Cityam 2013-02-07

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FTSE 100 n6,295.34 +12.58 DOW n13,986.52 +7.22 NASDAQM3,168.48 -3.10 £/$ 1.57 unc £/€ M1.16 -0.01 €/$ M1.35 -0.01
England beat Brazil: Sport P26-27
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from 26/11/12 to 30/12/12 is 127,678
RBS took a £390m fine for Libor fid-
dling yesterday after watchdogs found
that 21 staff had colluded with rivals
over four years to fix the key market
interest rates for the benefit of their
own financial positions.
Traders offered each other steaks and
sushi in exchange for entering false
interest rates to drive the Japanese yen
and Swiss franc interest rates up and
down for their own gain.
Investigators found almost 100 writ-
ten requests for rates to be fixed,
including instant messages boasting of
the money made from the scheme.
Yesterday RBS was fined £87.5m by
the UK’s Financial Services Authority,
$325m (£207.6m) by the US
Commodity Futures Trading
Commission and $150m by the US
Department of Justice.
Investment bank chief John
Hourican also lost his job, forfeiting
£4m in bonuses and shares despite not
being involved with or aware of the
Libor fiddling.
The majority of the staff involved in
or aware of the scam have been fired
or have resigned. A handful of
staff who were peripherally
involved remain. The fine is
above the £290m paid by
Barclays but below UBS’s
$1.5bn, in part because RBS
did not push down rates to
falsely flatter the bank’s
position during the
credit crunch.
15 September 2009
Yen Trader 1: can we lower our fixings today please
[Primary Submitter]
Primary Submitter: make your mind up[,] haha, yes
no probs
Yen Trader 1: im like a whores drawers
5 December 2007
Yen Trader 2: FYI libors higher again today [...]
YenTrader4: 'ucksake. keep ours low if poss. don't
understand why needs to go up in yen
Yen Trader 2: no reason dude[,] [Bank C] and [Bank
D] went high yest
Yen Trader 4: send the boys round […]
Yen Manager: pure manipulation going on
20 August 2007
Senior Yen Trader: this libor setting is getting nutss
Bank A Trader: im puzzled as to why 3m libor fixing
not coming off after the FED action […]
Bank B Trader: [UBS] is lending dolls through my
currencies in 3 month do u see him doing the same
in urs […]
Senior Yen Trader: yes[,] he always led usd in my
mkt[,] the jpy libor is a cartel now [..]
Senior Yen Trader: its just amazing how libor fixing
can make you that much money […]
Senior Yen Trader: its a cartel now in london[.] they
smack all the 1yr irs ..and fix it very high or low
4 December 2008
Swiss Franc Trader: can u put 6m swiss libor in low
Primary Submitter: NO
Swiss Franc Trader: should have pushed the door
Primary Submitter: Whats it worth
Swiss Franc Trader: ive got some sushi rolls from
yesterday? [...]
Primary Submitter: ok low 6m , just for u
Swiss Franc Trader: wooooooohooooooo[,] 0.01 %?
thatd be awesome
Primary Submitter: 1.33
Swiss Franc Trader: perfect u r a nice man
14 May 2009
Swiss Franc Trader: pls can we get super high 3m
super low 6m. PRETTY PLEASE!
Primary Submitter: 41 & 51
Swiss Franc Trader: if u did that[,] i would lvoe [sic]
u forever
Primary Submitter: 41&55 then...
Swiss Franc Trader: if u did that i would come over
there and make love to you[,] your choice
Primary Submitter: 41+51 it is
22 November 2010
Senior Yen Trader: hey think we be able to con-
vince [Primary Submitter] to change the libor today?
Yen Trader 1: i can try
Senior Yen Trader: need to drop 3mth Libor and hike
6m Libor he dropped 6m by 2 bps last Friday
Yen Trader 1: at the moment the FED are all over us
about libors
Senior Yen Trader: thats for the USD?
Yen Trader 1: yes
Senior Yen Trader: dun think anyone cares the JPY
Yen Trader 1: not yet[,] i will walk over ot [sic] them
25 November 2010(audio recording)
Primary submitter: Morning, [Senior Yen Trader]? Hi,
[Primary Submitter].
Senior Yen Trader: Yeah, how are you?
Primary submitter: I'm pretty good sir. Very Good.
We're just not, we're not allowed to have those con-
versations on [instant messages].
Senior Yen Trader: Oh, sorry about that. I didn't
know. (laughter)
Primary Submitter: (laughter)
Senior Yen Trader: Oh because of the, the BBA thing?
Primary Submitter: Yes, exactly.
Senior Yen Trader: ah, ok ok. So yeah, leave it with
me, and uh, it won't be a problem.
ALLISTER HEATH: Page 2; Page 4
n n
n The instant messages RBS traders sent as they rigged Libor
RBS boss Stephen
Hester has
[email protected]
Follow me on Twitter: @allisterheath
UK in line for fresh tax hit
following 2015 election
CHANCELLOR George Osborne may
be forced to hit UK citizens with yet
another swathe of taxes after the
next election, in order to fill the hole
in the country’s finances.
Current budget plans imply total
real term cuts of 33.2 per cent in
unprotected departmental spending
between the 2010-11 and 2017-18 fis-
cal years, the Institute for Fiscal
Studies (IFS) pointed out in its green
budget yesterday.
But since such a level of cuts could
be extremely politically difficult, the
government may choose instead to
cut into unprotected departments,
welfare for the elderly, drop its fiscal
targets, or hike taxes.
And typically new governments
have hit the populace with about
£7.5bn of taxes after being voted in,
the IFS claimed, giving the incoming
government in 2015 a potentially
tempting precedent.
The IFS report also looked into the
taxation of higher earners, after the
coalition have called on those with
the broadest shoulders to bear the
biggest burden.
The top 20 per cent of households
by income paid around half of all
taxes, with the top 50 per cent pay-
ing close to four fifths. And looking
at net taxes – taxes minus benefits –
the size of the burden on higher
Buyout firms seek £10bn EE bid
Buyout firms have accelerated talks with
lenders to secure funding for possible
£10bn bids for EE, the UK’s largest mobile
phone operator, in what would be the
biggest private equity-backed acquisition
in Europe since the financial crisis. The
efforts have picked up in intensity in the
past week amid buoyant credit markets
and in the wake of mega deals such as the
$24bn buyout of Dell, raising hopes a
debt package of up to £7bn could be
raised to fund such an acquisition, people
with knowledge of the talks said.
Cantor in talks over Seymour Pierce
Cantor Fitzgerald is in late-stage talks to
buy lossmaking Seymour Pierce, in a deal
that would secure the future of one of the
City’s oldest stockbrokers. Talks on a deal
were continuing late into last night.
Commodity hedge funds lose assets
Commodities hedge funds surrendered at
least 20 per cent of their assets last year
after investors pulled out large sums
following the sector’s worst annual
performance in more than a decade. The
average commodity hedge fund lost 3.7
per cent in 2012.
Hundreds lose jobs at IT firm 2e2
Administrators overseeing the sale of 2e2,
the failed IT services company, yesterday
dismissed 627 staff after failing to find a
purchaser for the firm. Administrators are
now seeking a deal with O2, the mobile
network, that could save about 100 jobs.
M&S starts selling online in China
Marks & Spencer is selling online in China
for the first time after signing a deal with
Taobao, the world’s second-largest e-
commerce website.
Coalition scraps plan to end GCSEs
The government’s plan to scrap GCSEs and
replace them with a new baccalaureate
qualification has been shelved because of
significant opposition from the Lib Dems.
GCSEs will instead be reformed.
BT launches phone to block cold calls
BT has started producing a landline phone
which should block up to 80 per cent of
unwanted calls. Users will be able to block
all calls from international or withheld
numbers, as well 10 extra numbers.
Pinterest seeks $2.5bn valuation
Online scrapbooking site Pinterest is in
talks to raise a new round of financing at a
$2bn to $2.5bn valuation. Global user
visits to its website hit 48m in December,
up from 9m a year earlier
Open source smartphones in October
Smartphones running the open source
Ubuntu operating system will be available
to customers beginning in October 2013.
British firm Canonical has made a version
of the Linux-based software for mobiles.
PRINTING money should not be
taboo, outgoing City watchdog boss
Lord Turner said last night, as it
can be beneficial in small doses.
The Bank of England currently
boosts the money supply through
buying gilts, with most economists
holding that printing cash instead
could lead to hyperinflation like in
Zimbabwe or early-1920s Germany.
But departing Financial Services
Authority head Lord Turner said
the Bank should go beyond
quantitative easing (QE) – gilt
buying – and actually print money.
Turner calls for
money printing
Chancellor George Osborne has failed to react to a £65bn hit to borrowing forecasts
To contact the newsdesk email [email protected]
O wonder trust is at a low ebb
in Britain today. Two major
institutions – RBS and the NHS
– have been shown to have
failed. We devote much of our front
page to some of the shameful emails
sent by the traders involved in the
Libor rate-rigging scandal; this has
been another disastrous day for the
City’s reputation, with the hundreds
of thousands of honest people who
work in financial services yet again
seeing their reputation tarnished by a
minority of idiots.
Meanwhile, a devastating 1,782 page
official report has exposed the worst
ever scandal in the NHS yesterday, one
which led to a horrendous number of
unnecessary deaths. Five other hospi-
tals are to be investigated. It’s a huge
and deadly affair. In both cases, unfor-
tunately, the coalition has mishan-
dled its response.
Coalition mishandles its response to Libor and NHS scandals
First, RBS. George Osborne’s state-
ment that “taxpayers won’t be paying
the Libor fine, bankers will” is mis-
leading. The nationalised banks’
accounts are not consolidated within
the government’s accounts. There
was never any chance of extra cash
being transferred from taxpayers to
RBS as a result of the Libor fines, as
much of the discussion and language
used yesterday implied. Also, the fines
were levied by the authorities on the
bank, not on staff.
The only things that should matter
are punishing individuals who do
wrong, discouraging others from so
doing and ensuring that all banks
have the right systems in place to
reduce the chances of future deba-
cles; maximising the tax receipts gen-
erated from RBS and its staff; and
maximising the value of the public’s
82 per cent stake in RBS, which even-
tually needs to be reprivatised.
The first point can only happen if
the government is seen to be very
tough with those who manipulate
markets. There needs to be far more
criminal prosecutions of white collar
crimes and jail sentences. As to the
second point, reducing bonuses of
staff who were not involved in the
scandal will prove to be a direct hit to
the taxpayer, as pay is subject to high
levels of income tax and national
insurance. Demoralising RBS’s
excuse whatsoever for the absurd
manipulation – is that the FSA made
it clear that “the direct impact of
actual manipulation of the Libor fix
on UK retail consumers is likely to be
Tragically, the same is not true of
the NHS scandal. Banks needed to
change their practices – and clearly,
so does the UK’s health service, which
is in desperate need of structural, cul-
tural and managerial revolution. Yet
it doesn’t seem as if anything will
really change, for all of yesterday’s
posturing. The coalition needs to be
as tough on failing hospitals as it has
been on corrupt bankers – though in
both cases it needs be objective and
cool-headed, rather than endlessly
resorting to demagogy.
remaining employees will do nothing
to boost the bank’s long-term value
and share price. Of course, retaining
cash could in theory boost the bank’s
value but market capitalisations and
balance sheet assets are two very dif-
ferent things. The fact that key man-
agement decisions – such as pay
awards – are now openly being taken
for political reasons will do more to
depress RBS’s long-term value than
any retained cash will do to bolster it.
Of course, the government, as RBS’s
main shareholder, may genuinely
believe that pay is still too high in its
bank, and that lowering it would
boost profits sustainably and hence
long-term value. In that case, it
should order its executives to pay well
below market rates for all positions,
permanently – and test its hypothesis.
It would be a disaster, but so be it.
The only good news – and that is no
earners is even clearer. The top 10 per
cent pay nearly three fifths of net
taxes, while the top 20 per cent pay
over four fifths.
The top 30 per cent effectively pay for
all the benefits – both cash and in
kind – afforded to their other seven
deciles, the IFS said.
But if the government did want to
claw in yet more funds from the
wealthier members of society, the IFS
said, it would be wise to step away
from stamp duty land tax, which the
think tank described as a “bad tax”,
because it taxes transactions, imped-
ing economic efficiency. A better
option would be to update council tax
through a complete program of revalu-
ation – as the current system is based
on 22-year-old house prices.
The IFS said property taxes were
much more difficult to avoid, and had
significantly less harmful distor-
tionary effects on economic activity.
But a mansion tax, such as that pro-
posed by the Liberal Democrats would
not bring in much revenue, the think
tank said, as it would focus on a tiny
minority of properties in the top band
of council tax.
through the slow economic recovery,
driven by an influx of middle-aged
men, according to data out yesterday.
Since 2008, 367,000 more UK
residents have become self-
employed, the Office for National
Statistics (ONS) said, bringing the
total to 4.2m, an all-time record.
The average age of this 4.2m
cohort is 47, the ONS report showed,
while 70 per cent of them were men.
Cab drivers, builders, carpenters, and
farmers were the top four trades
cited in yesterday’s figures.
Brits employ
selves in dip
Find your next step at
n The Institute for Fiscal Studies (IFS) has
dug into the figures and found that since
the 2010 spending review, government
borrowing has worsened by £65bn above
forecast – but it has made only £1bn of
adjustment to counter this worsening.
n The cyclically-adjusted current budget
deficit, which underpins chancellor George
Osborne’s fiscal mandate, is based on the
Office for Budget Responsibility’s (OBR)
estimate of the output gap – how much
spare capacity there is in the UK economy.
But output gap estimates vary from 0.8 per
cent of GDP to six per cent of GDP – if the
OBR estimate were wrong, the government
would need either drastically more or less
consolidation. There is huge uncertainty.
n The deficit is going up, not down. Like-
for-like borrowing – with one-off changes
stripped out – is set to rise £4bn in 2012-13,
compared to 2011-12, the IFS say.
n Unprotected sectors will face cuts
totalling almost a third over the whole
planned austerity period (2010-11 to 2017-
18), if the government adds in no more tax
hikes, and refuses to cut into welfare
spending on the elderly, or the NHS,
education or foreign investment spending.
n Whatever promises they make,
governments tend to hit their subjects with
tax hikes worth around £7.5bn in the year
after they are elected.
n Public sector workers of the same age
and with the same level of experience and
education as those in the private sector are
currently paid two to eight per cent more.
n If the Eurozone breaks up, government
debt could rocket above 100 per cent of
GDP very quickly, from only around 40 per
cent before the crisis.
n The top 20 per cent of earners already
pay around 80 per cent of net tax.
VIRGIN Media’s new owners yesterday
pledged business would continue as
usual, despite the telecoms firm’s
chief executive announcing he would
step down.
After signing a $23.3bn (£14.9bn)
agreement to buy the company, boss-
es at Liberty Global played down sug-
gestions of massive investments in TV
rights that would heighten Virgin
Media’s competition with Rupert
Murdoch’s BSkyB.
Liberty, which said it would become
“the world’s leading broadband com-
munications company” on complet-
ing the deal, announced the
acquisition yesterday morning.
Virgin Media’s chief executive Neil
Berkett, who has led the company
since 2007, shortly after its formation,
announced he would step down once
the deal is finalised. Berkett, who has
built up a sizeable bundle of Virgin
Media shares and options, will pocket
$65m, rising to as much as $85m,
when he leaves.
“I’m not a very good number two,”
Berkett said yesterday. Liberty’s chief
executive Mike Fries said he had not
started the process of appointing a
successor. Fries said Virgin Media
New owners of
Virgin Media to
avoid TV war
would keep its branding, and that he
was not planning a major change of
strategy. Virgin Media currently pays
Sky to offer some of its channels on
Virgin Media’s own service, rather
than competing for sports and movie
rights, and Fries said this relationship
with Sky would continue.
“I think Neil’s done a terrific job
building a strong relationship with
Sky. We don’t see any reason why that
would change or why Virgin Media
needs to compete with Sky for that
premium content so I don’t see any
significant changes in strategy,” Fries
His comments were echoed by John
Malone, the billionaire chairman
behind Liberty Global. Malone’s entry
into the UK telecoms market created a
new rivalry with Murdoch, whose
News Corp owns 39 per cent of BSkyB,
after the two had vied for control of US
media companies in the early 2000s.
But Malone pointed to “a long history
of co-operative relationships with News
Corp” yesterday. The deal came as
Virgin Media posted a slight annual rise
in customers to 4.9m, and said it had
moved more people on to “triple-play”
contracts, in which they take landline,
broadband and pay-TV services.
Virgin Media chief Neil Berkett will leave the company with a payout of up to £54m
n n
Results that show why Malone made his move
NOTHER day older and deeper
in debt: that’s Virgin Media,
with its new soon-to-be-owner
Liberty Global announcing a
plan to add $3bn (£1.9bn) to its
existing £5.723bn net debt pile.
Overall, however, the deal makes a
great deal of sense for the UK’s
quadruple-play specialist, as I
discussed yesterday.
An understandable interest in the
nuts and bolts of the deal itself
drowned out Virgin Media’s results
yesterday, but its numbers for the
last quarter of 2012 and the year as a
whole are worth considering.
Revenue for the year was up 2.7
per cent, slightly missing some
analysts’ forecasts. However, the
crucial consumer divisions
performed as expected. Virgin’s
business segment was to blame,
down 4.5 per cent year-on-year last
quarter, on declining voice revenue
and wholesale data revenue. And
even here, over the whole of the year
it was up 5.2 per cent year-on-year,
accounting for almost a third of
group revenue growth.
Free cash flow was down 4.9 per
cent for the year and 1.4 per cent in
the quarter. That doesn’t seem to sit
with the praise for the firm’s ability
to generate free cash flow in the
official press release for the
acquisition. However, the fall was in
line or better than analyst
predictions and driven by further
investment in Virgin Media’s core
asset: its broadband infrastructure.
Virgin Media has 1.7m contract
mobile customers, versus 4.89m
consumer cable customers. Since its
business model needs customers to
lock in for multiple services, that is a
problem. But consumer cable
customers are booming: net
additions went from 5,600 in 2011 to
88,700 in 2012. It is also notable that
41 per cent of gross broadband
additions are paying extra to get top
speeds. John Malone, Liberty
Global’s chairman, has made a
natural addition to his group. Just
don’t mention his rivalry with Sky’s
owner Rupert Murdoch.
VIRGIN Media’s $23.3bn (£14.8bn) sale to
Liberty Global saw a host of banks and
lawyers poring over the books, with the deal
funded by an enormous mix of bonds and
loans. The deal will see Virgin Media take
£2.3bn of debt – the biggest junk sale in
Europe since 2010 – with Liberty’s loans on
the deal equivalent to £2.9bn. This required
some heavy work from the two companies’
advisers. Virgin Media was advised by its
house broker Goldman Sachs, with manag-
ing directors Peter Gross and Mike Smith
working on the deal in New York where the
agreement was signed late on Tuesday
night. Also working on the deal on Virgin
Media’s behalf was JP Morgan in the UK,
with the bank’s London co-head of technol-
ogy, media and telecoms investment bank-
ing David Lomer leading the team. Lomer,
who has been at JP Morgan and its prede-
cessors since 1997, has worked on a variety
of deals around Europe, including the initial
public offering of Dutch cable firm Ziggo in
March last year. Lomer has spent most of his
JP Morgan career in media M&A, and was
made co-head of the division last year.
Leading the JP Morgan team in New York
was Ben Berinstein, the bank’s US co-head
of corporate finance advisory. Liberty
Global’s lead financial advisers were New
York boutique investment bank Liontree
advisors, while Credit Suisse’s Marisa Drew,
co-Head of the bank’s global markets solu-
tions group, led the team in London.
New York’s Milbank and Fried Frank were
legal advisers to Virgin Media, while
Shearman & Sterling and Ropes & Gray
worked for Liberty Global.
STATE-BACKED bank RBS struck a
two-year deferred prosecution deal
with US authorities, admitting
responsibility and paying an extra
$100m (£63.8m) as one condition of
the settlement agreed yesterday.
The bank’s Japanese arm pleaded
guilty to one charge of wire fraud
under the deal with the American
Department of Justice (DoJ), while the
deferral agreement with the parent
group covers charges of wire fraud
relating to Swiss Franc Libor and an
antitrust violation on Yen Libor.
Traders did not fiddle US rates but
some of the activity went through the
US, giving the authorities power to
fine the bank.
The wrongdoing took place from
2006 to 2010, two years after chief
executive Stephen Hester took con-
trol. But he maintains senior man-
agers and regulators were unaware at
the time as they were more focused
on preventing the giant institution
from collapsing.
RBS wants to
move on from
Libor scandal
“We are also determined to correct
the broad range of control and risk
management failures that originated
in RBS during the financial boom
years. Libor manipulation is one exam-
ple,” he said.
But Hester conceded it would be dif-
ficult to fully stamp out the cosy rela-
tionships in the sector: “In trading
culture there was a mateyness, meet-
ing in City bars,” he said.
“It is not a case of senior managers
from different banks gathering
around the table, but a risk of traders
having discussions they shouldn’t.”
RBS, headed by Stephen Hester, expects a fine in future for anti-money laundering failures
Royal Bank of Scotland Group PLC
6Feb 31 Jan 1 Feb 4Feb 5Feb
350 p
CHANCELLOR George Osborne
yesterday claimed a victory for
taxpayers as the bank said its
bonus pool would be reduced and
previous payouts to bankers
clawed back in light of the fine.
Over the weekend Osborne
called for staff to pay the fine, and
RBS said yesterday roughly £300m
will be cut from pay packets.
“What happened at RBS and
other banks is totally
unacceptable,” Osborne said. “At
my insistence, the bankers, not the
taxpayers, will pick up the bill.”
But RBS chairman Sir Philip
Hampton said the decision had
already been made before the
chancellor demanded it.
Meanwhile influential
backbench MP John Mann called
Bankers lose bonuses to cover
huge interest rate-fixing fine
for the bank to fire everyone
related to the scandal.
“This fine does not go far
enough. All the staff that were in
charge at the time and had
knowledge of what was going on
should be removed,” said the
Labour member of the treasury
select committee.
But the bank argued not all
those involved deserve to lose
their jobs.
Of the 21, six were fired over the
scandal and eight had left before
they could be punished. Another
was fired for an unrelated matter
and six have been disciplined.
RBS argues a final warning is
appropriate in some cases – one
graduate recruit was caught up in
the emails after two months at the
bank, leading managers to deem a
warning the best solution.
RBS’ investment banking head has
lost his job and around £4m in
bonuses and shares because
he is the senior banker
closest to the Libor fixing,
rather than because he
was involved.
Chief executive
Stephen Hester said a
head near the top of the
bank had to roll to show
bosses are accountable for
the actions of their
Hester sorry investment chief
Hourican took fall for debacle
And he said John Hourican
fitted the bill as the wrongdoing
happened in his department, but
to go any further up the bank
would take the blame too
high up and cause
unnecessary damage.
“It is very tough on
John – it happened a long
way down his
organisation,” said Hester.
“But it is right that senior
accountability has to
be accepted. It is
right for John
to lose his
John Hourican first joined
the giant bank in 1997
DEUTSCHE Bank is believed to have
suspended five traders over its
ongoing internal investigation into
Euribor manipulation.
The German lender suspended
two others late last year for
involvement in Libor rigging.
“Upon discovering that certain
employees acted inappropriately, we
have suspended or dismissed
employees, clawed back unvested
compensation, and will continue to
do so as we complete our
investigation,” it said at the time.
The traders worked on Deutsche
Bank’s money market team in
Euribor probe
at Deutsche
HSBC was forced into its biggest
restructuring in almost 150 years
because the bank’s complex structure
made it attractive to criminals, its
chief executive admitted yesterday.
“Our structure was not fit for pur-
pose for a modern world,” Stuart
Gulliver told the parliamentary
commission on banking stan-
dards. “Our geographic footprint
became very attractive to
transnational criminal
organisations, whether
they are terrorist in origin
or criminal in origin.”
HSBC was in December
slapped with a $1.9bn
(£1.2bn) fine, the
largest ever imposed
on a bank, following a
US investigation into
its Mexican and US
The probe made scathing
Gulliver admits
HSBC was too
large to police
BY HARRY BANKS criticism of HSBC’s anti-money-laun-
dering systems and found its lax con-
trols allowed two drug cartels to move
$881m through the bank.
“We’ve crushed our reputation with
the Mexico events,” Gulliver said. “The
behavioural stuff of what went on in
Mexico is absolutely shocking to us.”
After taking the bank’s helm at the
start of 2011, Gulliver took much of
the control out of the hands of coun-
try managers.
“It’s the biggest organisational
change in this firm since 1865
and we did it to deal with the
weaknesses,” he added.
Some senior people have
been removed from the
bank for “values breaches”
in the last two years, but
Gulliver said there were
rewards on offer as well
as penalties.
Ex-Northern Rock chair joins Lords
n The 5th Viscount Ridley, chairman of
Northern Rock when the bank collapsed
in 2007, was yesterday elected to the
House of Lords after an unusual by-
election vote. There are 92 hereditary
peers left in parliament’s upper
chamber and when one dies – as Earl
Ferrers did last year – a vote is held to
replace them with another hereditary
peer from the same party. Ridley
topped the poll of 26 other Tory peers
and can now influence legislation.
JP Morgan pares back wages
n JP Morgan is reported to be paying
its investment bankers and trading staff
three per cent less for 2012 as a lack of
large deals dented the bank’s fees. The
bank, which was also knocked by the
London Whale trading loss, will impose
a larger share of the bonus pain on
more senior staff, according to
Anglo Irish Bank to be liquidated
n The former Anglo Irish Bank is
expected to be liquidated in order to
reduce the Republic of Ireland’s debt
burden. The move, subject to ECB
backing, would mean that Ireland no
longer has to make €3.1bn annual
payments on a €28bn note used to bail
out the bank in 2008. Instead the debt
will be transferred to the Central Bank
of Ireland, enabling the state to make
more gradual repayments.
Stuart Gulliver said HSBC’s
reputation was “crushed”
Mark Kleinman is the City editor of
Sky News @MarkKleinmanSky
EPUTY heads must roll. It’s
impossible to decrypt
yesterday’s Libor-rigging
settlement between Royal Bank
of Scotland (RBS) and regulators in
the UK and US without being
reminded of that immortal phrase.
John Hourican, who will step down
as the boss of RBS’s investment bank
at the end of April, is entitled to feel
hard done by. By the admission of
regulators and RBS board members
alike, he had no case to answer over
wrongdoing at the bank, much of it
outlined in luridly self-interested
messages disclosed yesterday.
Nevertheless, those close to him
say he had accepted that his
departure had become necessary to
satisfy the political desire for a scalp.
“It is the right thing to do,” he told
staff. “The jobs that many of us do
are well paid and with high reward
comes a greater responsibility.” He
hadn’t anticipated the bloodthirsty
way George Osborne would pursue
the £4m in deferred share awards he
had earned in previous years.
Osborne does the wrong thing while Hourican takes the fall
Hourican is not an impoverished
man, and his career is far from over:
indeed, his track record at RBS,
generating more than £12bn of
profit for the investment bank
during his tenure, will leave him
well-placed to land another top job
in the industry. Yet while he will
move on, for RBS and Osborne,
Hourican’s rather brutal treatment
augurs badly.
The group’s investment bank still
has a balance sheet with £60bn in
assets, a number not dissimilar in
scale to the GDP of a small country.
Recruiting capable leadership for
the unit has just been rendered next
to impossible, particularly if – as was
being noisily suggested at RBS’s
investment bank headquarters on
Bishopsgate yesterday – some of
Hourican’s closest lieutenants follow
him and jump ship.
It is hard not to interpret this
meddling as creating a permanent
impairment to the value of
taxpayers’ stake in the bank.
Osborne walked into the Treasury
in 2010 confident that he would soon
be trumpeting the recovery of
taxpayers’ money from Lloyds and
RBS. His politically-myopic actions
resemble those of a man repeatedly
jamming his finger on the self-
destruct button.
The listing of Russia’s main index,
which published its flotation price
range this week, offers a clue to the
Fortunately for Sir Simon Robertson,
he is a young 71. In recent months,
he has needed to be. As deputy
chairman of HSBC and chairman of
Rolls Royce, the former Goldman
Sachs partner has had a full in-tray
dealing with corruption probes of
varying existential significance.
His workload is about to lighten.
Rolls’ May AGM will be Sir Simon’s
last after eight years at the helm.
People close to the company say it
has used MWM Consulting, the
headhunter, to conduct a global
search for his successor. Expect an
announcement from the aero-engine
manufacturer in the coming weeks.
Kremlin’s view of those corporate
emigres which have tapped capital
markets in London and New York.
Even at the bottom of the
indicative price range, the Moscow
Exchange will be valued at a
comparable level to its London rival.
One early candidate to list on it
could be Megapolis, a Russian
tobacco distributor which had
harboured hopes of floating in
London last year.
I understand that the UK Listings
Authority raised reservations about
some of the individuals involved in
Megapolis. The company’s plans were
quietly dropped, according to one
insider familiar with the deal. Its
next move will give an indication
about the threat posed by London’s
newest rivalry.
FINANCIAL adviser Hargreaves
Lansdown was the FTSE’s biggest
blue chip riser yesterday after report-
ing record revenue and profit for the
second half of last year.
However it warned a new govern-
ment initiative to boost lending
would compress revenue margins for
the outfit over the rest of this year.
The company, co-founded by Peter
Hargreaves and Stephen Lansdown
in Bristol in 1981, leapt to a record
share price high in trading yesterday
after delivering a 30 per cent jump in
profits on revenues of £140.3m for
the six months ending December
Hargreaves, who still sits on the
company’s board as executive direc-
tor, said customer trust and the com-
pany’s cost consciousness and
efficiency had helped maintain its
momentum over the period.
However, he warned that the gov-
ernment’s continued support for the
Funding for Lending scheme (FLS)
would hit short-term revenue from
cash margins at the company.
“As margins decline we will need to
Markets cheer
bumper profits
at Hargreaves
accelerate our business,” he told City
The FLS was designed to give banks
access to cheaper money to boost
lending but has subsequently led to
banks cutting interest rates paid to
UK savers. The firm predicts this will
result in a reduction on the revenue
margins of its cash balances into
Hargreaves yesterday criticised the
interference of FLS and other mone-
tary policies such as quantitative eas-
ing and said the market should be
left on its own to operate.
“The FLS is allowing a few people to
soldier on paying their mortgage but
what we need are thousands of repos-
sessions to get the house prices down.
The market should be allowed to
cleanse itself,” he said.
The company, which offers a super-
market-style approach to picking
investments for retail investors, built
its assets under administration by 30
per cent over the half year. They now
stand at just over £30bn. The compa-
ny also increased its interim dividend
from 5.1p to 6.3p on the back of the
success. The firm first floated on the
stock exchange in May 2007.
Co-founder Peter Hargreaves said the market should be allowed to cleanse itself
SWEDISH group Handelsbanken
recorded solid growth in 2012
with international expansion
driving profits, the institution’s
annual results showed yesterday.
Post-tax profits jumped 18 per
cent to SEK14.5bn (£1.46bn) with a
10 per cent rise in interest income
providing much of the boost.
Expenses increased five per cent
with staff costs up eight per cent.
UK profit rose 56 per cent to
SEK1.02bn, headcount increased
25 per cent to 133 and branch
numbers rose 28 per cent to 133.
UK profits leap
VINCENT Tchenguiz yesterday
released details of his claim for
over £200m of damages against the
Serious Fraud Office (SFO) over its
botched investigation into him.
The court filing, which relates to
a high profile raid on Tchenguiz
and his brother Robert in 2011 over
their dealings with failed Icelandic
bank Kaupthing, accuses the SFO of
false imprisonment, malicious
prosecution and misfeasance in
public office under the agency’s
former director Richard Alderman.
SFO faces £200m
Tchenguiz claim
While first half profit is very close to our forecast, revenues are £2m
higher and importantly, assets under administration are £1.5bn (i.e. four per
cent) above our expectations. In addition, the equity market has been
very strong year to date. We are revising our forecasts upwards.

Hargreaves continues to benefit from strong net client in-flows despite
a tough consumer environment... The boost to results allows an increase in
interim dividend in-line with top-line growth which will please income
seekers (although yield not the biggest).

Customer growth, better equity markets and increased client optimism
combined with easier customer switching bodes well for flows and profit devel-
opment going forward. We upgrade our pre-tax profit forecasts four per
cent this year .



THE SUCCESS of the MailOnline
website has led to a boom in digital
advertising revenues at the owner of
the Daily Mail newspaper.
Daily Mail & General Trust (DMGT)
said yesterday that advertising rev-
enues at its national newspaper
websites had grown 51 per cent year-
on-year in the three months to 30
This made up for a nine per cent
decline in advertising revenues at
the company’s newspapers, which
include the Daily Mail, Mail on
Sunday and Metro.
Last year, MailOnline became the
world’s most popular newspaper
website and reached profitability
for the first time since its birth in
2007. The website saw 127m unique
users in January, the company said.
The online advertising boom
meant that despite the decline in
print, like-for-like advertising rev-
Internet boom
leads growth in
sales at DMGT
enues at DMG Media – DMGT’s
national newspaper division – stayed
relatively steady, dipping by one per
cent. However, with a decline in cir-
culation hitting newspaper sales,
DMG Media’s turnover fell seven per
cent to £204m. DMGT’s local newspa-
per arm, Northcliffe, saw revenues
down eight per cent to £49m.
The division is being spun off into
a new Local World venture, along
with several other local newspaper
Weak volumes hit CME Group
n CME Group yesterday said its fourth-
quarter profit fell sharply from a year
ago as trading sagged, a decline Wall
Street had anticipated given muted
market volatility and the US Federal
Reserve’s renewed commitment to low
US interest rates. The Chicago-based
exchange operator said its net income
tumbled to $167m (£106m) from
$745.9m a year earlier. Revenue fell to
$660.9m from $736.5m. CME said it
stands to win business from an
expected shift from swaps to futures.
ICE nets small rise in income
n American exchange business
IntercontinentalExchange, which is in
the process of buying NYSE Euronext
for $8.2bn, yesterday reported a two
per cent rise in quarterly profit, helped
by an increase in market data revenues
and slightly lower expenses. Net income
attributable to the Atlanta-based
commodities exchange was $129.5m
(£82.7m), up from $126.8m. Revenues
fell one per cent to $323m, as ICE’s
futures business saw a one per cent
decline in average daily volume.
Property giant CBRE beats forecasts
n CBRE, one of the world’s largest
commercial property providers, last
night unveiled a 22 per cent rise in
fourth quarter profits, far surpassing
Wall Street’s forecast, with strong sales
in all regions, particularly the Americas.
Profit jumped to $181.9m (£115m), up
from $149.3m a year earlier. Revenue
rose 14 per cent to $2.0bn.
CANARY Wharf Group will today put into place the final piece of steel at 25/30 Churchill
Place, the last building in the original Canary Wharf 1988 masterplan to be completed.
The 525,000 square feet property has been half pre-let to the European Medicines
Agency for 25 years at £46.50 per sq ft. The rest of the tower remains unlet.
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EUROPEAN firms’ €1 trillion
(£863m) cash pile will not be
invested in a splurge on capital
expenditure thanks to recent
improvements in confidence,
ratings agency Standard and Poor’s
warned yesterday.
Fears of years of weak growth in
the periphery and the continued
chance of a Eurozone break up or
collapse continue to plague firms
who are still likely to sit on their
cash piles, the analysts said.
And they added that the cash
piles peaked two years ago and are
not unusually high currently, again
suggesting hopes are misplaced.
Capex splurge
hopes fading
MEDIA giant News Corp last night
reported a jump in quarterly
profits thanks to strong growth at
its cable networks.
Total revenue at the Rupert
Murdoch-controlled business rose
five per cent to $9.43bn (£6bn) for
the final three months of 2012,
while profits more than doubled
to $2.4bn.
However it spent a further
$56m covering costs relating to
the closure of the News of the
World following the phone
hacking scandal.
The division that operates the
company’s newspapers and book
Rupert Murdoch’s News Corp
sees quarterly profits double
publishing reported operating
income rose to $234m from
$218m. News Corp said the launch
of The Sun on Sunday helped
offset lower advertising revenues
at its Australian newspapers.
News Corp is preparing to
separate its faster growing
entertainment assets from its
newspapers such as The Times and
The Wall Street Journal. The move
has been greeted with enthusiasm
from investors who have driven
up the stock almost 50 per cent
over the last year.
The company’s global media
empire also includes Fox
Broadcasting and the film studio
Twentieth Century Fox.
PHARMA giant GlaxoSmithKline
(GSK) said yesterday that it expects
revenue and profit to bounce back
this year, despite a weak European
market dragging sales down one per
cent during 2012.
Chief executive Andrew Witty also
revealed that the firm is weighing up
the future of its famous Lucozade and
Ribena brands, refusing to rule out
the possibility of divesting both.
Witty said that he has a completely
open mind over the future of the
drinks, as GSK launches a
review that will report by
the middle of the year.
The company could look
for partners to help grow
the brands in its key emerg-
ing markets, or invest more
cash – or sell them off.
“Nothing is ruled out,”
Witty stressed.
Lucozade and Ribena
attract high sales in coun-
tries such as Nigeria and
New Zealand – as well as in
Glaxo promises
a sweeter 2013
as sales go flat
the UK – yet have been less successful
in places such as India and China.
It said the drinks do not “naturally
fit” with the firm’s operations as well
as other products such as Horlicks.
Witty is upbeat over GSK’s future in
drug sales, pointing to six new prod-
ucts filed since the start of 2012, and
arguing that the pipeline is packed
with promising new developments.
Core pre-tax profits were down four
per cent at £7.6bn in 2012, on a seven
per cent slump in European sales as a
result of states forcing down prices.
“Governments [in Europe] are sending
a very clear signal,” Witty said,
adding that GSK will turn its
attention to other parts of the
world. “All the growth is else-
where,” he said.
Nonetheless, GSK expects
core earnings per share growth
of three to four per cent for
2013, predicting that sales will
be one per cent higher.
GERMAN media giant Bauer, whose
empire includes UK radio stations
Kiss and Magic, has bought
lossmaking digital radio station
Planet Rock for around £1m-£2m.
“Our brands, along with the
music industry, are seeing a real
resurgence in guitar-based music
which makes this acquisition an
exciting and timely addition to our
portfolio,” Bauer’s UK chief
executive Paul Keenan said.
The station, which was previously
owned by Planet Rock chairman
Paul Bluemel,
has around
900,000 weekly
Bauer buys up
Planet Rock
GOOGLE has won a landmark legal
case in Australia, with a court ruling
that the search engine is not
responsible for the content of
adverts it displays.
The ruling said that internet
advertising platforms such as
Google and Facebook do not publish
adverts, but merely carry
information. Thus they are not
accountable for potentially
misleading adverts on their
Although the decision only covers
Australia, it could set a legal
precedent that may be used around
the world. The case follows years of
legal proceedings from the
Australian Competition and
Consumer Commission which had
threatened Google’s core
advertising business.
Google wins
advert battle
HEALTHCARE Locums revealed
yesterday that its two biggest
shareholders have issued an
indicative joint proposal to buy up
all of the shares that they do not
already own.
The troubled firm, which
provides staff to the health and
social care sectors, said that
Toscafund Asset Management and
Ares Capital Europe (ACE) offered
at least 54p per share in cash –
matching Healthcare Locums’
closing share price on Tuesday.
Together Toscafund and ACE
Toscafund and ACE come to the
rescue of Healthcare Locums
currently own around 72.5 per
cent of Healthcare Locums.
At the end of last month the
firm’s chief executive Stephen
Burke asked Toscafund and ACE
for help, following a warning that
it might not meet its banking
covenants in March and June.
Yesterday’s statement said the
shareholders “have indicated their
joint intention to inject significant
capital into the business following
successful completion of an offer.”
Shares closed up 2.78 per cent
yesterday at 56p. The stock has lost
over 80 per cent of its value in the
past year.
Planet Rock has
900,000 listeners
GSK is looking at options for
its Ribena and Lucozade drinks
UK Wind is hoping to raise at least
£205m through a government-
backed float that will jettison it to
the main London market.
Managed by Greencoat Capital, the
fund has bought interests in six wind
farms from utility firms SSE and
Closed-end investment company
Greencoat, which will be fully
invested from launch, also has the
option to increase the size of the
offering by up to £55m.
The company will be the first listed
infrastructure fund focused on
wind according to Greencoat. It
offers a six per cent dividend
with the intention of increas-
ing it in line with the Retail
Prices Index (RPI).
The float has been backed
by the Department for Business,
Innovation and Skills and blue chip
utility company SSE – which is divest-
ing four wind farms – which have
pledged to buy 50m and 43m shares
respectively in a move to encourage
private investment in the renewable
UK wind fund
blows onto LSE
in £205m float
energy sector.
“Operating wind farms should
make attractive investment assets,
particularly for investors seeking
long-term, predictable returns,” said
Stephen Lilley, partner of Greencoat
Capital and chief executive of the
wind fund.
Non-executive chairman Tim
Ingram added: “With an anticipated
initial dividend yield of six per cent,
limited planned gearing, and invest-
ment only in proven operating wind
farms, Greencoat UK Wind offers a
very attractive opportunity for
investors seeking a sustainable and
growing return on their
The sale of the
SSE and RWE wind farms is depend-
ent on Greencoat successfully rais-
ing the capital and listing on the
LSE. The day to day operations of the
wind farms will be maintained by
their current owners SSE and RWE.
The shares are expected to begin
trading in March.
A host of big names worked on the
Greencoat UK Wind IPO, including RBC
Capital Markets, Barclays Bank and
Winterflood Securities.
RBC Capital Markets acted as the sole global
coordinator, sponsor and joint bookrunner,
with Dai Clement, Lorna Shearin and
Matthew Coakes on the team.
The investment bank has advised many
high-profile utility transactions in recent
years, and is an established adviser in the
renewables and utilities space.
In 2011, RBC advised on the £2.4bn sale of
Northumbrian Water. RBC also advised Irish
energy firm Bord Gáis on its sale by the
In the past, Clement, head of European utili-
ties and industrials, led the team advising a
consortium on the acquisition of Open Grid
Europe from E.ON.
His colleague Coakes, a managing director
in European capital markets, was involved
in the flotation of Kea Petroleum in 2010.
Coakes has also worked with Ithaca Energy,
Bayfield Energy, Serica Energy and
Gulfsands Petroleum.
Shearin, co-head of European utilities and
renewables at RBC, completes the trio.
Iain Smedley and Adam Welham joined
from Barclays Bank, which acted as joint
bookrunner on the offering. Darren Willis
from Winterflood acted as the co-lead man-
ager, and Tulchan Communications had a
role as the public relations adviser.
Non-exec chairman Tim Ingram is a former chief executive of Caledonia Investments
Greencoat UK Wind has bought six
wind farms from SSE and RWE
EDINBURGH microchip maker
Wolfson Microelectronics reported a
52 per cent jump in revenues
yesterday following rising sales of
smartphones such as Samsung’s
Galaxy SIII.
The company, which makes audio
chips for processing voice input and
audio output on phones and other
electronic devices, said revenues rose
to $56.1m (£35.8m) in the final
quarter of last year. Over 2012 as a
whole, it saw 15 per cent revenue
growth but a 60 per cent rise in sales
related to smartphones and tablets.
Mobile craze
boosts Wolfson
VISA’S first-quarter profit jumped 30
per cent, and the world’s largest credit-
and debit-card network authorised a
new $1.75bn (£1.1bn) share repurchase
programme, it said yesterday.
The new share buyback programme
brings the total outstanding authori-
sation to about $2.9bn.
The company’s profit rose to $1.3bn,
or $1.93 per Class A share, from $1bn,
or $1.49 per Class A share, a year earli-
er. Total operating revenue rose 12 per
cent to $2.8bn. Payment volumes grew
nine per cent to $1.1 trillion, and
processed transactions four per cent.
Visa in $1.8bn
stock buyback
HOMESERVE, the FTSE 250 home repair and
insurance company, yesterday said full-year pre-
tax profits are likely to be in line with
expectations as it continues to scale down its UK
business following allegations of mis-selling.
The group said UK customer numbers would hit
2.25m for the full financial year ending 31 March
– at the lower end of its 2.2 to 2.4m target.
However, the firm said its customer retention rate
had increased slightly from the 78 per cent it
reported for the first half of the year.
The firm, which spooked its investors last year
by admitting it was being investigated by the FSA
over allegations of potential misselling, said this
investigation was ongoing and would continue for
a “number of months”.
Homeserve on track as
FSA probe continues
SPORTS DIRECT has hired the Spanish investment
bank Espirito Santo as its corporate broker after
ending its six-year relationship with Bank of
America Merrill Lynch (BAML) earlier this month.
The sportswear retailer, controlled by
Newcastle United owner Mike Ashley, said it had
appointed Espirito with
immediate effect, becoming
joint broker alongside Oriel
Ashley and BAML had
worked together since the
firm floated in 2007.
Sports Direct hires
Espirito as broker
THE NUMBER of jobs available in the retail sector
slumped by a quarter in the second half of last
year according to research published yesterday
by, the specialist retail
recruitment website.
The company, which sampled 30,000 jobs
advertised through its website between July and
December last year, said while total vacancies
declined, the growing importance of online
shopping led to a 42 per cent jump in demand
for e-commerce roles.
Management roles bore the brunt of the
decline with over 3,500 fewer jobs advertised
while the fashion sector was also hit with a 21
per cent fall in jobs – around 3,750 fewer jobs–
compared to the same time last year.
Retail job vacancies
fall 25 per cent in 2012
AUSTRALIAN developer Lendlease was yesterday
granted detailed planning permission by Southwark
council for the first phase of its £1.5bn regeneration
of the Heygate estate in Elephant & Castle after
winning approval for the masterplan last month.
The scheme has caused an outcry from critics after
it emerged on Tuesday that Heygate was sold to
Lendlease for just £50m even though the council
spent £44m to move 3,000 residents from the estate.
Details of the sale were revealed after confidential
information was accidentally revealed in a document
on the council’s website. Local groups reacted saying
the land was “sold off for peanuts”. The council
rejected this, saying it will be sharing a slice of the
profits from the sale of houses on the estate.
Lendlease gets okay
for Heygate revamp
Mike Ashley owns 71 per
cent of Sports Direct

Left to right: Ben and Sue Bengougam with Graham Jackson
TO the Royal Automobile Club’s
country campus on Monday evening,
for the launch dinner announcing
the 2013 Square Mile Salute banquet.
The Capitalist can reveal that the
third annual Square Mile Salute feast
will be held at the Guildhall on 18
October, with food prepared by chef
Albert Roux, co-founder of the Le
Gavroche, and his son Michel Roux Jr.
The banquet, held in association
with media partners City A.M, sup-
ports military charities Help for
Heroes, The Royal British Legion and
The Royal Navy and Royal Marines
Children’s Fund.
Surprise guest of honour at the
launch event this week was Top
Gear’s The Stig, whose helmet pre-
vented him from sampling the rock
oyster beignets and foie gras ravioli
prepared by the servicemen and
women from Headley Court’s reha-
bilitation centre.
Previous attendees at the culinary
bash have included Mayor Boris
Johnson and Jeremy Clarkson.
Tables this year start at £4,000 for
ten people. For more information
Headley Court chefs in the RAC kitchen
The Stig outside the Royal Automobile Club
Lance Corporal Andrew Kennedy
The Stig guest
of honour at
military dinner
Got A Story? Email
[email protected]
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Mark ßoleal (¡iclured) hosls a business
rale¡ayers' consullalion meeling al
Guildhall's Livery Hall on 11 February
al 12.30¡m lo discuss lheir vievs aboul
lhe Cily Cor¡oralion's ¡lans and
hnances for 2013/14. He vill be |oined
by lhe Chairman of lhe Finance
Commiuee, Commissioner of lhe Cily
of London Police, and lhe Tovn Clerk.
Policy Chairman hosts
ratepayers' meeting
Tour lhe London Melro¡olilan
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Children play on
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Find your
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Grainger posts rise in group sales
nGrainger said institutional investor
interest in the residential market was
growing thanks to government
measures such as the launch of the
£200m Build to Rent fund, as it posted
group sales of £64.6m for the first four
months of the year, up £2.2m on last
year. The listed residential landlord said
fee income rose to £4.6m from £2.9m
last year while rents fell £3.1m to £27.3m
after it sold-off German assets.
Quintain schemes make progress
nQuintain Estates said yesterday it
was making good progress with its
London schemes and in selling-off
non-core assets, although markets
outside London remain challenging. In
an interim statement the developer
said its near-term focus was achieving
planning permission for its giant
Greenwich Peninsula scheme and the
opening of the London Designer
Outlet at its Wembley development.
Capita gets Carphone work
nCarphone Warehouse yesterday
signed a £160m deal to outsource its
customer services to Capita for the
next ten years. Capita will be
responsible for non-store customer
contact such as helplines and tech
support. Capita boss Paul Pindar said
yesterday: “Capita’s significant
experience in this area is evident
through the work it does with the
public sector and with clients who are
household names.”
TRUCK maker Volvo yesterday
warned of a rough start to 2013 after
weak demand in its main markets
left its factories running at half
speed and pushed it into a much
heavier than expected earnings fall
in the fourth quarter.
Sweden’s Volvo, which only weeks
ago laid claim to having dethroned
German Daimler as the world’s
biggest heavy truck maker after
forming a joint venture with Chinese
group Dongfeng Motor Group said
weak orders at the end of 2012
meant the first quarter would be dif-
“Profitability will be affected by low
capacity utilisation, high spend lev-
els in research and development and
costs associated with the launch of
new products,” chief executive Olof
Persson said in a statement.
“However, we expect market condi-
tions to gradually improve during
the course of 2013 when economic
Volvo stalls as
demand slump
reduces output
growth across the world gains
Heavy-duty truck makers have run
into tougher times in recent quarters
as the deep economic downturn in
Europe and sluggish activity in North
America has weighed heavily on the
highly cyclical demand for commer-
cial vehicles.
Volvo’s operating earnings tumbled
to 1.12bn Swedish crowns (£112.7m)
from 6.96bn a year ago, well below a
mean forecast for 2.19bn seen in a
poll of analysts.
Earnings were hit by weak capacity
use at many of its plants as well as
restructuring charges totalling 990m
crowns, compared to the 565m hit
expected by analysts.
Volvo has been cutting shifts due to
weaker demand, but stood by a fore-
cast for flat markets in Europe and
North America. However, it raised its
forecast for the Brazilian market,
where government incentives have
boosted demand, by 10,000 trucks to
about 105,000.
Aer Lingus insists it can fend off
Ryanair bid as its earnings soar
IRISH flag carrier Aer Lingus
yesterday insisted it could survive
as an independent company and
said the hostile takeover bid from
rival Ryanair was unlikely to make
it past European competition
“It seems to me so farfetched,
this proposition, that we don’t
bother wasting our time on it,” Aer
Lingus chief executive Christoph
Mueller said yesterday as he
BY JAMES WATERSON unveiled a 40 per cent
rise in operating
profit to
(£59.7m) for
made its third
bid for the
company last
year, valuing
Aer Lingus at
€694m. But
its deal
FASTJET, the African budget
airline backed by EasyJet founder
Stelios Haji-Ioannou, has flown
into turbulence over its use of
the Fly540 name.
Five Forty Aviation, which
owns the brand, yesterday
withdrew Fastjet’s licences to use
the name in Angola, Ghana and
Tanzania, claiming Fastjet owes
$7.7m (£4.9m) in charges.
Five Forty Aviation also said
that Fastjet was in breach of
commercial and safety
Fastjet flies into dispute over
brand licencing in Tanzania
“We have not received any
safety reports for the past three
months from Fastjet’s Africa
operations,” said Five Forty boss
Don Smith.
The Aim-listed airline has also
been caught up in a row over its
planes in Tanzania, which
aircraft leasing business Avmax
claims the firm is operating
without paying fees – something
Fastjet disputes.
Fastjet yesterday released a
statement saying it has the
support of the government in
Tanzania, where it started
commercial flights in November.
▲ ▲
hinges on offloading some routes
to British airline FlyBe to allay
competition concerns. The
European Commission will decide
on the deal by 6 March.
“We question very much that
Flybe will be an independent
competitor to Ryanair and we are
working from the assumption
that we will be around next
year,” added Mueller.
Ryanair’s Michael O’Leary
is eyeing up Aer Lingus
THE HOUSING market has sprung
back to life in recent months, Halifax
said yesterday, while citing the UK
government’s lending initiative.
Prices dipped 0.2 per cent in
January when compared to
December, the company said.
Yet a three-monthly measure of
house prices – used to iron out
month by month fluctuations – rose
at its sharpest rate for three years.
From November to January, prices
were 1.9 per cent higher than in the
previous three month period, and 1.3
per cent above the level they were at
a year earlier.
“Market activity has also improved
with sales in 2012 at their highest for
five years,” said Halifax economist
Martin Ellis.
“Rising mortgage approval num-
bers point to further increases in
home sales in the coming months.”
UK house prices
propped up by
lending scheme
Ellis said that the Funding for
Lending Scheme (FLS) was likely con-
tributing to a pick-up in sales and
higher prices.
The FLS – which incentivises banks
to lend by providing conditional
funding at low rates – was introduced
by the Bank of England and the gov-
ernment with the intention of loos-
ening credit and aiding growth.
The average house price in the UK is
now £162,932, Halifax said.
Car sales rev up as registrations
rise for the 11th month in a row
THE UK’S resurgent car-buying
market shows no sign of slipping
down a gear in 2013, having
recorded its 11th straight month of
growth in January.
New car registrations jumped
11.5 per cent last month compared
to the same time a year earlier,
with 143,643 vehicles registered.
The Society of Motor
Manufacturers and Traders (SMMT),
which released the figures
yesterday, expects modest growth
throughout the rest of the year.
British consumers continue to
perplex analysts by defying the
economic slump and heading to
the forecourts. Over 61,000 new
privately-bought cars were
registered in January, a
considerable 15.9 per cent more
than a year earlier.
“The UK’s love affair with new
cars continues into 2013,”
commented Richard Lowe, head of
retail and wholesale at Barclays.
“Despite the snowy forecourts,
consumer demand ensured that
sales rose for the eleventh month
running, and with new model
deals, we
expect to
see at least
two million
cars sold this year,” Lowe estimated.
Registrations by businesses saw
an even steeper increase; with 7,357
registrations, the number of new
company cars spiked by over 40 per
cent, according to the data.
Registrations of cars bought as
part of new fleets rose six per cent
annualised, to 75,211.
Ford continues to produce the
two most popular new cars, with
the Fiesta and Focus models
remaining at the top of the best
sellers list. Vauxhall’s Astra and
Corse occupy third and
fourth positions.
Annual house price growth steady in January
Jan‘13 Oct‘12 Jul ‘12 Apr‘12 Jan‘12 Oct‘11 Jul ‘11 Apr‘11 Jan‘11
2 Growth, %
7,906 new Ford Fiesta’s
were registered in January
“No change. There is no longer any lack of money supply, and the services sector purchasing managers’ index business survey suggests we may just
about escape a triple-dip, if we are lucky. The real problem in the UK is that ultra-loose monetary policy is keeping zombie firms alive, slowing the read-
justment. More quantitative easing (QE) would be a big mistake.”
“I think the monetary policy committee should sit down and
do nothing this month. There’s no need to change any policy,
although there probably needs to be a bias towards a small
extension in the gilt purchase programme in March or April
later this year.”
“With the economy expected to gradually recover during 2013
the Bank needs to be mindful of its primary responsibility –
price stability. We therefore argue for no further change on
rates or the asset purchase programme.”
“Cut rates to 0.25 per cent and restart the QE programme with
another £50bn of asset purchases. The economy is close to a
triple-dip and the improvement in market sentinment proba-
bly won’t last. Inflation is above target, but will come down
later this year.
“More monetary medicine is needed–£50bn more QE. The Bank of
Englandshouldannounce that redemptions of gilts will be reinvest-
ed. The economy is movingsideways. Uncertainty plagues invest-
ment decisions andthe fiscal consolidation is biting. Carney’s
reminder that monetary policy is not maxedout is already helping.”
“Hold policy on both counts. Business surveys confirm that the
economy is improving. Money supply growth is at a post-
recession high, with corporate liquidity surging. The key risk to
the economy now is another inflation spike, not insufficiently
loose policy.”
“Holdbut keepoptions open for further QE despite concerns about
higher energy andfoodprices. The first quarter of 2013 may show
small growth but a still uncertain external environment, weak con-
struction activity andrestrainedhouseholdspendingwill remain a
dragon growth.”
“Keep rates on hold with a neutral policy stance, and keep QE
unchanged. The UK is not performing as badly as the prelimi-
nary estimate of a 0.3 per cent drop in GDP in the fourth quar-
ter of 2012 suggests. Lloyds Bank’s monthly business survey
suggests recovery this quarter, so no triple-dip.”
“I vote no change on either the asset purchase programme or
interest rate policy. Little has changed in recent months in
terms of the basic economic fundamentals – the recovery
remains fragile while inflation stickiness persists.”
THE rate-setting monetary
policy committee (MPC) will sit
on its hands today, according to
Most analysts thought the
outcome of February’s meeting
would see the committee adopt
a wait and see approach.
“It looks highly unlikely that
the quarter-on-quarter drop in
GDP in the fourth quarter will
prompt the Bank of England
into further stimulative action
today,” said IHS Global Insight’s
Howard Archer.
This put the MPC in
agreement with City A.M.’s
shadow MPC, which voted 7-2
against a change in either rates
or quantitative easing policy.
QE expansion
not expected
THE ECONOMIC climate brightened
across the Eurozone in the first
quarter of 2013, according to data
out yesterday.
German think tank Ifo’s
economic climate indicator for the
bloc rocketed from 81.7 to 95.1, it
said, reversing most of the losses
seen since the second quarter of last
year, when it stood at 100.3.
But the improvement in
sentiment did not move with the
current economic situation, the
data suggested – as the situation
indicator slide from 97.9 in the final
quarter of 2012 to 95.1 this quarter.
However, firms were vastly more
optimistic for the future, the Ifo
data showed. The expectations
indicator surged from 72.1 to also
rest on 95.1.
Euro outlook
more hopeful
GERMANY said yesterday the
strong euro was not a concern and
signalled opposition to a French
proposal for a mid-term target rate,
exposing policy divisions over
mainland Europe’s currency.
The comments from Berlin,
where most politicians are firmly
opposed to currency intervention,
precede talks later in the day
between Chancellor Angela Merkel
and French President Francois
Those talks, which will take place
partly over a football match, may
set the tone for today’s EU summit
which aims to secure a deal on the
bloc’s long-term budget and a G20
summit in mid-February where
global leaders are expected to
Germany and France clash over
the threat posed by strong euro
BY CITY A.M. REPORTER discuss currency issues.
The focus of that debate is likely
to be Japan, where a new monetary
and fiscal policy drive has
significantly weakened the yen.
“If you look at the historic
context, the German government is
of the view that the euro is not
overvalued at the moment,”
Merkel’s spokesman Steffen Seibert
told a regular news conference, in
unusually strong comments on
exchange rates.
The euro firmed to $1.3535 from
around $1.3506 after the remarks.
Last week it peaked at $1.3711, its
highest level since November 2011.
On Tuesday Hollande proposed
that the Eurozone should agree on
a “medium-term” exchange rate
and act on global markets to
protect its interests.
THE deficits of FTSE 350 pension
schemes expanded by £13bn more
during January, despite soaring
stock markets.
Pension deficits totalled £75bn
at the end of last month,
according to data put out by
Mercer yesterday, with assets
adding up to only 88 per cent of
liabilities. This was up from £62bn
at the end of December, which
represented a funding ratio of 89
per cent.
One major contributor to the
widening gap was the Office for
National Statistics’ (ONS) shock
decision not to change the retail
prices index (RPI) formula, which
the markets had priced in.
This pushed up long-term
Main market pension deficits
explode despite bull markets
BY BEN SOUTHWOOD expectations of RPI, therefore
driving implied liabilities on
defined benefit schemes – which
have to be discounted with RPI – to
£610bn from £588bn.
Assets increased just £9bn, or 1.7
per cent, from £626bn to £635bn,
Mercer said, despite a 6.5 per cent
rise in the FTSE 100 index.
“On 10 January the ONS
announced that it did not
recommend any material change
to the RPI calculation,” said Ali
Tayyebi at Mercer. “Immediately
after this announcement we
reported that pension deficits
were estimated to have increased
by £20bn.
“This reflected an increase of
approximately 0.3 percentage
points in the market’s view of
long-term RPI inflation.”
US MORTGAGE applications
climbed in the last week of
January, despite increasing
interest rates, data showed
Seasonally-adjusted loan
application volumes increased 3.4
per cent in the week ending 1
February, the Mortgage Bankers
Association said.
Unadjusted mortgage
applications were some 16 per
cent higher that week than
during the same seven days a year
earlier, indicating the US housing
recovery may be setting in.
And this came despite the
average 30-year fixed interest rate
edging up from 3.67 per cent the
previous week to 3.73 per cent.
US mortgage
requests jump
SHARES in Siberia-focused oil and
gas explorer Ruspetro plunged
yesterday as it said it would
postpone its senior secured note
Ruspetro said it would consider
the bond sale at a later date. It gave
no reason for the delay.
The proceeds from the placing
were intented to replace Ruspetro’s
existing debt facility with Sberbank,
due to mature in April 2015.
Last month, the firm said it would
launch the offering to strengthen its
balance sheet, sending its shares on
a sharp upward spiral.
“We have existing debt that
doesn’t mature until 2015, so we
have time, and we are able to be
opportunistic in the bond market,”
Dominic Manley, head of investor
relations, said yesterday.
Shares closed down 15.69 per cent
at 43p.
Ruspetro sinks
as it postpones
bond offering
EURASIAN Natural Resources (ENRC)
shares soared yesterday as investors
cheered the miner’s latest output
In its ferroalloys division, ENRC pro-
duced 6.8 per cent more ferrochrome
in the fourth quarter of 2012 than the
previous year, and reported an 8.9 per
cent jump in the amount of total
saleable ferroalloys output in what
chief executive Felix Vulis said was
the highest annual production vol-
ume since its 2007 float.
Sales of iron ore production climbed
11.3 per cent in the fourth quarter.
Both divisions operated at full capac-
ity over the three months to 31
December, ENRC said, leading to their
increased production.
Its aluminium division reported
falls in output, with bauxite extrac-
tion down 17.5 per cent and alumina
production down 12.4 per cent
against the previous year’s fourth
quarter. The FTSE 100 miner cited
technical issues – leading to the alu-
minium division operating below
capacity – for the fall in production.
ENRC soars as
output jumps
in strong year
Chief executive Felix Vulis said that
Kazakhstan-focused ENRC, which has
been the subject of renewed specula-
tion surrounding a takeover bid,
would deliver “strong operational per-
formance across the group in 2013”.
“The fourth quarter production
report, while mixed, does show good
growth in production of saleable fer-
roalloys and ferrochrome, and cou-
pled with expectations of a strong
2013 should at the very least underpin
the stock at current levels,” added
Richard Curr at Prime Markets.
Shares closed up 9.12 per cent, mak-
ing ENRC the second biggest riser on
the FTSE 100.
Total partners with Cyprus in
oil search as it divests gas unit
FRENCH oil major Total said
yesterday it had signed a deal with
Cyprus to search for offshore oil and
gas, as the Mediterranean nation
hopes to become an energy hub.
Signing a production sharing
agreement yesterday with the third
energy major this year, Cyprus
hopes for a windfall from
hydrocarbons beneath the seabed
in a largely untapped area of the
east Mediterranean.
Any finds are not expected to
come ashore until 2018 at the very
earliest for domestic consumption,
and in 2019 for export.
Total said yesterday it had been
awarded two production blocks
south-west of Cyprus, in water
depths ranging from 1,000 to 2,500
“This acreage acquisition is
aligned with Total’s ambitious
exploration strategy focused on new
acreage and plays,” Arnaud
Breuillac, senior vice president of
the Middle East, said yesterday.
Cyprus first struck natural gas
offshore in late 2011, when US-based
Noble reported an estimated seven
trillion cubic feet natural gas find,
close to a major gas discovery by
neighbouring Israel.
Separately, the energy behemoth
said it was in exclusive talks with a
French energy consortium –
including EDF – over the sale of its
unit Transport et Infrastructures
Gaz France (TIGF) in a deal worth
around €2.4bn (£2.07m).
Much like British oil major BP,
Total is divesting non-core parts of
its portfolio, and the company said
yesterday that the sale was in line
with its “active portfolio
management strategy”.
“The consortium selected,
consisting of industry-leading
operators and long term investors,
will support TIGF in its further
development, while meeting the
commitments made to TIGF’s
employees and partners”, said
Christophe de Margerie, chairman
and chief executive of Total.
TIGF supplies gas and storage
services in 15 departments in South
West France. The agreement will
protect TIGF jobs, benefits as well as
its headquarters in Pau, south west
Eurasian Natural Resources Corporation PLC
6Feb 31 Jan 1 Feb 4Feb 5Feb
380 p 375.60
RusPetro PLC
6Feb 31 Jan 1 Feb 4Feb 5Feb
55 p 43.00
ArcelorMittal built the Orbit
sculpture in the Olympic Park
SHARES in explorer Victoria Oil &
Gas plummeted yesterday, as it
announced that it had raised
£23.5m in an oversubscribed share
Victoria Oil & Gas, which has
assets in Cameroon, will use the
funds to finance the roll-out of its
downstream strategy at its gas
project in the central African
country, in which it holds a 95 per
cent interest.
The proceeds will help ramp up
production and sales at the
Logbaba Project, so the company
can deliver gas to more customers.
Victoria Oil & Gas raises £23.5m
to fund Cameroon gas venture
Following completion of the
placing, the firm – which is in the
process of appointing a new chief
executive – will be fully funded to
meet development plans, it said.
The junior stockmarket-listed
firm placed nearly 1.5bn shares at
a price of 1.6p each in a two-stage
equity offering through Fox-Davies
Capital, where Daniel Fox-Davies
and Richard Hail led the team.
Shares are expected to begin
trading next week.
Simon Raggett and Angela
Hallett from Strand Hanson also
had a role in the offering.
Shares closed 20.19 per cent
down at 1.64p.
The AIM-listed company placed the nearly 1.5bn shares through Fox-Davies Capital
Quilter Cheviot
The asset management firm
has appointed Jane
Seymour as group
marketing director. She
joins from Rathbone
Brothers, where she held a
similar position. Seymour
has over 20 years’
experience working in the financial services sector,
and will report to chief executive Martin Baines.
Catalyst Corporate Finance
The advisory business has appointed two new direct
entry partners, Andrew Shellard and Mark Farlow.
Shellard has over 20 years’ investment banking
experience in the City, most recently as a managing
director at Barclays Capital. Farlow joins from KPMG,
where he was a partner for 10 years.
Allied World
Julian James has been named president of the
insurance solutions provider’s European platform. He
has over 30 years’ industry experience, most recently
as chief executive of Lockton International. He has also
held senior positions at Lloyd’s insurer globally.
FTI Consulting
The advisory firm has appointed Andreas von Keitz as
senior managing director in the corporate finance and
restructuring practice in Europe, Middle East and
Africa. He joins from KPMG, where he was head of its
operations team within transaction services.
SIX Payment Services
Pedro Deserrano has joined the payments provider as
its chief marketing officer. He most recently held the
position of senior vice president, sales and marketing
at Visa Europe.
Renaud Oury has joined the services and software
provider as chief sales officer. He joins from CETREL
Securities, where he was managing director.
WHO’S SWITCHING JOBS Edited by Annabel Palmer
+44 (0)20 7092 0053
To appear in CITYMOVES please email your career updates and pictures to [email protected]
in association with
ARCELORMITTAL, the world’s largest
steelmaker, forecast improving
demand and earnings this year, after
a wretched 2012 in which sliding
European consumption and a
Chinese slowdown drove it to a deep
net loss.
The group posted a net loss of
$3.73bn (£2.38bn) for the year,
mostly due to a massive
writedown on its European
ArcelorMittal said global
steel consumption would
grow by three per cent in
2013 after a two per cent
increase last year, while
Europe would start to level
suffers a loss
Rothschild calls for Bumi head
nIn the latest development in the
bitter Bumi divorce, co-founder Nat
Rothschild yesterday called on the
miner’s chief executive Nick Von
Schirnding to step down over claims
that he misled the company and
shareholders over alleged
irregularities on his CV. Bumi has said
that the accusations are “false”, and
that Von Schirnding was hired for his
“experience and competence”.
Balfour Beatty wins Dubai deal
nFTSE 250 infrastructure group
Balfour Beatty has snapped up a
mechanical and electrical contract
worth £64m with Dubai International
Airport. Awarded by the Dubai
Aviation Engineering Projects, it will
install the electrical, ventilation, air
conditioning, plumbing and fire
protection systems in the new airport
concourse, which hosts between 60
and 75m passengers each year.
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HE FTSE 100 nudged into
positive territory yesterday on
a strong showing from asset
managers following robust
results from Hargreaves Lansdown,
which outweighed declines in
energy stocks.
The FTSE 100 closed up 12.58 points,
or 0.2 per cent, at 6,295.34, having
risen 0.6 per cent the previous ses-
sion after suffering its sharpest one-
day percentage drop in three months
on Monday.
While choppy trade in recent days
has raised questions over the FTSE
100's ability to sustain its recent
strength - with the index on
Wednesday having swung from 6,265
through 6,321 - strategists reckon
more gains are likely.
“It's likely to see near-term consoli-
dation because it's a bit over-
stretched, but fundamentally we're
relatively constructive,” UBS strategist
Nick Nelson said.
Hargreaves Lansdown jumped 11.2
per cent, grabbing the top spot on
the blue-chip leaderboard after it
unveiled hefty increases in first-half
profit, sales and assets.
Major banks have been cutting trad-
ing staff and, in some cases, battling
fallout from rate-rigging scandals.
But while trading volumes are gener-
ally in decline, co-founder Peter
Hargreaves said his firm was finding
new clients at an unprecedented rate,
boding well for the sector.
Blue-chip peers Schroders and
Aberdeen Asset Management rose
2.9 per cent and 1.2 per cent respec-
tively, and midcap Henderson
climbed 2.4 per cent.
Heavyweight energy stocks fell,
with traders citing profit-taking after
gains in the previous session when
both BP and BG Group posted
Barclays weighed in on both oil
majors, trimming its target price for
BG to 1,420p to reflect a lower level of
LNG profitability, though reiterated
its “overweight” recommendation. Its
shares shed 0.6 per cent.
The bank was cautious on BP, off 0.6
per cent, on which it has an “under-
weight” rating, highlighting contin-
ued risks associated with remaining
claims over the Gulf of Mexico oil
Among commodity stocks, Kazakh
mining group ENRC surged 9.1 per
cent to 372p, boosted by the compa-
ny's strong quarterly output and
media talk that it could be a takeover
“The Q4 production report, while
mixed does show good growth in pro-
duction of saleable ferroalloys and
ferrochrome, and this coupled with
expectations of a strong 2013 as stat-
ed by chief Felix Vulis should at the
very least underpin the stock at cur-
rent levels,” Richard Curr, head of
dealing at Prime Markets, said in a
Fund managers
help FTSE 100
edge up again
6 Feb 31 Jan 1 Feb 4 Feb 5 Feb
6 Feb
stocks weigh
on Wall Street
S stocks ended mostly flat
yesterday, taking another
pause in the recent rally that
has driven the S&P 500 to five-
year highs, as transportation and
technology shares lost ground.
Transportation stocks were among
the worst performers. Shares of CH
Robinson Worldwide fell 9.7 per cent
to $60.50 and the stock was the
biggest percentage loser on the
Nasdaq 100 after the freight transport
company posted a lower-than-expect-
ed adjusted quarterly profit.
Without a strong catalyst, the mar-
ket could struggle to continue its
rally, analysts said. The benchmark
S&P 500 index has advanced 6 per
cent this year, reaching its highest
since December 2007, while the Dow
Jones industrial average has risen
above 14,000 recently.
Bank of America-Merrill Lynch ana-
lysts see a near-term pullback likely,
based on strong equity inflows at the
start of the year, said Dan Suzuki, the
bank’s equity strategist in New York.
“The fact that we’ve gone since
November without seeing one, from a
timing perspective, it wouldn’t be a
surprise to see one now.”
With fourth-quarter earnings near-
ing an end, the market will be losing
one of its big supports, said Frank
Lesh, a futures analyst and broker at
FuturePath Trading LLC in Chicago.
“That’s one thing that’s been holding
the market up,” he said.
Shares of Time Warner jumped 4.1
per cent to $52.01 after reporting high-
er fourth-quarter profit that beat Wall
Street estimates, as growth in its cable
networks offset declines in film, TV
entertainment and publishing units.
The Dow Jones industrial average
was up 7.22 points, or 0.05 per cent, at
13,986.52. The Standard & Poor’s 500
Index was up 0.83 points, or 0.05 per
cent, at 1,512.12. The Nasdaq
Composite Index was down 3.10
points, or 0.10 per cent, at 3,168.48.
Shore Capital has a “sell” rating on the investment manager. In spite of a 50 per cent
rise in the firm’s share price since the summer, the broker still believes the firm has
overstretched on its new strategy, yet the share price already assumes the plan will
succeed. Shore Capital expects cost forecasts to rise, and Brewin looks expensive
compared to peers such as Rathbones.
Morgan Stanley has upgraded the asset manager to “overweight” and changed its
target price from £16.65 to £22.50. The broker sees Schroders as the best relative
play on European risk recovery in a sector already lifted by improved markets, and
has raised its earnings estimates to around 10 per cent ahead of consensus. Morgan
Stanley has also cut rival Ashmore to an “equalweight” rating.
UBS has added Man Group to its “most preferred” list following a change of
leadership at the asset manager at the end of last year. The broker thinks the firm
could reveal a change in direction alongside its full-year results on 28 February that
could give the share price a bump. “Long term, we believe a sale of the company is a
possibility,” UBS adds.
Brewin Dolphin Holdings PLC
31 Jan 1 Feb 4 Feb 5 Feb 6 Feb
p 217.5
6 Feb
Schroders PLC
31 Jan 1 Feb 4 Feb 5 Feb 6 Feb
p 2,020
6 Feb
Man Group PLC
31 Jan 1 Feb 4 Feb 5 Feb 6 Feb
p 98
6 Feb
£390M Libor fine for RBS and
a $5bn (£3.2bn) US
government lawsuit against
Standard & Poor’s. In both the
ongoing Libor and credit
rating agency sagas, previously free
and private information services are
being pulled under regulatory
control. The unwritten rule is that
markets depend on information, that
information should be competitively-
provided, and that information
should be diverse. But the new
constitution that regulators are
writing has turned this on its head.
Markets are wild, private information
providers are irresponsible, and they
need to be regulated.
I favoured speedy government
intervention and reform of Libor.
HIS is a story of appalling and
unnecessary suffering of
hundreds of people,” said
Robert Francis QC yesterday. For
those who think that the NHS is
more important than the patients it
exists to serve, and the taxpayers who
pay for it, the publication of Francis’s
report into the failings of Mid
Staffordshire NHS Foundation Trust is
a dark moment.
In an impressive, exhaustive 2,000
page study, the result of 18 months’
work and £13m, Francis exposed poor
care, the neglect of patients and the vic-
timisation of staff who raised concerns.
Mid Staffordshire may not be the rule,
but it is far from the exception in the
NHS, a point backed up by a slew of
recent scandals. In this respect, this
tragedy is the tragedy of history repeat-
ing itself.
Francis placed the responsibility for
Mid Stafforshire’s failure firmly with its
leadership, especially its board. He is
right to do so. Care quality and compas-
sion for patients was forgotten.
Concerns and complaints were ignored.
The organisational culture was per-
There is no single
culture – some hospitals
have improved care
without central mandate
Twitter: @cityamforum on the web: or by email: [email protected]
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

NHS failures will stay common until
we hold management accountable
verse, from the leaders right through to
the frontline. A system of targets, and
the registration system for hospitals at
the time, may have been partly to
blame. The wider NHS system also
failed to pick up on this, and checks
and balances didn’t work effectively.
The Francis Report hit the nail on the
head in its diagnosis of what went
wrong at Mid Staffordshire hospital.
And its greatest legacy will be how it
might prevent such failures from hap-
pening again.
But with the dust still settling on the
last reorganisation of the NHS, Francis
refrained from demanding yet another
overhaul. Instead he called for a “funda-
mental culture change” in the health
service, with a “relentless focus on the
patient’s interest”. He offered 290 rec-
ommendations on how this could be
achieved. These ranged from simplify-
ing national regulation, introducing a
“duty of candour” for all doctors and
nurses, to teaching staff the impor-
tance of compassion.
There is not “one culture” in the NHS
that needs to be transformed, however.
While an NHS culture failed patients at
Mid Staffordshire, an NHS culture at
other hospitals in England delivered
high quality care. Leading institutions
like University Hospitals Birmingham
and Salford Royal have clear commit-
ments to patient safety and patient
care now. Their staff already have a
commitment to candour and compas-
Unlike Mid Staffordshire, these hospi-
tals have also taken steps to be better
employers and introduced active per-
formance management of staff. At
Salford, the performance of staff is
measured according to achievement
and values, ranking employees from
“role model” to “unsatisfactory”. The
quality of nursing care in each ward is
measured, performance is ranked and
the responsible staff held to account.
There is no secret to high quality care. It
is simply down to strong and effective
leadership of doctors and nurses.
While the failures at Mid
Staffordshire were supposedly the
result of cost-cutting in the NHS, other
hospitals have been able to improve
quality at the same time as saving
money. Elite institutions have reformed
services to deliver safer and better care,
often through reducing medical errors
and complications, which in turn
improves efficiency. Managers have
taken the initiative to develop their
own positive cultures, and have not
waited for a mandate from on high.
The Francis report shines a penetrat-
ing spotlight onto the failures of the
NHS. But national efforts to improve
quality too often shift responsibility
away from those who should take con-
trol – the chief executives and boards.
As the report rightly recognises, it is
individual NHS organisations that
should be responsible for their own
quality rather than government impos-
ing central control.
Pioneering hospitals have trans-
formed themselves to achieve higher
quality, but the rest are in danger of
falling further behind. If failing institu-
tions cannot develop cultures of excel-
lence for their staff, there should be a
clear system of consequence for the
management. One option must be the
takeover of whole hospitals by new
organisations, whether run by the pub-
lic or private sector.
It is unlikely the Francis report will be
the last word on problems in the NHS.
But if these inquiries are to become a
lot rarer, the government will need to
empower leaders, and not shy away
from holding failing hospitals to
Thomas Cawston is research director at the
independent think tank Reform
Martin Wheatley’s review was exactly
that – it was quick. And it also
recognised the danger of letting Libor
slip under government control.
“Public ownership would change the
relationship between the market that
created and developed Libor, and the
future evolution of the benchmark,”
he argued. Wheatley realised that
public control would “reduce the
incentive and ability for Libor to
adapt to the needs of market
participants; and potentially affect
the choice of benchmarks.” He didn’t
mention the creation of new
incentives for manipulation by
But governments are now claiming
to help control markets by
controlling information. Financial
institutions should be ringing loud
warning bells about the dangers they
have created for themselves through
their greed. Information providers
have significant responsibilities;
responsibilities that some
shamelessly shirked. But that does
not change the dangerous reality of
long-term regulatory supervision.
We therefore need to set out clearly
the case for private financial
information provision. This shouldn’t
be hard. It’s virtually the same case as
for a free, independent and
competitive press. Both arguments
are based on the importance of
And this transparency should come
from both directions. There has been
a worrying lack of reform within the
rating agencies, for instance. And the
result of this reform vacuum is that,
in Brussels, there are calls for
government-owned agencies – a
terrifying prospect. But there’s a
simple way this can be resolved;
companies and public organisations
can declare the amount they pay for
debt ratings in their accounts, as they
do for audits. This would start to shed
light on any potential conflicts of
interest in the rating process.
There remains a deeper issue in the
dark corners, however – a lack of
competition. We need to root out, not
tolerate, cosy cartels. Issues with Libor
emerged within areas where
competition wasn’t enforced. And
there are other instances of
information provision that are
blighted by poor competition. We
need clear roadmaps to drive Libor
and other information providers
towards competitive private delivery.
But are we prepared to face up to
Professor Michael Mainelli is chairman
of Z/Yen Group and co-author with Ian
Harris of The Price of Fish: A New
Approach to Wicked Economics and Better
Libor needed reform – but state control of market information is dangerous
In association with
FARES ARE FOR RETURN ECONOMY AND INCLUDE ALL TAXES AND CHARGES. Fares are correct as of 5 February. Non-refundable, changeable for a fee. Subject to terms, conditions and availability.
Labour’s record
[Re: Why Labour is the natural party of
small business and entrepreneurs,
While Chuka Umunna’s vision for small
business is admirable, his ideas smack of
the same old political rhetoric. Half-baked
measures and ill thought-out plans are
hardly sufficient to mend the problems
facing British business. A temporary VAT
cut will not deliver long-term growth. And a
British investment bank will simply
undermine the ability of existing lenders –
that still provide the majority of lending –
to offer credit at reasonable market rates
while reflecting the risks involved.
Umunna’s ideas are just more political
Kyle Lecuona
I appreciate Chuka Umunna’s history, and
agree with his suggestion that the school
curriculum should include some element of
business education or entrepreneurship. But
his other suggestions will only worsen
inefficiencies in small businesses. By
providing too much government support,
firms fail to grow up and compete. True
entrepreneurship demands absolute
doggedness against all odds, not freebies.
Ladi Tokosi
Umunna is living in cloud cuckoo land. If
Labour gets in again, the party will borrow
even more money and eventually bankrupt
the country. That isn’t exactly conducive to
business success.
ARK Carney makes his first
appearance in front of the
Treasury Select Committee
today. But what should the
influential committee ask
our new Bank of England governor?
It certainly shouldn’t waste time
questioning his salary. Whether the
governor is paid £305,000 like Sir
Mervyn King, or £874,000 as Carney
will be, pales into insignificance
against the cost or profit to the UK
economy of a governor making the
right decisions. The Bank under King
made a hash of its financial stability
mandate, at the cost of billions. The
committee should discover how
Carney plans to improve this situa-
tion. And it must cover five areas.
First, the organisation of the Bank.
Carney was appointed as an outsider
to shake things up. And he has a
track record of doing so. At the Bank
of Canada, he replaced not only the
existing deputy governors but a
number of other senior staff when
he took office. The committee should
press him on how he intends to
change the Bank of England – partic-
ularly how he will reorganise it,
given the dramatic increase in its
powers care of its additional respon-
sibilities for financial and prudential
King had a near iron grip, with key
decisions flowing through him. But
the new job is too big for one man.
The governor should be more of a
chairman and less of a chief execu-
tive, as former Monetary Policy
Committee member Adam Posen
has recently argued. Carney must
put his own men in place as deputy
governors and give them the room to
run their respective divisions. And he
should be allowed to bring in more
people who understand financial
markets, solving one of the biggest
weaknesses of the Bank under King.
Second, the committee must ask
Does the £15bn bid for Virgin Media mark
the return of major deal-making to the UK?
While the deal market has been slow over the past few years, a
recent wave of high-profile activity at “big ticket” prices, like
Liberty Group’s £15bn bid for Virgin Media, suggests companies and
investors are regaining a taste for mergers and acquisitions (M&A).
Our research suggests that there is the capacity and appetite to do
deals, since UK companies have largely repaired their balance
sheets. The counter-cyclical activity in the power and utilities
sectors, which saw big investments at Thames Water last year and
at Sutton & East Surrey Water this week, continues. And the deal
buzz is extending across different sectors too: we expect to see
activity in consumer goods, as the big players divest “non-core”
businesses and seek footholds in high growth markets. The big
theme is the appeal of UK companies to international investors,
particularly from Asia. This seems like a theme that is here to stay.
Andy Cox is head of transaction services at KPMG.
Andy Cox
Jon Hughes
The completion of mergers and acquisition (M&A) transactions in
2013 will pose challenges. Both the pre-bid and post-announcement
periods will continue to remain longer than the historical average,
with caution and inertia categorising the market. Value and growth
will not be created by waiting for a major upturn – which is still a
long way off. Business leaders need to identify opportunities to
break into high growth economies, transform their business models
to reflect the low growth economy, and gain market share by
targeted inorganic growth. In theory, the fundamentals are there to
support increased activity: in developed markets there is an
availability of cheap corporate debt and strong cash positions, and
in emerging markets companies have cash and appetite for deals.
But in reality, M&A activity is likely to remain subdued, as executives
continue to exercise restraint before taking a seat at the deal table.
Jon Hughes is head of transaction advisory services at Ernst & Young.
The five questions
Mark Carney must
deliver answers to
Carney what he thinks the Bank can
do to further stimulate the economy.
King now talks of monetary policy
having reached its limits. But he was
just pulling the wrong levers. Carney
ought to discuss the importance of
getting bank lending growing,
rather than just buying government
Thirdly, the committee should ask
Carney whether he intends to be
more lenient with banks on capital.
King focused on forcing the banks to
raise capital ratios. While this has
probably improved their financial
strength, it has done little to stimu-
late lending. We would like to see a
governor who encourages banks to
increase profitability through
increased lending, which has been
falling for over two years.
Fourthly, Carney has talked about
moving away from a pure focus on
inflation targeting to having more of
a growth bias. The committee should
ask him how he thinks this can best
be done, and whether he will be
push for a formal change in the
objective of the Bank of England.
Finally, we need to know how
Carney would judge whether he has
been a success at the end of his five-
year term. How he ranks his objec-
tives will be key. Ideally he would like
put growth first and foremost, sub-
ject to inflation and financial stabili-
ty. The US Federal Reserve has
recently done this, and Carney
should follow Ben Bernanke’s lead.
James Barty is head of financial policy at
Policy Exchange.
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The Labour party did not defend the NHS. It
threw money at a problem that required root
and branch reform.
As wonderful an idea as the NHS is, change
and reform is now essential. Things don’t
work well for many many reasons.
In response to the Libor scandal, there needs
to be better accountability mechanisms and
more transparency in banking.
RBS is ordered to pay fines of £390m for
fixing Libor rates, and its stock price finished
up by 1.36 per cent yesterday.
LETTERSto the editor
E: [email protected] | Comment: | @cityamforum
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Fill the grid so that each
block adds up to the total
in the box above or to the
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You can only use the
digits 1-9 and you must not
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a block. The same digit may
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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,
1 2 3 4 5 6
7 8 9
11 12 13 14
15 16 17 18 19
21 22
23 24
6 13 8
30 4
7 14 12
23 17
11 14
15 22
17 15 13
7 29
5 12 7
1 Blossom (5)
4 Cringe in fear (5)
7 Insect considered
divine by ancient
Egyptians (6)
9 Subjected to great
tension (4)
10 Ofce note (4)
11 Dissertation (6)
13 Aristocrat (4)
15 Country, capital
Lima (4)
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20 Open vessel with a
handle and a spout (4)
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character (4)
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infirm with age (6)
23 Painful eyelid
swellings (5)
24 Victoria Beckham’s
former surname (5)
1 Place where
vehicles halt to
discharge and take
on passengers (3,4)
2 Rounded like
an egg (5)
3 ___ Vice, TV
series (5)
5 Eight-armed
creature (7)
6 Evade (5)
8 In addition (7)
12 Compress (7)
14 Make amends
for, remedy (7)
16 Perform as if
in a play (5)
18 Central area of an
ancient Roman
amphitheatre (5)
19 Port in north-
western Israel on
the Bay of Acre (5)



2 1 2 1 4 8
8 4 6 1 9 3 7 2 5
9 7 8 6 2 4 1 3
6 9 4 7 5 8
8 1 2 9 9 8 3
9 5 2 3 8 7 6 4 1
6 3 1 1 5 5 2
3 4 5 6 1 2
7 8 5 9 8 3 7 9
1 5 4 8 3 9 2 6 7
4 9 7 1 8 9
The nine-letter words were
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Hit the right
note this
HE CONCEPT of Valentine’s Day
as a time for lovers to express
their romantic desires has,
contrary to the cries of the cynics,
been around since at least the Middle
The tradition of sending flowers and
hand-written letters has been around
ever since, albeit with the intervention
of the ubiquitous greetings card.
These days it can be something of a
minefield, strewn with fully-booked
restaurants and unreciprocated gifts –
but opting out still isn’t an option for
the majority of people in a relationship.
However, if you keep things simple, you
can emerge triumphant: a bottle of
champagne, a box of chocolates and a
decent meal is all it takes.
But choose wisely – in this age of
online shopping, checking up on how
much your other half has shelled out to
give you the ultimate romantic evening
has never been easier.
Our guide outlines the finest options,
no matter what your price range, from
rare champagne to Michelin-starred
restaurants. And if even these don’t
work, you can take solace in the fact
that the Eastern Orthodox church
celebrates St Valentine’s day on 6 July,
meaning you can have a second crack at
it in the summer.
Steve Dinneen
La Maison du Chocolat
Valentine’s coffret
Heart Assortment
Godiva Chocolatier
Jaime Hayon Porcelain Box
Dom Perignon
Vintage Rosé 2000
Brut Rosé
Brut Rosé
1 2 3
4 5 6
1. Tom Aitkens restaurant
The Valentine’s Day package offers luxury
transportation to and from the restaurant, a
six-course tasting menu, a custom-bouquet
of flowers and hand-crafted chocolates.
£145 per person; 020 7584 2003
2. Alain Ducasse at The Dorchester
Renowned head chef Jocelyn Herland has
created a special four-course menu, which
features dishes like marinated sea scallops
and limousine farmhouse veal lion.
£155 per person; 020 7629 8866
3. Aqua London
Start the night sipping cocktails while taking
in the views on the roof terrace before
heading to the restaurant to enjoy the
special five-course Japanese menu on offer.
£95 per person; 020 7478 0540
4. Saka No Hana
The fine dining restaurant located in the
heart of Mayfair is offering a six-course
menu featuring hassun, wagu and sashimi.
£65 per person; 020 7925 8988
5. Galvin at Windows
Tuck into a six-course menu featuring dishes
like lobster cocktail and pressed terrine of
foie gras at the Michelin-starred restaurant.
£140 per person ; 020 7208 4021
6. Corrigan’s Mayfair
Enjoy a bespoke three or four-course menu
at Richard Corrigan’s Mayfair restaurant. The
venue has been designed to resemble a cosy
hunting lodge, creating an intimate
ambiance to enjoy the decadent menu.
£85 for three courses and £150 for five; 020 7 499 9943
Sony(April 2011)
Breach sees 77m users’ data
stolen, including usernames
and passwords.
Nintendo (June 2011)
LulzSec breaches Nintendo’s
security but the firm says no
data was stolen.
The IMF (June 2011)
Internal data is accessed in a
professional and sustained
attack on the organisation.
The CIA (Feb 2012)
Hacking group Anonymous
breaches the security of the
US federal agency.
SOCA (May 2012)
The Serious Organised
Crime Agency website is
temporarily taken down.
NYT (October 2012)
Hackers in China suspected
of infiltrating the
newspaper’s server.
Twitter (February 2013)
Accounts compromised at
the micro-blogging site,
including celebrities.
The Fed (February 2013)
Bankers’ details accessed by
Anonymous after yet anoth-
er security breach.
don’t get
RUG LORDS and gun-toting terrorists used to top governments’ “most
wanted” lists. Now, the face of international crime has changed – and
it’s wearing a Guy Fawkes mask. This week hackers have been in the news
again. The Federal Reserve. Bloomberg. Twitter. No-one, it appears, is safe.
Two days ago hacktivist group Anonymous published the personal information
of 4,000 bank executives while the Fed admitted that information was stolen
from its servers during the Superbowl. Rogue hacktivists are not the only threat.
Yesterday morning, Rupert Murdoch tweeted “Chinese still hacking us, or were
over the weekend” in reference to the recent news that the Wall Street Journal’s
China coverage was being monitored by hackers. While governments and
corporations are the targets of activism and espionage, small businesses and
home computers are at risk from petty criminals trying to use our information
to steal cash. Graeme Batsman from Data Defender and Data Security Expert
( gave us his top six data protection tips:
1. Unplug
The Internet is the single biggest threat to
computers, so the most reliable way of
protecting sensitive data is to keep it
offline. If you’ve got no connection then
you can be ninety-nine per cent sure
you’re not going to get hit. When it comes
to the most sensitive data, MI5, the army
and even many charities have offline
networks. These ensure that anyone who
wanted to get hold of sensitive
information would need to get in the
building to do so.
2. Invest in an internet security suite
Many people will buy a computer, which
can cost anything from £400 to £1,000, but
don't want to spend £30 to £40 on an
internet security suite. The standard
Windows firewall is ok but it doesn’t
protect you from viruses and other threats.
A security suite will protect you from most
threats but be careful, there are some
rogue ones out there. Do some research
before downloading and installing, as
some can do more harm than good.
3. Update your software
New versions of software are released in
order to nullify vulnerabilities discovered
in previous versions. Make sure your OS is
up to date by downloading and installing
all available patches, hot fixes and service
packs. With Microsoft Windows XP and
upwards, it is usually done for you and
you can choose how often and what level
of updates to download and install.
4. Back up your data
This doesn’t stop hackers or viruses from
getting to your data, but it does prevent
Online villains are the scourge of leading
international firms and home internet users
alike. We suggest ways to make sure you
you from losing it. You should have some
on-site back up on an external hard-drive,
USB drive or CD ROM. Be sure to encrypt
this in case it gets into the wrong hands.
You could also back up your data off-site
using cloud software and self-manage
your encryption to ensure privacy.
5. Choose a strong, varied password
If you have the same password for all your
internet accounts, someone could get
your into your bank account just by
hacking your twitter. The ideal password
is long, complex, easy to remember and
hard to break. Try thinking of an easily
variable “passphrase” if you struggle to
remember long passwords.
6. Be careful what you open
Since the inception of emails, viruses have
been passed around as attachments.
Viruses still travel around by email but,
thanks to improved virus scanning,
criminal gangs are now placing links
within emails that lead to malicious
software. So the next time you receive an
email from a stranger, do not click on any
links or open any attachments. Virus
scanners are not 100 per cent accurate so
just because it says it’s clean, doesn't
mean it is.
Because no two businesses are the same.
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terms apply. For a copy of applicable product warranties, visit 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 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 26/09/2012 and may not include storage, hard drive, operating system or other features. Reseller prices and savings to end users may vary. Products
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Partner for the most current pricing in your geographic area. ©2012 IBM Corporation. All rights reserved.
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ENGLAND’S top football clubs are
today expected to take a historic vote
on so-called financial fair play (FFP)
measures, but agreement could yet
be scuppered by differences over
exactly how strict they should be.
Representatives of all 20 Premier
League clubs have discussed two
different ways of reining in spending:
restricting year-on-year wage bill rises
and a rule requiring teams to work
towards breaking even.
But chairmen were last night
understood to be split over the finer
details of both plans, while some are
not in favour of either of the
proposals, which could be
implemented as soon as next season.
For a rule change to be passed, at
least 14 of 20 clubs must vote in
favour. A vote is not certain to take
place, but indications yesterday were
that months of negotiations were set
to result in one, or more likely both,
rules being passed.
Under the first proposal, believed
to have been advanced by
Sunderland, teams would be
prevented from increasing their
wage bills by more than five or 10
per cent each year. However, there is
thought to be disagreement among
clubs as to which figure should be
the upper limit.
A break-even rule, similar to that
devised by European governing body
Uefa and applied to clubs in the
Champions League and Europa
League, would require sides to spend
only what they generate.
Such a rule would take several
seasons to phase in, with clubs being
permitted to make limited but ever-
diminishing losses – if covered by
cash from the owners – and
ultimately break even.
Manchester United, Arsenal,
Tottenham and Liverpool, who are
among those with the biggest
revenues, are firmly in favour, but
there remain differences over what
level of losses should be permitted in
the phasing-in period.
The moves to curb spending are in
part a response to wage inflation
and the financial difficulties faced
by some clubs. New television
contracts are set to earn clubs an
extra £20m at least from next
season, and there is appetite to avoid
it fuelling further salary rises.
Fulham and Manchester City are
thought to be among those opposed
to either rule, which critics have
argued will help to cement the
dominance of the current elite.
Wrangling over
sums threatens
top clubs’ vote
Football broker Harris lining up
rival bid for stricken Portsmouth
CITY financier and leading
football deal-broker Keith Harris
last night emerged as the face of a
possible rival bid for embattled
League One club Portsmouth.
The south coast side, who are
£60m in debt, had been expected
to be sold to the Portsmouth
Supporters’ Trust (PST), who were
appointed preferred bidders by
administrators PKF in November.
Portsmouth’s future is set to be
decided in the High Court in seven
days’ time, after a hearing to
resolve wrangling with former
owner Balram Chainrai was last
week adjourned for a third time.
Harris, who was involved in the
sales of Chelsea to Roman
Abramovich and Manchester City
to Thaksin Shinawatra, would
become chairman if his bid was
successful, according to Sky News.
It is not known who would fund
the bid fronted by Harris, who
part-owns troubled stockbroker
Seymour Pierce and has previously
acted for Chainrai.
PST spokesman Colin Farmery
told City A.M. that rumours had
circulated of a rival bid but that
theirs remained best for the club.
“As far as the PST is concerned,
our bid is fully funded and ready
to go,” he said. “We need to be
sure that we make a clean break
from the past.”
Harris is a former chairman of
the Football League and an ardent
Manchester United fan.
Wilshere stars and
Lampard warned
not to move to US
England locate rhythm
MANAGER Roy Hodgson heaped
praise on Jack Wilshere after the mid-
fielder marked his first international
start for 20 months with a man-of-
the-match performance in last
night’s friendly victory over Brazil.
Wayne Rooney’s 33rd England goal
and what threatens to be Frank
Lampard’s last, either side of Fred’s
equaliser, earned the hosts a first tri-
umph over the celebrated South
Americans since 1990.
Goalkeeper Joe Hart also played a
crucial part with an excellent penalty
save from Ronaldinho, but on a night
of milestones and celebrations it was
the return of Wilshere that offered
greatest hope.
“He was made man of the match
and I concur with that, I thought he
had an excellent game,” said
Hodgson. “As did Theo Walcott, I
thought those two were the serious
contenders. Jack brings us energy,
mobility and enthusiasm in midfield,
and links that with an awful lot of
skill. I thought the three midfielders
in both halves did very well.
“It really was a good result. The play-
ers worked really hard for it. We had a
mad spell at the start of the second
half, which put them back in the
game, but we were good value for our
victory over 90 minutes. I think we
can be satisfied with not only the win
but also the manner of the win.”
Lampard secured the victory with a
deft first-time shot that curled in off
the post, and Hodgson urged the 34-
year-old to stay in the Premier League,
or Europe at the very least, when his
Chelsea contract expires in the sum-
mer. The evergreen midfielder has
been tipped to follow in David
Beckham’s footsteps by joining LA
Galaxy, but Hodgson warned such a
move would make Lampard’s
progress hard to monitor.
“I’m rather hoping we’ll still see
him if not in England then Europe,
which will make my task easier,” he
added. “If he goes further afield and
follows David, it complicates matters
but it doesn’t mean your career is
over with England. But the further
afield you go, the more problematic
it gets for the media and the England
manager to follow you.”
England’s fourth win over Brazil
ensures Hodgson’s men approach
next month’s 2014 World Cup quali-
fiers against San Marino and
Montenegro emboldened, and came
on a night of milestones, including
left-back Ashley Cole’s 100th cap.
That honour was also shared by
Brazil forward Ronaldinho, at whose
hands England famously exited the
2002 World Cup, but he conjured lit-
tle of his old magic nor found any
favours from Hart. The Manchester
City stopper saved the former
Barcelona forward’s tame penalty eas-
ily enough, but then showed superb
agility to halt his follow-up, before the
alert Tom Cleverley cleared.
Hodgson did not hide his anger that
a spot-kick had been given for a cross
striking Wilshere – “They can’t chop
their arms off,” he said – but it dissi-
pated moments later when England
took the lead. Wilshere, playing in a
midfield triangle with captain Steven
Gerrard and Manchester United’s
Cleverley, released Walcott, and,
when Julio Cesar saved at the Arsenal
Harris is part-owner of Seymour Pierce
n A majority of 14 of 20 clubs must
vote in favour for either of the
following rules to be passed. It is
thought more likely that both or
neither will succeed, rather than one
n Wage cap: Teams are restricted to
increasing their wage bill year-on-
year by a certain amount. Figures of
5-10 per cent have been mooted, but
neither is thought to have full backing
n Break-even: Clubs required to limit
losses to a pre-agreed amount, as long
as they are covered by owners, with a
view to eventually breaking even
Billy did well, Manu brings something different.
I’m just thankful I’m not making the decisions
Hamilton shaken by
nightmare first test
Door not closed on Armstrong criminal charge
Rooney tapped in the
opening goal – his 33rd
for England –after
Wilshere had released
in Brazil win
forward’s feet, the lurking Rooney
Santos wunderkind Neymar blazed
over before half-time, but the visitors,
and next World Cup hosts, levelled
when substitute Fred beat Hart with a
powerful left-footed effort after Gary
Cahill had been dispossessed.
Fred hit the crossbar seconds later,
but Lampard clinched a deserved win
on the hour when Brazil half-cleared
and he clinically guided an 18-yard
shot in off the woodwork.
Hodgson finds
magic formula
in midfield trio
LAST night offered an exciting
glimpse of exactly how I think
Roy Hodgson wants England to
play, a nervy 20 minutes aside.
The midfield was very good
indeed, with some terrific link-up
play and great movement between
Steven Gerrard, Jack Wilshere and
Tom Cleverley.
Gerrard looks very comfortable in
front of the back four, while
Wilshere was exceptional – it was a
pleasure to see him back to his best.
That fluidity, and England’s
confidence in playing short passes
in the final third, helped Wayne
Rooney to be more dangerous.
Theo Walcott, meanwhile, looked
a different, much more mature
player. His excellent club form has
clearly given him belief and he no
longer shrinks in an England shirt.
I’m not sure about Danny
Welbeck on the left, although he
does offer a goal threat coming
inside when Rooney drops deep.
Brazil, it must be said, were pretty
disappointing, but let’s give credit to
England for working very hard and
using the ball well.
Midfield aside, the main
experiment was in defence, where
the Gary Cahill-Chris Smalling
partnership looked a touch untidy
and naive, with Brazil dragging
them out of position. They won’t be
Hodgson’s No1 choice but will have
benefited from 90 minutes against
quality opposition.
Trevor Steven is a former England
footballer who played at two World Cups
and two European Championships. He
now works as a media commentator.
I was right to quit Sky, says Cav
n CYCLING: Britain’s Mark Cavendish
says his instant success at new team
Omega Pharma-QuickStep has justified
his decision to quit Team Sky. Cavendish
took the overall lead in the Tour of Qatar
yesterday with his second successive
stage win – his third in a month with his
new outfit. “I am really, really happy
here right now,” the Isle of Man rider
said. “Three wins already shows me that
I made the right move.”
Strachan off to winning start
n FOOTBALL: New Scotland manager
Gordon Strachan enjoyed a winning start
to his reign last night after Charlie
Mulgrew’s first-half strike earned a 1-0
friendly victory over Estonia.
Tottenham’s Gareth Bale carried his club
form onto the international stage with a
goal and an assist as Wales beat Austria
2-1. Republic of Ireland beat Poland 2-0
with goals from Ciaran Clark and Wes
Hoolahan, while Northern Ireland were
held 0-0 by Malta.
Allardyce fined for cup comments
n FOOTBALL: West Ham boss Sam
Allardyce has been fined £8,000 by the
Football Association for his criticism of
officials in last month’s FA Cup third-
round defeat at Manchester United.
Allardyce was angered at being refused
a penalty and said: “You see it time and
time again at Old Trafford.”
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BRITAIN’S Lewis Hamilton
admitted suffering a “pretty
heavy” impact after he crashed
just 15 laps into his first testing
session with his new Formula One
team Mercedes yesterday in Spain.
A braking failure left Hamilton
unable to prevent the car hurtling
headlong across the gravel and
into a tyre wall, and brought to a
premature and abrupt end the
outfit’s track time for the day.
The 2008 world champion
shrugged off the incident in Jerez,
insisting it was better to have
identified the problem before the
season begins in Australia next
month, but conceded to being
slightly shaken.
“[The impact] was pretty heavy
but it wasn’t as bad as I've
experienced in the past,” the 28-
year-old said.
“We damaged the car a little bit
and as all the new stuff is still
being built we didn’t have too
many spare parts to be able to
change it, so they are working on
it tonight.
“I’m just glad that firstly I’m
safe and that it’s happened now,
not when we’re in the season or
something. This is what testing is
about. It’s about getting through
those development phases, errors
or whatever they may be and
working on them and that’s what
the guys are doing.”
Yesterday’s crash represented a
nightmare start to Hamilton’s
new career with Mercedes, having
made the controversial decision
to leave McLaren, his home since
the age of 13, last year.
It also continued a dreadful
week for the team, after an
electrical problem left Nico
Rosberg’s car in flames and
restricted the German to just 11
laps on Tuesday, the first day of
pre-season testing.
Rosberg is set to resume testing
today, with Hamilton, who
despite his limited track time
posted the sixth fastest lap
yesterday, not due back behind
the wheel until tomorrow.
Frenchman Romain Grosjean of
Lotus was quickest, ahead of
Force India’s Scottish driver Paul
di Resta and Australian Daniel
Riccardo of Toro Rosso.
His countryman, Red Bull’s
Mark Webber, was fourth,
German Nico Hulkenburg fifth on
his Sauber debut, Hamilton sixth
and his replacement at McLaren,
Mexican youngster Sergio Perez,
finished seventh fastest.
DISGRACED former cyclist Lance
Armstrong may yet face criminal
charges in his native America,
despite an attorney’s suggestion to
the contrary, following his
doping admissions.
Armstrong is under
investigation by the Food
and Drug Administration
(FDA), who could probe
allegations he obstructed
justice and intimidated
witnesses, according to
US media.
Attorney Andre
Birotte dropped a
investigation into
Armstrong last year and insisted on
Tuesday that it would not be
revived, despite the 41-year-old last
month confessing to cheating in all
of his seven Tour de France wins.
But ABC News, citing an
unnamed source, reported that
federal agents were still looking into
claims of “obstruction, witness
tampering and intimidation”
against the Texan.
FDA spokesperson Sarah
Clark-Lynn appeared to
confirm an investigation
was indeed active in
remarks published
yesterday by USA Today.
“When the US Attorney’s Office
declines to prosecute an individual
or entity, typically law enforcement
agencies do not pursue further
investigative activities,” she was
quoted as saying. “That said, this is
an ongoing matter for the agency
and I cannot comment further.”
Armstrong, who was stripped of
his titles and banned from
competitive sport last year, is
already facing a number of lawsuits.
Insurance company SCA
Promotions is demanding the
return of $12m (£7.5m) relating to
bonuses he was paid for multiple
Tour de France victories, while the
Sunday Times newspaper is suing
Armstrong for up to £1m over a
libel settlement to him in 2004.
The Englishman escaped unhurt after the brakes failed on his new Mercedes
Armstrong confessed to
doping last month
ENGLAND cricketer Michael Lumb
insists they will not underestimate
New Zealand after suffering defeat
in their final warm-up match for the
Twenty20 series.
Jos Buttler and Eoin Morgan both
hit half-centuries as England reached
170-5, but captain Stuart Broad’s 3-24
could not prevent a New Zealand XI
claiming a three-wicket win off the
final ball. “I think it will be tight,”
Lumb said of the three-match series,
which starts on Saturday. “A lot of
people have written them off, but
you can’t take them lightly.”
Broad’s men in
Twenty20 blow
England hooker Dylan Hartley on the Twelvetrees-Tuilagi dilemma
Calling hotshot drivers and their crews to apply at

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