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Issue 1,324 Thursday 17 February 2011 www.cityam.com FREE

KING LIFTS LID ON Bankers on

Sanofi deal
INFLATION ERROR bag $125m

▲
M&A
BY ALISON LOCK
ADVISERS to the $20.5bn-plus
UK ECONOMY (£12.75bn) Sanofi-Aventis takeover of
▲

BY JULIAN HARRIS US biotech firm Genzyme will walk

INFLATION was higher than official
figures suggested throughout the
housing bubble and credit boom, the
Bank of England admitted yesterday.
Consumer price inflation was 0.3
per cent higher than previously
thought every year between 1997 and
2009, due to errors on clothing prices.
Sales prices were wrongly assumed
to be the norm, distorting the Office
for National Statistics’ numbers. The
blunder was bound to have misled the
Bank, economists said, and meant
that interest rates were kept too low
for too long during the boom.
“If the ONS had got its figures right,
the Bank might have moved more
quickly to raise rates and get us out of
the cheap-money spiral that caused
the housing and borrowing bubble,
and the inevitable bust that followed,”
said Eamonn Butler of the Adam
Smith Institute think tank.
“At the same time it has cheated
pensioners and others on fixed
incomes and budgets linked to infla-
tion,” he commented yesterday, after
the Bank published its latest Inflation
Report.
The error, revealed in the Bank’s
Inflation Report, had an even greater
effect on the retail prices index (RPI)
inflation, driving up the wedge
between RPI and CPI by an additional
0.3 per cent.
Mervyn King’s Bank of England Inflation Report revealed a significant blunder in the UK’s inflation figures
Yet Bank governor Mervyn King was
notably more dovish over future infla-
tion threats than had been expected,
causing investors to ease their expec-
tations of a rise in bank rate.
Sterling interest rate futures rose
across the curve, implying lower
expectations of future interest rates in
the UK.
Nevertheless, the market was still
fully pricing in a rate hike by 9 June,
with at least two 0.25 per cent rate
hikes by the end of the year and a 96
per cent chance of rates being 0.75 per
cent higher by the beginning of
January next year.
Inflation in two years time is still
“more likely to be above the target”
rate of two per cent, if interest rates
and the level of asset holdings were to
remain at their current rates, the
Bank said yesterday.
With interest rates rising according
to market expectations, inflation will
Picture: GETTY
fall just below the target rate in two to
three years, yet the Bank admitted to
stronger upside risks.
Meanwhile, King admitted that
there is “a wider than usual range of
views among committee members”
regarding the risks of inflation.
The committee’s most recent voting
pattern will be published by the Bank
next week.
ALLISTER HEATH: P2
ECONOMICS: P6--7
away with an estimated $125m in
fees, corporate finance house
Freeman & Co said yesterday.
Banking teams for both sides,
which include JPMorgan and
Goldman Sachs, will earn around
$60m each for the nine months of
work it took to close the deal.
Sanofi’s lead financial advisers –
New York-based Evercore Partners and
JPMorgan Chase – will earn $50m-
60m, while Genzyme’s bankers, Credit
Suisse and Goldman Sachs, should
take home $53m-65m.
A further $120m of lending and
M&A fees will be paid to JP Morgan
and French banks BNP Paribas and
Societe Generale, which arranged an
estimated $15bn in loans for Sanofi,
Freeman said.
Paris-based Sanofi will pay $74 in
cash per share plus a contingent sum
dependent on Genzyme’s experimen-
tal drug Lemtrada.
Evercore’s team included founder
Roger Altman and senior managing
director Francois Maisonrouge, who
advised on Pfizer’s $68bn takeover of
Wyeth in 2009. JPMorgan’s work was
led by its vice chairman of investment
banking, Robbie Huffines.
The Credit Suisse team included
vice chairman Scott Lindsay while
Goldman’s side included managing
director Marshall Smith.
MORE ON SANOFI DEAL: P14

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 2 News
Why the devil is always in the detail
EDITOR’S LETTER
ALLISTER HEATH
AT LAST, proof of what we had all
been suspecting: official measures of
inflation have failed to pick up actual
price rises. Yesterday’s Inflation
Report from the Bank of England con-
tained a fascinating gem: the revela-
tion that consumer price index (CPI)
inflation has been underestimated by
0.3 per cent a year for the past 12 years
as a result of an astonishing blunder
by the hapless Office for National
Statistics. The difference on the retail
price index (RPI) measure of inflation
was even greater – prices were going
up even faster than the government
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WHAT THE OTHER PAPERS SAY THIS MORNING
OAKTREE RETURNS INVESTOR’S CASH
Oaktree Capital’s distressed invest-
ment fund has returned $3bn of the
$10bn it raised from investors,
reflecting its difficulties in finding
opportunities as the economy
improves, people familiar with the
matter say. The fund, run by Bruce
Karsh, was among the most aggres-
sive buyers of distressed debt after
the failure of Lehman Brothers in
September 2008. But Mr Karsh is now
telling his investors he cannot decide
what to do with their money, these
people say.
A ROUND OF JOB CUTS HITS ATKINS
The shortfall in government funding
for large building projects has pushed
Atkins into a round of job cuts, as the
design and engineering group looks
to scale down its UK business.
Atkins, which generates just over half
of its revenues in the UK, said it
had been telling us. The ONS over-esti-
mated the extent of the collapse in
clothing costs from 1997 to 2009,
seemingly because it focused on prices
during the sales and forgot about the
rest of the year.
This may seem like a small error but
it was a major gaffe. Interest rates
would undoubtedly have been higher
every year during the bubble had the
Bank known prices were going up as
much as they were. Even half a per
cent more on rates would have damp-
ened credit growth and property
prices; the bubble wouldn’t have been
as bad. And anybody with contracts,
bonds or pensions linked to inflation
lost out because of the errors.
While King’s revelations came out
of the blue, the poorish employment
figures were less surprising given the
slowdown during the last quarter of
2010. Youth unemployment is once
again a shameful blight on British
society. But the labour market per-
formance last year was more balanced
than the headlines in other media
Fed boost for
US recovery
US ECONOMY
▲
BY JULIAN HARRIS
POSITIVE data from the US has
caused the Federal Reserve to raise
its forecasts for economic growth, it
was revealed last night.
“Participants generally expressed
greater confidence that the econom-
ic recovery would be sustained,” the
Fed revealed in minutes of its last
rate setting meeting in January.
The GDP growth forecast was
increased to a range of 3.4 per cent
to 3.9 per cent, up from the
November projection of three per
cent to 3.6 per cent.
However, America’s exceptionally
high level of unemployment
remains a concern for the Fed, with
officials forecasting only modest
decline over the coming two years.
Meanwhile, the forecast for infla-
would cut 300 jobs by April – taking
total staff to 17,000 – and relocate a
small number of people to the Middle
East.
OSBORNE EYES LOOSER LIQUIDITY
SCHEME
George Osborne is looking at ways in
which Britain’s tough bank liquidity
rules might be eased, potentially sav-
ing banks hundreds of millions of
pounds and releasing funds for lend-
ing to businesses and homeowners.
The chancellor is looking sympatheti-
cally at claims by the banks that
Britain’s regulators have gone too far.
PEPSI BACK ON SAINSBURY’S SHELVES
Pepsi is back on Sainsbury’s shelves
following a standoff over pricing, set-
ting the tone for what promises to be
a tough round of negotiations
between suppliers and retailers.
Sainsbury is understood to have caved
in, at least partially, on the higher
prices demanded by Britvic after the
Pepsi bottler stopped supplies.
might suggest. There were 500,000 job
vacancies in the three months to
January 2011, up 40,000 from the
three months to October 2010 and up
20,000 from a year earlier, once again
highlighting that skill and attitude
shortages are a major issue.
The number of people in employ-
ment was 29.12m in the three months
to December 2010, down 68,000 from
September but up 218,000 on a year
earlier. In other words, employment
rose by 0.8 per cent last year – even
though public sector employment fell
by 77,000, or 1.3 per cent. The badish
news is that all of the annual rise was
made up of part-timers, with the num-
ber of full-time jobs down by 5,000.
However, total hours worked per
week were 924.6m in December 2010,
up 3m from the September 2010 and
up 16m (or 0.8 per cent) on the year.
And even though UK GDP supposedly
grew by just 1.4 per cent last year, the
private sector created an extra 1.3 per
cent jobs (296,000, to be precise)
including a net rise in full-timers. The
tion moved only at the bottom end,
edging from a range of 1.1 to 1.7 per
cent to 1.3 to 1.7 per cent.
“Under those circumstances, we
don’t anticipate that the Fed will call
an early halt to its plan to buy a total
of $600bn (£373.5bn) of Treasury
securities by mid-year,” said Paul
Ashworth of Capital Economics.
However, the downside risks to
growth and dangers of deflation had
“diminished,” the Fed announced,
declaring faith in a sustainable
recovery, with the economy “on a
firmer footing” than previously
thought.
Federal Reserve chair
Ben Bernanke remains
concerned about the
unemployment rate
across America
AUSTERITY SINKS PORTUGAL INTO
RECESSION
Spending cuts and tax rises have led
Portugal into recession as it aims to
cut its budget deficit, the country’s
central bank governor said today.
Carlos Costa’s admission came ahead
of a sale of up to €1bn in treasury bills
seen as a vital test of market senti-
ment towards the eurozone’s weakest
economies.
NORTH KOREA BACK IN PLAY WITH
CHINA TRADE
North Korean exports to China soared
by 51 per cent to $1.2bn (£740m) in
2010 as the impoverished regime sold
its coal, iron ore and other natural
resources into the Chinese market. At
the other end of the relationship, and
in a year where North Korea sunk a
South Korean warship, Chinese
exports to North Korea rose 21 per
cent higher to $2.3bn.
private sector is easily making up for
public sector job cuts, which have
come earlier and faster than predict-
ed. However, it didn’t grow enough to
keep up with the labour force, which
is why unemployment rose by 40,000
in the three months to December
2010, compared with a year earlier.
The number of people on Jobseekers’
Allowance in January 2011 was 1.46m,
up 2,400 on December but down
157,100 on a year earlier. This is not an
especially useful figure. As the welfare
reforms kick in, and criteria on bene-
fits are tightened, more people will be
reclassified as out of work on that
measure, rather than sick.
So far, this has not been a jobless
recovery, contrary to what many have
claimed. But much more needs to be
done to help the jobless: the coalition
needs to make it easier, cheaper and
safer for firms to take on staff. Real
action, rather than speeches about the
Big Society, is urgently required.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Martin Wheatley, CEO of the Hong Kong Securities and Futures Commission Pictures: REX
Watchdog powers grow
REGULATION
▲
BY ALISON LOCK
REGULATORS are to get significant
new powers when the Financial
Services Authority is split into three
next year, it was reported yesterday.
The new agencies, including the
powerful consumer protection body to
be led by Martin Wheatley, head of
Hong Kong’s regulator, will be able to
tell a bank or broker’s investors of
planned action against the institution
before the party is notified.
EASYJET IN EXECUTIVE PAY WRANGLE
Sir Stelios, easyJet’s founder and
largest shareholder, said last week
that he would oppose the airline's pay
package for directors because of a
£1m payment made to former chief
executive Andrew Harrison between
April 1 to September 30 last year,
which includes three months after he
left easyJet.
SINGAPORE BEATS LONDON AND NY
Singapore has beaten London and
New York as the number one career
destination for UK investment
bankers, research has revealed.
The study suggests over-regulation in
the UK could be damaging London’s
reputation and lead to a brain drain
of talented staff that threatens to
derail the recovery, according to
Astbury Marsden, a financial recruit-
ment firm which carried out the
survey.
CITYA.M. 17 FEBRUARY 2011
NEWS | IN BRIEF
Head of Growth Fund named
Private equity veteran Stephen Welton
is to become chief executive of the UK
banks’ new £2.5bn Growth Fund, it was
confirmed to City A.M. yesterday.
Welton, currently at global private equi-
ty firm CCMP Capital, will work along-
side BAA chairman Sir Nigel Rudd at
the investment fund, which will invest in
growing UK companies.
Borders files for bankruptcy
Bookshop chain Borders has filed for
Chapter 11 bankruptcy protection and
said it would close about a third of its
shops yesterday. Continued sales decline
has left its $1.29bn (£800m) debt load
unmanageable, while online rivals such
as Amazon have cut its market share.
Icesave deal gets final approval
Iceland’s Parliament is to approve a deal
to return about $5bn (£3bn) of bailout
money for failed bank Icesave to the UK
and the Netherlands. The payout, which
should be approved next week, repre-
sents about 86 per cent of the amount
the government had to pay depositors in
Icesave, which collapsed in 2008 at the
height of the financial crisis.
The move means investors would
know of enforcement actions before
the institution was able to appeal, the
Treasury’s financial secretary Mark
Hoban said in an interview with the
Financial Times. The Consumer
Protection and Markets authority – to
be renamed the Financial Conduct
Authority – will be able to ban finan-
cial products from the market for up
to a year. The government will today
name the four external members of a
new Bank of England committee to
supervise the financial sector.
FIRMS WANT WHISTLEBLOWER CHANGE
Large US companies are asking the
Securities and Exchange Commission
to require that workers report wrong-
doing to employers in order to be eli-
gible for payments under the
agency’s new “whistleblower” pro-
gramme. Google Inc. and General
Electric Co. are among the more than
two dozen companies that have writ-
ten letters to the SEC, asking the
agency to revise its proposed rules.
G20 FRET OVER INFLATION TARGETS
Top officials from the Group of 20
industrialized and developing
nations have agreed to draw up a
“limited set” of indicators aimed at
curbing global economic imbalances
and better coordinate economic poli-
cies, but have yet to decide what
those indicators will be, according to
an early draft of a statement due to
be released by the G-20 on Saturday.
CITYA.M. 17 FEBRUARY 2011
Seymour deal
in doubt as
Gerova tanks
▲
M&A
BY ALISON LOCK
THE future of a £40m deal to take
over City stockbroker Seymour Pierce
suffered a blow last night amid a
botched management overhaul at its
US buyer.
Gerova Financial Group, a New
York-managed reinsurance company,
had engineered a reverse takeover of
Seymour Pierce that would have seen
its chairman Keith Harris become
chair of a group worth about £400m.
Seymour Pierce announced in
December that Gerova was to buy it
and a third business, equities trader
Ticonderoga Securities, and merge
the two brokers. It would earn Harris
an estimated £10m payout from his
25 per cent stake in Seymour Pierce.
But Gerova’s shares plunged by
over a third yesterday after its newly-
named chairman Dennis Pelino
refused to take the job.
Pelino’s decision to walk followed
the resignation of former chairman
Gary Hirst and four board members
last week after Gerova announced a
board overhaul. A report in January
also raised questions about Gerova’s
finances, though the company said
the paper was inaccurate.
Gerova shares have slumped from
more than $86 (£53.40) last June to
just $6.39 yesterday.
Harris last week postponed his new
role as chair and the ongoing con-
cerns could mean Seymour Pierce has
to abandon the plans. Michael Hlavsa,
Gerova’s chief financial officer, is to
lead the firm until it recruits a new
chairman.
ANALYSIS l Gerova Financial Group Ltd
35 $ GOOGLE chief executive Eric Schmidt
30
6.39
25 16 Feb
20
15
10
5 flexible for users and a better deal for
22 Nov 13 Dec 3 Jan 21 Jan
Google boss Eric Schmidt launched a new subscription service yesterday Picture: REUTERS
Google ups heat on Apple
TECHNOLOGY
▲
BY ALISON LOCK
stole Apple’s thunder yesterday by
launching a well-received online con-
tent subscription service just a day
after its rival unveiled its own.
Google’s One Pass payment model,
which will allow publishers to charge
for content viewed on computers and
mobile devices, was praised as more
11 Feb publishers than Apple’s service.
Schmidt said One Pass would allow
users to easily switch between devices
by giving them a single password
with which to access content on PCs,
tablets and mobiles.
It will also charge publishers just
ten per cent of their price, compared
with the 30 per cent levied by Apple.
Both systems are designed to help
content publishers recoup revenue
from media and information pub-
lished online, as users are increasing-
ly open to paying for their content.
LATEST TECHNOLOGY NEWS: P12
News 3
Glitch hits trade
just days after
LSE upgrades
FINANCIAL MARKETS
▲
CONFUSION reigned last night after a
second consecutive day of technical
glitches hit traders.
Technical errors hit brokers, alleged-
ly as a result of data provided by the
London Stock Exchange (LSE).
Zeroes intermittently appeared on
some shares displaying LSE bid and ask
prices, just one day after the auction
close was delayed.
Data provider Thomson Reuters
issued a service alert warning of the
error, which said the glitch was
“caused by an issue at the exchange.”
On Tuesday, the bourse failed to stop
trading on schedule, running over by
42 seconds, causing problems for bro-
kers.
Traders looking to invest in the day’s
closing auction, which takes place after
continuous trading closes, instead
placed orders in the earlier period.
Many brokers look to invest in the
day’s closing auction for clients want-
ing to trade on the closing price, which
is formed during the period.
However, the LSE insisted yesterday’s
error was not related to Tuesday’s prob-
lem and was not caused by its new soft-
ware.
On Monday, the exchange migrated
to an upgraded IT system provided by
MilleniumIT, the Sri Lankan technolo-
gy provider it bought in 2009.
 4 Politics
Report says
public service
reform slow
▲
POLITICS
BY DAVID CROW
THE government’s public service
reforms are “all over the place”,
according to a scathing report out
today.
Reform, a think-tank focused on
overhauling public services, said the
pace of change in education and
health was too slow and not radical
enough.
Although education secretary
Michael Gove is introducing more
academies and free schools – which
are both free from local authority
control – Reform said his insistence
that schools must be not-for-profit
ventures was stymying the policy.
And the think-tank said attempts
by Andrew Lansley, the health secre-
tary, to overhaul the NHS by giving
commissioning power to GPs had not
resulted in more accountability to
patients.
However the think-tank said the
Home Office had delivered a coherent
reform programme, by making police
forces accountable to their elec-
torates, giving police officers new
terms and conditions, and saving
money.
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Vince Cable has promised changes in favour of employers
Tribunals cost firms £1.6bn
▲
REGULATION
EMPLOYMENT tribunals cost UK busi-
nesses a staggering £1.6bn in 2010,
according to new figures released
today.
According to Ambition, the global
recruitment firm, just one in twenty
HR professionals fully understands
the employment tribunal process.
That means the majority of firms –
one in five – settle every single tribu-
nal case before they get to court, even
if they have a good chance of winning.
The average cost of settling a tribu-
Pack your toothbrush!
Fly from Heathrow
New York
Boston
Miami
Nairobi
Singapore
Seoul
Coalition has
done little to
cut red tape
POLITICS
▲
BY DAVID CROW
THE coalition government has done
Picture: REUTERS little to cut costly red tape since it
came to power, according to a report
from the National Audit Office (NAO)
– despite promising to slash burden-
some regulation.
The report from the NAO, pub-
lished today, found “ no attempt has
nal is £5,400 while an employer who been made to review the total num-
chooses to defend themselves will typ- ber of regulations that businesses
ically pay £8,500. That is before one face” since David Cameron came to
counts the amount of business hours power.
that are lost to tribunal sessions and And the government still has no
meetings with lawyers. plan to stop the tide of regulation that
Tim Gilbert, UK managing director swamps firms, according to the
of Ambition said: “High costs, a lack of report.
understanding and worry over bad Last year, the coalition promised a
publicity means the majority of busi- “bonfire of red tape”. It said it would
ness decide to settle claims before they only introduce regulation as a last
end up in court”. resort and bring in a “one in one out”
Vince Cable, business secretary, is policy that would see out-dated rules
planning to introduce changes to scrapped when new ones are made.
make tribunals fairer for employers. However, earlier this week the
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CITYA.M. 17 FEBRUARY 2011
British Chamber of Commerce (BCC)
said new red tape – including regula-
tions from the EU – would cost firms
an extra £23bn over the next four
years.
Yesterday at Prime Minister’s ques-
tions, Cameron said he wanted to see
fewer regulations and praised busi-
ness secretary Vince Cable for his
approach to the issue.
However, Cameron’s aides privately
say he is frustrated at what he sees as
Cable’s lack of urgency when it comes
to scrapping British rules and limiting
the impact of European ones.
In the face of rising unemployment,
the BCC yesterday warned the private
sector would be less likely to pick up
the slack following public sector job
cuts if the regulatory burden contin-
ues to increase.
Alexander Ehmann, head of regula-
tion at the Institute of Directors, said:
“Today’s findings underline the
immediate need for a coherent de-reg-
ulatory strategy across Whitehall.”
Immigration
cap to spare
high earners
▲
POLITICS
BY RICHARD PARTINGTON
BUSINESSES have welcomed an
exemption for high earners from a
government immigration cap due to
come into force in April.
Bankers, lawyers and other highly-
paid workers who earn over £150,000
per year will not be subject to the
limit.
Head of employment policy at the
CBI, the employers’ organisation Neil
Carberry said: “This announcement
of new rules for the immigration cap
confirms the government’s welcome
decision to prioritise skilled workers.
“The government is right to be
putting the emphasis on the most
economically beneficial part of
the system.” The British Chambers
of Commerce also welcomed the
news.
Under the new rules, employers
will have to apply for a certificate of
sponsorship if they wish to bring
someone to the UK. An annual limit
of 20,700 visas will be made available
to skilled workers, whilst an extra
1,000 visas will be made available for
“exceptional talent”.
Firms will also be able to apply for
intra-company transfers for staff
paid more than £40,000 or more for
a maximum of five years.
Transferred employees who earn
between £24,000 and £40,000 per
year will be allowed to stay for one
year only.
Immigration minister Damian
Green said: “Britain will benefit from
migration provided it is controlled
and directed towards improving our
economy.”

CITYA.M. 17 FEBRUARY 2011
WHISKY,
JAZZ, AND
BETTING ON
THE EURO
WITH whisky tasting, a jazz band and the
chance to win a sports car for the week-
end on offer, WorldSpreads winter party
(definitely not just a late Christmas do)
was the place to be in the City on Tuesday
night.
Held in a candlelit crypt underneath St
Etheldreda’s church near Chancery Lane,
the night saw the spread betting firm’s
chief executive Conor Foley welcome
guests to the crypt – marked by the shiny
silver Lotus Evora parked outside – for an
evening of drinking, eating, and a rather
unusual raffle.
In January, WorldSpreads launched the
first ever spread bet on the future of the
Euro, allowing investors to take a position
on exactly how many days the single cur-
rency will last in its current guise.
The current price is pitched between
700-710 days, with returns based around
the Euro lasting for longer or shorter than
that before at least one country decides to
withdraw.
To celebrate, guests were each given a
defunct European coin – in The Capitalist’s
case a Belgian franc – on arrival. A corre-
sponding coin was then pulled out in a
draw, with the winner getting the keys to
the resident Lotus for a weekend.
The coy winner declined to be named,
but rumour has it the £70,000 thorough-
bred went to a journalist who doesn’t own
a car, seldom drives one, and looked
EDITED BY
ELIZABETH FOURNIER
GOT A STORY? EMAIL
thecapitalist@cityam.com
WorldSpreads CEO Conor Foley poses with the night’s big prize - a weekend in a Lotus Evora
rather nervous at the prospect of taking
the wheel of the luxury machine, not to
mention returning it unscathed...
A WORTHY TIPPLE
Red wine drinkers have long dined out on
its supposed health benefits – it’s chock
full of polyphenols thought to protect
against heart disease, and chemicals in the
grapes’ skin may even slow aging. But now
there’s even more of an excuse to indulge,
with news that sales of red wine could save
London’s ailing bars and restaurants.
According to research by Wilson Drinks,
those who chose to quaff red wine splurge
more than any other type of drinker each
time they go out, with an average spend of
The Capitalist
5
Spread
betting on
the euro lets
investors take
a position on
how many
days the
single currency
will last
With much of the fund’s growth driven
by Asian demand for first-growth claret, it’s
particularly interesting to note that
Mouton Rothschild’s 1996 vintage rose 25
per cent – with significant interest in the
bottle sparked by the fact that Chinese
artist Gu Gan painted its label.
Perhaps Jacobs Creek should think about
giving Rolf Harris a call…
£17.68 per outing. They also prefer gastro
pubs to any other type of drinking estab-
BACKWallets
A WINNER
at the ready – the Epsom
lishment – a format that analysts predict Derby’s Spring Meeting is fast
the most likely to survive tough trading approaching, including the
conditions. first of the year’s official Derby
And if red wine drinkers hold the key to Trials.
preserving UK pubs, bars and restaurants, The Spring Meeting will take
then their ‘hobby’ is also likely to be driv- place on Wednesday 20 April,
ing the latest figures from the Fine Wine with prize money totalling
Fund, which saw its share price rise 1.9 per £30,000 thanks to a second year of
cent in January – the latest increase in a sponsorship from Investec, which
steady upward trend that has seen the has committed to the event for the
fund grow 73 per cent since it was next three years.
launched in 2006. Last year saw trainer Andrew Balding
Long seen as a stable investment, the (above centre, with Investec’s chief
fund has recently seen demand for cheap- marketer Raymond Van Niekerk
er, lower quality vintages outperforming and guest of honour Ian Balding)
the more expensive, higher quality ones. pick up the trial trophy.
 6 Economics
UK labour market stumbles
▲
UK ECONOMY
BY JULIAN HARRIS
EMPLOYMENT dropped by 68,000 in
the final three months of 2010,
reflecting the labour market down-
turn that economists expect will con-
tinue through the year.
There are now 29.12m employed
people in the UK. The unemployment
rate stuck at 7.9 per cent, yet the fig-
ures showed an extra 44,000 people
unemployed, compared to the previ-
ous three months.
“Overall, not a good report, but nor
was it terrible,” commented Alan
Clarke of BNP Paribas. “The data have
King insists a
rise in rates is
not imminent
▲
UK ECONOMY
BY KATIE HOPE
MERVYN King yesterday tried to play
down expectations that the Monetary
Policy Committee (MPC) would immi-
nently start raising interest rates to
curb inflation, insisting that it would
be a “futile gesture”.
Unveiling the Bank of England’s
quarterly Inflation Report, in which it
lowered its forecast for economic
growth this year from 2.6 per cent to
around two per cent and confirmed
that inflation could reach five per cent
before June – more than double its two
per cent target for the consumer prices
index (CPI), the governor said that peo-
ple were “running ahead of themselves
in saying we are pre-announcing, or lay-
ing the ground, for a rate rise.”
Despite King’s protestations, econo-
mists yesterday said the growth fore-
casts contained in the report indicated
a hike in just three months’ time in
May.
Under the Bank’s “central projec-
tion”, which King stressed was not a
“pre-announcement” of policy, rates
will rise a quarter point to 0.75 per cent
in the next four months and to one per
cent by the end of the year. By the end
of 2012, rates will be at two per cent
Export markets offer hope to small UK World economy fires up
companies as demand at home stalls with rate hikes expected
▲
UK ECONOMY
BY JULIAN HARRIS
LONDON’S small and medium sized
companies were yesterday encour-
aged to look overseas to bolster their
growth.
Research by accountancy body
ICAEW showed that 70 per cent of UK
businesses are looking to exports to
further their recovery, while Bank of
England governor Mervyn King said
Britain was successfully “rebalanc-
ing” towards exports.
stopped improving as the pace of GDP
growth has slowed,” he said.
Britain’s GDP was knocked back
half a percentage point in the quarter
due to severe effects from the snow,
the Office for National Statistics (ONS)
estimated last month.
“If growth bounces back into line
with the surveys, then this soft patch
in the jobs numbers will probably
prove temporary,” Clarke said. Yet if
growth stutters, “we should get used
to disappointing jobs numbers,” he
added.
The number of people claiming
unemployment benefit increased in
January, the claimant count rising by
and at three per cent by the end of
2013.
“The Inflation Report projects that
inflation is as likely to be above target
as below target 2-3 years ahead and
does imply that the MPC is likely to
hike rates soon, in the next few
months, unless there are major disin-
flationary surprise,” said Michael
Saunders at Citi.
Economists at both RBS and Barclays
brought forward their rate rise expecta-
tions to May after the report. Nomura
economist Philip Rush said that King’s
personal scepticism about the urgency
of action to tackle Britain’s above-target
inflation may lie behind the divergence
in tone between the Inflation Report
and his own comments downplaying a
rise. “The forecasts are the MPC’s collec-
tive judgment, whereas what King says
often seems to verge off more to his
dovish stance,” he added.
The Inflation Report confirmed the
divisions on the rate-setting Monetary
Policy Committee, saying there was a
“wider than usual range of views” on
both growth and inflation. Economists
interpreted the disclosure as evidence
that Andrew Sentance and Martin
Weale have been joined by at least one
other MPC member in calling for a rate
hike.
While the “25 per cent fall in the
nominal exchange rate” had con-
tributed to the Bank struggling with
inflation, it was nonetheless “neces-
sary for rebalancing, to escape the
recession,” King said.
“The UK is an almost saturated
marketplace,” said Ian Strange,
ICAEW’s London regional director.
“Economic growth will be delivered
by SMEs and those that look beyond
these shores to market their products
and services.”
His comments chimed with those
2,400, having fallen by 3,400 in
December.
“Admittedly, the rise is pretty mar-
ginal, but it is nonetheless the first
increase in four months,” said Vicky
Redwood of Capital Economics.
The results provoked calls for the
coalition government to boost private
sector employment.
“On its part, the Government
should ensure that the labour market
remains flexible, and should avoid
imposing onerous regulations on
business,” said economist David Kern
of the British Chambers of Commerce.
Companies face £23bn in costs
from new employment laws, he said.
BANK OF ENGLAND INFLATION REPORT - MAIN POINTS
l ”True clothing prices were around 5.5 per
cent higher than measured in the CPI, equiva-
lent to adding around 0.3 per cent to aggre-
gate annual CPI inflation"
l In two years inflation is likely to fall below
the Bank's target rate -- if interests rates rise.
of King, who cited “robust global
demand” as a driver of economic
recovery, speaking after the publica-
tion of the Bank’s inflation report.
“The past depreciation of sterling,
together with the recovery in global
demand, should provide continued
support to the recovery in output,”
the report said.
“The committee judges that net
trade is likely to add to GDP growth
throughout the forecast period, as
export volumes continue to grow rap-
idly,” it continued.
RICS calls for more help
for housing in the Budget
▲
PROPERTY
THE ROYAL Institution of Chartered
Surveyors called on the government
to support the construction industry
and housing in particular yesterday in
its pre-Budget letter to the Treasury.
RICS said the sector accounted for
more than 1.4m jobs in the UK, and
that VAT exemptions, more affordable
homes and simpler government pro-
curement is needed in the next
Budget to aid growth.
RICS said the government should
l The forecast is based on interest rates
increasing to 2.1 per cent by the end of 2011.
l "There is a high degree of uncertainty, and
a wider than usual range of views among
committee members around the overall look
for inflation
▲
WORLD ECONOMY
GLOBAL economic recovery is back on
track, according to a world survey
released yesterday.
After a slight decline at the end of
2010, the measure of the economic cli-
mate “has risen markedly,” reaching
its highest level since the end of 2007,
the Munich-based Ifo think tank said.
Both the current situation and the
six month outlook have improved, it
said, with the headline indicator
“now clearly above its long-term aver-
CITYA.M. 17 FEBRUARY 2011
make an effort to attract large
investors to residential property,
through tax changes and also by
broadening access to the real estate
investment trust (REIT) structure to
include housing.
It estimated that the VAT rise to 20
per cent could cost the construction
sector up to 34,000 jobs by 2019,
adding that repair work on homes
should be subject to a reduced rate.
Director of external affairs Mark
Goodwin said house-building is at a
“desperately low level”.
age.”
And expectations that interest rates
will increase in the coming six
months have risen “nearly every-
where,” the survey said.
Central banks are expected to tight-
en policy in response to rising price
pressures in “nearly all countries.”
On average for the world, a price
increase of 3.4 per cent is expected for
2011, in comparison to 3.1 per cent for
the previous year. In western Europe
prices are expected to rise by two per
cent.
 CITYA.M. 17 FEBRUARY 2011 Economics 7

New man to lead the Bundesbank Oil hits new highs after
fresh Middle East tension
▲

PROFILE
has been criticised for opposing key the European Central Bank to pro-
BY ALISON LOCK European Central Bank policies such mote a stability culture.”
IN a mark of continuity, Jens as its bond buying programme. Weidmann has spent the past five
Weidmann, Angela Merkel’s chief Merkel said Weidmann would years advising Merkel through the an Israeli newspaper as a frigate and a

economic adviser and a protege of
his predecessor Axel Weber, will be
the next Bundesbank president.
At just 42, Weidmann will be its
youngest-ever head when he takes
the helm on 1 May, but he backs the
same tough stance on inflation as
German chancellor Merkel and
Weber.
He is also known as politically-
savvy and able to provide a more
diplomatic tone than Weber, who
maintain Germany’s policy to keep-
ing the euro stable by fighting infla-
tion, pursued under Weber.
“Everyone acquainted with Jens
Weidmann knows he is highly com-
petent on the issues, has a brilliant
intellect and an independent mind,”
Merkel said.
She added: “We are all convinced
that he will be an outstanding presi-
dent of the Bundesbank and will rep-
resent Germany and use his voice in
▲
OIL
credit crunch, recession supply vessel, which would not pres-
and Eurozone sover- BRENT crude oil prices surged to ent a significant danger to the Jewish
eign debt crisis. near two-and-a-half year highs yester- state. Israel’s state-funded television
department. day as fresh tensions between Israel said Lieberman, a far-right partner in
He has also worked and Iran added to spreading unrest in the conservative coalition, had spoken
at the International the Middle East. out of turn as the Defence Ministry
Monetary Fund and in Israel’s foreign minister, Avigdor “had preferred to ignore” the ships’
the Bundesbank’s Lieberman, said two Iranian warships approach. Brent crude posted its high-
monetary policy planned to sail through the Suez est close since September 2008, set-
team. canal en route to Syria and called the tling up $2.14 at $103.78 a barrel after
move a “provocation”, sending up rising as high as $104.52. US crude set-
JENS WEIDMANN prices in morning US trade.
Later, the ships were identified by
tled up 67 cents at $84.99, rising after
three days of losses.

ANALYSIS l Inflation forecast, at current monetary levels

7
%
Forecast

2
Traget rate
1

-1

Source: Bank of England

-2
2006 07 08 09 10 11 12 13
ANALYSIS l GDP forecast, at current monetary levels
8
% Forecast
7

0
Traget rate
-1

-2

Mervyn King’s -3
Bank of England
-4
has revised up its
inflation forecast. -5

-6
Picture: GETTY
Source: Bank of England
-7
2006 07 08 09 10 11 12 13

Pay rises flat in Surprise drop

manufacturing in US industry
▲

ECONOMICS
MANUFACTURING body EEF said yes-
terday pay settlements have remained
flat in the last three months, as con-
tinued economic worries among
employers put pay negotiations
under a cloud.
One in six pay negotiations ended
in a pay freeze, EEF said, with the
average rise remaining stable at 2.2
per cent.
“Firms remain under intense pres-
sure to control their internal costs in
the face of global competition,” said
EEF chief economist Lee Hopley.
ECONOMICS
US industrial output unexpectedly
fell in January as a return to normal
winter temperatures caused a sharp
fall in utility output, while produc-
tion from mines also fell, a Federal
Reserve report showed yesterday.
Industrial production fell 0.1 per
cent after an upwardly revised 1.2 per
cent jump in December, which had
been driven by unseasonably cold
weather that spiked heating demand.
The drop was the first decline in
output since June 2009 and fell short
of forecasts for a 0.5 per cent increase.
 8 News
ING preparing insurance sale StanChart decides to shut
▲
BANKING
BY JULIET SAMUEL
ING is ready to embark on two initial
public offerings (IPO) of its insurance
business, it announced at its full-year
results yesterday.
The sale, mandated by the Dutch
government after a €10bn (£8.4bn)
bailout during the crisis, will take
place in 2012, the bank said.
The sell-off of its insurance arm will
cut ING’s size by almost a third, with
the division accounting for €20bn of
its €66bn equity.
Results at the insurance business
worsened from a loss of €202m last
SocGen profit
up as capital
growth stalls
▲
BANKING
BY JULIET SAMUEL
SOCIETE Generale (SocGen) moved
back into profit last year, bringing its
returns on equity up to 9.8 per cent
after they ended 2009 in barely posi-
tive territory at 0.9 per cent.
Group pre-tax profit rose more
than sevenfold, from €800m
(£674.5m) to €5.8bn in 2010, with
every business line in the bank
improving its performance except for
its private banking division, where
pre-tax profits plunged 45 per cent.
The bank blamed an uncertain
economic environment for keeping
private banking client activity low,
despite an inflow of assets under
management.
Its investment and corporate bank,
however, showed a dramatic recov-
ery: pre-tax profits were up more
than 300 per cent to €2.37bn,
accounting for almost half of the
group’s total earnings.
The bank said the division benefit-
ted from an expanded product range,
including the launch of a new forex
trading platform. It also more than
doubled its European market share
in advisory business from 4.5 per
cent to 9.2 per cent.
3i acquires Japanese lender Mizuho’s
debt management business for £18.3m
▲
M&A
BY RICHARD PARTINGTON
PRIVATE equity group 3i has bought
the debt management unit of
Japanese lender Mizuho Corporate
Bank for £18.3m.
Mizuho Investment Management
(MIM) is one of Europe’s biggest debt
managers with assets under manage-
ment (AUM) of £3.7bn.
3i’s existing debt management
activities will be merged with MIM
to create a new specialist division
year to a loss of €519m in 2010. But
profits were sharply up at the group’s
bank, from €1.36bn in 2009 to €5.86bn
last year.
Chief executive Jan Hommen said:
“The operational separation of the
bank and insurer was completed at
year-end”, paving the way for a sale.
Despite the bank’s improved results,
however, its property loans still pose a
problem. Overall, non-performing
loans worsened 2.2 per cent, with the
lion’s share of the decline in real estate
financing.
ING said it was making efforts to cut
its property exposure, reducing invest-
ment in real estate developments by
However, the bank’s core tier one
capital ratio showed barely any
improvement, inching up from 8.4
per cent to 8.5 per cent under Basel II.
With Basel III’s more stringent defini-
tions and a 7.5 per cent minimum,
the bank still has some way to go to
bring it in line with coming regula-
tions.
Chief executive Frédéric Oudéa
said SocGen is one year into a five-
year plan to adjust to the new envi-
ronment, setting a target of €6bn in
net income for next year (versus
€3.9bn in 2010).
“Far-reaching changes in pruden-
tial rules will lead to radical changes
in the way banking markets operate,
especially in Europe,” said the bank
in its results statement.
ANALYSIS l Societe Generale
55 € 51.24
16 Feb
50
45
40
35
30
22 Nov 10 Dec 30 Dec 19 Jan 8 Feb
handling £4bn of AUM.
The deal, first mooted in
September last year, will see MIM
chief executive Jeremy Ghose lead
the merged unit.
Andrew Golding, who previously
led 3i’s debt management activity,
will become managing director with
operational responsibility for the
team.
The new division complements
3i’s other core business areas in
infrastructure and private equity
investment.
€500m between the fourth quarters of
2009 and 2010. Its core tier one capital
ratio improved from 7.8 per cent to 9.6
per cent under Basel II.
ANALYSIS l ING
€ €9
9.00 16 Feb
8.50
8.00
7.50
7.00
2010 6 Dec 20 Dec 18 Jan 31 Jan
SocGen chief executive Frédéric Oudéa has set a €6bn target for net income
The fat lady hasn’t sung
T
HE across-the-board improve-
ment in SocGen’s results will
give some relief to chief execu-
tive Frédéric Oudéa after a
ropey 2009.
Analysts remain tepid on the stock
but investors reacted positively yes-
terday with the share price gaining a
solid 4.9 per cent by the end of the
day.
The bank still has to show that it
can generate improved earnings
while bringing its capital ratio in
line with requirements: its core tier
The firm, which bought rail
rolling stock owner Eversholt from
HSBC last year, has been granted reg-
ulatory approval from the Financial
Services Authority to operate its new
debt management unit.
Named 3i Debt Management, the
arm will target new acquisitions, as
well as look to grow organically, it
said yesterday.
It will be focused on European and
US markets but will also seek growth
opportunities in India and the
Middle East.
Asian loans trading unit
▲
BANKING
EMERGING markets-focused lender,
Standard Chartered has shut its global
loans trading unit, ending a unique
experiment in Asia.
The roughly 10-person trading team
with desks in New York, London and
Singapore, was established in 2002
and led by global head of secondary
trading Rafael Valbuena.
“We are rationalising the secondary
loan trading business,” said a
StanChart spokeswoman in an email.
one ratio barely moved last year.
But adding to the uncertainty is
SocGen’s exposure to peripheral
Eurozone economies: it has €2.7bn
in net exposures to Greece, €2bn to
Spain and €4.1bn to a sluggishly
growing Italy.
The combination means that,
despite the progress, it is too soon to
celebrate.
BOTTOMLINE
Analysis by Juliet Samuel
JAMES WOOLF
KPMG
FINANCIAL services transactions
partner at KPMG James Woolf
advised on 3i’s acquisition of Mizuho
Investment Management.
Trained as an auditor, he first
joined the firm 22 years ago. He has
advised on transactions in the invest-
ment management sector, as well as
in insurance, since 1999.
John Humphrey led the advisory
for UBS on the deal. As managing
director of the Swiss bank’s financial
institutions group, he has advised on
CITYA.M. 17 FEBRUARY 2011
She added the bank may move
members from the trading team to the
bank’s core loan syndication business.
StanChart’s loans trading team was
unique in Asia Pacific for trading high-
grade corporate loans in a region
where most banks hold loans to matu-
rity, and rarely trade them because of a
cultural focus on client relationships.
It was not clear why StanChart
decided to shut the unit, but the oper-
ation was not integrated with the
bank’s traditional lending business
and was considered non-core.
Moody’s cuts
ratings on
Danish banks
▲
BANKING
MOODY’S cut the long-term ratings of
five Danish banks, saying yesterday
that the government had become less
willing to bail out depositors and cred-
itors in the event of a bankruptcy.
The move came after small bank
Amagerbanken earlier this month
became the tenth lender to fall into
state hands in the wake of the global
financial crisis.
“We now maintain negative out-
looks on all Danish banks’ standalone
bank financial strength ratings, and
will evaluate these additional pres-
sures as they unfold over the coming
months,” Moody’s said.
The rating agency said the state’s
takeover of Amagerbanken showed the
government’s willingness and ability
to impose losses on depositors and sen-
ior creditors in a bankruptcy.
Moody’s said a state aid package for
banks -- “Bank Package III” -- in October
provided a framework for allocating
ailing banks’ losses to senior debt and
deposits instead of only to core equity,
hybrid capital and subordinated debt.
“Combined with its implementa-
tion with respect to Amagerbanken in
February 2011, this law implies that
the Danish government is now far less
willing to continue to support bank
creditors at the expense of taxpayers
than it was only a few months ago,”
Moody’s said.
The ratings agency also said that
Danish banks’ funding will now be
more vulnerable to investor and depos-
itor transfers.
several previous asset management
deals over the past 15 years.
He was the lead financial adviser
on the Henderson acquisition of rival
fund manager Gartmore, which was
completed earlier this year following
months of speculation.
Humphrey also advised on
Henderson’s initial public offering, as
well as the Australian fund manag-
er’s purchase of rival fund New Star.
He joined UBS in 1997 after he
had qualified as a chartered
accountant with KPMG, where he
practised for six years in Sydney and
London.
He is a graduate of the University
of New South Wales with a degree
in commerce.
David Higgins and James Grand
from Freshfields Bruckhaus Deringer
also advised on the deal.
CITYA.M. 17 FEBRUARY 2011
BHP buyback
fails to cheer
shareholders
MINING
▲
BY MARION DAKERS
BHP BILLITON’S shares fell yesterday
following its half-year results, as some
investors called into question the min-
ing giant’s strategy of a share buyback
rather than the pursuit of acquisi-
tions.
As analysts pored over BHP’s results
statement yesterday, which included a
record $10.7bn (£6.7bn) attributable
profit and a below-forecast 46 cents
dividend payment, its London-listed
shares fell 1.44 per cent to 2,464p
against an overall rise in the FTSE.
“BHP has been ahead of expecta-
tions on net income despite its operat-
ing profit falling short – but this could
well be due to its effective tax rate of
30.3 per cent, compared to its previous
guidance of 34 per cent,” said one ana-
lyst, who did not wish to be named.
Another mining analyst, Christian
Georges of Olivetree Securities, said
that a lack of growth ideas might have
Tullow falls on BG Group and
Mauritanian oil Petrobras find
disappointment fuel in Brazil
▲
ENERGY
TULLOW OIL was one of the biggest
fallers in the FTSE 100 yesterday after
it abandoned a well in Mauritania
and French oil firm Total and said it
was renegotiating its deal to buy a
stake in Tullow’s oil fields in Uganda.
The offshore well was plugged after
hitting poor quality oil reservoirs.
Tullow is waiting for approval from
Uganda before selling stakes in its oil
blocks to Total and Chinese group
CNOOC. The deal has been held up by
a tax dispute between Uganda and
Tullow’s former partner Heritage Oil.
Tullow shares closed 0.7 per cent
higher at 1,409p, against a larger rise
in the blue chip index.
NEWS | IN BRIEF
Helical Bar promises purchases
Property development company Helical
Bar hopes to continue buying up real
estate this year after completing 22
new lettings and 11 renewals in the four
months to the end of January, after
completing a £29m share placing in
December. “Life is far from dull at
Helical and our continued focus is to
dispose of the few remaining non-per-
forming properties in our portfolio
[and] to increase our spending power in
the market, at a time of considerable
opportunity” said chief executive
Michael Slade in an interim manage-
ment statement.
BAE buys $300m biotech firm
BAE Systems completed its purchase of
technology firm L-1 Intelligence Services
News 9
Shell’s $12bn
biofuel firm
goes ahead
BHP Billiton chief executive Marius Kloppers will return $10bn to investors in 2011
ANALYST VIEWS: WERE YOU IMPRESSED BY
▲
ENERGY
BY MARION DAKERS
BHP BILLITON’S RESULTS? By Marion Dakers SHELL’S ethanol joint venture with
Brazilian oil firm Cosan will have a
market value of $12bn (£7.5bn), the
disappointed the market. “It’s a com- DAMIEN HACKETT | CANACCORD GENUITY firms confirmed yesterday.
“
pany that’s between two worlds, with- The firms said in a statement that a
out M&A or convincing plans for new entity called Raizen, which is
organic growth, and it’s lacking in BHP has particularly impressed me with its confi- due to launch in the first half of this
”
excitement. Future upside is very diffi- dence in extending the share buyback. This is a firm that year, will produce 580m gallons of
cult to envisage, and there might have ethanol per year for the Brazilian and
been some profit taking,” he said. doesn’t need to put padding round its balance sheet. international markets.
BHP has pledged to spend $80bn The deal, which was signed in
over the next five years on organic August, was given the green light by
growth, but offered few details of NIK STANOJEVIC | BREWIN DOLPHIN the European Commission last
“
which projects would be expanded. It month.
also accelerated its $10bn share buy- Raizen will have around $1.6bn
back programme. It was a bit mixed. This is a company that makes cash inflow from Shell’s side, the
”
statement said.
ANALYSIS l BHP Billiton phenomenal profits, but some were expecting more capital The firm plans to finance its opera-
p returns and there’s little available for BHP to acquire. tions with a cash-raising in the mar-
2,600 ket, possible through a corporate
2,464.00 bond issue.
16 Feb
2,500 CHARLES KERNOT | EVOLUTION SECURITIES The venture is one of Shell’s only
“
investments in renewable energy,
after the Anglo-Dutch firm dropped
2,400
Strong results, impressive growth outlook, major other projects to focus on Raizen last
year.
”
2,300 share buyback – what’s not to like? This must be the core The firm plans to produce 62m
mining holding. ‘Add’. tonnes of sugar a year by 2016, which
1 Dec 28 Dec 21 Jan 11 Feb will be used to produce the biofuel.
ENERGY
UK OIL explorer BG Group and
Brazilian state-owned firm Petrobras
announced a successful oil find off
the coast of Rio de Janeiro state, the
companies said yesterday.
BG, which holds a 25 per cent stake
in the oil field, and Petrobras, with a
65 per cent holding, said they will
now start evaluting the size and qual-
ity of the find in the Santos basin.
This latest find could push up total
oil estimates for BG’s stake in the
basin, which already stands at more
than 10.8bn barrels of oil equivalent.
BG Group shares ended the day 1.9
per cent higher at 1,499.91p yester-
day.
Group yesterday for around $300m
(£187m) in cash. The acquisition, first
announced in September, will beef up
BAE’s biometrics business, which
includes fingerprint technology and
identity cards. US firm L-1 will use the
proceeds to pay down debts.
Woolwich Crossrail gets funding
Work on Woolwich Crossrail station is
finally set to go ahead after housing
developer Berkeley struck a £100m
deal with Transport for London and the
government. Berkeley will fund con-
struction of the empty shell of the sta-
tion with an expected completion date
in 2013, though Crossrail and its part-
ners have not yet secured funding to
build the rest of the station. The agree-
ment ends months of uncertainty for
Woolwich station development, during
which Berkeley said red tape was hold-
ing up the start of construction.
 10 Consumer News CITYA.M. 17 FEBRUARY 2011

Thorntons in
profit warning
OVERSEAS BOOST FOR ABERCROMBIE & FITCH
Game Group looks
as sales falter online to stem the
RETAIL

tide of falling sales

▲

THORNTONS issued a profit warning

yesterday, becoming the latest retailer
to flag a worsening consumer envi-
ronment and announce plans to close
stores as spending habits change. RETAIL Game Group also signed a partner-

The chocolatier, which has 371
owned stores and 229 franchise out-
lets, said profit before tax and one-off
items fell 8.5 per cent to £8.3m in the
28 weeks to 8 January, due in part to
severe winter weather around
Christmas and to the rising cost of
raw material like cocoa.
Thorntons said it expected underly-
ing profits for the year to 30 June
would be around the previous year’s
level of £6.1m, compared with ana-
lysts’ average forecast of £6.8m.
New chief executive Jonathan Hart
said the firm will take advantage of
over 200 lease expiries in the coming
years to reshape its business.
“I think it’s clear that the size of
the portfolio is going to be reduced
going forward.”
However he said that all 200 stores
would not be offloaded.
▲
BY JOHN DUNNE
THE new chief of video games chain
Game said yesterday his strategy to
cope with the trend away from buying
physical games would be to concen-
trate on online sales.
Ian Shepherd said he plans a “step
change in our online revenues”.
However he admitted that a large
chunk of the £15m cost savings the
group aims to make in the next year
would be eaten up by the move, lower-
ing profit margins by around one per
cent.
Shepherd added, however, that over
the next three years he expects the
changes he will introduce will be
US RETAILER Abercrombie & Fitch’s profit jumped 95 per cent – fuelled by internation- “profit enhancing”.
al sales. In the fourth quarter, sales abroad rose 61 per cent, while on the domestic front Game also said it had agreed a new
they increased 16 per cent. Its profit for the quarter was $92.6m (£57.7m). The company, £160m borrowing facility out to May
which specialises in teen fashion, has been improving market share. 2014.
ship with Microsoft earlier in the
month to sell a range of downloadable
games in UK stores.
At least 30 downloadable games and
extras, priced from as little as £2.04,
will be sold from units in 40 Game
stores as part of a six-month trial.
The release of hit games such as Call
of Duty: Black Ops have failed to lift
sales at the group which saw a 2.1 per
cent slide over Christmas.
That was blamed on the grim
weather as shopper numbers dived,
while download sales marched on.
Game Group’s Ian
Shepherd is pinning
his hopes on online
rather than physical sales
at the groups’ stores

Heineken sees lift

as cost cuts pay off
Cheltenham
CONSUMER the Dutch brewer’s outlook on Heineken did not disclose fig-
▲

BY JOHN DUNNE rocketing raw material costs, likely ures for the UK business but said
to be a hot issue in 2011. the group’s western European arm
HEINEKEN, the world’s third- The futures price for malting reported a 3.6 per cent decline in

in theCity
largest brewer, beat full-year earn-
ings forecasts as cost cuts in Europe
and savings from a large Mexican
acquisition more than offset lower
beer sales, lifting its shares.
The group, whose main brands
are Heineken and Amstel, which
are Europe’s number one and
three beers, said it expected
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barley has risen 50 per cent since volumes in 2010, while operating
the launch of the contract in May profits were up 14 per cent to
last year. Chief executive Jean- €904m (£761.6m).
Francois van Boxmeer said: Its shares rose 3.1 per cent to
“Harvests influence a lot of the close at €38.04 yesterday.
pricing. We are happy with that
and we are of course now prepar- ANALYSIS l Heineken
€
ing the next year [2012] and there 37.50 38.00
are still many uncertainties.” 16 Feb
37.00
The group said it expected
36.50

other drinks this year. cautious this year due to unem- 36.00
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chief financial officer. progress. He joined Cadbury after Bonfield prior to
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Treasurers. Greencore has said it
is still considering its options with and global supply chain finance.
regard to a merger with Northern He was widely touted as the
Foods and Williams will be a key likely chief financial officer suc-
cessor to Andrew
leaving Manchester university in the Kraft takeover,
1992, where he studied French, and was offered
and worked in a number of differ- the role of
ent roles – latterly as the global finance director
corporate finance director. In this for Kraft’s
position Alan reported directly to European busi-
the group chief financial officer ness in
and led a team of 120 worldwide. Switzerland,
He was responsible for leading which he
the central finance functions declined.
within the group including tax,
treasury, corporate reporting, per-
formance management, global IT ALAN WILLIAMS
CITYA.M. 17 FEBRUARY 2011
Why the London Olympic Games mean business
VIEW FROM CITY HALL
ANTHONY BROWNE
T
HE extraordinary thing about
the great Olympic stadium lega-
cy debate is not that everyone
has an opinion, although they
do. No, it is that we are having this
debate at all eighteen months before
Rise in corporate travel
boosts Hogg Robinson
▲
AVIATION
BUSINESS travel firm Hogg Robinson
yesterday raised its profit expecta-
tions for the full-year due to a boost
in travel activity, particularly in the
Asia Pacific region.
Hogg Robinson said travel books
rose 15 per cent in the four months to
the end of January, while the amount
spent per client rose 15 per cent in
real terms compared with last year.
The company, which owns or con-
trols operations in 25 markets in
North America, Europe and Asia
Pacific, said there was no material
financial impact from the weather
disruptions over Christmas.
According to the Office for
MADOFF: BANKERS WERE COMPLICIT
CONVICTED fraudster Bernard Madoff has said top banks and funds must have known he was running a Ponzi scheme.
Speaking in his first interview since his arrest in December 2008, he said: “They had to know.” Madoff, who is serving a 150-
year sentence for defrauding investors of $50bn (£31bn), told the New York Times from his California cell: “I am saying that the
banks and funds were complicit in one form or another.”
Kotak India pulls £100m City share placing
▲
INVESTMENT
KOTAK Mahindra, an Indian finan-
cial services group, was yesterday
forced to abandon a £100m
London share placing and offer
after failing to satisfy the rules
over having a sufficiently free
float.
Kotak adviser Investec said
there was demand for around
the start of the London games.
Normally in a host city at this stage,
the great debate is: will it be finished
in time, or make us a global laughing
stock? It is because, unlike previous
host cities, London has made legacy its
top priority in delivering the 2012
Games, and everything is going so ter-
rifyingly smoothly that public atten-
tion is focused on what is happening
after the games rather than before.
Indeed, the success of building the
Olympic Park is a great national tri-
umph (of the sort the media never tire
of being silent about). It is the first
time in Olympic history that the con-
struction of the venues will be finished
a year early – ahead of schedule, and
National Statistics, the number of
Britons travelling abroad fell 15 per
cent in December compared with a
year earlier
Air freight grew by over one fifth in
2010, in a sign of global economic
recovery, but severe weather in
Europe and North America dented
passenger demand at the end of the
year, according to airline body IATA.
Before the firm’s interim manage-
ment statement, analysts were
expecting a pre-tax profit of £31.3m
on revenue of £349.4m.
Hogg Robinson shares, which have
gained more than a quarter of their
value since the firm beat first-half
forecasts in November, closed up 6.2
per cent at 47.25p yesterday.
£40m worth of shares in Kotak’s
Infrastructure Fund – below the
maximum amount but above the
minimum required by the compa-
ny – that would have invested in
companies focused on infrastruc-
ture sectors in India.
But Kotak faced a major
problem in that London regulators
insist there is a free float of 25 per
cent of the shares in issue, which
under budget. A regular trickle of ven-
ues are being completed, and the sta-
dium has had its lighting-up
ceremony. The Mayor jokes that he is
going to ensure British victory at the
London Games by catching everyone
else napping by calling them a year
early.
We still seem to have a national
belief in Britain that we can’t do big
construction projects; but there’s an
Olympic size park that says we can.
Our project management and con-
struction firms are world leaders, and
2012 is our chance to showcase them
to potential customers around the
world.
The London Games are a once-in-a-
CITY VIEWS: ARE BUSINESS TRIPS MAKING A COMEBACK?
Interviews by Marion Dakers
Save or Borrow peer to peer at RateSetter.com
GARETH LODGE |
SECURA MONDE
“I do travel for work, and while it’s
currently better than it was two
years ago, it’s nowhere near the
peak. The amount com-
panies spend on trav-
el has been reduced;
it used to automati-
cally be business
class.”
Picture: REUTERS
has to be made up of shareholders
owning five per cent or less of the
stock who are also unconnected to
the company.
Sources close to the deal said
they would “consider all options”
including a relaunch on the main
market. There was also a chance
the group might set up a private
fund or an open platform fund,
sources said.
generation marketing opportunity to
promote London businesses. For three
weeks, the world’s attention will be
focused on us, and examining what
we are like as a city. Business and polit-
ical leaders will descend on us in
unprecedented numbers to look at
what is going on. Unlike Beijing or
Barcelona, this is not a coming out cer-
emony, trying to put ourselves on the
world map. We’re already there.
Obviously as a city we need to wear
our Sunday best. But there is far more
to it than that. Done right – and we are
working hard with London businesses,
the national government and UKTI to
ensure it is – the London Games can be
harnessed to showcase the best of
www.RateSetter.com Customer Phoneline: 08442490115
SHAFIQ EBRAHIM |
BUILDING ZONES
“I think business trips are staying
pretty stagnant at the moment.
Businesses are spending on tech-
nology that allows meetings
without the need for
travel – firms won’t pay
for flights without a
real return on
the invest-
ment.”
News 11
British business to the world, promot-
ing exports and inward investment.
Chinese manufacturers are raising
their demand for design services, and
we are the design capital of the world;
the Games can help broker that mar-
riage. This is our chance to prove we
are indeed the digital capital of
Europe, and to show off our world
leading film expertise to Hollywood
movie moguls. We can confirm that
despite the financial crisis and banker-
bashing, Europe’s financial centre is
still very much open. The London
Games aren’t just serious sport. They
are also serious business.
Anthony Browne is an adviser to the Mayor
of London
IN ASSOCIATION WITH
ANTOUN MASSAAD |
CEDAR ROSE
“I’m actually on a business trip at the
moment. But I think companies are
still very conscious about the cost of
travel, and people are using things
like teleconferences a
lot more. There are
fewer people at inter-
national confer-
ences too.”
 12 Mobile World Congress CITYA.M. 17 FEBRUARY 2011

THE TOP STORIES FROM THE WORLD'S BIGGEST MOBILE PHONE SHOW

NEW PRODUCT
Nokia chief Elop LAUNCHES

comes out fighting

Samsung Galaxy S II
The Galaxy S II is a thing of beau-
ty. Featuring a gigantic 4.27 inch
touch-screen but coming in at just
8.5mm thick, it’s one of the best
looking smartphones on the mar-
ket. It is also amongst the most
powerful handsets out there, with
per cent are currently connected. a superfast chip and an 8-megapix-
2011

MOBILE He said: “You’ve heard a lot about el camera.

WORLD
CONGRESS
BY STEVE DINNEEN IN BARCELONA
NOKIA boss Stephen Elop took to the
stage for his keynote speech at
Mobile World Congress yesterday
with calls for his resignation ringing
in his ears.
A group of shareholders, all for-
mer Nokia employees who are dis-
mayed by his decision to ditch the
Symbian operating system in favour
of Microsoft’s Windows Phone 7
(WP7), issued an open letter calling
for the former Microsoft employee’s
head.
smartphones this week. But that’s For a
only part of our strategy. lifestyle
“We want to bring the next billion accessory,
online. We can connect the uncon- this Android
nected.” device is
Nokia also said it is unlikely it will right up
tweak WP7 to offer its users a unique there with
“Nokia experience”. However, it is Apple’s
unlikely the Finnish firm will begin iPhone 4. Warren East said his firm would charge clients more for newer chips Pic: Micha Theiner
issuing phones with the operating
system until at least October, when
an updated version, codenamed
Mango, is released.
Analysts say this could lead to a
Huawei IDEOS S7 Slim
Huawei is also in the fray to pro-
vide a viable tablet alternative to
New devices give shot in ARM
sales vacuum, with people unwilling the you-know-what. It launched
to spend money on a soon-to-be- the Ideos S7, a seven inch Android TECHNOLOGY Galaxy S II, which run on ARM’s dual-

But Elop came out fighting, saying
Nokia would be at the forefront of
the next great wave of mobile
uptake.
He said emerging markets, in
which Nokia performs well with its
low-cost handsets, would drive
growth, with up to three billion peo-
ple ready to use mobile devices to
connect to the internet.
He told the conference in
Barcelona that 80 per cent of the
world’s population lives within range
of network coverage but that only 20
retired product.
Meanwhile, Yahoo chief executive
Carol Bartz unveiled a new magazine
platform that learns from user’s
browsing history to deliver person-
alised content and adverts.
The Livestand platform can then
be used by publishers to deliver cus-
tomised content to their readers.
People viewing a financial publica-
tion like City A.M. online, for example,
would see more investment features
or political news depending on their
past consumption.
▲
powered device with all the usual
trimmings, including 3G capabili- UK CHIP maker ARM was one of the
ties for voice and video calls, wi-fi big winners from this year’s Mobile
and a front facing camera. The World Congress, with its royalties set
ultra wide-screen view is great for to rocket from the uptake of its
watching movies but, unlike the processors powering many of the new
HTC Flyer, devices on show.
this machine It receives up to two per cent of the
has little to selling price for its Cortex designs,
set it against nearer one per cent for older
apart chips.
from Its designs power nearly all the
the pack. world’s mobiles phones, including
the new LG Optimus 3D and Samsung
core Cortex chips.
ARM is also beating its rival Intel in
the battle for tablets. Chief executive
Warren East said: “We are not sur-
prised by the speed of the roll-out.
“As the chips have more functional-
ity, we are giving more value to our
customers, and we expect to be paid
more.”
East said ARM retained the edge
over Intel, which is targeting the
mobile and tablet markets. He said:
“Unless it can make their processors
smaller it will struggle.”

The new trade minister on exports,

China and telecoms... but not banks
Lord Green gives his But in the context of the rise in the bank-
ing levy and the pressure on bonuses, is the Former HSBC chair
CV | STEPHEN
GREEN
first interview since UK still attractive for investment in finan-
cial services? “Yes,” he says, “look at
Lord Green said he
would provide
becoming trade Santander”.
His job as trade minister, he says, is sim-
“bespoke ministerial
support” to big Age: 62
minister. ple: “The UK economy faced the challenge
of finding a stable growth path, and that
foreign investors
Education: Lancing
College and Exeter
By Steve Dinneen has to come from a better external per-
formance. It isn’t going to come from con-
Picture: Micha
Theiner/City A.M.
College at Oxford,
before earning a mas-
sumption growth fuelled by debt and it ter's degree from the
isn’t going to come from government Massachusetts

I
T IS fitting that new trade minister
Lord Stephen Green, who is ordained
in the Church of England, should
make his first foreign trip to an event
that inspires an almost religious fervour
amongst its followers.
Sitting at Mobile World Congress in
Barcelona, surrounded by the giants of the
telecoms world, the former HSBC chair-
man tells me it is innovation in industries
like this that can drive the UK’s recovery.
He is at pains to avoid taking about bank-
ing (each time the “b word” is mentioned
the UK Trade & Investment PR accompany-
ing him squirms uncomfortably by my
side). “I’m just a retired banker”, he tells
me. “I don’t have anything to say about
banking.”
But with Barclays being criticised for its
bonus pool, despite cutting payouts by 12
per cent, and his former employer HSBC
likely to suffer the same fate, he is unable
to resist defending his former colleagues.
“I have a job that’s about trade and
investment and financial services is about
trade and investment. We want to encour-
age investment in financial services, which
contributes quite a lot to our exports.”
spending – we all know that. It’s got to Institute of
come from investment and trade and that’s Technology.
a challenge for every sector of the econo-
my.” Career: Joined
He says the UK telecoms industry is a per- McKinsey & Co in 1972.
Ten years later he went
fect example of the innovation needed to to work for HSBC in its
boost the UK’s exports. corporate planning
“You can see the way in which the econ- department. In 1985
omy is going to look significantly different he moved to focus on
because of this industry. It is changing busi- the bank’s global treas-
ness models in public services, transport, ury operations, before
health care for the elderly. The challenge becoming group treas-
for the UK is to engage in the international urer in 1992. He was
appointed to the board
domain from the world go. Nobody can rest of HSBC Holdings in
on their laurels.” “I don’t regard this as particularly party Chinese mobile firm Huawei later in the 1998, heading up the
He says one of the changes he is instigat- political. This job is one that the UK needs afternoon . bank's investment divi-
ing is to encourage greater personal rela- to get right. It’s not ideological. I can’t He says spending more time with the sion. He was made
tionships with big ticket investors, think of a single thing we’re saying that Chinese – “sharing experiences with chief executive of
providing them with “bespoke ministerial wouldn’t have been done by any govern- them” – is vital for UK trade. HSBC Holdings in
support” from a designated minister who ment.” “I want to understand what Huawei’s 2003. In 2005 he
will be personally responsible for the rela- I hazard to ask him about his views on strategy for Britain is. There are great became chairman of
HSBC Bank, finally tak-
tionship; “It’s not rocket science but it is the banking levy, causing another flash of opportunities in China and there are ing the job of group
new.” panic from the PR, who reiterates in no opportunities for the Chinese in Britain. It’s executive chairman of
His light-footed side-stepping of my bank- uncertain terms that the issue is off the not a one way street.” HSBC in 2006.
ing questions show he is already adapting agenda. Had Green stayed on at HSBC he would
to working alongside politicians. But would I am eventually ushered out of the meet- inevitably have seen his focus shifting Family: Married with
he have accepted the position under a ing, but not before Green, calm and collect- towards China. It seems all roads lead to two daughters.
Labour government? ed throughout, tells me he will meet with Beijing.
 d a y 2 0 F e b r u a ry
n
Thursday 17 - Su
b i l e e P l a c e , F R EE
Ju
Key Trends
o l o u r M a t c h i n g
C
t y l e C o n s u l t a t i ons
S o n s
D e m o n s t r a t i
Beauty Advice &
c l u s i v e P r i z e D raw
Ex
 14 News
Merc sales driving Daimler
▲
AUTOMOTIVE
BY HARRY BANKS
GERMAN carmaker Daimler yester-
day posted disappointing fourth-quar-
ter earnings, with an upbeat outlook
failing to deliver the detail that ana-
lysts said was needed to reassure
investors.
“On balance, a weak fourth quarter
2010 and no specific 2011 outlook”,
wrote JP Morgan analyst Ranjit
Unnithan in a research note.
Daimler, which ditched its divi-
dend last year, predicted a consider-
able gain in earnings this year on
better sales of its Mercedes premium
Sanofi agrees
$20.1bn deal
for Genzyme
▲
PHARMA
BY ELIZABETH FOURNIER
AFTER months of negotiations, French
pharmaceutical company Sanofi has
confirmed it will pay $20.1bn
(£12.5bn) for Genzyme, the US biotech
specialist it has been pursuing since
last year.
The deal, confirmed yesterday, com-
bines a $74 per share cash offer with
extra delayed payments based on the
performance of Genzyme’s experi-
mental drug portfolio.
It marks the second-biggest biotech
acquisition on record, after Genentech
bought Roche in March 2009 for
$46.7bn.
Traditional pharmaceutical compa-
nies have been increasingly investing
in biotech firms, to broaden their port-
folio as lucrative patents expire.
The agreed package includes an
innovative contingent value right
(CVR), which is tradable at a price
determined by the future revenue
from diabetes drug Lemtrada.
Analysts said that while in theory
the CVR could add $3.8bn to the price,
its market value is likely to be heavily
discounted due to the uncertain out-
look for the treatment and scepticism
from investors towards the instru-
NEWS | IN BRIEF
Delaware judge slams BarCap
A Delaware judge yesterday slammed
the dual role of Barclays Capital in the
takeover of Del Monte Foods by a private
equity consortium led by KKR. The judge,
which delayed the shareholder vote on
the takeover by 20 days, criticised
Barcap, saying the bank wanted to gain
fees on both the sell side and buy side of
the deal. “Barclays secretly and selfishly
manipulated the sale process to engineer
a transaction that would permit Barclays
to obtain lucrative buy-side financing
fees,” the judge wrote. Barclays said it
“strongly disagrees with characterisa-
tions that are based on an incomplete
factual record.” The bank said it contact-
ed 53 potential buyers “in an extensive,
robust, and public sale that yielded no
higher price.”
cars and a turnaround at its industry-
leading trucks business.
It also proposed a higher-than-
expected annual dividend, plan-
ning to pay €1.85 (£1.56) per
share for the 2010 business
year, it said.
The mid-range estimate
in an analyst poll predicted
a dividend of €1.75 per
share, above the 10-year aver-
age of €1.58 when excluding
last year – the first time Daimler had
to scrap a payout since 1995.
The company said 2011 earnings
before interest and tax would be sig-
nificantly above last year’s figure,
ment.
“I think the CVR was an extremely
important tool to bridge differences in
value,” said Genzyme chief executive
Chris Viehbacher.
Genzyme had previously rejected a
$69 per share offer from Sanofi, which
had valued the company at $18.5bn.
Once the acquisition is complete
Genzyme president Henri Termeer,
who has led the company since 1983,
will step down.
Termeer had been reluctant to sub-
mit to any takeover advances, but a
shortage of drugs combined with a
manufacturing crisis saw the compa-
ny shares slump 46 per cent between
May and July of 2008.
Sanofi shares yesterday closed 3.51
per cent up on the previous day’s
close, at €51.55.
ANALYSIS l Sanofi-Aventis
€ Sanofi’s offer directly to Genzyme
52.00 51.55
51.00 16 Feb
50.00
49.00
48.00
47.00
29 Nov 20 Dec 17 Jan
Clariant secures Sued-Chemie
Swiss speciality chemicals maker
Clariant has won the battle to take over
Germany’s Sued-Chemie with a €1.4bn
(£1.2bn) acquisition that expands its
presence in high-growth sectors. The
deal has an enterprise value of €2bn, or
€1.4bn in equity and €600m in debt. The
financing includes a SwFr400m
(£257.6m) rights issue.
Westfield meets expectations
Westfield Group, one of the world’s
largest shopping mall operators, deliv-
ered 2010 earnings in line with expecta-
tions amid improving global retail
markets, but said it was too early to
ramp up existing plans for new develop-
ment investment of up to A$1bn
(£622m) a year.
having previously said 2011 would be
a “very good” year.
Daimler posted fourth-quarter
earnings before interest and taxes of
€1.56bn, compared with a forecast
for €2.05bn. Daimler chief finan-
cial officer Bodo Uebber told a
news conference he expected
global car markets to grow five
to seven per cent in 2011.
Daimler raised its outlook
three times last year, most recently
forecasting in October that group
EBIT would top €7bn for 2010.
Group full-year industrial free cash
flow doubled to €5.4bn from €2.7bn
in 2009.
Sanofi chief executive Chris Viehbacher has finally succeeded in his protracted bid for Genzyme
TIME LINE | SANOFI’S APPROACH FOR GENZYME
23 May 2010 Sanofi chief executive
Viehbacher approaches Genzyme presi-
dent Termeer about a deal.
7 July 2010 Termeer tells Viehbacher
he cannot commit to a meeting until
after Genzyme's board meets on 9 July.
29 July 2010 Sanofi plans to send a
written proposal, including a price per
share. The subsequent letter outlined
Sanofi's $69 per share offer.
29 August 2010 Sanofi publicises
its offer for Genzyme, which Genzyme
publicly rejects a day later.
14 Feb
Deutsche Boerse posts fourth quarter
loss as it gears up for New York merger
▲
FINANCIAL MARKETS
BY RICHARD PARTINGTON
DEUTSCHE Boerse yesterday reported
a fourth-quarter loss of €61.2m
(£51.6m), yet said it was optimistic for
the year ahead as it gears up to merge
with the New York Stock Exchange
(NYSE).
The Frankfurt-based exchange was
forced to pay a €453.3m charge on its
International Securities Exchange
business. The bourse recorded the
€61.2m net loss for the three months
Volvo truck shipments rise
as trade market recovers
▲
AUTOMOTIVE
WORLD number two truckmaker
Volvo said shipments surged 62 per
cent to 15,277 units in January, as a
recovery in commercial vehicles mar-
kets carried into the New Year.
The highly cyclical heavy-duty
truck market has picked up strongly
in recent quarters with growth
spreading out of emerging markets
to mature markets on both sides of
the Atlantic.
Volvo said unit shipments rose 78
20 September 2010 Termeer and
Viehbacher meet. Termeer refuses to
give guidance on a value for Genzyme
and suggests Sanofi considers making
contact again in 2011.
4 October 2010 Viehbacher takes
shareholders.
22 October 2010 Genzyme hosts an
investor meeting to explain why it’s
worth more than Sanofi’s offer.
26 November 2010 Termeer says
he is open to a deal linking Genzyme’s
to 31 December, compared with a
€33m loss for the same period a year
earlier. The exchange hit revenues of
€518.4m for the final quarter of last
year, up 2.7 per cent on a year earlier.
Analysts had projected a higher loss
and lower revenues for the group.
Frank Braden, analyst at Standard &
Poor’s, said: “We think that Deutsche
Boerse is well positioned to benefit
from improving equity volume
growth.”
Braden added: “We remain positive
on the proposed merger with the New
CITYA.M. 17 FEBRUARY 2011
per cent in Europe, its biggest market,
while they were up 83 per cent in
North America.
In Asia, further down the road to
recovery than markets on either side
of the north Atlantic, deliveries rose
51 per cent.
The group, second globally to
German group Daimler, earlier this
month raised its demand outlook,
saying it expected markets to grow to
about 220,000 units in both Europe
and North America, implying double-
digit growth.
Picture: GETTY
value to the success of the Lemtrada
drug by using a contingent value right
(CVR).
31 January 2011 Genzyme says it
allows Sanofi to conduct due diligence.
Sources say the two have reached a
basic agreement on deal terms pending
the review.
16 February 2011
Sanofi announces it will buy Genzyme
for $74 per share plus a CVR that could
trade at $2-3 per share. The deal is
worth roughly $20.1bn and should close
early in the second quarter.
York Stock Exchange.”
ANALYSIS l Deutsche Boerse
€
62 58.84
16 Feb
58
54
50
46
22 Nov 10 Dec 30 Dec 21 Jan 10 Feb
CITYA.M. 17 FEBRUARY 2011 News 15

CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel in association with

PensionsFirst
The pensions risk management firm has hired
three new assistant vice presidents: Matthew
Furniss (pictured) and Robert Heathcoat, who
both join from Punter Southall, and Chris
Hoddman, who joins from the Pension
Protection Fund. Furniss will work in the client
solutions group, helping clients to manage
their pension risk. Hoffman and Heathcoat will
be working in the firm’s professional services
team.
an asset and liability management
Aviva director, starting 11 April.
Martin Muir has joined the insurer as The newly created role will give Muir
responsibility for the asset allocation of
Aviva’s investment portfolio. He will be
based at the firm’s London HQ and will
report to Tim Harris, the group’s deputy
chief financial officer.
Muir joins the firm from Goldman
Sachs, where he is a managing director
in the securities division. Previously, he
worked for twenty years at Watson
Wyatt, where he was a partner and
leader of the UK life practice.
Deloitte
Graeme Matthews has joined the com-
pany as an associate partner in its secu-
rity team, helping to improve its cyber
security advisory.
The cyber security team resides in
the Deloitte enterprise risk service
practice, which has more than 900
people.
Matthews has previously spent four
years as a lead client partner at Detica,
focused on national and government
security. Before that, he worked at
Capgemini specialising in change man-
agement and organisation design in the
TMT market.
Haymarket Financial
Howard Rowe, Glenn Clarke and Carlos
Baigorri have joined the firm. Rowe was
formerly a managing director at
Goldman Sachs and has joined
Haymarket’s healthcare financial busi-
ness.
Clarke has joined from Chapdelaine
in the US to drive the firm’s capital
markets efforts. He previously worked
at CSFB’s CLO franchise. Baigorri joins
as an investment analyst from Goldman
Sachs.
TeachFirst
The education charity has hired John
Colenutt as chief operating officer. He
has left JP Morgan Cazenove after 22
years for the role.

To appear in CITYMOVES please email your career

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com morganmckinley.com

BEST OF THE BROKERS To appear in Best of the Brokers email your research to notes@cityam.com

ANALYSIS l AMEC ANALYSIS l Barclays 332.30 ANALYSIS l Go-Ahead Group

1,300 p 330 p 16 Feb 1,400 p 1,305.00
1,183.00 16 Feb
16 Feb
310
1,200 1,300
290

270
1,100 1,200

250
22 Nov 10 Dec 4 Jan 24 Jan 11 Feb 6 Dec 24 Dec 13 Jan 2 Feb 22 Nov 10 Dec 4 Jan 24 Jan 11 Feb

AMEC BARCLAYS GO-AHEAD GROUP

Morgan Stanley has downgraded the engineering consultancy to “under-
weight” with a target price of £10.80 due to risks from the firm’s excess
cash pile of around $1bn. The broker believes that AMEC missed the
opportunity to expand through acquisitions when valuations were low in
2009, and sees a risk of the firm acquiring rivals at demanding multiples
or instead leaving its cash pile idle.
Nomura rates the bank “neutral” with a 340p price target. The broker
sees the bank’s return on equity targets as relatively demanding, implying
a pre-tax profit of £10.4bn in 2010 terms, meaning a material re-rating is
unlikely despite its recent positive results. Nomura has raised its pre-tax
profit estimates by eight per cent to £7.135bn for 2011 on the back of bet-
ter-than expected results at Barclays Capital.
RBS rates the transport group “hold” with a target price of £11. The bro-
ker expects in-line half-year results tomorrow, though the focus will be on
possible structural changes for the UK rail sector and how the firm will
approach franchise opportunities. RBS predicts half-year revenues of
£1.09bn and pre-tax profit of £45.9m. It expects the interim dividend to
remain in place at 25.5p per share.

Hopes of revival for financial S&P 500 bounces

sector drives the FTSE higher after Dell results
giants RBS and Lloyds. RBS rallied tively, after HSBC raised its ratings 1936, according to Howard

THELONDON nearly four per cent to 47p as Credit

Suisse and Deutsche suggested they
for both.
GKN added 4.5 per cent as Investec THENEW YORK Silverblatt, senior index analyst at
Standard & Poor’s.

REPORT
could be the best placed to benefit
from recent regularity changes,” said
Giles Watt, head of equities at City
Index.
REPORT
Securities started coverage of the The steep advance on relative low
automotive parts maker with a volume has sparked many forecasts
“buy” rating. for a correction. “You have still a
Invensys and IMI rose 1.2 and 0.9 healthy degree of scepticism out

B
RITAIN’S leading share index A March 24-25 gathering of per cent respectively, after Barclays there,” Mata said. “You never want

rallied yesterday, powered by
banks, on hopes for further
upbeat earnings in the sector
after Barclays and French peer
Societe Generale set the standard.
HSBC gained 2.8 per cent, Royal
Bank of Scotland rose 4.3 per cent
and Barclays, which reported results
on Tuesday, was up 1.0 per cent.
Societe Generale nearly quadru-
pled fourth-quarter net profit and
said plans to get profit back to pre-
financial crisis levels were on track.
The FTSE 100 index closed up
48.19 points, or 0.8 per cent, at
6,085.27, wiping out a 0.4 per cent
slide on Tuesday.
Insurers joined in the rally with
Resolution up 6.1 per cent, after
Redburn Partners initiated coverage
of the stock with a “buy” rating.
Financial stocks have enjoyed a
bullish start to 2011, with traders
pointing to their underperformance
in 2010, future earnings growth
potential and clarity over Europe’s
debt situation as reasons for the
gains.
“The hope is that Barclays’ excel-
lent numbers have set the tone for a
solid reporting season from the
financials, including state owned
European Union leaders will cap a
series of meetings to flesh out a
“comprehensive package” of meas-
ures to placate markets.
“The fact there appears to be more
willingness to address the European
situation has ... helped sovereign
debt spreads come in, in the year to
date, and that’s positive for banks
and their exposure,” Neil Tong, head
of UK equities at Alliance Trust, said.
GIVE US A CLUE
The governor of the Bank of England
warned against investors jumping to
conclusions about when it would
raise interest rates.
Sterling beat a minor retreat and
interest rate futures rose after the
BoE’s quarterly inflation report, as
some investors had priced in a more
hawkish outlook for monetary poli-
cy.
“(BoE governor) Mervyn King’s
comments are perhaps less hawkish
than some expected, so that’s help-
ing the FTSE bed in above the 6,000
level,” said David Morrison, market
strategist at GFT Global.
Real estate firms climbed with
Land Securities and British Land up
3.6 per cent and 2.7 per cent respec-
Capital initiated coverage on both
with an “overweight” rating.
Miners were the biggest drag on
the FTSE 100, extending Tuesday’s
declines on further metals price
weakness.
BHP Billiton fell 1.4 per cent after
saying it plans to pour $80bn into
expansion over the next five years
rather than chase ambitious
takeovers, as it nearly doubled first-
half profit.
Fellow Miner African Barrick Gold
rose 1.0 per cent after better-than-
expected full-year results.
Tullow Oil shed 1.3 per cent. The
oil explorer said drilling at its
Gharabi-1 well, offshore Mauritania,
was unsuccessful.
ANALYSIS l FTSE 6,085.27
6,100 16 Feb
p
5,900
5,700
5,500
22 Nov 10 Dec 4 Jan 24 Jan
T
HE S&P 500 rose yesterday to
twice its value from just two
years ago, in a bounce that
showed vigour not seen since
the Great Depression.
Stocks were boosted by Dell’s earn-
ings and deal announcements that
fuelled hopes for gains, but light vol-
ume made the move more tenuous.
The market overcame concerns
about tensions between Israel and
Iran, and indices slowly climbed back
to close near the session’s high.
“It seems there’s just a lot of pent-
up demand, and the market is very
quick to shrug off news that could
appear negative,” said Angel Mata,
managing director of listed equity
trading at Stifel Nicolaus in
Baltimore.
Still, volume struggled to match
the year’s average of 7.9 billion shares
on the New York Stock Exchange,
NYSE Amex and Nasdaq. About 7.5 bil-
lion shares changed hands yesterday.
The S&P 500 closed up 0.63 per cent
or 8.31 points at 1,336.32, double the
intraday low hit in early March 2009.
On a closing level, the market has
risen more than 96 per cent since
March 9, 2009 – a run not seen in
11 Feb such a short period of time since
the market to be too bullish.”
Dell, the world’s No. 2 personal
computer maker after Hewlett-
Packard, flew past Wall Street’s profit
and margins estimates late on
Tuesday, and its shares jumped 11.9
per cent to $15.56 (£9.67). HP shares
gained 2.1 per cent to $48.99.
Two Iranian warships planned to
sail through the Suez canal en route
to Syria yesterday, an Israeli official
said, calling it a “provocation” by the
Islamic Republic. The pullback follow-
ing the comments was another oppor-
tunity for money on the sidelines to
get back into stocks, Mata said.
The Dow Jones industrial average
gained 61.53 points, or 0.5 per cent, to
12,288.17. The Nasdaq Composite
Index added 21.21 points, or 0.76 per
cent, to close at 2,825.56.
Rising stocks outnumbered declines
on the NYSE by a ratio of three to one.
On the Nasdaq, more than nine stocks
rose for every five that fell.
Crude and basic materials shares
gave the market direction, with the
S&P 500’s energy sector up 1.3 per
cent and materials up 1.2 per cent. Oil
services provider Halliburton closed
at its highest level since July 2008
after a 4.3 per cent climb to $47.49.
 16
Wealth Management | Mortgages & Savings
Three ways to maximise
your borrowing potential
City workers have options to cope with tight mortgage criteria, says Jennifer Hill
I
T’S bonus season, and some
high-earning City workers are
likely to take advantage of the
promise of rising top-end prices
to snap up exclusive pads – provided
they can get the necessary finance.
The Centre for Economics and
Business Research (CEBR) estimated
earlier this year that bonuses would
amount to £7bn. The final figure is
expected to be lower as many banks
increase salaries rather than bonus-
es. Nevertheless, three-quarters of
City workers anticipate a higher
bonus than last year, according to
Investec.
The resurgence of City bonuses
coupled with a growing band of
international property buyers are
keeping the London property market
booming, in spite of a wider UK mar-
ket slowdown.
Britain’s property market recovery
has run out of steam lately, with
house prices falling 1.3 per cent in
December – the fastest annual rate
in more than a year. They rose 0.8
per cent in January, but on an annu-
al basis, were still 2.4 per cent lower,
as measured by the average of the
latest three months against a year
earlier, according to mortgage
lender Halifax.
However, prices in exclusive areas
of London have bottomed out, rising
by 3.3 per cent since November,
according to estate agent Knight
Frank.
Tim Murphy, chief executive of IP
Global, the property investment
firm, expects prime London proper-
ty prices to rise by 5 per cent this
year, 6 per cent next and 8 per cent
in 2013. Over the next five years,
they will surge by 33 per cent, he
says.
“Grade A property should outper-
form the average by 5 per cent over
next five years, though mortgage
funding will still be difficult to
obtain,” he says.
Those who aren’t cash buyers can
find it difficult to get a mortgage,
CLICK TO SAVE: WEBSITES
THAT STOP YOU LOSING OUT
T
HE internet is tearing up many
traditional business models,
bringing down costs, along
with barriers to information-
sharing and market entry. We look at
four sites that could change your life
(or at least your bank balance):
BILLMONITOR.COM
This new mobile phone comparison
website uses technology developed
over the last four years by Oxford
CITYA.M. 17 FEBRUARY 2011
but there are ways that City workers
can maximise their borrowing
potential:
KEEP RECORDS
It pays to be organised. Banks
require more documentation as evi-
dence of your income than in the
past, especially if it’s not of a regular
nature, or perhaps if your bonus is
paid in equity rather than cash.
Lenders typically insist on two
years’ evidence of income from the
self-employed, for example, and
sometimes three.
David Hollingworth at London &
Country Mortgages says: “It makes
sense to anticipate a lender putting
your finances under greater scrutiny
than before.
“Those with a heavy accent on
bonus income will find that main-
stream lenders will generally take
only a proportion of that income
into account when assessing how
much they might lend, so pull
together as much information as
possible to demonstrate a good track
record of those bonus payments.”
Having things like tax returns, tax
calculations (such as P60 and SA302
forms), your bank statements and
payslips to hand will speed up the
process and make sure you don’t
make wasted applications. Be
upfront, too, about any unusual
University statisticians.
Unlike other price comparison
sites, its algorithms work by
analysing online mobile phone bills
and patterns of usage (voice, SMS,
MMS, data and roaming habits),
before it recommends the best phone
contract for you.
ANYVAN.COM
This free-to-list delivery auction web-
site connects people who need items
CITYA.M. 17 FEBRUARY 2011
aspects of your income.
USE A BROKER
Some lenders are non-starters for
those who want their bonus pay-
ments to be taken into account
when it comes to how much they
can borrow; others are more lenient.
Using an independent broker will
help you separate the wheat from
the chaff.
“Brokers have access to underwrit-
ers with whom they can discuss the
specifics of the case to ensure there’s
some hope of getting the right result
and gain a clear picture of what
information the lender will need,”
says Hollingworth.
Brokers also have access to lenders
beyond the traditional, high street
names.
17
Improve your
mortgage prospects ANALYSIS l KF Prime Central London Index
125
115
105
95
Source: Knight Frank Residential Research
Jan 09 Jun 09 Jan 10 Jun 10 Jan 11
your entire bonus into account
when deciding how much you can
borrow. Private banks access appli-
cants on a case-by-case basis.”
Investec Specialist Private Bank
has recently launched a £1m-plus
mortgage aimed at high-net-worth
individuals who aren’t paid along
conventional lines, but accrue irreg-
ular income, such as lump sum
bonuses.
The custom-made mortgage takes
Discover a new world of opportunity.
overall income and wealth into
account, rather than just the value
Offshore banking for expats.
of the property and your regular
monthly income. You must have 9JGPKVEQOGUVQOCPCIKPI[QWTƂPCPEGUDCPMKPIQHHUJQTGECPJGNR
“sustainable earnings” of more than
£300,000 a year. If you’re a couple, [QWFKUEQXGTCYQTNFQHDQVJUGEWTKV[CPFQRRQTVWPKV[
this criterion must be met by the pri-
mary applicant, so you can’t add up
both parties’ income. You must also 9GJCXGQXGT[GCTUoGZRGTKGPEGKPJGNRKPIKPFKXKFWCNURTQVGEVCPF
have an “established balance sheet” ITQYVJGKTYGCNVJKPVJGUGEWTGQHHUJQTGNQECVKQPQH,GTUG[QPGQHVJG
GO PRIVATE
Private banks are more accustomed
to dealing with high-earning City
workers and their atypical income
stream.
Melanie Bien, director of broker
Private Finance, says: “The danger of
walking into your nearest high-street
bank for a mortgage is that they may
not lend as much as you need: many
won’t go above £500,000.
“They also tend to be inflexible,
insisting on repayment rather than
interest-only, or they will not take
moved cheaply with transport
providers already travelling in that
direction.
Users can save up to 75 per cent
compared to hiring a firm to do the
job as a one-off. Since launch a year
ago, it’s saved users £1.2m. Some
have moved antiques from auction
houses and hot tubs to Spain, while
others have simply moved house.
EVENTFULSTAYS.COM
Started by Camilla Shaughnessy, a
former management consultant who
invested in property just before the
credit crunch, this site allows people
to rent out their homes for special
events. The founder earns £3,000 for
two nights for her barn conversion in
Banbury, Oxfordshire, which comes
with a swimming pool, gym and heli-
of more than £3m.
“Private banks lend on the basis of
the client rather than the property,
so will welcome you if you are the
‘right’ sort of client, with whom they
can develop a relationship that goes
beyond a mortgage,” adds Bien.
Rates are bespoke, but they are
often more competitive than those
from high-street lenders. However,
the trade off might be a requirement
to move some of your banking or
investment holdings to the private
bank to qualify.
pad, and can sleep up to 14 people.
Currently listed on the site, along-
side events such as the Cheltenham
Gold Cup and Edinburgh Festival, are
an Elizabethan manor house near
Henley and The Underground House
in Cheltenham, which featured on
Grand Designs.
PROTECTYOURBUBBLE.COM
Can’t live without your gadgets?
Many standard home insurance poli-
cies won’t cover gadgets taken away
from the home, but this new online
gadget insurer is here to help.
It gives the first month free, as well
as data back-up and worldwide cover
as standard. You can insure a single
gadget from £1.49 a month, with dis-
counts for multiple gadget cover.
Jennifer Hill
YQTNFoUOQUVTGURGEVGFKPVGTPCVKQPCNƂPCPEKCNEGPVTGU
#PFCNQPIYKVJCYKFGTCPIGQHQHHUJQTGRTQFWEVUCPFUGTXKEGUYG
CNUQJCXGSWCNKƂGFGZRGTVUKPMG[GZRCVNQECVKQPUYJQECPRTQXKFG
URGEKCNKUVJGNRCPFCFXKEG
$CPMKPIQHHUJQTGYKVJ*5$%ECPRTQXKFG
r 2QVGPVKCNVCZCFXCPVCIGU
r /WNVKRNGEWTTGPE[DCPMKPI
r #DKNKV[VQOQXGOQPG[GCUKN[CTQWPFVJGYQTNF
r 'ZRCVYGCNVJOCPCIGOGPVUQNWVKQPU
Discover how to protect and grow your wealth offshore
Call: +44 (0) 1534 616079
Visit: www.offshore.hsbc.com
Search online: Why HSBC offshore
Issued by HSBC Bank International, a trading name of HSBC Bank International Limited, HSBC House, Esplanade, St Helier, Jersey JE1 1HS. HSBC Bank
International is regulated by the Jersey Financial Services Commission for Banking, General Insurance Mediation, Investment and Fund Services
Businesses. Licensed by the Guernsey Financial Services Commission for Banking, Collective Investment Schemes and Investment Business. Licensed by
VJG+UNGQH/CP(KPCPEKCN5WRGTXKUKQP%QOOKUUKQP&GRQUKVUCPF+PXGUVOGPVUOCFGYKVJPQP7-OGODGTUQHVJG*5$%ITQWRFQPQVDGPGƂVHTQOVJG7-
Financial Services and Markets Act 2000, including the Financial Services Compensation Scheme. However, HSBC Bank International Limited is a member
of the Depositors Compensation Scheme as set out in the Banking (Depositors Compensation) (Jersey) Regulations 2009. HSBC Bank International Limited
is a participant in the Guernsey Banking Deposit Compensation Scheme. The Scheme offers protection for ‘qualifying deposits’ up to £50,000, subject to
EGTVCKPNKOKVCVKQPU6JGOCZKOWOVQVCNCOQWPVQHEQORGPUCVKQPKUECRRGFCVKPCP[ƂXG[GCTRGTKQF&GRQUKVUOCFGYKVJQWTQHƂEGUKPVJG
Isle of Man are protected by the Isle of Man Compensation of Depositors Regulations 2008. For further information on these schemes, please visit the
Important Information section on our website www.offshore.hsbc.com/1/2/important-information. Copies of our Terms and Conditions and Audited
Accounts are available on request. Approved for issue in the UK by HSBC Bank plc. To help us to continually improve our service and, in the interest of
security, we may monitor and/or record your communications with us. © HSBC Bank International Limited 2011. All Rights Reserved.
MC8463/AC20626/SJ/2206547
 18 Wealth Management

TRADE IN... ...MORE CORNERS...

Watch the footprints
Picture: Getty

How you can score high for credit

Whether you are young, a returning expat, a worker 2. RECTIFY MISTAKES
Mistakes by lenders can happen, and you
from overseas, or just stuck with an out-of-date file, can challenge these. Contact the lender in
question. It will update its records and
notify the credit reference agencies.
your credit score can be improved, writes Jennifer Hill
3. CLOSE OLD ACCOUNTS
The more credit you have available to you,
external affairs director at Equifax, anoth- the higher the risk you are. You might
from your partner, but they might still
show on your report.
7. BRING RECORDS
Foreign nationals coming to Britain
should make sure they bring a credit file
from their previous country, as well as
prior credit contracts, rental agreements
and utility bills.

W
E ALL have one, but what exactly
makes up a credit score and
how can you improve it?
More than a quarter of credit applicants
have been turned down over the past year,
according to price comparison site
Moneysupermarket.com, with London
having the highest rejection rate.
Scores of expats who returned to
London due to the global downturn are
among those having the toughest time.
“People returning from working over-
seas can often run into problems when
trying to do something as simple as taking
out a mobile phone contract or credit card
because there’s no recent evidence of a
credit history here,” says Lucy Davies, a
spokeswoman for CreditExpert.co.uk, the
credit monitoring service from Experian.
“This can be frustrating, especially if
you have a good salary. Unfortunately, evi-
dence of salary sometimes isn’t enough.”
The situation is just as difficult for for-
eigners who come to the UK. Neil Munroe,
er credit reference agency, says: “Credit
information held about individuals in
other countries is difficult to access and
interpret from the UK due to differences
in language and the data held.”
Your credit score is a figure between 0
and 999 – the higher the better. Follow our
ten-step guide to improving yours:
1. CHECK YOUR FILE
Credit reference agencies don’t hold
secret information about you: you can
request to see what (if anything) is held.
You can access a basic credit report with
the three main agencies, Experian,
Equifax and Callcredit, for just £2. For
more detailed reports, you need a sub-
scription. It costs £12 a quarter with
Callcredit, £6.99 a month with Equifax
and £14.99 a month with Experian.
However, you can take advantage of a
free 30-day trial by signing up, checking
your report then cancelling before you’re
charged. The Callcredit service, however,
takes the first payment when you register.
have cut up that old credit card long ago,
but if you haven’t closed the account it
will still appear on your file. Get in touch
with lenders to close unused facilities.
4. REGISTER TO VOTE
If you aren’t registered to vote, speak to
your local authority to get onto the elec-
toral roll. For many lenders, this is a pre-
requisite to lending.
5. EXPLAIN YOURSELF
If there are special circumstances sur-
rounding past credit problems, explain
this by adding a ‘notice of correction’ to
your credit report. For example, you may
have missed several payments because you
lost your job.
6. DISASSOCIATE YOURSELF
If you have financial links to people on
your credit report which are no longer cor-
rect, you should ask for them to be
removed.
For example, you might have separated
8. BUILD A HISTORY
There are some credit cards on the market
aimed at people with little or no recent
credit history.
These tend to carry higher interest
rates, but if you pay the balance off in full
and on time each month you won’t be
charged and it will be easier to be accept-
ed in future.
9. DON’T LEAVE FOOTPRINTS
The worst thing you can do is to make
multiple failed applications in a short
period of time.
Price comparison sites like
Moneysupermarket.com and
Moneyexpert.com have free credit profil-
ing tools that help you search for the most
suitable credit for your circumstances.
10. KEEP CHECK
Check your credit file at least once a year,
and especially before applying for new
credit.

PERSONAL FINANCE NEWS

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Research from Confused.com shows
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CITYA.M. 17 FEBRUARY 2011
For the Brics,
adolescence
could prove
to be difficult
Released with much fanfare, funds that
cover Brazil, Russia, India and China are
still worth considering, says Bob Campion
W
HEN the idea of a Bric fund –
an equity fund focused on
Brazil, Russia, India and
China – first took off in the
mid-noughties, they were all the rage
with investors. Goldman Sachs predict-
ed 2050 would be the year when the
Brics became the world's leading
economies, and today they are heading
resolutely in that direction. But after a
period of extraordinary highs and lows
for Bric funds, are these products still
attractive to investors?
Few would question the growing
might of the Bric economies. China is
the fastest growing major economy in
the world – overtaking Japan as the
world's second largest this week –
Russia is the biggest energy exporter,
India has the second largest workforce,
and Brazil is a commodities giant.
Over the last decade they have grown
up from countries with massive poten-
tial to ones who are starting to domi-
nate the world stage. This youthful
exuberance has already proved popular
with international investors, fuelling a
boom in valuations that saw prices
nearly double across the Bric stock mar-
kets between October 2006 and
October 2007.
But it was short lived, as panic
during the financial crisis caused a run
that, overall, Bric shares have yet to
fully recover from – despite a 96 per
cent surge in 2009. While their rise in
the world economic order seems
assured, Bric stock markets have been
an unpredictable rollercoaster for
investors who face significant chal-
lenges as their respective economies
come of age. “In the short run their
challenges could become a problem if
not managed properly,” said Brian
Coulton, global emerging markets
strategist for Legal & General. “But over
a five year horizon I still believe they
will grow very rapidly.”
The difficulty for investors is to know
whether Bric stock markets will contin-
ue to grow as fast as their economic
output. Their potential is now well
understood, accepted and priced into
stocks by most analysts, even though
valuations have not recovered to their
ANALYSIS l Recent Bric performance versus the world
450.000
400.000
350.000 Bric standard (Large+Mid Cap)
300.000 World standard (Large+Mid Cap)
250.000
200.000
150.000
100.000
30.000
0.000
2000 2002 2004
Wealth Management | Funds 19
Food riots in the northern Indian city of Chandigarh REUTERS/Ajay Verma (INDIA)
2007 peak. Yet given their current prob-
lems, markets remain extremely
jittery, meaning that investors must
accept high volatility without necessar-
ily the growth potential offered by
younger, less well-researched emerging
markets.
In comparison, experts point to
Turkey, Indonesia and Colombia as
some of the most exciting prospects.
“Global emerging markets funds can
go much broader, going into any mar-
ket they want to,” said Danny Cox,
head of advice at Hargreaves
Lansdown. “You get flexible asset allo-
cation with an expert making all the
calls.”
HSBC Global Asset Management,
which launched the first Bric fund in
2005, caters for all tastes, and invest-
ment director Alex Tarver believes the
Bric versus global emerging markets
(GEM) debate is simply a question of
whether investors want diversification
or focus. “GEM is more diverse and has
recently underperformed Bric,” he says.
But he says Russia, one of the least
exciting recent Bric stories, is now his
favourite, with a fast growing middle
class and attractive stock valuations
compared to the rest of the Brics.
Brazilian exporters are under pressure
as its government wages currency wars
against China and America. China is in
good shape but cannot keep the yuan
under lock and key indefinitely. And
India is finding it increasingly difficult
to maintain its growth rate.
Investors considering Bric funds
anew have missed the heady early years
of the mid-2000s – and the bull market
recovery of 2009 – and to financial
advisers Brics now seem out of season.
Exposure to more dynamic, emerging
markets is making global funds more
popular. But going with the trend is
rarely a ticket for success in investing,
and the Brics remain the undisputed
powerhouses of the future. As their
stock markets mature, they are sure to
attract increasing flows of foreign and
local money, making an investment in
a Bric fund still a sensible long-term
asset allocation decision; just be pre-
pared for some severe mood swings.
Source: MSCI
2006 2008 2010
 20 Wealth Management CITYA.M. 17 FEBRUARY 2011

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 Business Features
Bulgari MBA is
the first of a
new generation
The link-up between an Italian business
school and a luxury brand is a sign of
things to come, writes Jeremy Hazlehurst
L
UXURY brands are brilliant at
marketing themselves, so perhaps
it was only a matter of time before
one put its name on an MBA. But
the news that Italian luxury goods firm
Bulgari has teamed up with Bocconi
business school in Milan may raise a
few well-plucked eyebrows. In the next
cohort of MBA students, up to 20 – out
of a class of about 100 – will be able to
choose the luxury business “track” as
they are calling it, meaning that while
others decide to specialise in finance or
marketing, they will spend three
months taking their classes at Bulgari
HQ in Rome and will have a two-month
in-company project at one of the com-
pany’s global offices.
It makes perfect sense for luxury
goods businesses to get involved with
business schools. While many Western
businesses have suffered since the
downturn, luxury businesses, with
their growing market in Asia, have
proved resilient. The brands too know
that they can no longer rely on domes-
tic markets, but need serious business
nous if they want to expand into these
newly wealthy regions. This phenome-
non cannot have escaped the attention
of potential MBA’s either; while once
they might have looked for a future in
finance or consultancy, these days sun-
glasses or handbags cannot be consid-
ered a frivolous career choice.
Professor Valter Lazzari, director of
the full-time MBA at Bocconi, says that
with Italy’s reputation in the luxury
goods sector it is natural that a school
might want to focus on it, and like all
industries, the luxury sector has peculi-
arities. “If you price a candy bar, the
higher you price it the worse it is for
the consumer, but in the luxury indus-
try the opposite, it gives more value for
the consumer.” He says that the Bulgari
experience could also interest those
who want to work in any area of retail,
21
| MBAs
Fashion meets the
blackboard at Bocconi
not just the highest end.
Students are already showing an
interest too, and not only those who are
obsessed with la bella figura. “The luxu-
ry industry is very very attractive in cer-
tain parts of the world, especially in
Asia. It was less cyclical than you might
have expected during the downturn.
We have a couple of Chinese students
who have applied to the MBA who did-
n’t know that the luxury business track
would be available, and their mentor in
China told them to do it because it is
the sector that is growing the most in
China.”
What does Bulgari get out of it?
Bocconi says that it is a question of CSR;
Bulgari has decided that it wants to
fund education, and this is one way
that it does so. No doubt there is also a
mutual benefit for both parties – man-
agers at Bulgari will enjoy having access
The Oxford Executive MBA
to professors from Bocconi, and vice
versa. Also, there’s surely no doubt that
the company will be able to cherry-pick A 21-month part-time modular Please register online at
talent that it spots while the MBAs are
in their offices. programme designed to help senior www.sbs.oxford.edu/emba
So are we going to see more of this? professionals realise their potential
Will Gucci, Louis Vuitton and Dolce & For further information about the
Gabbana soon be welcoming MBA stu- whilst delivering international general Oxford Executive MBA,
dents through their doors? Patrick De management competence to their please contact Emeline Tissot at
Greve, general director of Vlerick
Leuven Gent business school in organisations. emeline.tissot@sbs.ox.ac.uk or on
Belgium, doubts it. While this is a Learn about the programme and meet 0845 190 0019
CONTINUED ON P22
the Executive MBA Director and
ANALYSIS l Global Luxury Goods Market 2005-9 students at one of our events:
€bn
Europe Asia Pacific
100
• OXFORD - 24 February 2011
The Americas Others
80 • LONDON - 12 March 2011 (QS MBA Fair)
Total: Total: Total:
60 Total: • OXFORD - 24 March 2011
Total: 79.9 82.2 80.0
75.5
69.8
Source: Mintel
40 • LONDON - 07 April 2011
20
0
2005 2006 2007 2008 2009
 22 Business Features | MBAs CITYA.M. 17 FEBRUARY 2011

CONTINUED FROM P21 BUSINESS MEETS LUXURY

fantastic opportunity for Bulgari, whose
name is out there now with MBA students
as a business with the aspiration to
employ them, but he has some small
doubts about the programme. If he were
involved with the course, he might worry
about how the school will ensure that the
quality of the courses taught by the busi-
ness meet the same standards as those
run by academics. He says: “If I was the
dean of a business school with this sort of
link-up I would have to be clear that all
aspects of the pedagogic experience are
top quality. And that goes for both sides of
the partnership.”
NARROW TRACK
He also worries that the Bocconi/Bulgari
track might be too narrow. “Learning
about the industry is not just about one
business model. If I were a student I
would look at that,” he says. Contact with
Bulgari is great, no doubt, but what about
Ferrari, Mont Blanc or Rolex? Are you
truly studying luxury goods, or just the
culture and insights of one company?
So we shouldn’t expect to see an ava-
lanche of luxury goods MBAs: there just
isn’t the market for that many more, and
only a small number of places with the
expertise to teach one (and some of those
already do, see the box to the right).
Instead, business schools might find
themselves looking at aspects of the luxu-
ry business to learn from them – Vlerick
studies L’Oreal as part of the MBA market-
ing course. Retailers of all stripes might
want to look at how luxury brands work.
A trend that the Bulgari MBA does
highlight, says De Greve, is a boom in
MBAs that are closely connected with one
business. In 15 years in business educa-
tion De Greve says that he hasn’t run a
single MBA for a specific company, but he
says that pressure is rapidly building for
them. Firstly, businesses are more inter-
ested in retention management now that
they can’t just go to the market and make
expensive hires. But more importantly,
the MBA industry is becoming
homogenised – this has increased quality
globally, but they have all become rather
indistinguishable and businesses will be
looking for a qualification that works in
their specific niche. For example, large
retailers that move into Africa might feel
the need for their top talents to have a
specific MBA in retail expertise to make
this successful.
Businesses might well want to sponsor
MBAs that bring potential top-quality
recruits to their doorstep. The benefits, of
course, go both ways. “Imagine if Google
started an online MBA in web-based mar-
keting, the McDonalds MBA in customer
service or the Ferrari MBA in model engi-
neering,” muses de Greve. “Who wouldn’t
be interested in that?”
SDA Bocconi in Milan is not the first
business school to become involved with
the luxury business – and in fact its
Bulgari MBA is not its first entrance into
the sector – it already offers a number
of masters in management courses that
specialise in the Italian luxury industry.
ESSEC in Paris has been running a one-
year full-time luxury business MBA since
1995, and its partners include not only
Burberry and Chanel but also Krug
champagne among many others.
Participants can specialise in fashion
and accessories; fragrances and cosmet-
ics; or hotels and real estate. A chair is
sponsored by LVMH and there are regu-
lar talks from the heads of luxury
brands. Students spend two months in a
luxury brand, and typically work on proj-
ects like creating a fashion brand or a
new fragrance.
EMLYON, in Lyon, offers a masters in
luxury management and marketing,
where students spend time in France,
Switzerland and Shanghai, so students
can see both ends of the luxury market.
Then there is an alliance of business
schools called CEMS that partners with
70 multinationals including LVMH to
offer a very highly regarded masters in
management.
At the Monaco Business School there
is an elective that focuses on the luxury
sector, and also an MSc in luxury man-
agement. It’s a small MBA, but there is
plenty of local luxury brand expertise,
and there are regular trips to Paris and
Switzerland.
All business schools have dozens of
scholarships funded by firms and many
also have “chairs” sponsored by busi-
nesses, and luxury brands are of course
involved – for example, HEC, which is
also in Paris, also has a scholarship
sponsored by L’Oreal.

Not looking for another

perspective could be a
false economy.
Master of Finance (MFin)
University of Cambridge
Academically rigorous and commercially relevant, the Master of Finance
offers an opportunity to build on an outstanding professional track
record through access to the University’s excellent teaching faculty and
experienced finance practitioners.
One of the leading post-experience programmes of its kind in the world,
this one-year degree will prove invaluable for ambitious finance
professionals seeking positions of influence and leadership in the future.
To find out more go to
www.jbs.cam.ac.uk/mfin
Bloomberg CAMF <GO>
CITYA.M. 17 FEBRUARY 2011 Business Features | MBAs 23

Always be on
the lookout for
opportunity

Picture: GETTY

were not targeted and many ended up

How business school frustrated.

I went to only one career fair while at
IESE. It was useful to see who is out there
and recruiting MBAs, but the individual
company talks tend to be a bit too general
to be really useful. When they had the

helps with a job-hunt SLAVKA

KABAKCHIEVA
GRADUATED FROM FULL-TIME MBA AT IESE
right people it was great, but they can be a
bit samey, like reading a website.
The alumni network was the most use-
ful thing for me. The careers service has a
database of former IESE students and they
are a good starting point. If you want to go
into advertising in Peru, for example, they
IN 2010 AND CURRENTLY WORKING FOR can find you everybody involved in either
Jeremy Hazlehurst asks HAVAS MEDIA IN SPAIN.

A
SK people who are currently studying an
MBA what their top priority is and they will
recent MBA graduates almost all tell you that it’s finding a job after
they graduate. Always true, perhaps, but
how they made the most more so at the moment when the economic future
remains uncertain. We asked four recent MBA gradu-
ates how they used their time and the resources of
of their careers service their MBA school to land their jobs.
THE most important thing is finding out
exactly what you want; that makes your
job search more efficient and you save a lot
of time. A number of my classmates spent
a massive amount of time writing cover
letters and crafting CVs, but their efforts
advertising or Peru, or both.
My fellow students were probably the
best resource, though. Everybody at IESE
is warm and generous, which I think is
different to the big American schools. The
careers service’s contacts are useful, but
it’s not the same as somebody you know.
CONTINUED ON P24

BUSINESS SCHOOL NEWS

IN BRIEF
MBAS FINDING JOBS
Those with MBAs are still finding it
relatively easy to find work, says new
research from GMAC, the body which
runs administration testing for MBA
courses. Its Alumni Perspectives
Survey shows that 88 per cent of
2010 business school graduates had
jobs on graduation, 4 per cent higher
than the class of 2009 and close to
2006/7 levels. Median salaries had
also returned and are approaching
pre-downturn levels.
ONLINE TUITION
You can now download free audio and
video content from INSEAD through
iTunes. Lectures, video interviews with
faculty members, conferences and
research will be available, as well as
interviews with big names from
business and government. Events such
as the Annual Leadership Summits
and roundtables will also be available.
Downloads will be available in English,
Chinese and Arabic. See
http://itunes.insead.edu.
IPADS FOR ASHRIDGE
Ashridge Business School in London has
given each of its newest intake of MBA
students an iPad, as part of its aim to
run a more sustainable MBA. The school
said that iPads are the perfect platform
for bringing technology into the
classroom. The iPads are loaded with
the introductory manual and course
presentation notes, and make
downloading podcasts easier, says the
school. Ashridge has just 22 people on
the full-time MBA course that started in
January.
HEC GOES TO DOHA
Paris’s HEC business school has just
launched an EMBA in Qatar. The first
intake has an average age of 36 and
GDF Suez, HSBC and Qatar Petroleum
are among the companies with
employees participating. Those at the
Doha campus will be able to access a
network of participants from any of
HEC’s other global EMBA tracks. they
will be part of a 44,000-strong global
alumni network.
ISLAMIC FINANCE MBA
Bangor business school has opened a
campus in London and will offer an
MBA specializing in Islamic banking
and finance. Bangor has close links
with the Middle East, and several
members of the Qatari royal family
have taken MBAs at its Welsh campus,
and a leading Abu Dhabi royal also did
a PhD there. Bangor’s City campus will
also be offering MBAs in Banking and
Finance and a chartered banker MBA.
Bangor offered the first maaters in
banking in the 1970s.
EQUALITY EDUCATION
Cass will hold an event called Women
as Leaders aimed at prospective female
MBAs asking why so few women
progress to the higher levels of large
businesses. Dr Julie Verity and Phyllida
Hancock will host a seminar using
Shakespeare’s As You Like It to
investigate gender interaction and
explore why women face obstacles and
how they can be overcome. Women as
Leaders is at Cass, 13 April at 6.30pm.
Babington is a leading independent
training provider in Work Based Learning
combining with both on and off the job
training to meet the needs of employers
and learners. Due to our continued
growth we are expanding our delivery
team for - Insurance, Mortgages
and Financial Services.
If you are a commercially astute individual
experienced in the industry and would like to
find out more about a career in training
please visit our
website www.babington.co.uk or
email vacancies@babington.co.uk
We are an equal opportunities employer, will consider
both full/part time hours and flexible working.
www.babington.co.uk/
 24 Business Features | MBAs CITYA.M. 17 FEBRUARY 2011

CONTINUED FROM P23
MARTIN CORIAT
GRADUATED FROM THE FULL-TIME MBA
CLASS AT INSEAD IN 2008 AND WORKS FOR
FRENCH INSURANCE COMPARISON WEBSITE
LELYNX.FR.
When I graduated in 2008 I saw that the
alumni network can be really helpful for
finding a job in turbulent economic
times. In the good times the McKinseys
and Goldman Sachses of this world all
come to campus, but when things are
harder you need more help. The alumni
network can help you understand what
niches there are.
For example, all a lot of people know
about investment banking is that there
are a lot of jobs in M&A or IPOs, but there
are plenty of other opportunities, and
alumni who have worked in that industry
can help you identify them. The alumni
and the diverse classmates are also great
for research; you can go up to somebody
in the cafeteria and say: “I hear you used
to work for BP” and talk to them about it.
I got a job with Admiral, who I met at a
careers fair. There are several INSEAD
Alumni in the Admiral Group – a school
like INSEAD is good for companies that
are looking to expand internationally,
because you can go and find an Indian
and the same morning an American or a
French person.
I used the careers service too, because I
could go and ask them about the company
and they could tell me what it was like.
RONAN MORRISSEY
GRADUATED FROM THE FULL-TIME MBA AT
WARWICK BUSINESS SCHOOL IN 2010 AND
WORKS AT BARCLAYS BANK
I was an engineer at Intel prior to my
MBA and my objective for doing an MBA
was to change my career. The careers
service at WBS was fantastic: for the
first term they had regular sector
overviews where leading experts from a
range of sectors such as finance, energy,
PETER LAWLESS
COMPLETED THE FULL-TIME MBA AT CASS
IN 2009 AND WORKS AT ESAB HOLDINGS
One day a week at Cass was set aside for
career development and I spent a lot of
that time in workshops – they were about
things like dealing with interviews, and
they were run by psychologists. They
manufacturing or the public sector
would come in and do Q&A sessions
about the opportunities in their sectors.
That was phenomenally useful for me,
in finding out what sectors I might be
able to go and work in, because coming
from the background I did, I just didn’t
know.
They also had lots of CV sessions, and
people came in and talked about deal-
ing with psychometric tests and assess-
ment centres. At WBS I also had a
dedicated careers consultant who I
could talk to about where I wanted to
go and how to best tackle that.
They knew exactly what was going on
with my job hunt because they were
with me all the way along. They helped
me decide what areas I wanted to focus
on and were helping me apply for the
jobs. That was a phenomenal help to me
during my career search.
The alumni network was incredibly
helped me understand leadership and
organisational behaviour but mostly they
helped me understand myself and what I
might be suited to.
It’s only when you get to know your
own personal traits that you can know
where you want to go. Having worked in
sales, I had always had this perspective
that you had to put on a false persona to
impress people, but I learned that you
have to be yourself.
For the interview workshops we were
filmed and then watched ourselves back
and you see all the nervous habits you
have. That is always very embarrassing
and I have tried to learn from that.
Having people come in and give talks
was very instructive too. A lot of them
were pretty forthright; for example people
useful too. I got to talk to some really
senior people at various companies who
had previously been at WBS. In fact
some current students have already
been in touch with me. All the students
also told each other where they might
have useful contacts, which is a great
help.
I’d say you spend about 30-40 per cent
of your time on the job-hunt. It worked
for me – I’ve managed to change loca-
tion, job and sector, what they call the
triple jump.
The sector overview talks given by business
leaders were a highlight. I was an engineer
before my MBA and finding what sectors I
could work in was phenomenally useful
from financial services came in and said
that you probably can’t get a job unless
you have financial services experience
already, which I think really focused peo-
ple’s minds on what they were going to
do. One of the best things about the
course was getting to know yourself bet-
ter, and what you might realistically
expect to do.
I spent a lot of time in the workshops run by
psychologists. They helped me understand
myself better and what I might be suited to. I
learned that you have to be yourself to get on

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 Lifestyle SIMON PEGG’S 25
CLOSE ENCOUNTER
| Books PAUL: REVIEWED IN
TOMORROW’S PAPER

A passionate
novel depicting
a turning point
for women
Anthony Quinn proves that a man can write
a stirring novel set against the backdrop of
female emancipation, writes Zoe Strimpel
HALF OF THE HUMAN RACE (and attracted to) her quest for self-fulfil- A demonstration by does them proud and ends up with a al vacuum in the soul of man that,
BY ANTHONY QUINN ment. Despite their differences, the two suffragettes in 1906 Rhodes scholarship at Oxford. Luck seems absent God, is being filled up with
Jonathan Cape, £12.99 remain tied together, even as the outbreak to fall into his lap: despite being sent harmful rubbish, a process that had led
of war drives them apart. Photo: Roger-Viollet / down for tearing up a library book (he also to the precipitate decline of our civilisa-
hhhii Quinn has reminded us that crossing Rex Features spends a good deal of his spare time mak- tion. Indeed, the title of his book pub-
the gender barrier is in no way an obstacle ing LSD), he marries a nice English lished in 2006 was How the West Was
for a good writer – the result is a social woman, Anthea, and winds up – 30 years Lost – reading The Crisis Behind our
drama laced with private tragedy that cap- later – with successful kids, a great job at Crisis, it seems that, since then, at the

B
RAVO to Anthony Quinn, proving
that men can write a perfectly pas-
sionate, convincing novel about
women standing up for their rights,
in this case kicking off amid the turmoil
and violence of the beginning of the suf-
fragette movement. His heroine Connie
Callaway is a vividly-rendered evocation of
a young woman determined to make her
way with independence and facing con-
demnation and obstacles all round her,
not least in the form of the chauvinist
cricketer Will Maitland who – in an earlier
time – she’d have probably married.
It’s 1911, London. The streets are full of
cheers for the new king and also of the
cries of suffragist women marching for
the vote. Connie – who has been forced to
abandon her dream of being a doctor
since her family fell on hard times – is fac-
ing a tough choice: maintain lawful
protest or join the glass smashers?
Holidaying with her family on the
South Coast, she’s introduced to Will.
They’re attracted to each other but part on
unfriendly terms: Will strikes Connie as
innately chauvinist while he is appalled by
tures the violent clashes in understanding
between men and women at this turning
point in history.
WE HAD IT SO GOODE
BY LINDA GRANT
Virago, £14.99
hhhii
Zoe Strimpel
IT’S a bit odd, having just read One Day by
David Nicholls, to be confronted with
another wise and moving social pastiche
about students growing older and wonder-
ing where the time has gone. Why reality
doesn’t match their student dreams at all
and the sadness and banality of realising
that, maybe, they’re not so special after all.
One Day looks at the children of baby
boomers. This one looks at baby boomers
and asks what became of them. It revolves
around Stephen, the LA-born son of a
Polish-Jewish immigrant and a Cuban
mother, whose parents just want him to
get an education. A curious, clever boy, he
the BBC and a £3m house in Islington.
But it’s not all a bed of roses – as the
book continues, you realise Stephen just
drifts through life without much direc-
tion. His every move – especially the
unplanned ones – all seem to turn out
well. But he is never quite satisfied and by
the end we realise that good fortune may
not be all it takes to make a life.
Grant is no beginner – her novel is craft-
ed tightly, with just the right amount of
humour, satire and emotion. This is a
worthwhile study of a generation, though
if you’ve recently read One Day – like half
the world – don’t expect anything nearly
as heart-rending.
THE CRISIS BEHIND
OUR CRISIS
BY ALEXANDER BOOT
St Matthew, £12.95
hhhii
by Alex Deane
BOOT’S thesis in this short and thought-
provoking book is that there is a spiritu-
risk of incurring comparisons with
ABC’s popular drama, we have become
more lost than ever.
Boot writes with verve and wit, and
his pithy explanation of the currently
much-referenced Great Depression of
1929 is the best I’ve read.
His writing is not only insightful, but
fiercely provocative – any leftist who
picks up this book will blanch at the sus-
tained comparison of Franklin D
Roosevelt’s economic policies with
Hitler’s. To put it mildly, he is never
afraid of drawing robust conclusions.
Occasionally, one cannot help but feel
that Boot has gone a step too far. In the
process of expertly filleting modern eco-
nomics, he writes that the world is now
“in danger of collapsing like a house of
cards”.
While the financial crisis we have
endured (or are continuing to endure)
was or is grave, I don’t feel that the
world order is actually in danger of col-
lapsing. But one disregards predictions
built on such persuasive arguments at
one’s peril.

OUT OF OFFICE: CHELTENHAM IN THE CITY

TIMOTHY BARBER

Kauto Star will be running in the Gold Cup at
the Cheltenham Festival next month.
O
NE of the City’s great hospitality
jamborees, the Cheltenham
Festival, kicks off in just under a
month. It’s centenary year for the
festival this time round, but you don’t
have to be in Cheltenham – or squashed
round a telly in the pub on your lunch
break – to enjoy the action.
On 15 March, the first day of the festi-
val, one of the City’s grander dining
rooms, Green’s Restaurant on Cornhill, is
going to be converted into the Square
Mile’s own corner of the famous race-
course for a lunch reception called
Cheltenham in the City.
Owner Simon Parker Bowles will be lay-
ing on a gourmet meal for 200 people,
with each table of ten going for £1,750. As
well as sumptuous dining, guests will be
able to enjoy the racing action with
screens providing live streaming of the
races, while getting into the betting spirit
thanks to a tote betting process on each
race run by Ladbrokes. Guests can buy
tickets for selected horses and the money
goes into the pot for the race, to be paid
out to lucky winners afterwards.
The day’s not just about winning how-
ever – the proceeds from the lunch will be
going to Great Ormond Street Hospital
children’s charity as part of a fund raising
initiative between the hospital and the
gaming industry, titled Raising the
Stakes. Chaired by Ladbrokes CEO Richard
Glynn and involving several high-level
players int he industry, the aim is to raise
£500,000 to fund a four bed high depend-
ency bay in the hospital’s cardiac critical
care unit.
Tuesday 15 March, 12pm-6pm, Green’s
Restaurant & Oyster Bar, 14 Cornhill, EC3V 3ND.
For more information and to purchase tables
please contact Rebecca Hannawin on 020 7239
3174 or email Rebecca.hannawin@gosh.org
GOING TO CHELTENHAM? WHAT YOU NEED TO KNOW
WHERE Ascot is as much about
the spectacle and the fashion as
it is about charging nags, at
Cheltenham the racing is centre
stage. The Festival is the premier
jump racing event, meaning
longer, harder races from the
most famous names in the sport.
Kauto Star, Denman and
Imperial Commander are the
heroes contending this year’s epic
Gold Cup on the final day. But
first time attendees might want
to head to the earlier days when
there are a few less people to
fight one’s way through – tickets
are available on entrance as well
as in advance.
Tweed is out in force at
Cheltenham but there’s no need
to dress up too much – jeans are
fine, though prizes are neverthe-
less dished out for the best-
dressed women on Ladies’ Day.
However, bear in mind that
Cheltenham in March is rather
colder than Ascot in June, so
bring a coat.
Races start at 1.30pm each
day, though gates open at 10.30 –
if you’re driving, arrive as early as
possible to avoid a queue. There
are seven races a day, and you
won’t want to miss a moment.
The festival runs 15-18 March.
www.cheltenham.co.uk
 26 Lifestyle | TV& Games CITYA.M. 17 FEBRUARY 2011

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News 6pm Eggheads 6pm London Tonight 6pm The Simpsons 6pm Home and Away:
6.30pm BBC London News 6.30pm One Man and 6.30pm ITV News 6.30pm Hollyoaks Bianca is concerned when April
7pm The One Show His Campervan 7pm Emmerdale 7pm Channel 4 News begins to skip school.
7.30pm EastEnders: BBC News 7pm The Culture Show: 7.30pm Endgame 7.55pm 4thought.tv 6.25pm OK! TV:
8pm Human Planet Andrew Graham-Dixon Afghanistan: Tonight 8pm CHOICE With guests JLS.
9pm MasterChef examines Tate Britain’s new 8pm Emmerdale Relocation, Relocation 7pm Five News at 7
10pm BBC News exhibition, Watercolour. 8.30pm Coronation Street 9pm Rome Wasn’t Built in a Day 7.30pm Live UEFA Europa
10.25pm Regional News 8pm The Hairy Bikers: 9pm CHOICE Marchlands: In 10pm 10 O’Clock Live League Football: Sparta
10.35pm Question Time Mums Know Best: Recipes that 1987, Eddie unearths intriguing 11.05pm Russell Brand: Prague v Liverpool (Kick-off
11.35pm This Week: evoke the taste of home. information about Alice. Doing Life 8.05pm). Coverage of the
Skiing Weatherview 9pm CHOICE The Spice Trail 10pm ITV News at Ten 12.10am Music on 4: CTRL MX first leg of the last-32 fixture THE SPICE TRAIL
12.25am Sign Zone: WikiLeaks: 10pm Victorian Pharmacy: 10.30pm London News 12.40am Music on 4: at the Stadion Letna. BBC2, 9.00PM
The Secret Story: Panorama Ruth Goodman braves the 10.35pm Odd One In: With 4Play: Miles Kane 10.10pm FILM Today You Die: Kate Humble goes on the trail of some
12.55am Sign Zone: Countryfile Malvern water cure. Angellica Bell and Craig Gazey. 12.55am FILM Action thriller, starring of the world’s most valuable spices to
1.55am Sign Zone: Antiques 10.30pm Newsnight: Weather 11.20pm Send in the Dogs The Page Turner 2006. Steven Seagal. 2005. examine their history, trade and usage,
Roadshow 2.55am Sign Zone: 11.20pm Mad Men 12.15am The Zone; 2.25am FILM Knights of the South 12am SuperCasino beginning with pepper and cinnamon.
Rip Off Britain 3.25am Sign Zone: 12.10am The Culture Show ITV News Headlines Bronx 2005. 4am Brothers & 4.05am FBI Files 4.55am Animal
Save My Holiday 4.10am- 1.10am BBC News 4am-6am 2.20am Spartacus 3.45am-5.30am Sisters 4.50am Wogan’s Perfect Rescue Squad 5.10am Wildlife SOS
6am BBC News BBC Learning Zone ITV Nightscreen Recall 5.15am-6am Countdown 5.35am-6am House Doctor

SKY SPORTS 1 BRITISH EUROSPORT BBC THREE 12.40am Skins 1.40am FILM 4.40am Treasure Quest
SATELLITE & CABLE

7pm Live Premier League
Darts. Round two from the
Capital FM Arena in
Nottingham. 10.30pm Ringside
11.30pm The Rugby Club
12.30am Football’s Greatest
1am Premier League World
1.30am Premier League Darts
5am-6am Ringside
SKY SPORTS 2
7pm Cricket World Cup 8pm
The Rugby Club 9pm Ringside
10pm Time of Our Lives.
Recalling the 1981 Grand
National. 11pm WWE: Late
Night – Raw 1am WWE NXT
2am Cricket World Cup 5am-
6am Time of Our Lives
SKY SPORTS 3
6pm European Tour Golf 8pm
Live PGA Tour Golf. The
Northern Trust Open. 11pm
European Tour Golf 1am PGA
Tour Golf 4am-4.30am ATP
Tour Uncovered
6.55pm Live Snooker: The
Welsh Open 10pm Alpine
Skiing 11pm Ski Jumping
11.30pm-12.15am Cycling
ESPN
5.30pm Live UEFA Europa
League Football 8pm Live
UEFA Europa League Football
10.30pm UFC Unleashed
11.30pm UEFA Europa League
Highlights 1.30am ESPN Press
Pass 2am Live Basketball 4am
UFC Unleashed 5am
Snowboard FIS World Cup
Magazine 5.30am-6am NBA
Action
SKY LIVING
7pm Ghost Whisperer 8pm
Criminal Minds 9pm FILM
Indecent Proposal 1993.
11.15pm Bedlam 12.15am
Celebs 24/7 12.30am Criminal
Minds 1.30am CSI: Crime
Scene Investigation 3.20am
Charmed 5.10am-6am Maury
7pm Top Gear 8pm The Big Fat
Truth About Low Fat Foods
9pm The World’s Most
Dangerous Place for Women
10pm EastEnders 10.30pm
Lunch Monkeys 11pm Family
Guy 11.45pm The Big Fat Truth
About Low Fat Foods 12.45am
The World’s Most Dangerous
Place for Women 1.45am
Lunch Monkeys 2.15am
Coming of Age 2.45am The
World’s Worst Place to Be Gay
3.45am Almost Famous IV
4.20am-5.20am Sun, Sex and
Suspicious Parents
E4
7pm Hollyoaks 7.30pm Friends
9pm The Big Bang Theory
9.30pm How I Met Your
Mother. Barney discovers
another artefact from Robin’s
teen pop career. 10pm Skins
11.05pm Rude Tube: Rude
Tunes 12.10am Scrubs
Kingpin 1996. 3.40am Dirty 5.30am-6am How
Sexy Money 4.25am Scrubs Does That Work?
4.45am How to Look Good
Naked 5.15am-6am Switched DISCOVERY HOME &
HEALTH
HISTORY 7pm A Baby Story 8pm How MARCHLANDS
7pm Heir Hunters 8pm IRT Clean Is Your House? 9pm ITV1, 9.00PM
Deadliest Roads 10pm Swamp
Paralysed and Pregnant 10pm In 1968, Ruth and Paul fight after
People 11pm IRT Deadliest
The Real ER 11pm Critical discovering they are unlikely to have
Roads 1am Oil Riggers 2am
Condition 12am Paralysed and any more children. Drama, starring
Swamp People 3am The
Pregnant 1am The Real ER Jodie Whittaker and Dean Andrews.
Nostradamus Effect 4am 2am Critical Condition 3am
Decoding the Past 5am-6am How Clean Is Your House?
Ancient Discoveries 4am Bringing Home Baby
5am-6am A Baby Story
DISCOVERY
8pm How Do They Do It? SKY1
8.30pm How It’s Made. How 8pm Hawaii Five-0 9pm
9pm Weird or What? 10pm Mad Dogs 10pm House
Extreme Engineering 11pm 11pm NCIS: Los Angeles
Frontline Battle Machines with 12am Invasion of the
Mike Brewer. The presenter Bodyscratchers 1.50am Inside RELOCATION, RELOCATION
tests the Ocelot. 12am Bear a Gunshot Victim 2.40am So CHANNEL4, 8.00PM
Grylls: Born Survivor 1am You Think You’re Safe? 3.30am Phil Spencer heads to Wales to catch
Deadliest Catch 2am Future Threshold 4.20am Don’t up with a couple who wanted to leave
Weapons 3am Hitler’s Gold Forget the Lyrics 5.10am- Milton Keynes and find a new home in
3.50am The First World War 6am Sell Me the Answer the countryside.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
11 15 16 4 10 22 13 
6 13 6
 
4 10 12
Place the numbers from 1 to 9 in each empty cell so that each 29 41 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 19 17
22
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 7 28
 
above or to the left of it. 11 23
You can only use the digits 1-9 21 18 
  and you must not use the
8 38 14
45    
same digit twice in a block.
 The same digit may occur 22 15 
30 14 23
     more than once in a row or
column, but it must be in a
12 11
 
14 6
     separate block.
3 8 12
10 24 10
 
8 12 17

     ACROSS DOWN
1 Wounding or wittily 2 Blacksmith’s
    
 WORDWHEEL N B
pointed remarks (5)
4 Noxious gases (5)
8 British county dissolved
block (5)
3 Popular trend that
attracts growing
Using only the letters in the Wordwheel, you have
  ten minutes to find as many words as possible,
E U in 1996 (4) support (9)
9 Garden pest (4) 5 Island in the
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters D 10 Cruel dictator (6)
Mediterranean (5)
6 Drop a hint (7)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
T A 11 Sluggish (4)
12 Jar of glass or porcelain (4)
7 Imagine, see in
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
S O 13 Affect with wonder (5)
one’s mind (9)
9 Monarch (9)
14 Lengthy (4)
QUICK CROSSWORD 1 6 2 2 4 8 1 11 Bathsheba’s
L O A N S S H O R T
4 8 3 7 1 2 5 9 6 SUDOKU         
16 Embedded part (4)
18 Halogen element (6)
son (7)
O Y T C V R
5 7 8 9 1 3 6          15 Coming next after
C O R D O B A E X E 2 9 6 7 7 3
         19 Thomas ___, German the eighth (5)
A R L R A 4 8 9 5 1 writer (1875-1955) (4)
L A T H E P L A I D 2 3 1 5 4 1 3 2
         17 Give a speech (5)
         20 Country, capital Teheran (4)
E
W I N C E
L
S A L V E
8
3
7
4
9
8
7 3
6 3 9
WORDWHEEL          21 Prime minister of India
A A X Q L         
V A N T R U F F L E
1 2 5 9 8 2 7 The nine-letter word was from 1947 to 1964 (5)
7 2 3 9 5 8 6 1 4         
E C O A E G
JUSTIFIED         
22 Heavenly messenger (5)
R O Y A L D I Z Z Y 6 5 8 4 9 7 8
CITYA.M. 17 FEBRUARY 2011
Impotence of
Serie A must
rile Gattuso
COMMENT
FRANK DALLERES
S
O WHAT really riled AC Milan
pitbull Gennaro Gattuso
enough to make him pick a
fight with Joe Jordan, a man
whose missing front teeth are a per-
manent testament to his grizzled
fearlessness?
Insults, as the Gattuso camp sug-
gest, perhaps. But this was evidently
a man also tormented by defeat, by
the humiliation of being outplayed,
outfought and well beaten in front of
his team’s own fans.
And, without delving too far into
amateur psychology, perhaps
Tottenham’s triumph poured salt on
an already raw wound: that caused
by English dominance of Italian sides
in the Champions League.
Remember when beating the
cream of Serie A was an exotic treat?
Manchester United’s comeback at
a Zinedine Zidane-led Juventus
(right) on the way to lifting the tro-
phy in 1999 was met with rapture.
When Arsenal routed Inter Milan 5-1
at the San Siro in 2003, their joy was
Pietersen thrilled at the opportunity
to act as England’s emergency opener
▲
CRICKET
BY JAMES GOLDMAN
ENGLAND batsman Kevin
Pietersen insists he is ready to
embrace the role of emergency
World Cup opener.
Pietersen, who has played the
vast majority of his 110 one-day
internationals at No4, was pro-
moted to the top of the order as
England struggled to a narrow
SPORT | IN BRIEF
Heidfeld given Renault drive
FORMULA ONE: Nick Heidfeld will drive
for Renault for the foreseeable future
after it was announced that the German
is to replace the injured Robert Kubica.
“I’m motivated and can’t wait for the
season to begin,” said Heidfeld.
Klasnic strike sees Bolton past Wigan
FOOTBALL: Bolton booked an FA Cup
fifth-round FA Cup tie with Fulham as
Wigan were beaten by a second-half
strike from Ivan Klasnic. The decisive
moment came in the 66th minute when
the Croat rifled beyond Mike Pollit.
matched only by shock at the result.
Nowadays it seems humdrum in
comparison. Italian teams no longer
frighten English teams like they did.
It is no wonder going by recent sea-
sons. Last term United ended Milan’s
hopes in a 7-2 aggregate drubbing.
The previous year all three Italian
clubs were dumped out at the last 16-
stage by English opponents. And the
term before that every Serie A team
to reach the knockout bowed out
upon meeting Premier League sides.
Inter are the only team to buck the
trend, beating Chelsea last season on
their way to a historic treble. That
can be put down to the Jose
Mourinho factor, however, given
their relative weakness this year – as
ruthlessly exposed by Gareth Bale
and Tottenham themselves at White
Hart Lane in November.
Now that the Portuguese
alchemist has fled to Spain, however,
normal service has resumed – and
how. So superior are English teams
now that Milan, three points clear at
the top of Serie A, proved no match
on their own ground
for Tottenham, a
team who may very
well not even finish in the Premier
League top four.
Gattuso was a part of the Milan
side that won the 2003 final on
penalties against Serie A rivals
Juventus. How long ago that must
seem now.
warm-up victory over Canada yes-
terday.
The South African-born star
made 24 on a typically slow
Bangladeshi wicket, which hardly
rendered the experiment an
unqualified success. Indeed, it was
ironic that England were bailed
out by the batting of the demoted
Matt Prior, who made 78, and the
bowling of a fit-again Stuart Broad
who took five for 37 as they
sneaked home by 16 runs.
Results
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email sport@cityam.com
Sport 27
Milan star cites
TALE OF THE TAPE: JORDAN V GATTUSO
provocation but
facing long ban
FOOTBALL
▲
BY JAMES GOLDMAN
EUROPEAN chiefs will meet on
Monday to decide on an appropri-
ate punishment for AC Milan cap-
tain Gennaro Gattuso.
The 33-year-old shoved
Tottenham assistant manager Joe
Jordan in the face following a sec-
ond-half altercation with Steven
Pienaar and then headbutted the
59-year-old after the final whistle.
Gattuso’s agent, Claudio
Pasqualin, said Jordan had pro-
Joe Jordan NAME Gennaro Gattuso voked the midfielder by calling him
Jaws; The Shark NICKNAME Ringhio (AKA ‘Growl’) a “f***ing Italian bastard”.
59 AGE 33 A long ban looks likely for
Cleland, Scotland BIRTHPLACE Corigliano Calabro, Italy Gattuso. Chelsea’s Didier Drogba
6ft 1in HEIGHT 5ft 9 1/2in was banned for six European
Bruising centre-forward REPUTATION Belligerent midfielder matches – two of them suspended –
Spurs keeper Milja PREVIOUS Sent off for slapping for raging at the referee and swear-
Aleksic broke his jaw in Zlatan Ibrahimovic in a ing into a live television camera fol-
altercation with Jordan 2003 match lowing their Champions League
elimination at the hands of
Barcelona in 2009.
"Swing low,
sweet Charidee''
Come and swing a club in aid of the Wooden
Spoon and challenge the ‘Tiger’ in you.
Our ‘Pebble Beach’ Golf Competition has tee’d off this week at City Golf.
Pietersen will remain as opener
with captain Andrew Strauss for It’s only £10 to play 5 virtual holes (Stroke Play) all
the tournament which starts on of which goes to this worthy cause; sponsored by
Sunday and said: “It’s really excit- Saxo Bank, and hosted at:
ing – a nice positive move going
into the World Cup.” City Golf, 40 Coleman Street, EC2R 5EH.
It’s not the first time England
have tinkered with their opening
partnership on the eve of a major Just email ElliotLake@citygolfclubs.com to book your one hour
tournament. In 1999 Nasser simulator experience.
Hussain ousted Nick Knight at the
last minute and they failed to The competition runs over six weeks and our current leader is
make it out of the group stages. John Connolly.
There is no limit as to the number of times you can enter.
1st prize
KF;8PËJ;@8IP A custom set of 8 Irons and the chance to mingle with
.%+,gdlec\jjjkXk\[ rugby legends at the Prize Giving and Q&A on 22nd March.
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 Sport
28 CITYA.M. 17 FEBRUARY 2011

UEFA TO PROBE GATTUSO

AFTER JORDAN HEADBUTT
MILAN’S FIERY CAPTAIN
FACES LONG EURO BAN: P27

WORLD BEATERS
KEY MOMENTS | GUNNERS STUN BARCA

Mighty Barcelona are defeated as Arsenal come

from behind to reward their manager’s gamble

After a flying start that 0-1: Messi punishes Arsenal for allowing
reaped no reward,
ARSENAL 2 Arsenal were gradually him to run at them by releasing Villa, who
coolly sweeps a finish under the advanc-
passed to death by the
Catalan side, who had ing Szczesny in the 26th minute
BARCELONA 1 lost just once in 35
games before last night,
until Wenger withdrew
▲

FOOTBALL Alex Song for Arshavin

BY FRANK DALLERES, EMIRATES STADIUM
ARSENAL manager Arsene Wenger
toasted “a special football night”
after late goals from Robin van
Persie and Andrey Arshavin earned
them a momentous Champions
League triumph against the side he
rates the best in the world.
The Gunners were headed for a
deserved defeat in this last-16 first
leg contest, owing to a ruthless first
half David Villa finish, until
Wenger threw all caution to the
wind for the final quarter of an
hour.
Van Persie punished Victor
Valdes for leaving his near post
unguarded by lashing home an
equaliser from the tightest of
angles, and Arshavin completed the
comeback with seven minutes to
spare with a calm steered finish
after a rapier-like team breakaway.
“I am hugely delighted because I
believe it was a special football
night,” said Wenger. “The game
promised a lot and absolutely ful-
filled the promises. I’m very proud
for Arsenal because everyone urged
us to play differently to our nature.
I believe more than pride it can
strengthen the belief in our philos-
ophy, and that’s most important.”
and went for broke in
the closing stages.
“I wanted to go for it
offensively,” he added.
“It could have back-
fired, to 2-0 or 3-0 to
them, but it worked. We
had to take a gamble.”
Arsenal’s comeback
echoed last year’s quar-
ter-final, in which they 1-1: With 12 minutes left Van Persie final-
scored twice late on to
snatch a draw at home. ly converts a chance, and it’s from the
The return leg in Spain, how- tightest of angles, his low drive somehow
ever, saw Lionel Messi score four sneaking in at the near post
times in a brutal rout, and Wenger
is refusing to accept favourites sta-
tus ahead of the trip to Camp Nou
in three weeks.
“Barcelona are still favourites but
now we know we can beat them,”
he said. “Tonight’s result gives us a
chance to go to Barcelona with
belief. We played the best team in
the world, and we managed to beat
them.”
Gunners captain Cesc Fabregas
went even further than his manag-
er in his praise for his former club,
but refused to get carried away.
He said: “They are the best side in 2-1: Wilshere feeds Fabregas whose per-
football’s history in my opinion. It’s Arshavin struck 15 fect pass sets Nasri free, the Frenchman
a nice victory. It will give confi- minutes after coming cleverly passes square to Arshavin who
dence to the team but that’s all.” on as a substitute
Pic: ACTION IMAGES sidefoots home with Barca all at sea

Hearn will fight to block West ICC bans team officials from
tweeting during World Cup
Ham Olympic Stadium move that possibility is something we are
▲

CRICKET
definitely interested in,” said ICC
could do to the League One outfit. tickets would seriously THE ICC HAVE imposed a blanket ban spokesman James Fitzgerald. “This is
▲

FOOTBALL
LEYTON ORIENT chairman Barry
Hearn has stepped up his campaign
to prevent West Ham completing
their proposed relocation to the
Olympic Stadium, urging Prime
Minister David Cameron to block a
move he believes could put his club
out of business.
Hearn (right) has written to
Cameron, Mayor of London Boris
Johnson and other ministers asking
them to delay rubber-stamping West
Ham’s bid while an investigation is
held into the potential damage it
Orient’s chairman, who is consider-
ing seeking a judicial review of the
decision to grant the stadium to the
Hammers, fears his team’s atten-
dances will be slashed if the
Premier League club moves to
within little more than a mile
and carries out plans to offer
discounted tickets.
“The government has a
responsibility to take into
account all the effects of any
ruling they take,” said Hearn.
“To have West Ham on our
doorstep offering discounted
bring into question the sur- on team officials tweeting during just a precaution, it’s not something
vival of Leyton Orient.” World Cup matches in a bid to cut out we are overly concerned about. But we
West Ham, mean- any possibility of the social network- do feel a team manager’s phone
while will have to ing site being used as a tool for poten- should be used for operational pur-
wait at least another tial corruption. poses only during matches.”
12 days before Following on from the spot-fixing Kevin Pietersen was fined an undis-
learning whether scandal involving Pakistan, the gov- closed sum last year by the England
their bid will get erning body have decided to elimi- and Wales Cricket Board for a Twitter
government nate the possibility of coaches and tirade which followed a decision to
backing. A for- officials leaving themselves open to drop him from the one-day team,
mal statement corruption claims, however baseless, while Aussie opener Phillip Hughes
has been delayed as a result of tweeting. endured the wrath of Cricket
until after the “As recent events have shown, the Australia when he announced that
Pa r l i a m e n t a r y ICC has a zero-tolerance approach to he’d been dropped from the third
recess. corruption. Anything that can negate Ashes Test in 2009.