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Meet Mark Carnflown in to save t

IN APPOINTING Mark Carney the new governor of the Bank of England, thegovernment has found an ex-GoldmanSachs director comfortable with gar-nering the views of the City yetunafraid of standing his ground attimes of conflict. The Canadian famously clashed with

JP Morgan chief Jamie Dimon after afierce disagreement over the new Basel III regulations designed to safe-guard the global financial sector. At the heart of an evolving battle of

macro-prudential regulation, follow-ing the most severe financial crisis inhistory, Carney is determined andspeaks his mind.

The reform agenda is being pursued with a legitimate effort to increase theresilience of the system in the mostefficient way possible, he told theEuromoney website last month.

The interests of the private financialcommunity should be absolutely aligned with those of the regulatory community to grow the real economy in a sustainable way. And the moreenlightened members of the financialcommunity have that perspective, hesaid, in an apparent jibe at his neme-ses.

His forthright approach earned himrespect among global officials. If Mark Carney had a run in with JamieDimon, then I have every sympathy forhim, former chancellor AlistairDarling told Channel 4 last night. And the Bank of Englands Andrew

Haldane has already clashed with hisnew boss. I thought Haldanes speech

was uneven, Carney said after theBanks executive director of financialstability questioned the complexity of Basel III. Basel I was simple and itdrove us off a cliff. Haldanes conclu-sion is not supported by the properunderstanding of the facts.

Mark Carney is one of the leading globalfigures in mending post-crisis regulations

2 NEWS: THE CITY HAS A NEW KING

BY JULIAN HARRIS

To contact the newsdesk email news@cityaTUESDAY 27 NOVEMBER 2012

The pair will need to patch up theirdifferences if they are to work togetheron the Banks new regulatory responsi-

bilities over the City. Carneys term will be a shorter than expected five years, yet will cover a crucial period asthe Bank radically extends its remit

beyond monetary policy.Born in Fort Smith, Canada, in 1965,

Carney went on to study at Harvardand Oxford, meeting his British wifeDiana Fox while taking his post-gradcourses.

Both are economists, and have anenvironmentalist bent having workedon issues such as climate change.

The new jobs website for London profeCITYAMCAREERS.com

CARNEYS VIEW

VIJAY KRISHNASWAMYHYMANS ROBERTSON

We see this as an excitingand bold step for the Bank ofEngland. Mark Carney is awell-respected financial fig-ure with a strong trackrecord.

PHILIP SHAWINVESTEC

Mark Carney is a surprisechoice but he is highly respect-ed, and experienced, regulat-ing the Canadian bankingsystem and chairing the G20sFinancial Stability Board.

MARTIN GILBERTABERDEEN ASSET MANAGEMENT

The appointment is astute. Hecomes with strong internationalcredentials as a board memberat the Bank of InternationalSettlements and as FinancialStability Board chair.

NEIL WILLIAMSHERMES

Carney is a highly crediblechoice for both the policyestablishment and nancialmarkets. He has helped steerCanada to be the G7s bestrecovery-rate-economy.

KATJA HALLCBI

Carneys strong track record asthe Canadian central bank gov-ernor and extensive experiencein nancial regulation mean heis well positioned to guide theUK through challenging times.

ROBERT WOODBERENBERG BANK

Carney is an excellent choicefor BoE governor, bringing atop quality CV and a factorthat Paul Tucker lacked: hecomes from outside the Bankof England.

DOUGLAS MCWILLIAMSCEBR

The task for Carney is toknow when to overrule hisunderlings. He will get a betterpress if he can persuade themto agree, but it is more impor-tant for him to get it right.

HOWARD ARCHERIHS GLOBAL INSIGHT

The appointment of Carneylikely reects the view that itis a good time to have a com-plete new broom within theBank of England following SirMervyn Kings dominance.

A critic of the USVolcker Rule onseparating bankingoperations. It is nottruly accurate to saythey [financial crisisevents] prove thatsomething systemic[was the cause], hehas said.

WHAT THE CITY MADE OF GEORGE OSBORNES LATEST APPOINTMENT

TO my great surprise, GeorgeOsborne has just pulled off anamazing hire. Appointing anew governor of the Bank of

England was always going to beOsbornes most importantdecision. I thought the chancellor

would go for the easy choice I was wrong. His wooing of MarkCarney, who will shake up theBank and draw a line under thefailures of the financial crisis, wasinspired. Within the bounds of themainstream consensus, he is the

best possible governor andfinancial regulator that Britaincould possibly hope for right now.

The fact that he is not British will make his communications with the public more challenging,especially when tough decisionsneed to be taken but it sends asignal to the world that the City remains global and open, aninternational marketplace at theheart of a trading nation.

His appointment will guaranteea coherent and stable approach. He

wants to reform finance to makesure it doesnt explode every few

years and to make sure that if firms do go bust, special wind-down and resolution procedureskick-in, protecting taxpayers fromhaving to bail out banks.

Crucially, however, he is a toughreformer, not a vandal. He is nosoft touch but neither does he

want to turn Canary Wharf into a ghost town. He oozesreasonableness. He doesnt want todestroy universal banks, unlikesome in Britain. His appointmentshows Osborne still wants bigfinancial firms to be based here.Carney rightly doesnt like the

Volcker rule, so beloved of banker- bashers; the Canadian, whoactually knows what he is talkingabout, sees that one cannotdistinguish between prop tradingand hedging. He wants to reform

behaviour, reduce leverage andimprove supervision, not ditchscale and complexity for the sakeof it. He is too confident in BaselIII but at least that is a possibleframework. Most important of all,he understands the trade-off

between making banks safer and

EDITORSLETTER

ALLISTER HEATHtheir ability to lend. He is a breathof fresh air. It is a tragedy that he

wasnt around before the flawed Vickers Commission, whosefindings wont solve anything.

Carney is hardly perfect. I partly disagree with his approach tomonetary policy, though heunderstands the danger of

bubbles. The Canadian economy isnot in as good a state as some haveargued. But Carney, unlike some,listens to his most interestingcritics: he recently sought toaddress (though ultimately dismissed too readily) the concernsof Austrian school economists, forexample. Carney will also be afearless, independent figure who

will happily contradict Osborne.Brussels second rate regulators

will suddenly face a formidablealternative. Yesterday wastherefore an unusually good day for the British economy, for theCity and for all of our future jobsand prosperity.

CITY A.M. NEEDS YOUDear readers, as a quality newspaper provided free to arecord number of readers, we

would very much like to find out alittle more about you. I know thatmany of you will be keen to helpus so please go to

www.cityamsurvey.com and you will be guided through a simplequestionnaire. To thank you fortaking the time to help us,everybody who fills in the survey

will be entered into a draw for anall-inclusive trip for two to one of Sandals luxury resorts (see fullterms and conditions on page 7).Thanks again to all of you for yourexceptional loyalty and trust, for

which we are extremely [email protected] me on Twitter: @allisterheath

New governor pullsno punches in hisdetermination to fixthe financial crisis

The cost of freshregulations, such asrequirements to buildup capital buffers, isnot culpable of hittinggrowth so he arguesIn many cases, theproblem is theabsence of creditdemand, he said.

An advocate offlexible regulation wisupervision rather thaone-size-fits-all rules.We are careful not toforce absolutecommonality in thefinancial system as thwould reduce diversitin the market, he saidof new global moves.

An unusually brilliantmove by Osborne willgive City a huge fillip

Age:47Born:Fort Smith, Canada, 1965 Academia:Harvard (economics),Oxford (D.Phil at Nuffield College)Career:13 years at Goldman Sachs,senior associate deputy minister offinance (in Canada), and governorof the Bank of Canada.Chairs the Financial Stability Boardand is on the board of the Bank ofInternational SettlementsPersonal:Married to British wifeDiana Fox, with four daughters.

M ARK CARNEYCV

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TUESDAY 27 NOVEMBER 20123NEWS: THE CITY HAS A NEWcityam.com

the Canadian

UK economy

WHEN he takes up the mantle at theBank of England, Carney will bestepping into shoes filled by 119others over 319 years, since firstgovernor Sir John Houblon.

Carney succeeds Sir Mervyn King,

who took the role on in 2003, andled the institution through the UKs

worst recession for decades. SirMervyns predecessor was heavy-smoking Eddie George, known asSteady Eddie, who held the roleduring the rapid expansion of thelate 1990s. Earlier bosses includeMontagu Norman, who ran the bank

during 1920-1944, overseeing theexit from the gold standard.

THE Bank of England underMark Carney will be far morepowerful than it ever has beenunder Sir Mervyn King. It islikely he will have to restructurehis top team to cope with the joband take a role akin to that of acorporate chairman, withexecutives of each branch of theBank below him.Carney is expected to appointtwo new deputy governors, inaddition to the two currently employed. The governor willcontinue heading the centraltask of setting monetary policy controlling interest rates and theprinting presses in an effort tomanage demand in the economy and so inflation.The new powers being given tothe Bank include control overfinancial policy.Carney will chair the financialpolicy committee (FPC) which ischarged with maintainingfinancial stability and stopping

bubbles building. For example, it

will be able to raise the level of capital banks hold againstcommercial property loans if itfeels the market is overheating.The Financial Services Authority is being broken up, with part of its powers going to the newPrudential Regulation Authority

which will be run by the Bank. Itis charged with promoting thesafety and soundness of firms,including insurers and someinvestment firms.Finally, a new chief operatingofficer is due to be appointednext year, and may become thefourth deputy directorresponsible for the day to day running of the Bank, includingfinance, IT and HR roles.But the Banks power is notunlimited the government stillsets the inflation target and theinstruments the Bank can use totry to achieve it, and alternativepolicies like Funding for Lending

were driven forward by theTreasury and the chancellor.

The Bank of Englands hugenew powers over UK finance

MARK CARNEY

OTHER GOLDMAN ALUMNI WHOVE RISEN

William C DudleyPresident of New York FedJoined Goldman Sachs in1986 where he was amanaging director and thefirms chief US economist.

Mark PattersonChief of st aff to the USTreas uryWas a Goldman vicepresident an d manag ingdirector from 2004-20 08.

Michael CohrsMember of the FinancialPolicy Committ eeWorked for Goldman inNew York and London inthe 1980s.

Olusegun O AgangaNigerian minister fortrade and investmentsWorked in hedge fundconsulting and Europeanprime brokerage.

Mario DraghiEuropean Central BankPresidentFormer vice chairman andmanaging director ofGoldman Sachs International

Hank PaulsonFormer US TreasurysecretaryThree decades atGoldman, rising to chiefexecutive.

Mario MontiItalian prime ministerWas once employed as anwas an internationaladviser to Goldman.

Gary GenslerChairman of the CFTCJoined Goldman Sachs in1988 and spent 18 yearsthere, inculding timespent in Tokyo.

Robert ZoellickChief executive of theWorld BankVice chairman,international at GoldmanSachs.

Stepping into a historic banking job

ANDREW BAILEYTHE HEAD OF THE PRUDENTIALREGULATORY AUTHORITY

CHARLES BEANDEPUTY DIRECTOR FOR MONETARYPOLICY, STAYING UNTIL JUNE 2014

NEW COOA NEW CHIEF OPERATING OFFICERWILL RUN AREAS LIKE HR AND IT

PAUL TUCKERDEPUTY DIRECTOR FOR FINANCIALSTABILITY, NEXT MOVE UNCERTAIN

BY BEN SOUTHWOOD

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MARK CARNEYS succession to theBank of England throne will be thefirst step in a revolution at the top of the central bank, analysts forecast yes-terday.

Deputy governor for monetary poli-cy Charlie Bean will leave after a year,chancellor George Osborne con-firmed in his announcement to par-liament. And Paul Tucker, deputy governor for financial stability andformerly the frontrunner to succeedSir Mervyn King as governor,is only contracted tocontinue in his jobuntil February 2014.

This appointmentopens up an interest-ing question on thetwo deputy governors,said Philip Shaw atInvestec. Even with aone year extension,Charlie Bean is set toretire in June 2014.

It is not clear that

Osbornes hir

could herald aBank shake uBY BEN SOUTHWOOD having missed the governors job,

whether Paul Tucker will remain inhis post beyond February 2014.

Yesterdays appointment could wellusher in a period of significantupheaval at the Bank of England.

Robert Wood at Berenberg Bank saidthat Carneys first priority might be toconvince Tucker to stay longer withthe Bank. If both deputy governors

were to leave shortly into Mark Carneys tenure, it would mark a hugeloss of experience at the top of theBank, he said.

But before any of this, Carney willface a grilling on monetary andfinancial policy from Andrew Tyries Treasury Select Committee, on his

own request.MPs are likely to quiz the

Canadian on his plans for ratespolicy, and his views on the quan-

titative easing programme.

GUESTCOMMENT

MARTIN BACCARDAX

Paul Tucker hadbeen seen asthe frontrunnerfor the job

TUESDAY 27 NOVEMBER 20124 NEWS: THE CITY HAS A NEW KING cityam.com

Carney is a great choice - but he didnt savIN hiring Mark Carney, GeorgeOsborne has ensured that Britain will stay at the forefront of global

financial market regulation. Thenew governor will be a game-changing counterweight to European

banking reform and a man certain tokeep the UKs f inancial services sector

at the centre of its economic recovery.His chairmanship of the FinancialStability Board and his directorships atthe Bank for InternationalSettlements (the central bank for cen-tral banks) means Britain will now have the most influential and respect-ed regulator batting for it during whatcould be the biggest round of legisla-tive and regulatory changes the indus-try has ever known. Carney will also beable to offer a persuasive challenge

and alternative to the EUs plans toestablish control over financial servic-es regulation across Europe.

Having Sir Mervyn King or his Paul Tucker argue for City of London excep-tionalism when both were fairly ornot tainted with the worst excessesof the crisis was not the most effectivestrategy. Carneys role as head of theBank of Canada during the worst of the financial crisis not a single bank

received state aid nor was implicatedin any of the myriad financial marketscandals makes him an almost unim-peachable representative of the UKsinterest in EU negotiations.

Hes also a former banker whoknows the markets. He is trusted by the major players as a no-nonsense

professional who muddied his bootsin the same trenches, not someone who lectures them on morality froman ivory tower. Hes also famously unafraid of their judgement, having

withstood a furious tirade last yearfrom JP Morgan CEO Jamie Dimon.

But Carney is far from perfect. Hesleft behind the largest pile of Canadian personal debt on record andthe brewing ingredients of a housing

bubble some say could pop at any

moment. Hes been criticised for try-ing to use bank rhetoric to anchorinflation expectations but failing tohike interest rates for fear of inflatingthe Loonie and blunting the interna-tional competitiveness of Canadianexports. Canadas pristine record forfinancial market probity owes more to

the protective instincts of the Federalgovernment and the province of Ontario, home to the city of Torontoand the countrys biggest banks, thanto any form of central bank prescience.

Replicating his success in the UK seems unlikely. Canadas financialservices industry is tiny when com-pared to the global powerhouse that isLondon. Its economic insularity dur-ing the crisis owed more to the soaring

value of commodities and the

spillover from the billions in US stimu-lus spending than to any particularpolicy decision from Ottawa. Eventoday, Canada benefits for having its

biggest trading partner the US growing at a two per cent clip. TheUKs closest export destination, theEurozone, is sinking into recession.

But without a strong, confident and well-managed City, the UKs future would be too bleak to contemplate. The simple truth is that the Bank of Canada governor was the best choiceavailable to preserve and strengthenthe UKs key economic asset. Martin Baccardax is a Canadian journal-

ist and former finance professional. He is the European business editor of the International Business Times at www.ibtimes.co.uk

Intrade to cut off bets from USIntrade, the leading prediction market forbets on events from elections to box-office receipts, said it would cut off UScustomers next month in the face of aregulators lawsuit. The Dublin-basedonline marketplace was regularly cited asa barometer of the fluctuating odds of thecandidates during the US presidentialcampaign.

Urban Decay scrubs up for LOrealLOreal has made a foray into the make upmarket for younger consumers with thepurchase of niche US brand Urban Decay.The French cosmetic giant boughtCalifornia-based Urban Decay fromCastanea Partners, a private equity firm,

for an undisclosed sum. The brand wascreated in 1996 by Sandy Lerner.

Civil servant sues DfTKate Mingay, one of the three civilservants suspended over the West Coastrail bid fiasco, has filed legal proceedingsagainst the Department for Transport overthe way she has been treated. Apreliminary High Court hearing isscheduled for Thursday. She isbeing represented by Mishcon de Reya.

US Airways says Sandy cost $35US Airways Group said yesterday thatSuperstorm Sandy cost the airline $35min profits, as the storm contributed to adecrease in bookings that stretched intoNovember. The carriers bookingsdeclined by 13 per cent in the severaldays before and after the storm,

compared with a year ago.

WHAT THE OTHER PAPERS SAY THIS MORNIN

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Mary Schapiro has been looking to stand down as SEC chairman for several months

Greek prime minister Antonis Samaras has seen interest rates cut

Elisse Walter willhead the watchdog

EUROZONE finance ministers andthe International Monetary Fundclinched agreement on a new debttarget for Greece last night in a

breakthrough towards releasing an

urgently needed tranche of loans tothe near-bankrupt economy, offi-cials said.

After nearly 10 hours of talks attheir third meeting on the issue inas many weeks, Greeces interna-tional lenders agreed to reduceGreek debt by 40bn, cutting it to124 per cent of gross domestic prod-uct by 2020, via a package of steps. They also agreed that the interest

rate on bilateral loans to Greece would be reduced by 100 basis

Eurozone finance ministers toallow Greece to cut its debt

BY HARRY BANKS points to 50 basis points above thecost of financing once Athens hasreached a primary surplus of 4.5per cent of GDP, a source familiar

with the talks said. The deal should open the way for

a major aid instalment needed to

recapitalise Greece's teetering banks a nd enable the governmentto pay wages, pensions and suppli-ers in December.

Greece could receive up to 44bn,although it remains unclear if thefull amount will be paid in one go.

Greek finance minister YannisStournaras said earlier that Athensfulfilled its part of the dealthrough tough austerity measures,now lenders needed to do theirpart.

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THE HEAD of Americas financial watchdog will be replaced by aDemocrat next month, the WhiteHouse said yesterday, in the first reg-

ulatory reshuffle since PresidentBarack Obamas reelection.Mary Schapiro, a registered inde-

pendent voter who has chaired theSecurities and Exchange Commissionsince January 2009, is stepping downon 14 December.

She will be replaced by Elisse Walter, who has sat on the SEC boardsince 2008 and whose ownterm is due to end next

year. Walter served a short

spell as interim chairman before Schapiro wasappointed during thedepths of the banking cri-sis.

The SEC is stronger, andour financial sys-tem is safer and

better able toserve the

American peo-ple thanks in

Schapiro stepsdown from SECchairmanship

BY MARION DAKERS large part to Marys hard work,President Barack Obama said yester-day.

Speculation had been rife formonths that Schapiro would leavesoon after the November presidential

election. Walter, a Harvard law graduate withdecades of regulatory experience,takes the reins as the SEC grapples

with a raft of new rules in the wake of the Dodd-Frank Act to separate invest-ment and retail banking operations. The SEC, which came under fire for

its handling of the crisis sparked by Lehman Brothers collapse in 2008,

has logged record numbers of enforcement actions in recent years as it attempts to clean upthe financial sector. The SECs five commissioners

are appointed by the Presidentfor five-year terms. No more

than three commissioners can belong to the same political

party, to try and keep the reg-ulator non-partisan.

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BARCLAYS shares dropped sharply yes-terday after a sizeable sale of warrants

by Qatar Holdings, which investedheavily in the bank at the height of thefinancial crisis.

Goldman Sachs and Deutsche Bank bought the warrants which can con- vert into shares at a later date fromthe fund, and aimed to sell up to 303mshares in Barclays to avoid being left

with a residual position. The sale of 80 per cent of the equity in

the warrants would cover the cost of the instruments, though some war-rants were also sold directly, reducingthe amount of stock that the banksneeded to sell.

By not selling the whole position, the banks generated speculation that thestock was overpriced.

Barclays shardrop on sale oQatari warrant

BY TIM WALLACE However bank sources close to thedeal insisted there was no problem withdemand rather, they suggest the

banks may simply be interested in hold-ing the warrants They claim to be com-fortable with the result.

Goldman Sachs and Deutsche Bank declined to comment. Barclays sharesfell 5.39 per cent on the day.

Megafon set to float in Londonas investors line up for shares ALISHER Usmanovs Russian

telecoms group Megafon appearedto be on track to successfully pulloff its 1bn plus flotation

yesterday, with banks saying thecontroversial share sale hadattracted sufficient investordemand.

The listing of Russias second-largest mobile phone firm wasnearly killed at its inception

when the intention to floatannouncement was accompanied

BY DAVID HELLIER by news that Goldman Sachs, theUS investment bank, had steppedaside from the deal despite

previously being tipped to be thelead bank.Sources at Goldman Sachs

suggested the bank was perturbed by corporate governance issuesrelating to the ownershipstructure of an umbrella company that will own Megafon and otherUsmanov assets, including thetycoons shareholding in Arsenalfootball club.

Yesterday it was suggested that

the share sale was boosted when alarge global investment fundplaced an order for more than a

tenth of the shares on offer.Megafon is trying to sell globaldepositary receipts in London, theUS and Moscow at $20 to $25,raising between $1.7bn and $2.3bn(1.06bn and 1.44bn) and valuingthe business at $11.2bn to $14bn.

The books on the deal are set toclose later today.

Banking sources said they expected pricing to be towards thelower end of the range.

TUESDAY 27 NOVEMBER 20126 NEWS cityam.com

Barclays PLC

26 Nov20 Nov 21 Nov 22 Nov 23 Nov

245.0247.5250.0252.5255.0

240.0242.5

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FUND manager Aberdeen AssetManagement yesterday said it hadupped its full year dividend payout toinvestors by 28 per cent, capping off a solid year of double digit revenueand profit growth for the FTSE 100-listed firm. Aberdeen, which was set up in the

granite city in 1983, took its finalinvestor payout up 37 per cent, giv-ing shareholders a full year dividendof 11.5p, up from 9p last year. This came despite a difficult and

uncertain year for markets, the firmsaid. The business has grown rev-enues consistently over the past few quarters while also keeping its cost base under control. Yesterday it reported that full year

revenues had shot up 11 per centover the year to 869.2m sendingits operating margin over the magic40 per cent mark.

Aberdeen hikdividend afterrevenue gainsBY MICHAEL BOW Chief executive Martin Gilbert yes-terday said emerging market debt

products would be a growth area forthe firm. Aberdeen recently attempted to

slow the flow of money into itsemerging market equity funds but

yesterday reported 1.3bn inflows.Its higher than we would like.

Were looking at other measures toslow it down without hard closingfunds, Gilbert said.

Aberdeen remains condent in sales of its equity-based products, butalso looks to increase the contribution from other asset classes in comingmonths. Its agship EM Debt fund has now passed the $2bn milestone,and Aberdeen has recently strengthened its global property platform.

ANALYST VIEWS

The base case price to earnings does not feel overly expensive to us andif you believe management can achieve its EMD ambitions and possibly

organic growth in other areas, then Aberdeen is still arguably cheap. It isnonetheless not as cheap as it once was.

Having hit our target price, we upgrade our target price to 380p based onpreliminary estimate of an uplift in current dividend driven by stronger

earnings per share momentum compared to our number and consensus. The contin-ued ow into pooled funds increases the revenue yield on managed assets.

HOW WELL WILLABERDEEN PERFOFUTURE?By Michael Bow

HALEY TAMCITI

DAVID MCCANNNUMIS

ARUN MELMANECANACCORD GENUITY

Aberdeen Asset Management PLC


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Businesses help people work their way out of povertyPoor people are business people. To grow their small business they need capital but...

THE REALITY

3. GEOGRAPHICThe commercial banksare too far away. They are concentratedin the cities whereas the majority of peopleliving in povery are in rural areas.

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3 BIG BARRIERS TOACCESSING THIS CAPITAL:

THE OPPORTUNITY

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SOCIAL ACCESSOur loan serviceis designed withpoor people inmind. Our ATMswith ngerprintrecognition alloweasy and safe access.

ECONOMIC ACCESSWe use trust as a guarantor.Groups of clients guaranteeeach others loans.

OPPORTUNITYINTERNATIONAL BREAKSDOWN THESE BARRIERS:

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more people in GHANA, MALAWI, MOZAMBIQUE,RWANDA and UGANDA (the ve countries we aresupporting with appeal funds).

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o poverty.

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CHRISTMASAPPEALCITY A .M.TUESDAY 27 NOVEMBER 2012cityam.com/appeal

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MAGIC Circle law firm Slaughterand May said yesterday it haschosen disputes resolution headRichard Clark as its nextexecutive partner, stepping intoGraham Whites shoes when heretires next year.

Clark will take upresponsibilit y for the firmsoverall management strategy

from 1 May 2013, having joinedSlaughters 30 years ago as atrainee.

Since making partner in 1991Clark has specialised in bankingand international trade disputes,as well as fraud and global assetrecovery cases.

Deborah Finkler will take overClarks place as head of disputesresolution.

LATIN Americas biggest bank ItauUnibanco is relocating its wholesaleoperations to London, taking advan-tage of the relative weakness of UK and EU banks which are shrinkingmuch of their operations The bank is relocating its wholesale

arms headquarters to its City offices,according to a note sent to clients andseen by City A.M., and has already moved 20 staff from Lisbon toBroadgate Tower. They includes capi-tal market operations, investmentand corporate banking roles andtreasury operations. That takes the total UK workforce to

70, and Itau Unibanco is believed to beconsidering taking on more staff tocover roles including compliance.

The banks 100 European back officestaff will still be based in Portugal. The move stands in stark contrast to

many other major banks, which are

Brazilian bankexpands work

force in LondonBY TIM WALLACE cutting back in London the Centrefor Economics and Business Researchestimates more than 100,000 City jobshave been lost since the start of thefinancial crisis, with thousands moreset to go in the next year.

Quite simply, London is one of the worlds most important financial cen-tres, said a spokesman.

It is thought that the rapid growth of Latin American firms is also a driver of the move, pushing the bank to expandits geographic footprint.

Richard Clark joined Slaughter and May in 1982 as a trainee

Itau Unibanco Holding SA


31.50

32.00

30.5031.00

BRL 31.5023 Nov


Capita Financial Managersoff from FSA fine over ArcCAPITA Financial Managers,

which provides administration

services to asset managers, yesterday escaped a 4m fine but was publicly censured by the UKsfinancial watchdog for failing tomonitor client cash under its

wing.The company, which is a

subsidiary of Capita, escaped thefinancial penalty from theFinancial Services Authority afterthe watchdog said the company

would be unable to pay it. CFMhas already contributed 32m to a

BY MICHAEL BOW

BY ELIZABETH FOURNIER

compensation scheme.Investors were hit by losses

when funds CFM was supposed to be monitoring were suspended in

March 2009. CFM was AuthorisedCorporate Director to the twofunds, run by investment manager

Arch Financial Products, and hada duty to protect investors by monitoring the fund prices butfailed to do so until late in 2008. It

was discovered the funds wereinvested in highly illiquid privateequity assets, which meantinvestors struggled to get theircash out.

FSA director Tracey McDermott

said: Capita Financial Managershas major responsibilities inrelation to funds holding a very significant amount of investors

monies. However, its performancein relation to the CF Arch Crufunds fell well short of the FSAsrequirements.

A 54m payment scheme was setup last June to compensateinvestors who lost out.

The FSA said CFM would beunable to make its 32mcontribution to the scheme as wellas a fine. The firm had to rely onits parent firm Capita to help itpay the fee.

GERMANYS Deutsche Bank hashired up to 50 new front officestaff in Birmingham as the firmsefficiency drive forces it to look atless expensive operations centresthan London.

The fixed income and equity sales workers will focus on serving

smaller clients those which it may not have been cost effective to

Deutsche hires inBirminghamas it cuts back in expensive City

BY TIM WALLACE serve from the City, where officespace and salary costs are higher.

The 50 posts in Birmingham arelikely to be expanded in the comingmonths, while a similar process isunderway in the US, with staff

being taken on in Jacksonville,rather than the more expensivefinancial centre New York.

The bank is undertaking a 4.5bn

(3.64bn) savings programme, which includes London job losses.

Slaughter and May picks RichardClark as next executive partner

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WHICH COUNTRIES WOULD STRUGGLE TO COPE WITH NATURAL CATASTROPH

$0.78bnPOLAND

$10.23bnTURKEY

$5.35bnSAUDI ARABIA

$3.20bnEGYPT

$7.78bnMEXICO

$0.57bnCOLOMBIA

$12.68bnBRAZIL

$2.40bnCHILE

$2.64bnNIGERIA

$79.57bnCHINA

$0.08bnHONG KONG

$2.90bnPHILIPPINES

$14.12bnINDONESIA$1.41bn

THAILAND

$1.69bnVIETNAM

$19.72bnINDIA

$2.99bnBANGLADESH

* Figures indicate amount underinsured (UMETHODOLOGY

Money spenton insurance

Adjustment to account ordiferences in GDP levels

Adjustment to account ordiferences in GDP levels

Expected lossrom catastrophes

UNDERINSURANCE BENCHMARKHONG KONG0.0

POLAND-0.2

COLOMBIA-0.2

THAILAND-0.4

BRAZIL-0.5

MEXICO-0.7

SAUDI ARABIA-0.9

CHILE-1.0

CHINA-1.1

NIGERIA-1.1

INDIA-1.2

TURKEY-1.3

EGYPT-1.4

PHILIPPINES-1.4

VIETNAM-1.4

INDONESIA-1.7

BANGLADESH-2.6

11

HEAVY rain continued to bring mis-ery to swathes of the UK last night as the government locked horns

with the insurance industry over thefuture of domestic flood cover. A week of poor weather has closed

dozens of major roads, while somerail links are out of action and hun-dreds of homes have been affected.

But recent events have focussedattention on concerns that 200,000households at high-risk of flooding

will not be able to access insurancecover when the current deal runs outin June 2013. At the moment insur-ers offer universal cover in return forguaranteed government investmentin flood defences.

City A.M. revealed earlier thismonth that talks on a replacementagreement are at a standstill follow-ing Septembers cabinet reshuffleand yesterday the industrys repre-sentative body broke ranks to con-

firm that negotiations with thegovernment have hit an impasse.

Governmentslammed overflood insurance

BY JAMES WATERSON Nick Starling of the Association of British Insurers (ABI) said his mem-

bers wanted to push ahead with aplan to charge every UK household anextra 10 a year to subsidise a not-for-profit universal cover scheme. Butthe government has refused to pro-

vide the scheme with a temporary overdraft facility, making it very dif-ficult for it to go ahead.

No country in the world has a freemarket for flood insurance with highlevels of affordable cover withoutsome form of government involve-ment, Starling added.

Environment secretary OwenPaterson told the House of Commonsthat the ABIs statement was com-plete nonsense, although he admit-ted that finding a suitable solutionfor the affected homes remained aconundrum. The government is wary of commit-

ting itself to the industrys preferredscheme in case costs spiral out of con-trol. This years UK flood payouts are

expected to pass 1bn, according toaccountancy firm PwC.

SHOULD HOMES AT RISK GIVEN INSURANCE SUBSI

Interviews by Kasmira Jefford

It is very difcult to nd insurance whencontinually ooded out. It is up to the g

ment and locals councils to ensure that areas at ritected and some subsidy should be provided if th

These views are those of the individuals above and not necessarily those of their compan

ANTHONY LEECHAGRICULTURAL BANK OFCHINA

I dont think there should be a subsidy. Tlem we have in this country is there are

subsidies... My main concern about insurance is iavailable, so the issue of price is slightly differen

GEORGE BROWNSHELL

I think there should be some sort of suif bad systems of sewage and things li

and things are ooding then thats not the faultple that live there.

DAVE HARRISON10 EIGHTY

CITYVIEWS

NEWSTUESDAY 27 NOVEMBER 2012

Emerging economiesface catastrophe threat

COUNTRIES with high-growth

economies could see their progressderailed by natural disasters,according to research releasedtoday.

It finds that emerging nationssuch as Vietnam, China and Indiado not have enough insurance tocover the effect a major naturalcatastrophe, leaving the countriesat risk of long-term economicdamage if they are severely affectedby an earthquake or hurricane.

The research, commissioned by

BY JAMES WATERSON Lloyds of London from the Centrefor Economics & Business Research(CEBR), says China insured just 1.4

per cent of losses arising fromnatural catastrophes between 2004and 2011, with $208bn (130bn) of uninsured losses having a negativeaffect on economic performance.

This insurance gap has a hugeand lasting impact on the ability of

businesses, governments and peopleto recover from the earthquakes,hurricanes, flooding and forest firesthat affect us all every year, saidCEBR chief executive DouglasMcWilliams.

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LEHMAN Holdings is set to sell

apartment owner Archstone, itannounced yesterday, in a cashand shares deal worth roughly $6.5bn (4.05bn).

Lehman Brothers bought thecompany, which at the very peak of the housing boom was wortharound $22bn. But it will now get

just $2.7bn of cash and $3.8bn of shares from developer rivals

AvalonBay and Equity Residential. This will give the L ehman

creditors 9.8 per cent of Equity Residential and 13.2 per cent of

AvalonBay. The two buyers willsplit Archstone 60-40 in favour of Equity Residential.

The sale came af ter the firmsinitial plan to raise $3.45bn, in

what would have been the biggestUS real estate initial publicoffering ever. Lehman hadacquired the entire firm, but thetwo buyers pre-empted the listing.The transaction deliverssignificant return on theinvestment we made earlier this

year to fully control Archstoneand has generated immediate andconsiderable proceeds for our nextdistribution to creditors, saidLehman chairman Owen Thomas.

AvalonBay shares slid 1.7 percent in after-hours trading whileEquity Residentals fell some 1.5per cent.

Lehman set sell off biggeasset Archsto

BY BEN SOUTHWOOD

PUBLISHING company UBM willmove its tax base back to Britain by the end of the week after sharehold-ers overwhelmingly voted for thereturn from Ireland yesterday. The transition was emphatically

approved at a special meeting, with99.997 per cent of votes cast in favourof the move. The former owner of the Daily

Express newspaper, which now runsa successful events division as well asowning over 100 business-to-businessprint titles such as Property Week,moved its tax base to Dublin in 2008due to what it calle a less complextax system. It will now make aspeedy move back to theUK.

It is anticipated thatUBM will become tax resi-dent in the UK effective30 November 2012, thecompany said after themove was approved yesterday afternoon.

UBM had decided on the moveafter George Osbornemade changes to cor-

UBM flies backto UK after nearunanimous voteBY JAMES TITCOMB porate taxes in a bid to turn Britain

into a more competitive place to do business.

The chancellor is slashing tax onforeign earnings, and cutting corpo-ration tax from 26 per cent to 22 percent by 2014. This compares toIrelands 12.5 per cent rate.

Martin Sorrells advertising giant WPP is set to follow UBM when itsshareholders vote on a return to theUK next month, and the likes of drinks giant Diageo and pharmaceu-ticals firm Shire are also believed to

be considering a move.UBMs lawyers are now set to

finalise the move. Although the com-pany only generated around one-eighth of last years 972m inrevenues, it was founded in the UK

and has a long history in Britain. As well as the events and print

business, the company owns thePR Newswire service as well as a

business information arm. Itemploys around 6,500 staff

worldwide.

UBM, led by boss DavidLevin, has a UK history

SWISS bank UBS, which last week saw former trader Kweku Adoboli

jailed for a 1.4bn trading fraud, wasfined 29.7m by regulators yesterday for failing to prevent the scandal.

The Zurich based bank, which lostits chief executive Oswald Gruebelover the trading debacle, managedto reduce an original fine of 42.4mthe Financial Services Authority handed it by settling early.

The FSA also said a 16m audit by KPMG paid for by UBS and 34m the

bank clawed back from staff involved in the trading scandal including taking back bonuses and

UBS fined 30m by watchdogover 1.4bn rogue trader loss

BY MICHAEL BOW withholding 50 per cent of deferredpay had been mitigating factors.

Adoboli was given a seven-yearsentence last week for $2.3bn(1.4bn) of losses he racked upmaking bad trades. The fine is the third largest by theFSA in its history, following a59.5m fine for Barclays over Liborand a 33.3m for JP Morgan forfailing to segregate client money properly.

The FSA said UBSs controls wereseriously defective.

Separately, the Swiss financialregulator Finma said it may call onUBS to increase capital to back itsoperational risks.


A D a

i m l e r

B r a n

d

Floats like /Stings like.The new SL -Class.The new Mercedes-Benz SL -Class is the perfect balance of agilityand power. The aluminium bodyshell trims up to 110kg of f theweight, while the muscular new V6, V8 and V12 engines packa smooth punch. The lithe SL -Class. Beauty with a sting in its tail.

Official government fuel consumption gures in mpg (litres per 100km ) for the new SL -Class range: urban 16.6 (17.0 ) - 28.5 (9.9), extra urban 33.6 (8.4 ) - 46.3 (6.1 ), combined 24.4 (11.6 ) - 37.7 (7.5 ).

CO2 emissions: 270 - 169 g/km. Model shown is an SL 63 AMG at 124,025.00 on-the-road including panoramic vario roof at 735.00 and AMG Performance Package at 12,530.00 (on-the-road price includes VAT, delivery, 12 months Road Fund Licence,number plates, new vehicle registration fee and fuel). The SL -Class range starts from 72,520.00 on-the-road. Prices correct at time of going to print.

Kweku Adoboli was sentenced to seven years in jail

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AMAZON made 3.351bn in revenuesin the UK last year, private letterspublished by the governmentsPublic Accounts Committee (PAC)revealed yesterday.

Information shared by the webretailer with the committee, intend-ed to be confidential, revealed a 23per cent rise in sales on

Amazon.co.uk last year. The UKs website, which channels revenue to Amazons European headquarters inLuxembourg, made 2.4bn in 2010and 1.9bn the year before that. The public release of the figures is

against Amazons wishes. Andrew Cecil, Amazon Europes director of public policy, was grilled by PACmembers earlier this month over thecompanys tax arrangements. He

was criticised when unable toanswer questions about certain

Amazons UKsales revealedby committee

BY JAMES TITCOMB aspects of Amazons business, butpromised to share the figures on aconfidential basis. The news came as Amazon revealed

it was issuing debt for the first timesince 1999, in a bid to continue anenormous investment drive that hashit profits in recent months. The $3bn bond sale, which is being

handled by Goldman Sachs andMorgan Stanley, is believed to haveattracted a good level of demand.

UK e-tail is paying off all roundTHE UK component of AmazonsEuropean revenues is astartling figure. Amazons sales

hit 9.1bn (7.3bn) across thecontinent last year. The new datashows it took in 2.91bn, or almost40 per cent, from amazon.co.uk alone, and another 441m fromother UK business such as Lovefilm.

With Amazon getting 45 per centof its European income from the UK,despite dedicated websites forFrance, Germany, Spain and Italy, itneeds Brits loyalty. The new figuresalso show the VAT revenues broughtin by Amazons UK sales.

Amazon UKs corporation taxpayment of just 1.8m for 2011,thanks to a legal if convoluted taxstructure, generated politicaloutrage. It certainly made the caseonce again for a simpler tax system,

but as these figures also reveal, theliabilities in question are dwarfed by

the 416m in VAT generated last year by Amazon.co.uks sales. And for thelast two years these VAT revenueshave increased by more than 50 percent a year. Web sales are booming and thats a good thing all round.

The figures are also a reminder of Amazons wafer-thin margins. Itearned just 74m in pre-tax profit onits 3.351bn of UK sales, a bare 2.2per cent. The cost Amazon pays foreach sale is at the edge of sustainability. Consumers wouldcount the cost if it paid more tax.

BOTTOMLINE

MARC SIDWELL

Amazon.Com Inc


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LOYAL readers will remember thatThe Capitalist reported last monthon five sparring solicitors fromDLA Piper, Clyde & Co and SJBerwin clubbing together to com-pete in a black tie charity boxingmatch near St Pauls. The gloves are now firmly off

and The Capitalist is happy to reportthat Saturdays punch-up at theGrange Hotel has so far raisedover 23,000 for therenovation of Buhinga School inUganda.

No surprises that our

favourite Ed the ExecutionerEccles, a litigation associate atClyde & Co, came out on top in his

bout against Chris The Cremator Ashbourne, a spy tells The

Capitalist . Apparently thelawyer bashing went

down so wellthey area l r e a d y planning

the nextfight.

14 cityam.com

cityam.com/the-capitalistTHECAPITALISTRetail fever has struck again. First BlackFriday, then Cyber Monday. And

adding to the spending spree, an unusualinvitation arrived onThe Capitalists deskyesterday morning. A festive red enveloperevealed an invitation to attend The RoyalExchanges Christmas shopping event thisevening: Join us from 6-9pm for luxuryshopping, Christmas fayre, canapes andcocktails in The Grand Cafe. Nothingstrange there, in fact it all soundsdelightfully jolly. Save for the fact theluxury shopping centres invite wasemblazoned with the words HAPPYREXMAS. Nothing quite says eat, drinkand be merry less than a rexy Christmas.

A milestone today for electronic charity box Pennies,which has not only celebrated an anniversary, but is also

welcoming over 20 new partners to the cause. Among them areMonarch Airlines, The Fragrance Shop and tailor Gieves &Hawkes. The charity works on the basis that every penny countsand therefore gives customers of affiliated firms the option todonate a few pence to charity when paying for goods orservices by card. All of which will soon be handily explained byCasualty actor Robson Green (pictured left) in a video that is

sure to tug on the heart and purse strings. President ofVisa Europe, Peter Ayliffe, and chief executive of Kingfisher,

Ian Cheshire, will both be speaking this morning at aconference held by the charity at Bafta. Ayliffe informedThe Capitalist : As banking, shopping and paymentsincreasingly go mobile we should be working to ensurePennies benefits from this evolving channel.

`

EDITED BY CALLY SQUIRES

Got A Story? [email protected]

FOLLOWING the announcement yesterday that Canadian candidateMark Carney is the new chosen oneat the Bank of England, bookieshave wasted no time in setting oddson his reign as governor.

Ladbrokes has set odds of 8/1that Carney will authorise a greater

volume of quantitative easing thanhis predecessor. They also makeinterest rates 4/1 to rise above 2.5per cent in Carneys f irst year,

while its much longer odds, at25/1, that UK borrowing rates willsoar above 7.5 per cent under his

watch.

Bookies raise a glass tosurprise new Bank gove

Only seven of the bookmakerspunters correctly backed Carney for the job following his public

withdrawal from the running forthe position, which was good newsfor the firm. Alex Donohue of Ladbrokes said: Carney has foileda major gamble and were raising a

glass with him tonight.No odds yet on Carney passing a

UK citizenship test, when he takesit, although with practice questionssuch as which two places can youobtain advice if you have a problemat work?, he may find revision aninformative exercise.

Mark Carney, the surprise new Canadian governor of the Bank of England

Adam The GingerJuicer Marcus (left)takes on Salvatore TheBee Chioccanii (right)

Twitter channel of the President of the European Coun

Autumn end november: The night has fallen/ The bare branches can be seen/ Even more lonely

A POETIC tweet yesterday from president of the European Council, Herman VanRompuy. Following an update to followers on important EU business such as Meetingwith Minister of Defence of France Jean-Yves Le Drian and M eeting with thechairman of the EU Military Committee Patrick de Rousiers the above seasonal verseappeared. Creative musings or an ode to the Eurozone crisis? Let the followers decide.

Herman Van Rompuy @euHvR

Lawyers slug out for charity

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Visit

Were an FSA regulated Forex broker with ahead office here in London.

We provide MT4, one of the leading tradingplatforms. But, we also provide a dedicatedClient Services team, fluent in our platformsas well as 14 languages. Which is sensible, aswe look after traders in 128 countries aroundthe world.

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YOUVIEW, the internet-connected set top TV boxcompany backed by BT and theBBC, has been sued in the HighCourt for trademark infringement, and may have toface a hefty payout or change itsname.

The lawsuit, from Yorkshire- based telecoms firm Total, comesafter YouView lost an appeal tohave its name trademarked. Two

weeks ago, the High Court ruledthat YouView has a confusingly similar name to Your View, a

business owned by Total.

Total is now seeking damagesas well as an injunction, which

would prevent YouView fromusing its name. The companysmanaging director Stuart Balkiesaid: Despite the recent

vindication of our position in theappeal proceedings we believethat YouView has continued toact without regard to ourregistered mark and businessinterests.

Arty Rajendra, of specialist

intellectual property law firmRouse, said that YouView would be very likely to lose the case if it were completed, but that 99 per

cent of similar cases end up being settled behind closeddoors, with YouView likely to pay a one-off fee to Total.

I would consider a sum of over half a million pounds to bereasonable, she added.

The news comes just monthsafter YouView launched,following years of delays whichled analysts to question itsimpact. The technology is beingrolled out to BT and TalkTalks

pay-TV customers. A spokesperson for YouView said the company has nointention of changing its name.

YouView sued by Yorkshire telecomsgroup in trademark name dispute

BY JAMES TITCOMB

BETFAIR has pulled out of Greece inits second European exit in a month,citing the threat of sanctions fromthe countrys gambling authorities. The exchange betting operator has

been trading without a licence in thecountry, claiming that Greek gam-

bling laws violate EU ones.Earlier this month the Greek

Gambling Commission announced aclampdown on non-licensed online

bookies, threatening financialpenalties and criminal sanctionsagainst gaming operators that didnot have a permit. The changes have

forced Betfair out of Greece, where ithad expected to generate 13m of revenue this year. The firm has previously said it will

withdraw most of its business fromGermany, after its exchange model in which players wage bets againsteach other was made unviable by atax hike on sports betting.

Betfair, along with a host of otheronline bookies and the EuropeanCommission, want many countriesto liberate their market. The commis-sion has launched proceedingsagainst nine European nations including Greece and Germany and

will refer them to the European

Court of Justice in the coming weeksif they fail to comply. Betfair yester-day said it was disappointing thatthe commission has not acted faster.

L A U R A L E A N / C I T Y A

M

Betfair Group PLC


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QUINTAIN moved a step closer torealising its giant GreenwichPeninsula scheme after announcing

yesterday it has submitted plans forthe first 500 homes on the site.

The developer secured a 300minvestment in June from HongKong billionaire Henry Cheng,helping to kick-start the 150-acreproject, which will see 10,000homes built on the peninsula.

Announcing its half-year results yesterday Quintain said the overall value of its portfolio, whichincludes its Wembley scheme, fell1.7 per cent to 1.1bn in the six

Quintain pushes forwardGreenwich as asset value

BY KASMIRA JEFFORD months to the end of September asproperty markets outside of London continued to struggle.

Revaluations and otherprovisions sent the firm to a pre-tax loss of 29.1m for the sixmonths to the end of September.

Non-core regional assets arelosing valueif you look rightacross the market you are seeing areal distinction between theperformance in London and therest of the regions, said Max

James, who replaced founder Adrian Wyatt as chief executive.

The group is selling off non-coreassets to cut its 465.2m debt pileand focus on its London schemes.


Quintains Greenwich scheme is set to deliver one of the UKs biggest housing projects

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IN BRIEFInternational Greetings on trackn International Greetings, the makerof wrapping paper, cards andchildrens party bags, said sales andunderlying profits for the six monthsto 30 September were on track tomeet City expectations, boosted bystrong growth in the US. The UK-listed group is gearing up for thefestive season and has made over65m Christmas crackers at its newfacilities in China. It also reported it isselling record levels of gift wrappingdespite tough market conditions incontinental Europe.

McGraw-Hill sells textbook armn US financial services andpublishing firm McGraw-Hill saidyesterday it will sell its educationalpublishing unit to buyout firm ApolloGlobal for $2.5bn (1.6bn), endingtalk of the business being spun off asa public company. The sale completesa shift for the 124-year-old firm,which has published educationaltextbooks for nearly a century.As a result, the company will changeits name to McGraw-Hill Financial.The deal fetched less than the $3bnfigure originally mooted.

Samsung finds labour failuresn Korean electronics giant Samsungsaid yesterday it had found evidenceof several instances of inadequatepractices at its suppliers in China.An internal audit of working practicesat 105 Chinese suppliers foundrepeated examples of excessiveworking hours and incorrectcontracts. The company, which is nowinvestigating further factories, said itwould remedy the failures.Working conditions in China havebecome a difficult issue for many ofthe worlds top technology firms.

GreeceState operator Opap has a monopoly

on some markets including sportsbetting, with other companies

re used licences

CyprusBet air has complained to theEuropean Commission on newlegislation that efectively bansexchange-based bookies

FranceLiberalised online

gambling market in 2010 A recent 5% tax on sports betting has orced Bet air to pull out o the country

BelgiumOnly ofers online gaming licences to o ine bookies, and has blockedwebsites o many internet gambling companies

SpainIntroduced regulated online

gaming in June this year

BelgiuALL BETS ARE OFF FOR GREECE

Betfair is cashing out ofGreece over crackdown

BY JAMES TITCOMB

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Cranswick PLC


780

760

740

800

820

840 p812.5026 Nov

GlaxoSmithKline PLC


1,320

1,310

1,330

1,340

1,350 p1,330.00

26 Nov

SDL PLC


450

475

500

525 p438.5026 Nov


IN BRIEFStandard Life to open Dubai offn Standard Life has unveiled plans toexpand its presence overseas byopening its first office in the MiddleEast. The insurer revealed yesterday ithas been granted a licence by theDubai Financial Services Authority toopen a branch of Standard LifeInternational within the DubaiInternational Financial Centre. Themove follows news last month that itplans to expand into South East Asiaby opening an office in Singapore.

German carmakers want loophon German car manufacturers areseeking to widen a loophole in EUregulations that would allow them toproduce more cars with carbonemissions above a 2020 EU target. EUcar makers are divided over how a2020 EU target to cut emissions to anaverage of 95g per km should beshared across the industry. A proposalfrom German automakers body VDAwould allow manufacturers to add onaround 10 grams of carbon per km.

EasyJet rolls out allocated seatsn Budget airline EasyJet will fromtoday allow passengers on all of itsflights to choose a seat, for anadditional cost. Following a trial inApril, the carrier is rolling out allo-cated seating across all routes. Chiefexec Carolyn McCall said last week thetrial had originally targeted businesstravellers, but found that families andolder customers were also keen to payextra to reserve a particular chair.

BRITAINS largest pharma company is hoping to spend over half a bill ionpounds expanding into consumermarkets in India and Nigeria, whereit earns significant revenue fromthe highly popular Horlicks drink.

GlaxoSmithKline (GSK) announced yesterday a 591m offer to boost itsstake in its Consumer Healthcaresubsidiary in India, along with a62m bid to buy more shares in itsNigerian consumer wing. The moves follow chief executive

Andrew Wittys 2010 pledge to steerthe company away from traditionalwhite pill and Western markets.

GSK warned this year that it con-tinues to be hit by Western govern-ments enforcing price cuts ondrugs, and that it will continue tolook elsewhere for growth.

GSK Consumer Healthcare is a well established business in Indiaand its leading product, Horlicks, isan iconic household brand, saidGSK executive David Redfern.

Glaxo heats upmove towardsdrinks markets

BY JULIAN HARRIS The Nigerian division also specialis-es in Horlicks, along with Panadol,Sensodyne, and Lucozade.

GSK has reached an agreement inprinciple to increase its stake in GSK Consumer Nigeria to 80 per cent, themaximum possible while still keep-ing the division publicly listed.

Meanwhile the voluntary openoffer for its Consumer Healthcaresubsidiary in India would take itsholding up to 75 per cent again thehighest allowed by listing rules.

GSKs shares close down 1.26 percent in London at 1,330p.

Profit warning knocks 30m offtroubled software company SDL TRANSLATION software company SDL saw more than 30m wiped off its value yesterday after posting asurprise profit warning.

When chief executive JohnHunter was shown the door earlierthis month, interim boss Mark Lancaster conducted an internalreview of the business. Yesterday the company revealed that itexpected profits 3m-4m up to10 per cent less than previously forecast.

The news sent shares in SDL

plummeting as much as 16 per cent yesterday, before they finished

BY JAMES TITCOMB eight per cent lower, knocking32.5m off SDLs marketcapitalisation.

The company which offers arange of content managementsoftware as well as translationservices has not seen shares thislow since mid-2010.

It said the profit warning wasdue to a cautious outlook oncontract completion in the secondhalf of the year, coupled with theunstable macroeconomicenvironment.

Peel Hunt analyst Alex Jarvis, who cut her price target on the

stock yesterday, said theannouncement was one of those

warnings that raise a lot of questions of management andcontrols, and comes on top of concerns over strategic positioningof the groups technology offering.

Cranswickprofits jumpaspigpricespassed on to customersCRANSWICK, the sliced meat andsausage-maker, yesterday reported

a 21 per cent rise in half-yearprofits as it succeeded in passinghigher pork prices onto itscustomer.

The Yorkshire-based group warned last month that UK prices were at a three-month high and would continue rising because of high livestock feed prices and theintroduction of new EU laws onanimal welfare that come intoeffect in January.

Cranswick, which suppliessupermarkets including Tesco, said

BY KASMIRA JEFFORD talks with customers wereprogressing well and it hadmanaged to recoup some of theinflation, although this is likely to

mean higher prices being passedon to shoppers.But Cranswicks finance director

Mark Bottomley said he did notexpect pig prices to rise sharply during the run-up to Christmas.

Costs are stabilising now, they are round about just a touch over160 pence per kilo, Bottomley said

yesterday.Pre-tax profits rose 21 per cent to

22.5m in line with analystsexpectations.

Underlying revenue rose five per

cent to 418.6m in the period, notincluding the acquisition in Juneof Milton-Keynes-based KingstonFoods, which manufactures cooked

meats.

LAW firm Pinsent Masons yesterday announced a half-yearturnover figure of 146m, a fourper cent increase on the sameperiod last year.

Pinsents, which earlier this yearsecured a tie-up with Scottish firmMcGrigors, also said it had hiredcorporate finance specialist

Jonathan Beastall from rivalClifford Chance. Stripping outrevenues from McGrigors, theturnover figures was 105m upsix per cent from last year.

I anticipate that our enhancedreach and capability will put us in

good stead for the second half of the year, said managing partnerDavid Ryan.

Pinsent growsturnover 4pc

BY ELIZABETH FOURNIER

STOBART Group has shelved plansto enter the retail bond market,though its board has not ruled outan offering in future.

The company said it decided not

to proceed following the entry of larger bond issuers at highercoupon pricing.

Stobart chief financial officerBen Whawell said: "We will keepunder review the possibility of issuing a retail bond in the future,as we see it as a potentialattractive funding option, but only

when we feel the cost of the bondto the company, its attractivenessto investors and its liquidity characteristics are in the rightalignment.

Stobartpullsits retail bond

BY JENNY FORSYTH

THE INCREASING need forsecurity checks in online banking,

gambling and shopping has drivenidentity screening firm GB Groupto a 44 per cent rise in sales in thefirst half of its financial year.

The Chester-based business, whose software checks onlineregistrations and logins againstdatabases of information in orderto verify them, has made a numberof acquisitions in the last year, butsaid its biggest driver of growth

was the shift from paper forms toelectronic filing systems.

The company reported turnoverof 17.7m in the six months to the

end of September, up from 12.3min the same period last year. Profit

Identity screening company GBGroupdriven by online deman

BY JAMES TITCOMB was up 58 per cent to 1.5m withacquisitions stripped out.

As online and cross-bordertrading continues to increase, weremain confident that there is acorresponding demand for ouridentity management services

which are designed to enableonline business and make it safeand easy for consumers and

businesses, the firms chief executive Richard Law said.

The six months of trading wasthe first complete period toinclude three recent acquisitionsof Data Discoveries, AdvancedChecking Services and Capscan,and the group has continued itsshopping spree since September,

spending up to 3m on CRB checksoftware TMG.

BORIS Johnson yesterday urged the government to make it easier forforeign students to study in the UK.

Despite the hurdles for students,he revealed that the number of Indian tourists visiting London hit145,000 in the first half of 2012 up from 113,000 in the same periodlast year.

Speaking on a trade visit to India,the Mayor of London said moremust be done to tap the hugespending power of overseasstudents and said he had written tothe home secretary to request thatstudents are removed from the

Boris says UK is losing foreignstudents due to tough visa rules

BY JAMES WATERSON governments net immigrationtarget.

The government is right not toopen the door to those who willsimply be a drain on the state, butits crazy that we should be losingIndias top talent and the globalleaders of the future to Australiaand the United States, he said.

The coalition has set an officialtarget of reducing net immigrationfrom its current level of 216,000 a

year to less than 100,000.Last week the Mayor of London

told City A.M. it was also absurdthat the capital was losing Chinesetourists to Paris because of visarestrictions.

Johnson also presented a petal from the London 2012 Olympic torch to Indian athletes

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A SPLIT within the Bank of Japan waslaid bare yesterday, with newcomers

to its board pressing to strengthencommitment to an ultra-loose policy.Pressure on the central bank for

bolder action has intensified in therun up to next months election

with leading opposition candidateShinzo Abe calling for the central

bank to adopt negative interestrates and other radical measures.

Existing Bank governor MasaakiShirakawa repeated his view thatmonetary easing alone can not beatdeflation, citing fiscal alternatives.

But minutes of the 30 Octobermeeting of the Banks nine-member

board released yesterday showed Takehiro Sato, one the newcomers,

had suggested a moreactivist stance onmonetary expansiononce Shirakawas term

ends in April. Japans general

election is scheduled for16 December.

Bank of Japasplit over nestimulus ide

BY CITY A.M. REPORTER

CUTTING entire government depart-ments, freezing public sector pay and

benefits, and allowing some cuts toNHS spending are the only ways toput state spending on a more sustain-able long-term footing, ConservativeMPs warned yesterday.

It came as Arbuthnot Banks eco-nomic adviser Ruth Lea warned thegovernment will not balance its budg-et until 2017, and will also miss its tar-get to have debt as a percentage of GDP on the way down by 2015. The Free Enterprise Group of MPs

called for another 22bn in spendingcuts. Kwasi Kwarteng MP called for

benefits to be frozen in cash terms,arguing it is unfair that wages rise by

just 2.7 per cent per year while bene-fits, linked to inflation, rise at closerto five per cent. He believes that

would save the taxpayer up to 7bnover the rest of this parliament.

Tory MPs demand payand benefits freeze

BY TIM WALLACE Similarly he believes a public sectorpay freeze which has not been imple-mented so far despite the chancellorsefforts will save another 7bn.

David Ruffley MP called for theDepartment for Business, Innovationand Skills, as well as the Departmentfor Culture, Media and Sport to beabolished, saving at least 2bn a year.

Both carry out work already done by other departments, or which could bedone better elsewhere, he said.

Ruffley agreed with PwC economist Andrew Sentance that this should just be the beginning. The former mone-tary policy committee member saidthere are currently 46 departments,

which could usefully be cut to 10.Meanwhile practicing GP, Philip Lee

MP, called for the ringfence aroundthe NHS to be dropped. He suggestedstarting with the drugs budget, trans-ferring more responsibility to patients,particularly for lifestyle-induced condi-tions, saving more than 400m a year.

IN BRIEFInflation expectations easen Inflation expectations have fallenslightly this month, according to aprominent survey releasedyesterday yet people still expectprices to keep ticking up. Medianinflation expectations for the yearahead edged down to 2.8 per cent,the YouGov report for Citigroup said,down from three per cent in October.In the longer term the next five to10 years inflation is expected to be3.4 per cent, the survey showed.There is little sign of deflationfears, it added. The share of peoplethat expect prices to fall or be stablein the year ahead is only four percent below the long-term average

of nine per cent.

Taxes crippling the high streetn High taxes on empty retailproperties are crippling the recoveryagenda, a leading group ofchartered surveyors will a rgue thismorning. More than nine in 10surveyors say that the charges on thehigh street are significantlydetrimental to UK town centres.The charges faced by propertyowners are quite simply crippling thehigh street and preventingbusinesses of all types fromachieving financial stability, saidSimon Rubinsohn, economist at theRoyal Institution of CharteredSurveyors (RICS). The group says thecoalition should extend exemption

periods for high street firms.

Argentine floods hit food pricesn Flood-hit Argentina will harvestcorn later than expected this season,supporting already-high world foodprices as consumer nations are forcedto rely longer on thin US supplies.Argentina is the number two cornexporter after the US, where theworst drought in decades trampledthis years crop. With food stocks hitby dry weather in breadbasketsRussia and Australia as well,importers are looking to SouthAmerica. But Argentine growers havesaid they will produce 20 per centless corn than initially forecast due toexcessive August-October rains thatturned prime Pampas farmland into

unplantable mush.

L A U R A L E A N / C I T Y A

. M .

Kwasi Kwarteng wants pay frozen

Masaaki Shirakawasteps down in 2013

BRITISH banks are being hit hard by incoming regulations, hurtingtheir ability to lend and sodamaging the economy, TheCityUK

warned yesterday.The lobby group particularly

singled out the impact on smallfirms, who are more reliant on

bank funding than bigger businesses, and called on the government to slow down the

Banks warn tough new capitalrules hit lending to small firms

BY TIM WALLACE implementation of the new rules tolimit the damage being caused.

New capital requirements in theUK are tougher than those beingimposed on banks in the rest of theEU, meaning the governmentshould not worry about stability

being undermined by a slowertimetable, it argued.

But TheCityUK also said the stateneeds to do more to promote non-

bank lending to SMEs to reducetheir dependence on banks.

TEN thousand first-time buyers took out a mortgage in London duringthe third quarter of the year,according to Council of MortgageLenders (CML) data out yesterday.

The figure was the highest on theCMLs records since the fourthquarter of 2009, yet its research alsorevealed significant barriers togetting on the property ladder inthe capital.

London has the lowest homeownership rate in the UK, the CMLsaid. Buyers on average need to beolder, with higher earnings andmore parental help.

The London housing marketfaces similar issues to the rest of theUK in terms of a lack of supply andaffordability, yet differentdemographics, population flowsand tenure patterns mean that it isalso unique, commented CMLdirector general Paul Smee.

The average age of a first time

Highest number offirst time buyers inLondon since 2009

BY JULIAN HARRIS buyer in London is 31, the CML said,compared to 29 elsewhere.

Parental assistance is greater,the report added. Recent estimatesindicate that only 28 per cent of first-time buyers in London boughtunassisted, compared to 34 per centin the UK overall.

Duncan Stott from the campaigngroup Priced Out said that theCMLs figures exposed how many people are reliant on the so calledBank of Mum and Dad.

Sky-high house prices aredestroying the aspirations of a

whole generation of would-be firsttime buyers, Stott said. Britainsimply cant call itself a property owning democracy if home-ownership is only open to thosefrom the wealthiest backgrounds.

The average first time buyer inLondon now has an income of 50,000 per annum, compared to aUK-wide average of 34,000 for

workers making their first step ontothe property ladder.

TheCityUK said small businesses need more access to funding, but new rules hit new lending


The acclaimed West end play Our Boys stars ArthurDarvill (Rory in Doctor Who), Laurence Fox (Hathawayin Lewis) and Matthew Lewis (Neville Longbottom inHarry Potter films). The Northall at Corinthia Londoncelebrates the breadth of British culinary strengths,with a menu showcasing the highest quality seasonaland sustainable ingredients from artisanal suppliers.

Package is 50 for a two course meal a glass of champagne atThe Northall and a top price ticket (worth 45) for Our Boys atMonday to Friday performances until 14 December. Subject toavailability. Booking fee of 2 per ticket applies.

Call the box office 0844 412 4659 quoting City AM

Our Boys plays the Duchess Theatre, Catherine St, CoventGarden, with pre-show meal at The Northall at Corinthia Londonat 10a Northumberland Avenue (nearest tube Embankment).

www.ourboystheplay.com - www.thenorthall.co.uk

PACKS A PUNCH EXCELLENT.Financial Times

TERRIFIC A PLEASURE.Evening Standard

LIGHT-HEARTED ANDHUMANE. City AM

Time Out Critics Choice

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7/30/2019 Cityam 2012-11-27.pdf

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IN BRIEF

STEELMAKER Mittal, which acquiredFrances Arcelor in 2006, is no longer

wanted in France due to years of bro-ken promises, Industry Minister

Arnaud Montebourg said yesterday,intensifying a row over plans to closetwo furnaces in north-eastern France.

Montebourgs attack on ArcelorMittal, which he later quali-fied, risks exacerbating tensions in adispute that is central to SocialistPresident Francois Hollandes effortsto save jobs and reverse years of indus-trial decline.

It came after Montebourg, one of the most left-wing ministers in thegovernment, said last week Francecould nationalise the companysFlorange site on a temporary basis

while the government tries to find a buyer.

ArcelorMittal, the worlds largeststeelmaker, has said it will shut downtwo blast furnaces at Florange from 1December unless the government canfind a buyer to operate them.

French ministerwants Mittal toleave country

BY HARRY BANKS We no longer want Mittal in France because they havent respectedFrance, Montebourg said in an inter-

view with Les Echos busines

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