΗ ĂŶĚ ĚŝƌĞĐƚŽƌ ŽĨ
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Q
What’s an investment
platform?
A
It’s a “one stop shop” for an
individual to hold their pension,
shares and other investments in
one place. Customers can invest through
advised or execution-only platforms.
Q
Sounds straightforward enough.
What’s the FSA’s problem?
A
The watchdog wants platforms to
stop taking money from product
providers, in exchange for offering
their particular ISAs, funds or other
products. The FSA would rather
investors pay directly for services they
want, rather than
indirectly through
less-than-
transparent
commission deals
that can put the
customer’s interests at
odds with the provider.
Q
Is this bad news for platform
owners?
A
They certainly put on a brave face
yesterday. The likes of Hargreaves
Lansdown said it only makes small
sums of money from this rebate
mechanism. But Deloitte thinks fund
supermarkets make 75 per cent of
revenues from such arrangements.
Q
A
and
Quick guide to the platform crackdown
Niall Ferguson gives
London a rough
ride
Niall Ferguson warns on
London’s possible fall
Got A Story? Email
[email protected]
10
cityam.com
cityam.com/the-capitalist
THECAPITALIST
A further piece of good news for
team Tchenguiz, after the family’s
legal eagles at Stephenson Harwood
won litigation team of the year at this
week’s The Lawyer Awards. Just days
after the Serious Fraud Office dropped
its investigation into Vincent Tchenguiz,
the property mogul’s lawyers picked up
the industry gong for its part in ending
the probe, and ongoing work linked to
the Icelandic bank Kaupthing.
Litigation partner Sean Jeffrey, who led
the lawyers fighting the SFO, picked up
the award on the night on behalf of the
team, which also includes senior
associate Richard Garcia, lead lawyer on
the Kaupthing claims.
Other big winners on the night included
Robert Jay QC, the fastidious face of the
Leveson Inquiry, who took home the
barrister of the year prize.
THURSDAY 28 JUNE 2012
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T
he historian who wrote a book
entitled The Ascent of Money
yesterday warned that London
faces a fairly rapid descent from
its platform as the world’s leading
financial centre unless it quickly
improves its infrastructure.
Niall Ferguson, the well-known
history professor at Harvard
University, said that infra-
structure improvements,
such as public transport,
and in particular airport
expansion, needed to hap-
pen within the next 10
years if London was to com-
pete with China’s flourish-
ing economy.
He was speaking at an
event with a panel including
Jeremy Quin, managing director at
Deutsche Bank, Mark Field, the MP for
Cities of London & Westminster, and
Witold Balaban, the global head of
financial institutions at Latham &
Watkins and others at the Corinthia
Hotel.
“China, especially Hong
Kong, is as good as
London – if not better,”
Ferguson said. “I
dread arriving at
Heathrow but I do
look forward to arriv-
ing in Beijing.”
Although China has
seen a slowdown in its
economy recently,
Ferguson expects this
only to last a short time.
He said that Manhattan,
once the world’s financial
centre, was now more
or less a tourist
attraction.
By staging the
Olympics and
the Queen’s
100th anniver-
sary, London has become the city to
visit in 2012.
During the Games about 300,000
people will be expected to travel to the
Olympic Park every day during peak
times.
London businesses and financial serv-
ices will be challenged by the Games,
which will show how well or badly
London’s infrastructure is prepared for
further challenges, Ferguson believes.
Ferguson quipped that the decision
over which city will become the world’s
new financial centre will depend on
just one thing – the fashion taste of the
world’s chief executives’ women.
The event was organised by Latham
& Watkins, one of the leading global
law companies.
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BY KASMIRA JEFFORD
Thames at Thurrock in Essex.
“The purchase of this large site
adjoining our existing ownerships re-
enforces our confidence in the area
and demonstrates our continued com-
mitment to the wider Canada Water
regeneration and Rotherhithe”, Mike
Rayner, development director at
British Land said.
David Dutton, a DMGT director
responsible for its property portfolio,
said it was “changes in technology”
that had led it to switch to a new
plant. The company announced in
February last year that it would invest
up to £50m in the new site over a four
year period.
Balfour Beatty wins £175m deal
for science park in Hong Kong
CONSTRUCTION giant Balfour
Beatty yesterday said that its Hong
Kong-based business, Gammon
Construction, has been awarded a
contract to build a major science
park.
The HK$2.18bn (£175m) contract,
will see the development of an
area of 105,000 square metres in
which the latest green construction
technologies and sustainable
building design will be on show.
Work on the Hong Kong project
will begin later this month and is
BY JOHN DUNNE
due for completion by December
2013.
The project will aim to achieve
the Leadership in Energy and
Environmental Design (LEED)
platinum standard – a green rating
system that is recognised globally,
and presently the highest level of
certification available. There are
only three other buildings in Hong
Kong which are certified platinum
standard.
Chief executive Ian Tyler said:
“We are delighted that Gammon
has been awarded this high-profile
contract. Along with other state-of-
the-art infrastructure projects that
Gammon has undertaken in Hong
Kong, including the Tamar Complex
which we completed recently for
the Hong Kong government, the
award of the new science park at
Pak Shek Kok demonstrates our
credentials in green building.
“Sustainability is at the heart of
Balfour Beatty’s operations and we
continue to grow as the choice
provider of innovative and
sustainable infrastructure
solutions, helping to reduce
customers’ emissions and energy
costs around the world.”
C&C UPBEAT DESPITE WEAK CIDER SALES
British Land Company PLC
27Jun 21 Jun 22Jun 25Jun 26Jun
502.5
505.0
497.5
500.0
495.0
507.5
510.0 p
508.50
27Jun
CREST NICHOLSON, the
housebuilder, said it saw the
number of sale completions surge
by 33 per cent in the first half of
the year as the housing market
showed signs of recovery.
The company, which operates in
the south east, south west and the
midlands, returned to a profit of
£16m in the six months to 30 April,
up from a £21.5m loss in the same
period last year.
Stephen Stone, chief executive,
said despite tough economic times,
the group had experienced good
customer demand “for high quality
homes” in London and the south.
Crest Nicholson
home sales up
BY KASMIRA JEFFORD
PROPERTY TYCOON Gerald Ronson’s
investment club has been given the
go-ahead to redevelop a 12-storey
Marylebone office building into a
residential scheme.
Ronson Capital Partners (RCP), an
invitation-only fund for wealthy
investors set up by Ronson in 2009,
intends to redevelop International
House on Chiltern Street, which
currently offers 80,000 square feet of
office space, into a residential block.
Westminster Council said it has
granted planning permission for the
scheme, paving the way for the RCP’s
debut project, acquired last year for
£63m from Lloyds Banking group.
Ronson wins
plan approval
BY KASMIRA JEFFORD
THURSDAY 28 JUNE 2012
12
NEWS
cityam.com
DMGT sells its
print works site
to British Land
G
E
T
T
Y
IRISH cider-maker
C&C said yesterday it
expects operating
profit to increase by
between one and six
per cent this year
after a strong first
quarter across its
other portfolios
helped offset weak
cider sales. C&C,
which sells cider
under the Magners,
Bulmers and
Gaymers brands,
said volumes rose
5.4 per cent in
Ireland and 21.6 per
cent in the UK in the
three months to 31
May. It expects full-
year operating profit
of €112-€118m.
THE DAILY MAIL & General Trust
(DMGT) said yesterday it has sold its
printing works site at London’s
Canada Water to British Land for an
undisclosed sum.
Analysts estimate the Daily Mail
owner to have pocketed around £12m
to £14m for the site.
The deal will see British Land
acquire the newspaper group’s free-
hold and leasehold interest in the
14.5-acre site, called Harmsworth
Quays, adding to its existing invest-
ment in the area.
The company has not yet deter-
mined plans for the site, but is weigh-
ing up various options.
In January, British Land announced
plans for a £34m refurbishment and
100,000 square feet extension at
Surrey Quays shopping centre that it
jointly owns with Tesco.
This includes improvements to pub-
lic spaces and transport connections.
British Land will not take control of
Harmsworth Quays until late 2013 fol-
lowing DMGT’s relocation to a new
development further along the
LAW firm Baker & McKenzie
yesterday promoted 63 lawyers to
its global partnership, including
three members of its London
office.
Banking and finance lawyer
Lynn Rosell Rowley and corporate
lawyers Emily Carlisle (pictured
right) and Nick O'Donnell will
become partners at the firm from
1 July, boosting the total number
of equity partners at its New
Bridge Street offices to 86.
Forty-four per cent of the
promotions were made in the
firm’s Asia Pacific practices,
where 28 partners were elected,
with 20 across its Europe, Middle
East and Africa offices, nine in
North America and six in Latin
America.
Bakers’ global M&A group saw
most promotions with 12 lawyers
making partner, followed by tax,
with nine, and dispute resolution,
with eight.
Carlisle, who is currently on
maternity leave, and Rosell Rowley
are two of the firm’s 21 new
female partners.
TOTAL UK M&A deal value
increased by 22 per cent during
the last quarter, according to
research released yesterday.
Data from the Ernst & Young
M&A Tracker also suggests that
there were 101 UK M&A
transactions completed between
April and June this year – a 13
per cent increase on the first
quarter.
However deal volumes are still
depressed in relative terms with
the UK registering its second
lowest number of M&A
transactions since the start of
2010, according to the figures
compiled by Cass Business
School.
“The market uncertainty
created by the Eurozone crisis
has led to many, who may have
been considering M&A, to adopt
a ‘wait and see’ approach,” said
Jon Hughes, UK & Ireland
transaction advisory services
leader at Ernst & Young.
“Buyers and sellers alike are
being far more cautious and for
some they are of the view that if
they don’t have to sell they will
sit on the asset until the
landscape across Europe has
stabilised.”
“On the positive side, there
was an increase in average deal
value quarter on quarter, with
deal size reaching $285m
(£183m), so while the quantity of
deals being done is being
restrained by market
uncertainty, buyers appear
willing to push through larger
deals.”
International M&A deal
volume and the value of these
announced deals rose by 10 per
cent and 18 per cent respectively
in the second quarter.
But the Eurozone M&A
market declined again as bid
volume fell 17 per cent. This is
largely a result of a drop in
domestic activity as the level of
cross-border Eurozone activity
increased significantly.
BY JAMES WATERSON
WHAT DO YOU THINK OF THE
DECISION TO DROP THE FUEL TAX?
Interviews by Lisa Moravec and Polly Young
“Obviously it is good for drivers but the ques-
tion is where is the money coming from. It
would help people to have confidence in the government
if it said more about why it has made decisions.”
These views are those of the individuals above andnot necessarily those of their company
MICHAEL
PERISSINOTTO
MIZUHO

“I think George Osborne’s decision is probably
a good idea with the state of the economy at
the moment. These government decisions, I believe, are
being made for the right reasons.”
TIM DAVIES
CALYPSO TECHNOLOGY
“I think not raising the fuel tax is a positive
decision. In regard to the U-turns the govern-
ment has been making I think there are bigger issues at
the moment, especially in the Eurozone.”
MÀTÈ KRANTZ
CAPITA


CITYVIEWS
UK: MARC M&A Value Tracker Index
210
190
170
150
130
110
90
50
10
30
70
Q1‘10
100
Q2‘10
151
Q3‘10
200
Q4‘10
134
Q1‘11
144
Q3‘11
147
Q1‘12
108
Q2‘12
132
Q2‘11
70
Q4‘11
90
THURSDAY 28 JUNE 2012
13
NEWS
cityam.com
UK M&A value
jumps by 20pc
but stays low
Bakers promotes 63
to global partnership
BY ELIZABETH FOURNIER
THE CHIEF executive of Jersey
Finance acknowledged yesterday
that the crown dependency’s
government is drawing up plans to
split with Britain “in extremis”.
However, he denied that the mood of
the crown dependency was turning
towards such drastic action, saying
“there is no drive for independence”.
Geoff Cook, whose organisation
promotes the low-tax Channel
island’s financial sector, said that he
understood ministers were “scenario
planning for a variety of outcomes”,
including extreme cases.
The assistant chief minister of the
States of Jersey Philip Bailhache
suggested to the Guardian on
Tuesday that the island’s interests
could lie in independence.
Cook however pointed to the
negative consequences for both sides
of such a step, calling Jersey a
“symbiont of the City”. He also hit
back at criticisms of Jersey’s role in
tax avoidance. Cook said: “We’re
pretty vanilla in what we do,” adding
“if the government of the day wishes
to change emphasis, it needs to
change the law.”
Jersey ready but not
willing to go it alone
MARC SIDWELL
Emily Carlisle will be a corporate partner
IN BRIEF
Ultra Electronics goes cyber
nUltra Electronics, the defence,
transport and energy technology
company, announced yesterday it has
snapped up Barron McCann Technology
and Payments companies for £12m.
Known as BeMac, the two businesses,
which provide cyber security services to
financial and military agencies as well as
the UK government, will be absorbed
into Ultra’s existing operations.
Whitefox to appeal Tate & Lyle case
nBritish group Whitefox Technologies is
to appeal against a US court ruling made
against it in a dispute with Tate & Lyle
which an analyst said could win the
London-based sweeteners and starch
company over £10m. The trial before the
Supreme Court of the State of New York
related to equipment and technologies
supplied by Whitefox that Tate claimed
were not fit for purpose.
Porsche plaintiffs suffer setback
nInvestors suing Porsche over its
botched 2008 takeover of Volkswagen
suffered a setback to claims for more than
€4bn (£3.2bn) of damages as German
court hearings yesterday exposed initial
cases as sketchy. Swiss investment com-
pany My Capital-MC and a German pri-
vate investor are seeking compensation
for €4.7m of losses from short-selling VW
shares in a bet that the price would fall.
Northgate reintroduces dividend
nVan rental company Northgate report-
ed an 11 per cent increase in full-year prof-
it as higher hire rates and a rise in used
vehicle sales boosted its UK segment. The
British company said underlying pretax
profit rose to £59.7m for the year ended
30 April from £53.8m last year.
Northgate’s board recommended the re-
introduction of a dividend at 3p per share
for the current year.
SONY’S top executives got a rap on the
knuckles yesterday as the Japanese
company declined to pay them bonus-
es after the company sank to a record
loss last year.
Neither former chief executive Sir
Howard Stringer nor current boss
Kazuo Hirai were awarded a cash
bonus for the year to 31 March, dur-
ing which Sony fell to a £3.5bn loss,
the company said yesterday in a regu-
latory filing.
Announcing the bonus cuts earlier
this month, the technology giant said
the move will save it £1.86bn.
Stringer, who led the company for
15 years, saw his pay package halved
to Y449.5m (£3.62m), including a
salary reduction of six per cent to
Y277m.
The Welshman was replaced in
April by Kazuo Hirai, whose basic
salary was upped by 29 per cent to
Y88m.
However, Hirai’s total compensation
including salary, stock options and
benefits came to Y115.6m – just three
quarters of his pay package the year
before.
Speaking yesterday at Sony’s annual
general meeting, at which Stringer
was confirmed as chairman of Sony’s
board of directors, shareholders ques-
No bonuses for
top Sony execs
after mega loss
BY LAUREN DAVIDSON
tioned why the man who took the
company to an unprecedented fourth
consecutive year in the red was still an
employee of the company.
Hirai said he “needed the advice and
support of Stringer,” adding: “Sony’s
business is in a very severe state. I am
fully aware of this and I promise to
change Sony and revive the company.”
He outlined measures to restore the
business and said he aims to bring
back the “sense of wonder” Sony’s
products used to give its users.
Sony, which was at the forefront of
technology innovation when it
launched the Walkman portable cas-
sette player in the 1970s, has lost half
its market value in the last year.
Stringer was the target of much
shareholder angst at the meeting in
Tokyo and said he “deeply regrets” the
company’s mega losses.
TalkTalk tops telco complaints table
TALKTALK is again the most
complained about telecoms
provider, according to data
published yesterday by Ofcom.
The regulator said it is sent
over 300 grumbles a day about
telecoms services, which it
publishes in a bid to promote
competition and assist
customers in choosing the
right provider.
In the first quarter of 2012,
TalkTalk generated over three
times more complaints, on
average, than its fixed line
telephony rivals Sky, BT Retail
and Virgin Media.
The communications
watchdog said most of these
problems centred around line
faults and other service issues.
But TalkTalk might find
solace in the fact that
complaints about its service
are steadily decreasing.
Ofcom also said mobile
operator 3 prompted more
grievances than its rivals
Orange, T-Mobile, Vodafone
and Virgin Mobile, while O2
generated the fewest.
Publishing data about the
pay TV sector for the first
time, Ofcom revealed more
customers grumbled about BT
Vision than Sky and Virgin
Media.
BY LAUREN DAVIDSON Fixed line complaints per 1,000 customers, January to March 2012
Sky BTRetail TalkTalk VirginMedia
APPLE has triumphed in the latest
round of patent battles with its
archrival Samsung after a US judge
yesterday backed the iPad maker’s
request to halt sales of the Galaxy
Tab 10.1 device.
“Although Samsung has a right
to compete, it does not have a
right to compete unfairly, by
flooding the market with
infringing products,” US district
judge Lucy Koh said in San Jose,
California.
The injunction, which does not
apply to Samsung’s latest tablet
offering, will come into effect
when Apple posts a $2.6m (£1.67m)
Samsung banned from selling
Galaxy Tab 10.1 device in the US
BY LAUREN DAVIDSON bond to compensate Samsung if
the ban turns out to have been
ungrounded.
The trial is scheduled to begin
on 30 July.
Koh had initially refused to
grant Apple this injunction, but
was instructed to reconsider by a
federal appeals court.
Samsung said, “Apple sought a
preliminary injunction of the
Galaxy Tab 10.1, based on a single
design patent that addressed just
one aspect of the product’s overall
design. Should Apple continue to
make legal claims based on such a
generic design patent, design
innovation and progress in the
industry could be restricted.”
A JUDGE jailed a German banker
for more than eight years
yesterday for taking $44m (£28.2m)
in bribes during the sale of
Formula One in a case that
centred on a payment from Bernie
Ecclestone, the motor sport’s
commercial chief.
Presiding judge Peter Noll
convicted BayernLB’s former chief
risk officer Gerhard Gribkowsky
of tax evasion, bribery and breach
of fiduciary trust in a court in
Munich.
Noll described the billionaire
Ecclestone as the “driving force”
behind the payments but said
Gribkowsky, in turn, had shown
“high criminal energy”.
Gribkowsky was arrested in
German banker jailed for over
eight years in F1 bribery case
BY CITY A.M. REPORTER
January 2011 over the sale of
BayernLB’s 48 per cent stake in
Formula One to UK investor CVC,
which Formula One chief
Ecclestone was keen to see as a
new shareholder.
Gribkowsky told the court
earlier this month that he received
the money and a job offer as part
of a secret agreement with
Ecclestone in 2005.
Ecclestone has been subject to
an investigation by German
prosecutors but no charges have
been filed against the 81-year-old
Briton. He denies wrongdoing and
has said he was the victim of
coercion by Gribkowsky.
“They based their decisions on
what he told them. I told them the
truth,” Ecclestone said when asked
about the verdict.
THURSDAY 28 JUNE 2012
14
NEWS
cityam.com
Apple has successfully placed an injunction on sales of the Samsung tablet
Microsoft’s multi-million fine is
upheld by Europe General Court
MICROSOFT yesterday lost its appeal
against an EU decision penalising it
for defying an antitrust ruling,
bringing nearer to an end a decade-
long battle with the European
Commission over the US software
group’s business practices.
However, judges at the General
Court – Europe’s second-highest –
reduced the fine by 4.3 per cent to
€860m (£688.9m) from the €899m
imposed in 2008 which amounted
to just over two per cent of
Microsoft’s revenue for the fiscal
year ended 30 June 2008.
The Commission imposed the
penalty – a record at the time – four
BY HARRY BANKS
years ago after Microsoft defied an
antitrust decision issued four years
previously by delaying the provision
of information to make business
easier for its rivals.
At the time, the EU regulator said
Microsoft had not complied with its
order for 488 days.
“The General Court essentially
upholds the Commission’s decision
imposing a periodic penalty
payment on Microsoft for failing to
allow its competitors access to
interoperability information on
reasonable terms,” the court said in
a statement yesterday.
But it cut the fine “to take account
of the fact that the Commission had
permitted Microsoft to apply, until
17 September 2007, restrictions
concerning the distribution of “open
source” products.”
Microsoft expressed
disappointment at the verdict but
did not say if it would appeal to the
EU Court of Justice, Europe’s highest.
“Although the General Court
slightly reduced the fine, we are
disappointed with the court’s
ruling,” the company said in a
statement.
EU competition commissioner
Joaquin Almunia welcomed the
court ruling, saying: “The judgment
confirms that the imposition of such
penalty payments remains an
important tool at the Commission’s
disposal.”
Sony Corp
27Jun 21 Jun 22Jun 25Jun 26Jun
1,140
1,160
1,100
1,120
1,080
1,180
1,200 ¥
1,092
27Jun
IN BRIEF
New subsidies for young workers
nFirms that take on young workers in
20 areas with high levels of
unemployment will receive improved
wage subsidies, deputy prime
minister Nick Clegg announced
yesterday. Employers who take on 18-
24 year olds classed as ‘long-term
unemployed’ from these regions will
now receive £2,275 per person after
six months while in the rest of the
country this benefit only becomes
available after nine months. All the
applicable areas are in Wales,
Scotland or the north of England.
Norwegian strike lifts oil prices
nAn oil workers’ strike in Norway, the
world’s eighth largest oil exporter, has
propped up Brent crude, pushing the
price to nearly $94 a barrel in
yesterday’s trading. The labour
minister, Hanne Bjurstroem, yesterday
said that the government was far from
intervening in the dispute. The
government has the authority to step
in to force a settlement because the
sector accounts for a fifth of the
Nordic nation's gross domestic
product and nearly half of its exports.
Brazil unveils stimulus measures
nBrazil unveiled a new round of
stimulus measures yesterday,
pledging to boost government
purchases and lower subsidised
lending rates for companies in another
bid to revive its economy. It is hoped
the new measures, which call for
government purchases to rise by
6.6bn reais this year, will shield Brazil
from the global economic slowdown.
G
E
T
T
Y
HIGH STREET sales shot up in the year
to June as a boost from the Queen’s
Jubilee celebrations confounded the
Eurozone crisis, according to a CBI
survey published yesterday.
Some 58 per cent of retailers report-
ed increased sales volumes, as
opposed to just 17 per cent stating
reductions.
In previous surveys retailers had
only expected the balance of positive
over negative responses to be at 25 per
cent, so 41 per cent was a welcome
surprise, and showed the broadest
growth since December 2010.
Judith McKenna, chair of the CBI
panel and chief operating officer of
Asda pointed to the benefits of the
Jubilee, saying it “provided a much-
needed boost to our high streets.”
Yet McKenna warned: “Sales were
below par for this time of year – weak
consumer confidence and uncertain-
ty are putting a brake on spending
across the whole retail sector.”
Blerina Urici at Barclays Capital
stressed that this “one-off increase
Jubilee helped
lift retail sales,
survey shows
BY BEN SOUTHWOOD
does not change the underlying weak-
ness in the sector – we expect a sharp
reversal in the balance next month.”
Grocers reported an 85 per cent bal-
ance of positive over negative, while
clothing stores saw a 69 per cent bal-
ance – footwear retailers reported a
figure of 96 per cent, the highest on
record.
On the other hand, motor traders
faced a third consecutive negative bal-
ance, this time at minus five per cent,
but expected growth in July, while
hardware shops, chemists and special-
ist food and drink shops also saw nega-
tive reports outweigh positives.
Real wages stagnant despite
steady private sector pay rises
PRIVATE sector nominal wages
grew steadily over the last few
months, according to research
published today by Incomes Data
Services (IDS).
The median pay deal in the three
months to May 2012 was three per
cent in the private sector, but just
2.5 per cent in the economy
overall, as some pay freezes in the
public and voluntary sectors took
their toll.
Since retail prices increased 3.1
per cent and consumer prices
increased 2.8 per cent in the year
to May, the headline figures seems
BY BEN SOUTHWOOD
to show that real wages were
decreasing only slightly.
However, the weighted average –
taking into account the number of
employees covered by each pay
deal – was far lower, at just a 0.6
per cent rise. This suggests many
workers have seen significant
declines in their purchasing
power – of up to 2.5 per cent.
Private sector manufacturers saw
three per cent median increases,
whereas the median for private
sector services was 2.6 per cent. In
the manufacturing sub-sector for
chemicals and pharma, the median
award was up 3.4 per cent.
Similarly, bigger firms -- those with
over 5,000 employees, tended to
award smaller increases, with the
median award at 2.5 per cent,
compared to a median of three per
cent for firms with fewer staff.
Distribution of pay settlements - Mar to May 2012
Payfreeze 0.1-1.99% 2.0-2.99% 3.0-3.99% 4.0%+
40
35
30
25
20
15
10
5
0
%
o
f p
a
y
s
e
ttle
m
e
n
ts
20%
7%
27%
36%
10%
S
o
u
r
c
e
: ID
S
BRITAIN’S “costly and complex”
planning system is stifling small
firms and stunting economic
growth, the Federation of Small
Businesses (FSB) said yesterday.
Nearly seven in 10 (69 per cent) of
small businesses are forced to wait
longer than the intended
maximum of eight weeks for local
authorities to decide on most
planning applications, the FSB said.
A mere 30 per cent of
applications are decided upon
within the allocated timeframe, the
FSB’s survey revealed.
Slow planning decisions thwart
growth, small firms complain
BY JULIAN HARRIS
“Most small firms only want to
make minor changes to their
business that would enable them to
expand and diversify, stimulating
much needed growth in the
economy,” said John Walker,
chairman of the FSB.
“Small businesses are already
over-burdened, especially in these
difficult times. Providing a fast-
track for small business planning
applications would make the
process cheaper and easier.”
Many of the applications for
planning permission merely involve
altering the use of a building, the
group said.
SENIOR Federal Reserve official
Charles Evans, one of the US
central bank’s strongest advocates
for further monetary policy easing,
said yesterday he is flummoxed by
the Fed’s timidity in the face of
high unemployment and relatively
low inflation.
At its policy-setting meeting last
week, Fed officials sharply slashed
their GDP forecasts for 2012 and
2013 and marked down the outlook
for inflation.
Those changes to the US central
bank’s summary of economic
projections, or SEP, suggest
progress on its twin goals of full
employment and stable prices is
slowing if not stalled.
Chicago dove Evans urges the
Fed to fire up the printing press
BY CITY A.M. REPORTER Instead of reacting with a new
round of bond buying to boost
jobs, the Fed took the much more
modest step of adding six months
to an existing program, known as
Operation Twist, that is aimed at
lowering long-term interest rates.
"I think if you look at our
projections and the SEPs, it’s hard
to understand why we wouldn’t be
willing to do more because the
inflation outlook is lower than our
objective,” said Evans, the president
of Chicago’s Federal Reserve Bank.
With unemployment at the
“completely unacceptable” level of
8.2 per cent and inflation predicted
to decline, the Fed should be
ramping up even more its already
significant level of accommodation,
Evans said.
THURSDAY 28 JUNE 2012
15
ECONOMICS
cityam.com
The FSB’s John Walker wants a fast-track system for planning decisions
Retail sales sprung back in June
Jun’12 Apr’12 Feb’12 Dec’11 Oct ’11 Aug’11 Jun’11
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
NegativeResponses
Balance
PositiveResponses
First dip in net mortgage lending
since counting began, say banks
NET MORTGAGE lending fell in May
for the first time since the British
Banking Association (BBA) began
measuring the figure in 1997, the
financial sector industry group said
yesterday.
With capital repayments
outpacing stable gross lending, net
mortgage lending dipped by £73m
from April.
And mortgage approvals fell 3.4
per cent in the year to May. This
represented a fall of 5.8 per cent
BY BEN SOUTHWOOD
compared to April, from 32,103 to
30,238.
Consumer credit also edged down
by £0.3bn – the same rate that it fell
in April – with repayment of
overdrafts outweighing slight
increases in credit card debt.
In industry, only hotels and
restaurants grew their borrowing,
whereas debt in property,
construction, manufacturing and
retail firms shrunk.
Re-mortgaging fell by 9.6 per
cent, while other secured lending
dropped 5.1 per cent.
Howard Archer, an economist at
IHS Global Insight believes the data
“indicates that underlying housing
market activity remains weak
following the limited boost
provided by the stamp duty holiday
that ended in March.”
Archer warns that “house prices
are likely to drift around three per
cent lower over the second half of
2012.” There is “significant danger
that house prices could fall even
more due to the problems in the
Eurozone centred on Greece and
Spain,” he added.
BETTER than expected American
economic data pushed up stocks on
major world markets yesterday.
Contracts to purchase previously-
owned US homes rose 5.9 per cent
in May, matching the two-year high
seen in March, fueling optimism
that the hitherto housing market is
beginning to recover.
Data showing better-than-
expected demand for long-lasting
US manufactured goods in May also
provided support, although
worries about slowing global
growth offset some of the positive
sentiment, traders said.
Positive US housing and factory
data provides boost to equities
BY CITY A.M. REPORTER
Nonetheless, the Dow Jones in
New York went up,with the Dow
Jones eventually closing up 0.7 per
cent at 12,627.01. Markets
worldwide also responsed to the
bullish news for the world’s largest
economy. The FTSEurofirst 300
closed up 1.29 per cent, while in
London the FTSE broke a four
session losing streak to close up 1.4
per cent. The MSCI world equity
index rose 0.8 per cent, though was
still down nearly 0.5 per cent for
the week so far, as investors remain
concerned over the Eurozone crisis.
US oil prices briefly returned to
above $80 per barrel for the first
time in nearly a week.
IN BRIEF
Tepco to receive £8bn injection
nTokyo Electric Power (Tepco)
shareholders voted yesterday to
approve the Japanese government’s 1
trillion yen (£8bn) capital injection, to
avert the collapse of the utility in the
aftermath of the Fukushima nuclear
crisis. The capital injection will hand
control of Tepco to the government. It
brings total state support for the
company to 3.5 trillion yen since the
reactor meltdowns at the Fukushima
Daiichi plant, which were triggered by
last year's earthquake and tsunami.
Xtract suspends share trading
Shares in Xtract Energy were suspend-
ed yesterday. The company said it had
received cash demands from Noreco,
the operator of its Danish Luna well, in
relation to cost overruns on the drilling
of the well. The company said in a mar-
ket statement that its financial future
was uncertain. It said: “We are explor-
ing various potential short term fund-
ing options designed to provide access
to immediate working capital in order
to continue trading.”
Italians clarify drilling rules
Mediterranean Oil & Gas said yesterday
it would pursue plans for a concession
in the Central Adriatic after the Italian
government clarified rules on offshore
drilling. Italy put in place offshore
drilling restrictions in 2010 as a defen-
sive measure after BP’s Gulf of Mexico
spill. Changes to these rules now mean
restrictions on offshore exploration and
production activities will apply to activ-
ities up to 12 miles offshore the Italian
coastline.
BRITISH chemicals maker Yule Catto
saw its share price plunge yesterday
after it announced that it expects its
business to be hurt by a volatile euro
and weakening demand in Asia.
Yule Catto shares plummeted by
21.4 per cent making them one of
the biggest percentage losers on the
London Stock Exchange.
The news undermines the group’s
central investment case, N+1 Brewin
analyst James Tetley said and down-
graded the stock to “reduce” from
“add” following the results.
“(It) calls into question its product
differentiation and market position-
ing,” he added.
Yule Catto said in March that it
expected sales from emerging mar-
kets to offset low growth in devel-
oped markets.
However, weak demand for synthet-
ic rubber component nitrile in the
emerging markets and recent capaci-
ty additions have pressured prices,
the company said. It expects demand
to remain weak until the next year.
“This will substantially lower oper-
ating profit in our Asia business seg-
BY JOHN DUNNE
ment,” the company said.
Nitrile is a speciality chemical
which is used in the manufacturing
of latex – a very fine quality of rub-
ber. Yule Catto – whose chemicals are
used by the adhesive, textile, paper
and pharmaceutical industries – also
said that it expected fluctuations in
the euro to cut operating profit by
about £5m.
However, the company still forecast
growth in its underlying full-year pre-
tax profit.
Yule Catto’s fundamentals
remained intact and it could contin-
ue to generate significant returns in
the long term, Barclays Capital’s
Gunther Zechmann said in a note.
Yule Catto & Co PLC
21 Jun 22Jun 25Jun 26Jun 27Jun
200
190
180
170
160
150
140
p
138.80
27 Jun
GLOBAL distribution and
outsourcing company Bunzl said
yesterday it had bought Service
Paper Company in the United
States while separately issuing an
upbeat trading statement.
Service Paper distributes
disposable supplies to the grocery,
food service, food processor and
industrial packaging sectors
throughout the Pacific Northwest.
Revenues of the business
acquired for the year ended 31
December 2011 was $61m (£39.1m)
and the gross assets purchased are
estimated to be worth $18m.
Bunzl acquires US distribution
firm as revenues head upwards
BY JOHN DUNNE Chief executive Michael Roney
said: “Service Paper is an excellent
business with a reputation for
providing high levels of customer
service which will complement
and expand our existing business
in the region.”
Meanwhile the firm said it had
seen revenue grow by around
seven per cent over the past six
months. It attributed much of the
rise to recent acquisitions.
It added that its margins had
also improved thanks to its
purchases of other companies.
Bunzl has bought five businesses
in the last year worth a total of
£130m.
THURSDAY 28 JUNE 2012
16
NEWS
cityam.com
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Enjoy a great evening’s racing followed by one of our fantastic outdoor concerts.
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Bunzl chief executive Michael Roney said Service Paper would expand its US footprint
Yule Catto hit
by weakening
demand in Asia
17
THURSDAY 28 JUNE 2012
LONDONREPORT
LDC
The private equity house has
announced that Keith Holdt has
been appointed as investor
director in its value enhancement
group. He joins from Swiss Post
Solutions, where he was head of
global business development and
sales. Holdt previously spent
eight years with IBM.
Lloyds Banking Group
Andrew Bester has been appointed chief executive,
wholesale at Lloyds. He was formerly chief operating officer
of consumer banking at Standard Chartered Bank. Bester
has held a variety of senior management roles at Standard
Chartered, and previously worked as group finance director
of Xchanging, and in the investment banking division at
Deutsche Bank.
Burberry
Jenna Littler has been appointed vice president, PR and
corporate relations, at the fashion house. She joined
Burberry in 2010 from McKinsey, the management
consultancy, and has since established the corporate
relations function within Burberry’s marketing and
communications team.
Menzies
The accountancy firm has appointed Julie Adams as senior
partner. She replaces Mike Sands, who steps down from the
position after 18 years. Adams joined Menzies in 1979 as a
trainee, and has since served as a partner and managing
partner.
Antenna Software
The app development software firm has announced that Bill
Smith has joined as chief financial officer. He arrives from
Kayak Software, where he was also chief financial officer.
Smith has also held senior roles at Novell and began his
career as an investment banking analyst at Merrill Lynch.
Gresham Computing
Bill Blythe has been appointed global business
development director at the financial services software
solutions firm. He has over 18 years’ experience in the
financial technology sector, and previously served as
managing director for North America at SmartStream
Technologies. Blythe has also held management positions
at Singularity, Mercator Software and Misys.
Berwin Leighton Paisner
Catherine Shirley has been appointed as a partner in the
law firm’s corporate finance practice in London. She joins
from Skadden Arps, and she has also worked for Freshfields
Bruckhaus Deringer. Shirley acts for corporations, private
equity funds and investment banks on a range of corporate
and commercial transactions.
WHO’S SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
Surprisingly
positive data
lifts US shares
U
S stocks rose yesterday as
stronger-than-expected
economic data helped lift
energy stocks, overshadowing
concerns a European Union summit
will not yield tangible progress in
easing the debt crisis.
The energy sector showed the
strongest gains among the 10 major
S&P 500 groups, rising 1.9 per cent as
oil prices settled higher at $80.21 a
barrel. Cabot Oil & Gas jumped nine
per cent to $41.24 and was the biggest
advancer on the S&P 500.
Worries about Europe have fed dra-
matic selloffs in stocks lately, but the
declines have been tempered by
enough short-term buying to keep the
market confined to a range.
Sentiment was helped by better-
than-expected sales of long-lasting
American manufactured goods in
May, although excluding transporta-
tion and defense items, orders were
down.
In other data, signed contracts for
home purchases jumped to a seven-
month high. The PHLX housing sector
index climbed three per cent, taking
the year-to-date gains near 26 per
cent. Shares of Lennar, the third-
largest US homebuilder, rose 4.8 per
cent to $28.70 after it reported a rise
in new orders for the fifth straight
quarter.
Arena Pharmaceuticals surged 28.7
per cent to $11.39 on news that US
health regulators approved the drug-
maker’s pill to treat obesity, the first
weight-loss drug in 13 years.
But uncertainty remained ahead of
the Eurozone leaders’ summit, which
begins today. Few anticipate anything
concrete to emerge from the two-day
meeting after German Chancellor
Angela Merkel said on Tuesday that
debt sharing, an idea backed by
France, Italy and Spain, would not
happen in her lifetime.
Healthcare stocks were in focus
heading into today’s US Supreme
Court decision on President Barack
Obama’s 2010 healthcare law.
Some investors have their attention
on stocks less likely to be affected by
the ruling, such as large pharmaceu-
ticals. Many investors expect the
requirement that uninsured
Americans purchase health insurance
to be overturned, “so people have had
plenty of time to position their port-
folios for that,” said Foreman.
The Dow Jones industrial average
gained 93.32 points, or 0.74 per cent,
to 12,627.99. The Standard & Poor’s
500 Index advanced 11.89 points, or
0.90 per cent, to 1,331.88. The Nasdaq
Composite Index added 21.26 points,
or 0.74 per cent, to 2,875.32.
The market’s rise came on light vol-
ume of 5.75bn shares traded on the
New York Stock Exchange, NYSE
Amex and Nasdaq. The daily average
year-to-date is 6.84bn.
Shares of Vivus and Orexigen
Therapeutics jumped following the
FDA approval of Arena’s obesity drug.
Vivus shares were up 7.4 per cent to
$28.33 and Orexigen Therapeutics
rose 20.3 percent to $4.92
B
RITAIN’S leading shares bounced
back yesterday, snapping a four-
session losing streak, with
commodity and banking stocks
squeezed higher as worries over the
global growth outlook were eased by
some upbeat US data.
Volumes were again low, however, as
most investors preferred to remain on the
sidelines ahead of a crucial European
summit. The FTSE 100 index closed up
76.96 points, or 1.4 per cent, at 5,523.92
points, recapturing the 5,500 level, on
trading volume of just 67 per cent of the
90-day daily average.
US blue chips were up 0.6 per cent by
London’s close, after both durable goods
orders and pending home sales for May
beat market expectations, providing hope
for the moribund US economy after a run
of disappointing data.
Building materials groups CRH and
Wolseley saw strong gains following the
US data, adding 4.2 per cent and 3.7 per
cent respectively, with both heavily
exposed to the US housing market.
“We have seen steady inclines ... as US
durable goods orders and pending home
sales were better than expected although
don't be surprised if the rally quickly runs
out of steam as investors cautiously lock
in some profit in this very nervy trading
environment,” said Jordan Lambert, trad-
er at Spreadex.
Investors were mainly focused on the EU
summit in Brussels on 28-29 June,
although hopes that the meeting will
yield any real solution to the Eurozone
debt crisis remained low.
German Chancellor Angela Merkel said
yesterday that there were no quick or easy
solutions to end the debt crisis and lead-
ers should avoid making rash promises
they could not keep.
Energy stocks provided the main
strength for the FTSE 100 rally as crude
prices jumped after the above forecast US
data improved the demand picture for
commodities.
Miners also recovered from earlier falls
in tandem with copper prices following
the US data.
Commodities trader Glencore, however,
missed out on the rally, losing 1.5 per cent
on doubts about its planned $26bn
takeover of Xstrata after Qatar’s sovereign
wealth fund – Xstrata's second-largest
shareholder – asking for better terms.
Xstrata added 1.4 per cent as sharehold-
ers bet on whether or not Glencore would
consider changing the terms of its deal.
“I would be looking to buy Xstrata stock
on weakness this morning. I don’t person-
ally believe that Glencore will walk away,”
said Securequity sales trader Jawaid Afsar.
Banks were also strong blue-chip per-
formers, bouncing back after recent
sharp falls, led by Lloyds Banking Group,
up 3.5 per cent.
Fledgling banking venture NBNK said it
had made a new proposal to buy 632
branches from the bank ahead of a sched-
uled Lloyds board meeting later last
night.
Standard Chartered was also in
demand, up 3.1 per cent after a reassur-
ing trading update.
Ex-dividend factors accounted for the
top blue chip faller, ICAP down four per
cent. Tate & Lyle, Next and Compass
Group all also traded without entitle-
ment to their latest dividend payout yes-
terday, clipping 1.59 points overall off the
FTSE 100 index.
“Long-only funds are on the sidelines
with nowhere for their cash to go. Hedge
funds are playing macro themes that
don't include equities. Bank prop books
are an endangered species, so that only
leaves day traders and HFT’s (high fre-
quency traders) to battle it out,” said one
London-based trader.
Boosted by bank and commodity
stocks, FTSE breaks its losing run
BESTof theBROKERS
LOGICA
Panmure Gordon downgraded Logica from “buy” to “hold”, but retained a
target price of 117p. The broker said it has long argued that the British IT
services provider, which recently accepted a £1.7bn takeover offer from
Canadian rival CGI, “is simply badly configured for the ‘modern’ market and
is ‘fixable’ given strong resolute management.” It also gives kudos to CGI for
getting “a cheap deal” in its purchase of Logica.
FTSE
5,600
5,625
5,475
5,450
5,500
5,550
5,575
5,525
21Jun 22Jun 25Jun 26Jun 27Jun
5,523.92
27 Jun
DASHBOARD CITY
CITY MOVES
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Logica PLC
108.50
108.25
108.00
107.75
107.50
107.25
107.00
106.75
p
21Jun 22Jun 25Jun 26Jun 27Jun
106.80
27 Jun
CAPITAL & COUNTIES
Liberum Capital has upgraded the property developer Capital & Counties
from “hold” to “buy”and revised its target price from 196p to 223p. The
broker said the likelihood of the company securing planning consent on its
Earls Court scheme in the second half of the year has improved significantly
in recent months and said it has sufficient confidence to include the expected
valuation surplus in its full year forecast.
Capital & Counties Properties PLC
206
204
202
200
198
p
21Jun 22Jun 25Jun 26Jun 27Jun
204.90
27 Jun
ASHTEAD
Canaccord Genuity said fourth quarter results published by the industrial
equipment firm Ashtead last Thursday were better-than-expected and as a
result, it is raising its target price by eight per cent to 285p and retaining its
“buy”stance. The broker has upgraded its full year profit-before-tax forecast
by nine per cent to £163.5m and said its forecasts assume some recovery in
end construction markets, albeit low single digits.
Ashtead Group PLC
275
270
265
260
255
250
p
21Jun 22Jun 25Jun 26Jun 27Jun
255.90
27 Jun
A
LEXANDER Hamilton, the US
Founding Father, described
the judicial branch of
government as the “least
dangerous to the political
rights of the Constitution,” because it
“has no influence over either the
sword or the purse; no direction
either of the strength or of the
wealth of the society.” With the
Supreme Court expected to rule
today on a key aspect of the
President’s landmark health care
reforms, it’s safe to say that at least
one side of the political spectrum
will have a bone of contention with
Hamilton’s observation.
The Supreme Court’s ruling on the
Affordable Care Act’s individual
mandate, which plans to compel
T
HE Eurozone crisis has grabbed
all the headlines. Yet Britain’s
economic problems are not
exactly the same as those of
the Eurozone.
In Euroland, the crisis has centred on
banking and sovereign debt. In Britain,
we have already given our banks plen-
ty of capital. Remember the part-
nationalisation of RBS and Lloyds TSB?
It was in late 2008. Because we avoided
the death trap of the euro, our govern-
ment can still borrow in sterling. Our
ten-year yields are the lowest since
1703. Over here, a much bigger prob-
lem is the issue of consumer debt, and
the consequent disappearance of con-
sumer demand.
In Britain, household debt in 2011
was equivalent to 98 per cent of GDP,
the highest in the G7. In Italy, the
equivalent figure was only 45 per cent.
In Greece, you may be surprised to
learn, the figure was a modest 62 per
cent. Even in America, where con-
sumers gorged on credit for more than
a decade, the proportion of household
debt to GDP was only 87 per cent.
The British consumer is under an
FLIGHTS STRAIGHT F
FROM £63
ONE
WAY*

*Fare available from London City Airport to Dublin. Price valid as of 19 June. Subject to terms, conditions and availability.
cityam.com/forum
The way to put
more money back into
people’s pockets is to
cut costs – tax cuts
In association with
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: [email protected]
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The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

18
THURSDAY 28 JUNE 2012
KWASI KWARTENG
The UK’s consumer debt burden is
stifling hope of economic recovery
enormous debt burden. With higher
inflation, no wage increases, and the
persistent overhang of debt, the aver-
age Briton has had very little money to
spend in the last few years.
Britain’s slump is largely due to the
collapse of consumer demand. The
solution to the problem must there-
fore involve some attempt to boost
that demand.
There are two ways you can do this.
You can either cut the price of goods
for sale, making them more attractive,
or, you can put more money directly
into consumers’ pockets. The first
route involves a cut in VAT, making
the goods cheaper. The second route
gives the consumer more choice. By
putting more money into the con-
sumer’s pocket, you are allowing him
or her to spend that money on whatev-
er he or she wishes. The consumer
may well pay down debt. But that is
also a good outcome, allowing more
future spending.
And, of course, the way to put more
money into consumers pockets is to
cut their costs. Tax cuts. We could
raise the 40 per cent threshold from
£34,370 back to £37,000. We can do
this without even changing the tax
rates. There has been talk of the
“squeezed middle”. This is precisely
our problem. The middle classes have
stopped buying things because they
have so little disposable income. The
average family is hard pressed. Yes, it is
true that their mortgage rates have
not risen. But the interest on the cred-
it card still needs to be paid; the week-
ly shop, in cash terms, is more
expensive than it has ever been. Travel,
the cost of getting into work every day,
is still very expensive. The double
income family hasn’t had a pay rise in
four years. Taxes have increased.
Yet it was middle class consumption
which, for good or ill, was driving the
economy in the decade before 2007.
Our country feasted on credit, which
in turn powered our economy. We can
regret that this happened, but it’s a
fact of our history. A child of ten can
understand that if economic growth
has occurred because of credit expan-
sion, economic growth will stall once
the credit stops. But the consumer still
needs money to spend. Without this,
our consumer-driven economy will
stagnate.
It’s difficult to see how consumer
demand can be stimulated by giving
banks more billions. We have been
pumping billions into the banks since
2008 and the results of this have not
been particularly impressive. The
extra money has been used simply to
bolster banks’ reserves. It’s not imme-
diately apparent why the banks, hav-
ing received all this extra money,
should then lend it out to companies.
They haven’t been doing this. Why
should they change? But even if they
did lend the money, it wouldn’t make
much difference without a restoration
of consumer confidence.
Without consumer demand, you
could give the banks £1 trillion and it
still would not stimulate the economy.
People who object to this focus on
consumer demand talk about deficit
reduction. Yet the one lesson of the
last two years has been that, without
growth, deficit reduction is an almost
impossible task. The latest figures
showed that we borrowed £17.9bn in
May, £3bn more than the year before.
The lack of growth is making deficit
reduction very difficult.
Our economy is different to others in
the Eurozone. By identifying our par-
ticular consumer debt problem, we
can focus on finding suitable solu-
tions to boost consumer demand.
Kwasi Kwarteng is Conservative MP for
Spelthorne.
every American to purchase health
insurance, certainly makes for a
grand legal finale. In the past week,
the court has riled the progressive
movement by striking down
campaign finance limits in Montana,
as well as upholding the so-called
“show me your papers” section of
Arizona’s controversial immigration
law. However, these protestations
will be miniscule compared to the
ire if, as expected, Chief Justice John
Roberts issues a majority opinion
that rules unconstitutional Barack
Obama’s healthcare plans.
The legacy of the Chief Justice is
not the only issue at play here. In his
first year of office, President Obama
expended all of his political capital
to pass what is still a deeply
unpopular piece of legislation. It also
happens to be the reform his base
holds most dear. If overturned,
Obama will have to defend his health
care reforms and pledge to have yet
another go in his second term. But
72 per cent of independents, who
now make up a plurality of the
electorate, want to see the individual
mandate struck down; voters
overwhelmingly believe it to be
unconstitutional. The President has
stated that the American people
don’t want to revisit the issue. In
truth, they never wanted to visit it in
the first place.
Whereas the President’s
supporters will want retribution
against the Supreme Court and to
encourage Democrats to rail against
“far right-wing” justices, Obama
would be best advised to temper his
rhetoric towards the judiciary,
because of the public’s expectation
of presidential decorum. In addition,
a president who has just invoked
executive privilege, amid a
congressional investigation into his
attorney general, will find it difficult
to lecture others about the
separation of powers.
Although polls indicate the belief
that the court has too much power,
the judiciary is not like Congress –
held in contempt by the majority of
the population. Democrats who
believe that they can reap the
electoral benefits of kicking around
Justice Roberts and co will be in for
an unpleasant surprise. Americans
may not approve of all of their
rulings but, in the words of former
justice Louis Brandeis, the justices
are still revered because “they are
almost the only people in
Washington who do their own
work.”
Ewan Watt is a Washington DC-based
consultant. You can follow him on
@ewancwatt.
THE WHITE
HOUSE RACE
EWAN WATT
A hostile US Supreme Court risks trapping Obama in a political nightmare
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19
Hester is not RBS
[Re: Useless PR has turned NatWest’s woes
into a corporate nightmare, yesterday]
Having gone through James Hutchinson’s
piece on the RBS computer failures, I was
very surprised that all his attacks were
directed on the person of Stephen Hester
rather than the bank itself. I believe Hester
has handled the situation in the best and
most appropriate manner a chief executive
could manage. It is those who are directly
involved in the matter who must be
sanctioned accordingly. Hester has simply
tendered an apology for something terrible
that has happened, and gone on to proffer
how steps are being taken to put things
right. I don’t see what else Hutchinson can
possibly want.
GBolahan
Tax and trains
[Re: Falling tax receipts show that we’ve for-
gotten Laffer’s lesson, yesterday]
Art Laffer’s ideas beg the question of why it is
right to maximise the tax take. Given that
governments spend so badly, why should it
maximise revenue? Why not minimise it?
SteveAnderson
[Re: It’s crazy that high speed rail will fail to
integrate with our airports, Tuesday]
Mark Bostock’s argument makes sense in the
current HS2 scenario, but he implies that the
selection of an alternative route for connect-
ing Heathrow is a solution to the lack of an
integrated transport strategy. He fails to
mention Crossrail, which will significantly
improve the airport’s connectivity to London.
RobBurton, independent transport consultant
I
F TODAY was a morning in
London 350 years ago, and you
wanted to catch up on the
latest news, market
information and gossip, rather
than picking up a copy of City A.M.
you would have gone to a coffee
shop.
In coffee shops you would find the
latest pamphlets and printed news,
and met other patrons to discuss
the issues of the day with. You
might have found stock prices
chalked up on the wall, or received
a tip from a messenger who had
run from another coffee house with
news of a business deal.
The coffee that you drank in a sev-
enteenth-century coffee house was
imported from Turkey or the
Levant, explaining why many coffee
houses of the day had names like
The Turk’s Head, or The Sultaness.
Tea and chocolate, two other recent-
ly imported hot drinks, were also
available, usually costing a penny –
they were still relatively expensive
luxuries. Despite the cost, a wide
range of people visited coffee hous-
es, including intellectuals and busi-
nessmen. Samuel Pepys, writing in
his diary, mentions several he visit-
ed. In the Sultaness in Cornhill, he
found “much pleasure… through
the diversity of company and dis-
course.”
However, there was a problem
which affected not just the coffee
shops, but all the small retailers in
England in the second half of the
seventeenth-century: a severe short-
age of small change. Between 1649
and 1672, there was no government
provision of small change, which
created huge difficulties in making
small payments and in having
enough low-denomination coins to
give change. But businesses came
up with a solution, by issuing their
own money in the form of small
TOP TWEETS
If anyone knows someone in George
Osborne’s office, can they tell them that to
increase tax receipts they must drop rates.
@FinancialBear
Club Med wants the eurobond because it will
allow them to keep spending at German
interest rates. They want to cheat the market.
@bigragingbull544
If the pay packets of top executives are high,
shouldn’t the penalties they face for failure be
high also? Take note, Stephen Hester.
@MartinShovel
Whymust thecoalitiondefendthefuel duty
risereversal?Labour’spositionisopportunism.
@OliverCooper
Should the UK create an industrial strategy
to guide its future economic development?
YES
The UK needs a strategy for industry and it must be better than what
has gone before. All too often, our industrial policy has been reactive
and incoherent. It has responded to lobbying and failed to offer
consistent and equal support to sectors of industry. Good industrial
policy must provide the tools that we need to thrive – skills, finance
or technology – with strong interaction between government and
industry. Government can make a big difference by using the right
regulatory incentives, promoting competition and encouraging
entrepreneurship across the economy. It can also provide direct help
through bodies like the Manufacturing Advisory Service and
Technology Strategy Board. A new industrial policy, with a proper
partnership between the state and private sector, is long overdue.
Vicky Pryce is former joint head of the Government Economic
Service and author of Britain Needs A Fourth Generation Industrial
Policy for CentreForum.
Vicky Pryce
NO
Kevin Dowd
We’ve tried industrial policy before and it doesn’t work. Successful
investment is based on incentives and markets: entrepreneurs
research the market, invest their own money and that of investors to
whom they are accountable, and take the hit if they are wrong.
Industrial policy lacks incentive and attempts to usurp market
discipline. If you believe in industrial policy then you must believe
that some unaccountable civil servant with (typically) no business
experience is smart enough to out-guess real businesspeople at
their own game. And you’ll also believe that this super-smart civil
servant can do so while taking orders from politicians, captured by
interest groups with their snouts in the public trough, who use
money forcibly extracted from the taxpayer. If you are gullible
enough to believe that civil servants can make better decisions than
businesspeople, you may as well believe in the tooth fairy too.
Kevin Dowd is an economist and a partner at Cobden Partners.
RAPIDresponses
A token solution
to a seventeenth
century dilemma
tokens, usually worth half a penny
or a farthing, which circulated
locally alongside the official
coinage.
This lack of small change in seven-
teenth-century England is one of
the stories featured in the new Citi
Money Gallery, where these London
coffee house tokens are on display.
These tiny objects tell us more than
the story of a seventeenth-century
shortage of small change. Because
each token names the business and
the street on which the business
was based, they also tell us about
the history of shopping in London.
The display in the gallery features
tokens from opposite where the
British Museum is today – Great
Russell Street. From the tokens
issued there, we know that on
Russell Street in the 1660s there
were lots of inns and coffee houses,
as well as a grocer, a fruit seller, a
flour seller, stationer and book-
seller – rather similar to the busi-
nesses that are there today, 350
years later.
As you read your paper and drink
your morning coffee, think back to
the coffee drinkers and information
exchange of the London of a few
centuries ago, when it was just
beginning to become the global city
that it is today.
Catherine Eagleton is the curator of
modern money at the British Museum. To
find out more about this and other stories
of money from the last 4,500 years, visit
the free Citi Money Gallery at the British
Museum. www.britishmuseum.org
THURSDAY 28 JUNE 2012
CATHERINE EAGLETON
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The Forum is open for you to take part. Got a sharp comment on
one of today’s columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email [email protected] or comment at cityam.com/forum
20
THURSDAY 28JUNE 2012
DIRECTOR UK ENTERPRISE, CISCO
Q
What are the key drivers
behind a mobility strategy?
A
The workspace is no longer a
workplace. Successful businesses
are reducing their dependence on
expensive office property and
enabling a mobile workforce to be
productive wherever they are most
effective.
A business is only as good as its
people. Retaining experienced and
knowledgeable employees when
their lifestyle priorities change is
essential. Moving out of town
shouldn’t necessarily require a
change of employer. Having dinner
with the family a couple of times a
week and making more use of the
house in Cornwall shouldn’t mean
less commitment to work.
Many industries are proactively
working to be less male-dominated
and more inclusive of women in
senior management roles. The right
mobility strategy can support these
goals, and corporate social
platforms will play an important
role by helping employees on
maternity or sabbatical leave to
stay-in-touch with their careers.
Equally important is attracting
the next generation of talent. With
a less traditional view on dividing
work and personal time, they
expect the flexibility to engage in
work at a time that suits them.
As we all take greater
responsibility of our own time
management we want to work our
way: out of office hours, wherever
we are, on our own choice of
device.
Q
What about the return on
investment?
A
Workforce mobility can deliver
tangible competitive advantages,
reducing end customer response
times. Finding the right people
with the right knowledge in good
time, wherever they may be. Giving
your customers greater access to
your people.
Also, reduction of property
TIM SKINNER
BUSINESSTECHNOLOGY
overheads is easy to measure. A hot
desk policy and a 2:1 employee to
desk ratio is commonplace with
many of our customers today.
Mobility policies and virtual
desktop infrastructure also allow
organisations to make better use of
contract workers, outsourcers and
agency staff.
Q
What are the essential
ingredients in a mobility
strategy?
A
A good mobility strategy should
give employees secure, consistent
access to corporate information on
their choice of device, regardless of
platform, browser, or device type.
The right collaboration solution
will provide quicker access to
experts using presence, messaging,
voice, video and web-conferencing
tools across all platforms.
The right network, governance
and contextual policy will help
maintain security by providing easy
access to information and
applications appropriate to a user’s
location and device.
As with any significant change in
IT infrastructure, maintaining a
consistent user experience and
confidence in staying connected is
paramount.
The new networking sky is flled with all kinds of clouds. Big ones.
Small ones. Public. Private. Even hybrid. Your people, partners,
citizens and customers must move swiftly and securely between
many clouds. Not just one. That’s why Cisco Data Center and
Cloud services ensure the same agility, efciency and security as
the rest of the Cisco architecture. So your data, your relationships and
your business can remain protected at every level. And you can focus
on taking your business to new heights through innovative growth.
Learn how businesses in every industry are entrusting their data with
Cisco Data Center and Cloud services in the physical workplace,
and the virtual one, at www.cisco.co.uk/ucs
In the past year,
67% more
companies
moved to cloud.
(But not just to one.)
A workspace is not a workplace:
A mobility strategy is crucial Employee freedom:
A
S WE head towards the
Olympic Games, many
companies have been making
contingency plans for the
anticipated congestion that this will
cause in London. According to the
Chartered Institute of Personnel and
Development (CIPD), almost three in
ten employers say they will try and
accommodate requests from
employees to work from home, 17 per
cent will extend flexible working
opportunities, while 13 per cent will
actively encourage staff to work from
home.
But rather than seeing these provi-
sions as being something that they
have been forced into by the arrival of
the Games in the capital, many com-
panies may find that the policies that
they put into place to allow greater
working flexibility for their employ-
ees lead to improved working prac-
tices on a long-term basis. “The
Olympics is a golden opportunity for
UK businesses to review their flexible
working policies to ensure they are
supporting their staff,” says Barney
Ely, director at Hays Human
Resources. “Communication is key to
ensure both parties clearly under-
stand and adhere to the guidelines
around flexible working. By embrac-
ing this exciting time, companies will
benefit from more engaged employ-
ees.”
ALWAYS IN THE LOOP
We are in an era of an increasingly
mobile workforce. In the modern
work environment, you are almost
never out of range of communication.
Ever aeroplanes are bringing in WiFi
on some flights – now that they have
set up a system to bill for their use,
electronic communication devices
seem to have ceased to interfere with
aircraft electronics.
Even the London Underground –
Employers embracing bring your own device
policies to cope with the Games should run
with them afterwards, writes Craig Drake
usually the biggest black hole for
communication in London – is
becoming WiFi enabled on some plat-
forms, through a free service provided
by Virgin for the duration of the
Olympic Games.
With employees almost always avail-
able to pick up an email on the move,
or read a presentation on a mobile
device, the work patterns of employ-
ees have changed, and so have the
ways that employers can and should
structure their business.
FLEXIBLE WORKING
So how are companies going to
respond to the immediate demands
for employee flexibility, as well as to
the need to be in a strong position for
the future shape of the workplace?
Studies indicate that by 2020 some 80
per cent of the UK workforce – and
the German and French, for that mat-
ter – will not be tied in to a nine-to-
five, fixed-place daily office routine.
Many companies are already respond-
ing to employee needs by implement-
ing bring your own device (BYOD)
policies, allowing employees to con-
nect personal computing devices to
their professional network. However,
this is not as simple as routing your
work emails to your personal
Blackberry. Businesses and IT system
administrators need to properly man-
age how these devices are connected
to the network – how this data is
shared, how secure this data is and
what to do if a device containing sen-
sitive company information is lost (see
column, right).
Increased flexibility from improving
technology allows employees to have
greater flexibility in the workplace
and has changed the way that compa-
nies structure their working time and
holiday entitlement rules. Take
Netflix and others who have done
away with holiday allowance and
Once employers have jumped the barriers to
replaced it with a policy of “not having
a policy”. This means that employees
are more likely to work on their person-
al electronic devices during their own
time when there is an urgent project,
knowing that they can take time off in
lieu when there is more slack. This is
something that would have been
almost impossible before the era of the
secure and reliable business and person-
al elecronic communications networks
upon which we are all now reliant.
Companies should be harnessing this
technological revolution if they want to
get the most out of their employees and
their business over the Olympic
Games – and beyond.
21
THURSDAY 28JUNE 2012
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Olympics and beyond
ticketholders (8.8m Olympic,
2m Paralympic).
people in the workforce.
Including 6,000 staff,
70,000 volunteers and 100,000
contractors.
UK firms have won over £6.3bn
of Olympic Development
Authority contracts. LOCOG has awarded
a further £1bn.
overseas teams have signed pre-
games training camp agreements
in communities across the UK.
pieces of sport equipment are being
sourced by LOCOG.
adjustable hurdles will be delivered
for athletics.
basketballs will be delivered to
the games.
spectator journeys will be made
in London, with 3m madeon the
busiest day.
ticketed spectators will
use public transport on
the busiest day.
square feet of warehouse space
required for logistics for the Games
will be used – with 15,000 deliveries by
300 trucks.
improving employee flexibility, they will find the practices worth keeping to
T
HE Olympics Delivery
Authority (ODA) predicts 20m
trips by spectators during
London 2012, including some
3m on the busiest day. The
resulting inevitable transport chaos
is prompting businesses and
employees to look closely at how
best to keep operating efficiently,
in particular working from home.
Many financial services sector staff
work in Docklands and the City –
right at the heart of the
excitement. So just how feasible is
it to work remotely while still
operating in a manner compliant
with the applicable FSA
regulations?
Before working remotely, firms and
employees need to think about a
number of things from the regulato-
ry perspective:
G Does system infrastructure
already exist? It may do so because
FSA systems and controls (SYSC) rules
require firms to have in place busi-
ness continuity plans. In some cases,
this may mean firms already have
systems enabling employees to work
remotely – if premises are flooded,
for example. But if your disaster
recovery site is also in the City or
Docklands that may not take you too
far.
G Are systems secure? A look at
FSA enforcement activity in recent
times makes it immediately appar-
ent that there have been a number of
fines for data security breaches.
Firms need to ensure that informa-
tion is safely encrypted, that laptops
are password protected and paper
records are disposed of securely.
G Is personal data protected? The
Information Commissioner’s Office
(ICO) has teeth too – the Data
Protection Act (DPA) 1998 requires
that personal data is protected,
including ensuring that firms have
systems capable of protecting person-
al data from access by criminals. DPA
breaches can lead to substantial fines
from the ICO. Remote working will
make this much harder to police.
G Is my mobile phone recorded?
Firms providing or sanctioning deal-
ing, arranging and executing activi-
ties using mobile technology need to
ensure they can record calls and
access records, hence many City
houses’ prohibition on conducting
such business on mobiles. As a gener-
al rule, those working on taped lines
in the normal course of their day
should expect to be remote working
on taped lines.
G Are you just too risky? Many
firms are unlikely to allow trading
outside of office systems and con-
trols for risk control reasons.
GOr too important? Employees per-
forming roles in compliance, finance
and operations may simply have no
choice but to be in the office, since
their not being there at the right
time and in the right numbers may
put the firm at risk of a SYSC breach.
Paul Anderson is a partner at Squire
Sanders, specialising in employment law
within financial services.
cityam.com
OLYMPICS BY NUMBERS
G
E
T
T
Y
PAUL ANDERSON
Regulatory hurdles
for the UK financial
sector to consider
10.8m 118 20m
800,000
1m
1m
510
600
200,000
1,500
R
E
U
T
E
R
S
M
icrosoft is no stranger to
throwing huge amounts of
money at markets it wants
to break into – it did it with
the Xbox and it’s in the process of
doing it with its new Surface
tablet. But even in this context, the
$1.2bn it has agreed to pay for
enterprise social network (ESN)
Yammer seems steep, especially for
a company that probably isn’t
making any money (Yammer is
notoriously guarded about its
financial figures).
The deal shows the tech world’s
belief that business-oriented social
networks have a real future. The
market, though, is more crowded
than you might realise, with a
plethora of services on offer. So
which one is right for you?
Microsoft shows business social networks
are big news –which one is right for you?
YAMMER
Yammer was already a big deal in
the ESN world, with a rapidly
growing user base of some 5m and
80 per cent of Fortune 500
companies using the site. It is
essentially a rather more sociable
LinkedIn, with the emphasis on
interacting with contacts through
direct and instant messaging,
rather than storing your existing
contacts or finding new ones. It
allows users to collaborate on
shared projects and instantly share
and edit each other’s documents –
great if you have a group
presentation to work on. Its
business model is “freemium” – it
won’t cost you to sign up but if you
want it to be particularly useful,
you’ll have to shell out a few quid.
Microsoft boss Steve Ballmer shakes hands
with Yammer chief executive David Sacks over
their $1.2bn deal (left)
THURSDAY 28 JUNE 2012
cityam.com
22
LIFE&STYLE
WORDS BY
STEVE DINNEEN
SOCIAL NETWORKING IS EASY, RIGHT?
NOT QUITE. HERE ARE SOME THAT FAILED
MySpace
It may still be running but it would take a particularly
deluded kind of optimist to claim it has been anything but
a disaster for News Corp, which bought it do $580m in
2005. This is how not to do it.
Google Buzz
It was heralded as the next generation of social networking
but Google’s foray into the market fizzled out and the brand
was retired not long after its launch. It has been superceded
by Google+, which has also failed to set the web on fire.
Sprouter
It was billed as a Twitter-style site for entrepreneurs but
Sprouter was forced to close the service after failing to
work out a way to make money from it. It has now been
restyled as a Q&A service for businesses.
Yahoo Buzz
Remember when Yahoo used to be a player? It even had
its own social network, with the same name as Google’s,
before Google used it. Unfortunately, like everything else
Yahoo has done since the year 2000, it flopped.
TECHNOLOGY
The company has said its revenues
are growing but attracting users
tends to cost money in the short
term. Why, then, does Microsoft
want it so badly? The answer is
simple: the cloud. Microsoft,
Google, Apple and a few
independent companies are all
fighting over the lucrative cloud
market, which is rapidly becoming
the primary space for content
creation and storage. Microsoft
wants to integrate Yammer into its
Office 365 offering, adding value
to its product and fending off
rivals like Google, which offers a
free alternative.
CHATTER
Chatter offers a very similar service
to Yammer, with an emphasis on
collaborating on projects with your
business “friends”. You can create
groups, share files and keep your
colleagues updated on your
schedule. Unlike Yammer, Chatter
is – mostly – free. You only have to
pay if, as a company, you want to
impose administrative restrictions
on your workers.
LINKEDIN
Probably the best known business
network, LinkedIn is a somewhat
different proposition, with most
people using it to connect with
colleagues and to mine its database
of contact information. However, it
is a rapidly expanding service that
is rolling out more interactive
features in the wake of its multi-
billion float last year.
JIVE
It may not be generating as many
headlines as Yammer, but Jive is
older and bigger than Microsoft’s
new toy. Jive bosses have jumped on
the Microsoft deal, saying they have
heard from a multitude of potential
defectors concerned about
Yammer’s future after the sale. One
of Jive’s selling points is its link-up
with Microsoft’s SharePoint,
presumably something it will face
increased competition over as
Yammer integrates further with
Microsoft.
ECADEMY
This network has a focus on hooking
you up with contacts in the business
world, through blogs, message-
boards and chat.
1
TBR Report – "IBM System x
®
x86 servers: Meeting the demands of today’s enterprises by combining value and support," January 2012.
2
Source: Intel
®
Performance comparison using SPECfp*_rate_base2006 benchmark. Baseline score of 267 on prior generation 2S Intel
®
Xeon
®
processor X5690 (3.46GHz, 6-core, 12MB L3, 6.4 GT/s, 130W)
based platform published at www.spec.org as of 6 Sept 2011. Estimated new score of 486 on 2S Intel
®
Xeon
®
processor E5-2690 (2.90GHz, 8-core, 20MB L3, 8.0 GT/s, 135W) is based on Intel
®
internal
measured estimates as of 6 Sept 2011 using two Intel
®
Xeon
®
processor E5-2690, Turbo Enabled, EIST Enabled, Hyper-Threading Enabled, 64GB memory (8x8GB DDR3-1600), Red Hat
®
Enterprise Linux Server
6.1 beta for x86_6, Intel
®
Compiler 12.1.
3
x3500 M4 supports up to 768GB of memory using 32GB LRDIMMs in its 24 memory slots. Previous generation x3500 M3 supports up to 192GB of memory.
4
Ships with 4 1Gb Ethernet ports standard and supports integrated slot-less 10Gb Ethernet with Virtual Fabric. Previous generation server includes two 1Gb Ethernet slots and requires use of a PCI Express slot
to support 10Gb Ethernet.
5
x3500 M4 supports up to 32 internal 2.5" HDD. Previous generation x3500 M3 supports up to twenty four 2.5" HDD.
6
Quarterly price quoted is based on IBM’s 0% System x Solution Finance offering (FMV lease). Terms & Conditions Apply: Offering availability subject to credit approval; for more details and full Terms and
Conditions please visit: http://www.ibm.com/financing/uk/lifecycle/acquire/xsolutionfinancing.html.
Rates and offerings are subject to change, extension or withdrawal without notice. Prices include VAT at a rate of 20%.
IBM hardware products are manufactured from new parts or new and serviceable used parts. Regardless, our warranty terms apply. For a copy of applicable product warranties, visit
http://www.ibm.com/servers/support/machine_warranties. IBM makes no representation or warranty regarding third-party products or services. IBM, the IBM logo, System Storage and System x are registered
trademarks of International Business Machines Corporation registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. For a current list of IBM
trademarks, see www.ibm.com/legal/copytrade.shtml. Intel, the Intel logo, Xeon and Xeon Inside are trademarks of Intel Corporation in the U.S. and other countries. All prices and savings estimates are subject
to change without notice, may vary according to configuration, are based upon IBM’s estimated retail selling prices as of 01/04/2012 and may not include storage, hard drive, operating system or other features.
Reseller prices and savings to end users may vary. Products are subject to availability. This document was developed for offerings in the United Kingdom. IBM may not offer the products, features, or services
discussed in this document in other countries. Contact your IBM representative or IBM Business Partner for the most current pricing in your geographic area. ©2012 IBM Corporation. All rights reserved.
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Intel
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RAID 5 disk controller
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£3,704 (incl. VAT)
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6
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External disk storage with 6Gb/s Serial Attach SCSI (SAS)
interface technology
Scalable up to 48TB with 500GB NL-SAS 2.5" drives
Support for 96 drives with combination of EXP3512 or
EXP3524 expansion enclosures
Field upgradeable with FC or ISCSI host interface cards
Self encrypting drive options available for secure data at rest
DS3512 also available with 3.5" drive support

24
TV & GAMES
cityam.com
T
E
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S
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I
A
SKY SPORTS 1
7pmLive T20 Cricket 10.30pm
You’re on Sky Sports! 11.30pm
Football’s Greatest 12amPremier
League World 12.30amRingside
1.30amT20 Cricket 2.30am
Women’s International T20
Cricket 3.30amYou’re on Sky
Sports! 4.30amFootball’s
Greatest 5am-6amRingside
SKY SPORTS 2
7pmEuro 2012 Report 7.30pm
NRL Fulltime 8pmSuper League’s
Supermen 9pmRingside 10pm
WWE 12amWWE NXT 1amTime
of Our Lives 2amNRL Fulltime
2.30am-3.30amSuper League’s
Supermen
SKY SPORTS 3
6.30pmRacemax 7.30pm
Sporting Greats 8pmLive PGA
Tour Golf 11pmEuropean Tour Golf
1amPGA Tour Golf 4amIAAF
Athletix 4.30am-5amSporting
Greats
BRITISH EUROSPORT
7pmUEFA Euro 2012 Show
7.30pmSnooker 10pmEuro 2012
12am-12.30amCycling: Tour de
France
ESPN
7pmNBA Action 7.30pmESPN
Films: Catching Hell 9.30pmESPN
Films: The Fab Five 11.30pmPress
Pass 2012 12amLive Major
League Baseball 3amFIBA
Basketball 3.30amNBA Action
4am-6amESPN Films: The Fab
Five
SKY LIVING
7pmCriminal Minds 8pmFour
Weddings 9pmBattle of the
Brides: A sci-fi fan clashes with a
casino enthusiast. 10pmThe
Biggest Loser USA 11pmBones
12amCriminal Minds 1amMaury
1.50amAmerica’s Next Top Model
2.40amMedium3.30amBones
4.20amNothing to Declare
5.10am-6amJerry Springer
BBC THREE
7pmDoctor Who 7.45pmDoctor
Who Confidential 8pmComing
Here Soon 9pmRussell Howard’s
Good News 9.30pmLive at the
Electric 10pmLittle Britain
10.30pmDead Boss 11pmFamily
Guy 11.45pmAmerican Dad!
12.30amRussell Howard’s Good
News 1amLive at the Electric
1.30amDead Boss 2amCherry
Healey: How to Get a Life 2.55am
Little Britain 3.25amComing Here
Soon 4.25am-5.25amCherry
Healey: How to Get a Life
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmThe Big Bang
Theory 8.30pmHow I Met Your
Mother 9pm2 Broke Girls 9.30pm
Don’t Trust the B**** in
Apartment 23 10pmThe Midnight
Beast Live 10.05pmRules of
Engagement 11pmAlan Carr:
Chatty Man 12.05amThe Big
Bang Theory 1amScrubs
1.30amHow I Met Your Mother
2amRules of Engagement 2.20am
The War at Home 2.45am
Desperate Housewives 3.30am
90210 4.15amGreek
4.55am-6amSwitched
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmIce Road Truckers 9pm
Ax Men 10pmStorage Wars
11.30pmPawn Stars 12am
American Pickers 1amStorage
Wars 2amIce Road Truckers 4am
Lock ‘n’ Load 5amPawn Stars
5.30am-6amAmerican
Restoration
DISCOVERY
7pmBear Grylls 8pmGold Rush
9pmWorld’s Toughest Drive 10pm
Auction Hunters 11pmDeadliest
Catch 12amWorld’s Toughest
Drive 1amAuction Hunters 2am
Auction Kings 3amAmerican
Chopper 3.50amIce Pilots
4.40amBear Grylls 5.30am-6am
Destroyed in Seconds
DISCOVERY HOME &
HEALTH
7pmWedding Planners 8pmI
Didn’t Know I Was Pregnant 9pm
Untold Stories of the ER 10pmThe
Girl with Eight Limbs: A
Bodyshock Special 11pmYour Kid
Ate What? 12amUntold Stories of
the ER 1amThe Girl with Eight
Limbs: A Bodyshock Special 2am
Your Kid Ate What? 3amWedding
Planners 4amA Baby Story
4.30amBirth Stories 5am-6am
Birth Days
SKY1
7pmThe Simpsons 8pmFuturama
8.30pmThe Simpsons 9pmAn
Idiot Abroad 2 10pmA League of
Their Own 11pmRoad Wars 1am
Gangster Wives 1.55amBrit Cops:
Law & Disorder 2.55amSo You
Think You’re Safe at Christmas?
3.45amMedical Emergency
4.10amReal Filth Fighters
5.05am-6amDon’t Forget the
Lyrics
S
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6pmBBC News
6.30pmBBC London News
7pmMatch of the Day Live:
Euro 2012
10pmBBC News
10.25pmRegional News
10.35pmCHOICE Question
Time
11.35pmThis Week
12.20amHoliday Weatherview
12.25amSign Zone: Life & Debt: A
Greek Tragedy – Panorama
12.55amSign Zone: Antiques
Roadshow1.55amSign Zone:
Crime and Punishment 2.40am
Sign Zone: Great British Menu
3.10amSign Zone: Countryfile
4.10am-6amBBC News
5.50pmWimbledon 2012:
Further live coverage from the
All England Club.
8pmToday at Wimbledon:
A round-up of the fourth day’s
play.
9pmCHOICE The Men Who
Made Us Fat
10pmMock the Week: With
Marcus Brigstocke, Gary
Delaney and Zoe Lyons.
10.30pmNewsnight: Weather
11.20pmBomber Command: A
Tribute
12.10amThe Culture Show
12.40amBBC News
3.55am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
8pmBarking Mad?: Tonight
8.30pmYou’ve Been Framed!
9pmBenidorm
10pmITV News at Ten
10.30pmLondon News
10.35pmEuro 2012 Highlights
11.35pmCaroline Quentin:
A Passage Through India
12.30amJackpot247;
ITV News Headlines
2.30amBarking Mad?: Tonight
2.55amITV Nightscreen
4.35am-5.30amThe Jeremy Kyle
Show
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmCHOICE Country House
Rescue
9pmThe House the 50s Built
10pm24 Hours in A&E
11.05pmGordon Behind Bars
12.05amRandom Acts
12.10amThe Secret Millionaire
1.10amOur Man in Ibiza 2.05am
Undercover Undertaker: Channel 4
Dispatches: An investigation into
the funeral industry. 2.35amTime
Team3.30amAncient Egyptians
4.25amDeal or No Deal
5.20am-6.05amCountdown
6pmHome and Away
6.30pm5 News at 6.30
7pmBig Body Squad:
5 News Update
8pmMarco Pierre White’s
Kitchen Wars: 5 News at 9
9pmThe Baby with a New
Face: Extraordinary People
10pmBig Brother:
More from the house.
11pmBig Brother’s Bit on the
Side
12amSuperCasino
3.55amGreat Artists 4.20am
Wildlife SOS 4.45amWildlife SOS
5.10amHouse Doctor
5.35am-6amHouse Doctor
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits 1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to find as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUE’S
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6 7 8
9 10
11 12 13
14
15 16 17
18
19 20
21 22
22 33
6 18
15 5
22 12
45
8 23
45
7 37
11 3
17 11
35 21
9
9
5
6
12
34
8
28
24
45
10
14
4
13
45 7
29
16
16
10
6
12
17
17
ACROSS
1 Plant from which
opium is obtained (5)
3 Reddish-brown tint (5)
6 Coniferous tree (4)
8 King who allegedly
burned the cakes (6)
9 Vehicle from another
world (inits) (3)
11 Beat with a piece
of leather (5)
12 Expression of
greeting (5)
14 Appearance of
a place (7)
15 Curl of the lip (5)
16 Unsuccessful person (5)
18 Penultimate Greek
letter (3)
19 Loveliness (6)
20 Small area of land (4)
21 Clause appended to
a legislative bill (5)
22 Furious (5)
DOWN
1 Tubes (5)
2 Short introductory
essay preceding
the text of a
book (7)
3 Doing things
without the
assistance of
others (4-4)
4 Loss of the
ability to move a
body part (9)
5 Relating to
sound (5)
7 Nanny (9)
10 Telephone
switchboard
assistant (8)
13 Wearing away (7)
15 Not afected by
alcohol (5)
17 High, thin in
tone (5)
D
P
N
R
I O
G
E
T


4


4

4
M O D E M S A G E
I A A T O L L N
L A D E A B E T
D R O P S N E
G T R I G G E R
U R I M R
H E N C O O P N
A R R E S I N
R I L E E N E E
E S P I E S A W
M A D E S I G H S
1 2 5 3 4 1 3 2
2 5 6 9 1 7 3 8 4
7 9 8 4 9 5 1
3 4 7 1 5 8 2 9
9 3 8 1 7 9
9 6 6 9 8 6 8
1 3 2 2 5 1
4 1 7 6 9 3 8 5
9 7 8 7 2 3 1
8 1 6 9 3 5 4 7 2
3 2 1 6 8 5 9 7
4
4
4
4
4
4
4
4
4
The nine-letter word was
ABDUCTION
T
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
THURSDAY 28 JUNE 2012
QUESTION TIME
BBC1, 10.35PM
David Dimbleby presents a topical
debate from Luton, with panellists
including Tony Robinson, Justine
Greening and Tessa Jowell.
THE MEN WHO MADE US FAT
BBC2, 9PM
Jacques Peretti discovers how
marketing can persuade consumers
to buy supposedly healthy foods
that are high in sugar.
COUNTRY HOUSE RESCUE
CHANNEL4, 8PM
Simon Davis meets the owners of
Bantry House on the west coast of
Ireland, and tries to provide a viable
business plan to keep the estate afloat.
TVPICK
TOTTENHAM winger Gareth Bale has
targeted a return to the Champions
League after ending speculation over
his future by signing a new four-year
contract at White Hart Lane.
Fears that the 2011 PFA Player of
the Year Bale could seek a move grew
when Spurs missed out on a place in
the competition last month and boss
Harry Redknapp was sacked.
But the 22-year-old said: “The club
is progressing and I want to be a part
of that, so it was great to get the deal
done. I love the club and the fans
and I want to play my part in trying
to get us back into the Champions
League – where we belong.”
Former Chelsea manager Andre
Villas-Boas is tipped to replace
Redknapp. Croatian defender Vedran
Corluka, meanwhile, has joined
Spartak Moscow.
Bale commits
to Spurs and
targets Europe
G
E
T
T
Y
BRITISH No3 Heather Watson
savoured the turnaround in her for-
tunes after yesterday becoming the
first British female in 10 years to
reach Wimbledon’s third round with
a clinical victory over America’s
Jamie Hampton.
Confidence built during
Wimbledon’s previous matches and
in reaching the French Open’s sec-
ond round last month had a visible
influence as Watson quickly built a
commanding lead before sealing her
impressive 6-1, 6-4 win, the juxtaposi-
tion of her demeanour against this
time 12 months ago – when losing to
Mathilde Johansson in the tourna-
ment’s first round – every bit as
great as the achievement secured.
“Last year I was probably feeling
right down, at the bottom, and now
I’m feeling good, I’m right at the
top,” said Watson, who faces Polish
third seed Agnieszka Radwanska
next but last year cried upon her
exit. “It was tough last year because I
was winning the match and then I
got injured early in the second set.
“It was horrible for me because it
was my main tournament of the
year, but it’s turned out for the better
this year. [The third round is] defi-
nitely not terrifying. It’s exciting. I’m
looking forward to it and I’m relaxed
about it as well.”
Defending champion Novak
Djokovic and all-time great Roger
Federer also yesterday advanced to
the third round and, like Watson,
did so without the dropping of a soli-
tary set, though the former admitted
his 6-4, 6-4, 6-4 victory over America’s
Watson makes history as British
highs continue at Wimbledon
Heather Watson’s victory over Jamie Hampton makes her the first British female to reach the third round of Wimbledon in 10 years
British No3 enjoys
unexpected success
at All England Club
LONDON 2012 medal hope Mo Farah
believes last night’s 5000m
European Championship victory
vindicates his decision to withdraw
from the final of last weekend’s
Olympic trials.
Farah pulled out on the morning
of Saturday’s 1500m final but having
won gold last night with a
comfortable time of 13 minutes and
29.91 seconds, was adamant that his
earlier judgment was right.
“I didn’t do the 1500m final but it
was just to save my legs and to come
out here and get a good race,” said
Farah. “I apologise to everyone who
bought tickets but this medal means
more to me than doing the final and
getting a medal there.”
Farah justifies
rest with gold
BY DECLAN WARRINGTON
THURSDAY 28 JUNE 2012
26
SPORT
cityam.com/sport
BY FRANK DALLERES
BY DECLAN WARRINGTON
@cityam_sport
GAUCHO SUNDOWN POLO
FRIDAY 29
th
JUNE
HAM POLO CLUB RICHMOND
Gaucho hospitality from 2pm
at Gaucho Richmond
Contact Sophie
[email protected]
gauchorestaurants.com
Ryan Harrison proved problematic.
“It was a great match but I was in
trouble in the second set and it could
have gone either way,” said Djokovic.
“It is difficult to adjust under the
roof, and Ryan was serving fantasti-
cally. It was a close match, he per-
formed really well but I got the
crucial breaks in every set when I
needed to.”
Federer’s win was considerably
easier, however. The third seed’s
form was as impressive as it has been
since being replaced by Djokovic as
the world’s premier player, and the
6-1, 6-3, 6-2 dismissal of Italy’s Fabio
Fognini was simply never in doubt.
Federer’s 2010 final opponent,
Andy Roddick, also advances to the
next round but does so at the
expense of Britain’s Jamie Baker, over
whom he triumphed 7-6 (7-1), 6-4, 7-5.
Somewhat surprisingly, former
world No1 Caroline Wozniacki, US
Open champion Sam Stosur and 11th
seed Li Na were eliminated following
respective defeats to Tamira Paszek,
Arantxa Rus and Sorana Cirstea.
Wozniacki had been on the verge
of victory in the second set before
losing 5-7, 7-6 (7-4), 6-4 to Paszek,
though Stosur’s 6-2, 0-6, 6-4 loss came
with far-reaching consequences. In
joining myriad compatriots in suffer-
ing an early elimination, Stosur
ensured Australia would be left with-
out a remaining singles competitor.
Na’s 6-3, 6-4 loss was equally com-
prehensive, but there was an uplift-
ing 6-3, 6-3 victory for Kim Clijsters,
in her final visit to the All England
Club, over Andrea Hlavackova.
World No1 Maria Sharapova will
today finish her match with Tsvetana
Pironkova after bad light stopped
play. She leads 7-6 (7-3), 3-1.
TODAY’S HIGHLIGHTS
Men’s singles
n I Karlovic v A Murray [4]
n L Rosol v R Nadal [2]
n J Ward v M Fish [10]
Women’s singles
n M Sharapova [1] v T Pironkova
n S Williams [6] v M Czink
n E Baltacha v P Kvitova [4]
27
IN BRIEF
London Welsh set for hearing
nRUGBY UNION: London Welsh’s
appeal against the block on their
promotion will be heard today.
Lipman announces retirement
nRUGBY UNION: Former England
flanker Michael Lipman has retired
after suffering several concussions
while playing for Melbourne Rebels.
Diakite inks permanent QPR deal
nFOOTBALL: QPR have signed Samba
Diakite on a four-year deal. The Malian
joined on loan from Nancy in January.
CRICKET
COMMENT
ANDY LLOYD
Capello is entitled to his opinions, but I always think it’s a
bit cheap to kid on a player who was so anxious to do well

cityam.com
THURSDAY 28 JUNE 2012
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NGLAND begin their one-
day international series
against Australia tomorrow,
but it is hard to escape the
feeling that I’d rather it wasn’t
happening at all.
It’s always nice to beat the
Aussies, and I think England will,
although they’ll certainly provide
a sterner examination of our 50-
over credentials than West Indies.
But I’d much sooner Andy
Flower’s men had one more Test
against South Africa in their
summer schedule than a watered
down series like this one.
What we are used to in this
country are Test series against
the very top sides in the world,
but this is far from an Ashes,
which always makes you tingle.
I understand, of course, that
England cricket chiefs have to
maximise revenue and contests
such as these play an important
part in funding the game.
But I found the recent 50-over
matches against the Windies
boring; one-sided matches in
which it was soon all too obvious
who was going to win.
If these encounters with
Australia go the same way, then
those people who have paid £50 a
ticket to witness the spectacle
may think twice about repeating
the exercise.
In any case, Australia are a
team in transition but well
rounded with, aside from the
usual suspects, emerging talent
among the bowlers, in Pat
Cummings, and the batsmen, in
David Warner.
Yet some of those players will
be slightly unfamiliar with
conditions here, not helped by
rain restricting their practice,
and I expect England to take an
early lead and win the series.
Andy Lloyd is a former England
Test opening batsman and captain
and chairman of Warwickshire.
Fabregas: I knew I’d be the one
to seal Spain’s place in the final
2008 winners Spain are on the verge of retaining their European Championship title
SPAIN’S match-winning midfielder
Cesc Fabregas insisted he knew
beforehand that he would be the
one to send his side into the final
of the European Championship
after scoring the decisive penalty
to do just that.
A penalty shootout was required
to separate the two sides after 120
minutes had failed to produce a
solitary goal and it was the
Barcelona ball-player that out-
shone Real Madrid rival Cristiano
Ronaldo in presenting his side
with the chance to become the
first-ever to win three consecutive
major international tournaments.
The reality is that reaching the
final four in some ways represents
an overachievement on Portugal’s
part, even if Ronaldo’s fabulous
form had previously suggested
they could have finished as
winners, while Spain will await the
victor of tonight’s fixture between
Germany and Italy in the final.
“I had intuition and wanted the
fifth penalty,” said Fabregas, who
also scored Spain’s winning
spot-kick against Italy in the
quarter-finals of Euro 2008. “I told
Toni Grande [Spain’s assistant]
I thought I could repeat that
great moment.
“They told me initially to take
the second one but I said no give
me the fifth as I had this
premonition. I played awfully but
the team has had the desire. I’m
very excited.”
While Fabregas was again
Spain’s hero, Ronaldo, perhaps
unfairly, could be considered
Portugal’s villain. Though
undoubtedly the irresistible
influence in inspiring his side this
far, the dead-ball specialist had,
against conventional wisdom, yet
to take a penalty before Fabregas
sealed La Roja’s win and may
forever regret doing so.
Both teams’ approaches to the
opening 90 minutes failed to even
provide the threat of a goal before
Spain’s superior quality provided
genuine urgency in extra time.
Xabi Alonso’s penalty was saved
by Portugal’s Rui Patricio, as was
Joao Moutinho’s by Iker Casillas.
Andres Iniesta, Gerard Pique and
Sergio Ramos then scored for
Spain, as did Pepe and Nani for
Portugal, before Bruno Alves’s
miss and Fabregas’s winner.
FORMER Germany coach Jurgen
Klinsmann has dismissed their
historical failure to ever beat Italy as
an anomaly as they prepare to meet
in tonight’s Euro 2012 semi-final.
Eventual winners Italy knocked
Klinsmann’s Germany out of the
2006 World Cup at the same stage,
when current boss Joachim Low was
his assistant. However, this year
Low’s men are the in-form side,
having won all four games in Poland
and Ukraine to Italy’s one.
“That Germany have not won
against Italy is nothing more than a
coincidence,” said the former
Tottenham striker. “The form on a
given day is the decisive factor in
such games.”
Low must decide whether to recall
Mario Gomez, Lukas Podolski and
Thomas Muller to face England’s
conquerors, having beaten Greece 4-2
on Friday without the trio.
Germany eye
historic victory
BY FRANK DALLERES
PORTUGAL.................................0
SPAIN.........................................0
BY DECLAN WARRINGTON
EURO 2012
Results
One-day series? Give me an extra Test
England manager Roy Hodgson on Fabio Capello’s criticism of England striker Wayne Rooney
Spain win 4-2 on penalties

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