BUSINESS WITH PERSONALITY
BUSINESS WITH PERSONALITY
Issue 1,230 Wednesday 29 September 2010
ED MILIBAND: I’M
NO UNION PUPPET
POLITICS
▲
BY DAVID CROW
ED Miliband yesterday tried to dis-
tance himself from the unions who
funded and supported his leadership
campaign, insisting he would not sup-
port a wave of public sector strikes.
In his first major speech as Labour
leader, Miliband warned trade unions
that “irresponsible” industrial action
would alienate the public.
He said: “I have no truck, and you
should have no truck, with overblown
rhetoric about waves of irresponsible
strikes. The public won’t support
them. I won’t support them. And you
shouldn’t support them either.”
Union leaders in the conference hall
looked distinctly unimpressed at the
remarks, although they later tried to
shake them off.
Miliband, who won the Labour lead-
ership by mopping up union support,
used his speech to appeal to the centre
ground.
“Red Ed? Come off it. Let’s start to
have a grown up debate in this coun-
try about… what kind of country we
want to leave for our kids,” he said.
His measured approach earned a
cautious thumbs-up from employers’
organisation the CBI. “He stressed that
Labour must win back fiscal credibili-
ty… and that it must build prosperity,
as well as distribute it,” said director
general Richard Lambert.
But others were quick to dismiss
Miliband as anti-business, after he
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Ed Miliband has attacked high pay in the private sector
attacked “big business” and criticised company in this country.”
high levels of remuneration. The new Graeme Leach, chief economist at
Labour leader also backed a higher the Institute of Directors, said he
bank levy, a living wage of at least £7 detected a “drift away from New
and new regulations for those employ- Labour’s efforts to talk up a pro-enter-
ing agency workers. prise agenda”.
Miliband said: “What does it say And the Tories attacked Miliband’s
about the values of our society, what failure to set out a clear plan for reduc-
have we become, that a banker can ing Britain’s yawning £158bn budget
earn in a day what a care worker can deficit.
earn in a year? Conservative party chairman
“I say: responsibility in this country Baroness Warsi said: “Ed Miliband
shouldn’t just be about what you can promised to tell us how he’d tackle the
get away with. And that applies to deficit. Instead, he spent today listing
every chief executive of every major all the cuts he’d oppose but didn’t give
NASDAQ ▲2,379.59 +9.82 £/$ 1.58 unc £/¤ t1.16 -0.02 ¤/$ ▲1.36 +0.02
Picture: GETTY
us one he’d support. It’s now clear that
he’s a man without a plan.”
Ed Miliband’s speech is likely to be
overshadowed if elder brother David
stands down from frontline politics, as
expected, later today.
David Miliband, who narrowly
missed out in the race to be Labour
leader, appeared furious at his younger
sibling’s insistence that the Iraq war
was wrong. He was seen turning to
Harriet Harman, deputy leader, who
was applauding the Iraq comments,
and saying “you voted for it – why are
you clapping?” ANALYSIS:P8-9
BEEF UP RULES P3
FREE
Posen: We
need QE to
start again
▲
UK ECONOMY
BY JESSICA MEAD
QUANTITATIVE EASING (QE) must be
restarted if Britain is to avoid persist-
ent high unemployment and eco-
nomic stagnation, Bank of England
Monetary Policy Committee (MPC)
member Adam Posen said yesterday.
In a speech delivered in Hull yester-
day, Posen was the first MPC member
to call explicitly for a second round of
QE. His comments put him on a colli-
sion course with fellow policymaker
Andrew Sentance, who has been call-
ing for higher interest rates since
June.
Posen argued: “It is right for both
long-term stability and short-term per-
formance for central banks to do
more now.”
He warned that policymakers’ mis-
placed fears of inflation should not
lead them to settle for weak growth:
“The risks that I believe we face now
are the far more serious ones of sus-
tained low growth turning into a self-
fulfilling prophecy, and/or inducing a
political reaction that could under-
mine our long-run stability and pros-
perity.”
Posen has not yet voted for further
monetary loosening and said that his
vote at the next meeting was not a
foregone conclusion.
“Although we find Mr Posen’s analy-
sis sobering and plausible, we believe
it will take further downside news on
the economy if a majority of MPC
members is to support a QE exten-
sion,” said Barclays Capital’s Simon
Hayes. P15: ECONOMICS
Certified Distribution
02/08/10 – 29/08/10 is 93,782
 2 News
Never trust UK economic statistics
EDITOR’S LETTER
ALLISTER HEATH
IT is becoming impossible to decipher
what is happening to the economy, for
one simple reason: the data is of terri-
ble quality. Take yesterday’s revised
second quarter GDP figures,
unchanged at 1.2 per cent growth. But
their composition has been complete-
ly revamped from when the first edi-
tion of the figures were released a few
weeks ago; they now paint a far better
picture of the recovery’s sustainabili-
ty, as I suspected they would.
The reams of analysis produced by
the City and the media have, once
again, turned out to be worthless. The
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Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
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WHAT THE OTHER PAPERS SAY THIS MORNING
FOX SAVAGES TREASURY ON DEFENCE
CUTS
Liam Fox, the defence secretary, has
launched a big assault on the
Treasury’s attempt to slash his depart-
ment’s budget, warning that “dracon-
ian” cuts to military spending cannot
be implemented without “grave con-
sequences” for the Conservative party
and the government. In a head-on
attack on chancellor George
Osborne’s call for cuts of up 20 per
cent in the Ministry of Defence budg-
et, Mr Fox has told David Cameron
that he refuses to back any substan-
tial reduction in funding for the
armed forces.
MEDVEDEV SACKS MOSCOW MAYOR
Dmitry Medvedev, Russia’s president,
took the risky move of sacking Yuri
Luzhkov, the Moscow mayor, one of
the few remaining powerful politi-
cians independent of the Kremlin.
original story was that the growth
spike was due to unsustainable stock-
building and government spending,
and that investment was collapsing.
The new story is rather different.
Rather than collapsing 2.4 per cent,
investment surged 1.2 per cent.
Instead of contributing one percent-
age point of the growth, stock build-
ing accounted for a sensible 0.4
percentage points. It was not all good
news: because real income is falling,
and consumer spending rose 0.7 per
cent, the household savings ratio fell
substantially. But the morality of the
tale is simple: don’t take data at face
value. It keeps getting revised, often
drastically so. Rely instead on gut
instinct, surveys and multiple data
sources. The sceptics are always right.
A FEW DO GET IT
ONE of the many myths of the reces-
sion is that finance was entirely
unregulated prior to the crisis. Ed
Miliband claimed as much yesterday
in his inaugural speech as Labour
Auditor calls
for shake up
ACCOUNTANCY
▲
BY EMMA SADOWSKI
GRANT Thornton, the fifth largest
audit firm, has urged the govern-
ment to review the market share held
by the big four accounting firms in a
bid to reduce threats to the financial
markets should one of them fail.
In a submission to the House of
Lords’ inquiry into auditors, and as
reported by the Financial Times,
Grant Thornton has said that finan-
cial markets would be significantly
impacted should either PwC,
Deloitte, KPMG or Ernst & Young col-
lapse as they audit the majority of
FTSE 100 companies.
Grant Thornton, led by chief execu-
tive Ed Nusbaum, said in the submis-
sion that the collapse of any of the
largest accountants was a “tangible
rather than a purely academic risk”.
LAW FIRM FACES PROBE OVER WEB
PIRACY LEAK
A law firm that has built its business
on pursuing illegal file-sharers is fac-
ing investigation by UK data protec-
tion officials after the personal
details of thousands of people it
accused of piracy were published
online. Acting on behalf of content
owners, ACS:Law has sent letters
demanding settlements running into
hundreds of pounds to UK broadband
customers.
GOME VOTE TO SPARK NEW POWER
STRUGGLE
The battle for control of Gome
Electrical Appliances Holding, one of
China’s largest electronics retailers, is
set to rumble on after its jailed
founder blocked the company from
issuing new shares that would have
diluted his stake. In a packed special
general meeting on Tuesday Gome
shareholders voted in favour to
revoke the company’s “general man-
date”.
party leader; the overwhelming
majority of the population would
undoubtedly agree. Yet that is a bla-
tant falsification of history. There was
an explosion in rules, regulations and
regulators covering financial services
over the past 15 years, many of them
global – but the regulations addressed
the wrong areas, were obsessed with
box ticking, missed the real risks and
actually encouraged banks to engage
in dangerous practices while discour-
aging safe ones. Some parts of the
financial world were largely unregu-
lated; other parts were hyper-regulat-
ed; the whole architecture was backed
by the implicit guarantee of the state
and taxpayer, meaning that it was a
rigged, rather than a truly free, mar-
ket. Miliband, who has an MSc in eco-
nomics from the London School of
Economics, should know better.
While the Tory establishment failed
to oppose Gordon Brown’s destructive
reforms, some individual parliamen-
tarians saw the writing on the wall
early on. John Redwood, the Tory MP,
The accounting firm has called on
the government to establish an over-
sight body that would implement
limits to the number of large UK com-
panies any one firm could audit.
It has also said that regulators
should suggest to large corporates
that they hand more audit work over
to the smaller firms.
The House of Lords economic
affairs select committee is currently
investigation the audit profession,
including competition concerns over
the market dominance held by the
big four accounting firms.
Ed Nusbaum’s firm
Grant Thornton says
limits should be in
place on the number of
large clients at big four.
FRENCH INVESTIGATE RYANAIR IN
MARSEILLES JOBS DISPUTE
Ryanair has been placed under for-
mal investigation by a French judge
on suspicion of flouting France’s cost-
ly and protective labour laws by
employing staff at its base in
Marseilles on Irish work contracts.
The airline responded to the latest
move in its dispute with the French
authorities by reiterating a threat to
close its Marseilles operation.
DOZENS OF SUB-STANDARD CARE
HOMES CLOSED
Almost 100 care homes and home-
help services in England have been
shut down or closed voluntarily in
the past year because of poorly
trained staff and substandard treat-
ment of residents. Bullying of
patients, poor management of drugs
and staff shortages were among the
problems that prompted action.
was one of the few who spotted the
flaws in Brown’s system of misregula-
tion; as he put it yesterday, the City
was more (but worse) regulated in
2007 than it was in 1997. He deserves
to be quoted in full: “Brown set up an
independent banking regulator, kept
the Bank of England involved, and
made the chancellor the chief regula-
tor of the whole structure. He intro-
duced extensive mortgage regulation
which regulated the wrong
things….and failed to stop the worst
mortgage crisis in history… All his reg-
ulators, far greater in number and bet-
ter paid than in the 1990s, got the
main judgment call wrong. They did
not control cash and capital sensibly,
and allowed a boom. They then con-
trolled money too fiercely, and
brought on a bigger bust.” There are
others in the Tory party who under-
stand this well and yet are not in gov-
ernment, including Sajid Javid,
Andrea Leadsom, Steve Baker, Michael
Fallon and others. They deserve a big-
ger voice. allister.heath@cityam.com
Incoming BP boss Bob Dudley starts the senior post on Friday
BP to sell $3.5bn in bonds
GAS AND OIL
▲
BY EMMA SADOWSKI
BP signalled a return to “business-as-
usual” after the Gulf of Mexico
tragedy, with plans to sell up to
$3.5bn (£2.2bn) in new bonds just
three days before Bob Dudley is set to
take over the chief executive post.
The oil major’s funding arm, BP
Capital Markets, is selling five and
ten-year bonds, the first such sale
since August 2009 when it sold $2bn.
BP had originally intended to raise
AOL MERGER WAS 'THE BIGGEST MIS-
TAKE IN CORPORATE HISTORY'
Jeff Bewkes, the chairman and chief
executive of Time Warner, has accept-
ed that Time Warner’s merger with
AOL was “the biggest mistake in cor-
porate history”, but said it had helped
the company focus on its strengths.
Mr Bewkes said he had learned post-
demerger that “the recipe for success”
of any company is “you have to know
what you are”.
VIRGIN BEATS SKY TO 3D SERVICE
LAUNCH
Virgin has launched a 3D Movies On
Demand channel, three days ahead of
Sky’s own 3D channel going live.
Virgin’s 3D Movies On Demand serv-
ice has gone live and can be accessed
by consumers who have a Virgin HD
plus set-top box, a 3D-ready TV and a
pair of 3D glasses. The movies will be
available on a pay-per-view basis.
CITYA.M. 29 SEPTEMBER 2010
NEWS | IN BRIEF
Nomura banker joins Occitan
Occitan Capital Partners, the new
London-based hedge fund launched by
two former Goldman Sachs bankers, has
appointed former Nomura banker John
Candillier as its new chief executive. The
appointment comes just before the
fund’s official launch in November.
Occitan was set up by former Goldman
Sachs traders, Herve Gallo and Thomas
de Gardiel-Thoron, in the summer.
Candillier, who was head of distribution
for continental Europe at Nomura,
worked with Gallo at Lehman Brothers.
FSA fines and bans ex-broker
The Financial Services Authority (FSA)
yesterday said that it had fined Fabio
Massimo De Biase, a former cash equi-
ties broker, £252,239 for acting improp-
erly at the same time banning him from
working in the financial services sector
on the grounds that he is not fit to do so.
De Biase, formerly a broker with TFS
Derivatives, received part of his pay in
commission when he won broking busi-
ness. The FSA said between January
2008 and September 2009, De Biase
paid kickbacks to AKO Capital trader,
Anjam Ahmad in return for business.
between $2bn and $3bn from the
bond sale, but due to over-subscrip-
tion, that figure has risen to $3.5bn.
A $2bn, five-year tranche was
offered at 1.95 percentage points over
similar-maturity Treasurys and a
$1.5bn chunk of 10-year bonds was
offered at 2.10 percentage points over
Treasurys. Barclays Capital, BNP
Paribas, Royal Bank of Scotland,
Citigroup and Mizhuo Securities are
leading on the bond sale.
The bond sale is the first since last
August.
UNION OPPOSES WAL-MART DEAL IN
SOUTH AFRICA
South Africa’s largest labor group
came out against Wal-Mart’s $4.6bn
offer to buy Massmart Holdings. The
Western Cape provincial arm of the
Congress of South African Trade
Unions said Tuesday it was alarmed
that Massmart is considering an offer
from the Bentonville, Ark., retail
giant to take over one of the country’s
“key strategic national companies.”
UK'S IMMIGRATION RULES SLAMMED
Large corporations and other employ-
ers are turning up the heat on the UK
government as it finalizes new immi-
gration rules that industry says
would restrict their ability to recruit
key talent. Firms that have expressed
concern include GlaxoSmithKline,
International Business Machines,
General Electric, JP Morgan Chase
and Deutsche Bank.
CITYA.M. 29 SEPTEMBER 2010 News 3

Olympic boss named as new

Network Rail chief executive
Rail chief executive Iain Coucher, top of his £613,000 salary.
▲

TRANSPORT
BY EMMA SADOWSKI
DAVID Higgins is to become the next
chief executive of Network Rail, it was
confirmed yesterday.
Higgins, who is currently top boss
of the Olympic Delivery Authority
(ODA) is to quit his role and move to
Network Rail at the start of February
next year.
He will succeed outgoing Network
who will depart from the rail infra-
structure group at the end of next
month.
Coucher’s departure was
announced in June and was followed
by a raft of controversy at Network
Rail after it emerged that the group’s
top managers were this year awarded
bonuses and incentive payments
totalling more than £2.2m. Coucher
is set to recieve a £641,000 bonus on
Meanwhile, it is thought that
Higgins beat more than 500 appli-
cants for the top post.
Prior to the five years he spent at
the ODA, Higgins served as chief exec-
utive of English Partnerships for two
years and seven years as group chief
at Lend Lease.
Higgins will be replaced in
February by ODA’s director of
finance, Dennis Hone. ODA boss David Higgins leaves the Olympics group after five years Picture: PA

Rebel MEPs
try to beef up
hedgie laws
in months of negotiations over the
▲

REGULATION
BY MARION DAKERS
NEW EUROPEAN rules on hedge
funds and private equity groups were
in disarray yesterday after French
MEPs claimed they could scupper the
regime’s passage into law.
Talks on the Alternative
Investment Fund Management
Directive (AIFMD) came close to agree-
ing a final draft in Brussels on
Monday, but yesterday dissenting
politicians scrambled to arrange
covert one-to-one meetings with
other MEPs to talk them into tough-
ening up the rules.
The French have not revealed the
full text of their proposal. However,
several sources said the rebels aim to
abolish a planned “passport” for
hedge funds, which would require
some non-EU funds to meet trans-
parency standards to trade here, and
replace it with a stricter, universal
benchmark.
“It felt a bit like when a phone com-
pany calls you up with a great new
deal, but then they won’t tell you any
of the details,” said Conservative MEP
Syed Kamall, who has been involved
directive.
Kamall told City A.M. yesterday the
breakaway group might have enough
support to stop further progress. “The
French are trying to undermine the
Belgian presidency and form a block-
ing minority, and they claimed
tonight to have done so.”
The acting EU finance minister,
Belgium’s Didier Reynders, said yes-
terday he realised the crackdown did
not command the support of every
member state, but said he will not
force through the current proposals.
The UK, which is home to 80 per
cent of Europe’s hedge funds, has
backed the introduction of a passport
system.
Andrew Baker, chief executive of
the Alternative Investment
Management Association, said yester-
day: “The French proposal could be
calamitous for European investors
who could be prevented from invest-
ing in funds or managers outside the
EU, and non-EU hedge fund managers
who would find it very difficult to
access the European market. This
would be a profoundly protectionist
move.”

DE Shaw slashes its headcount

by 10pc as investors lose faith
imise value for our investors over the
▲

HEDGE FUNDS
DE SHAW, one of the world’s largest
hedge fund managers, is to cut its
global headcount by 10 per cent.
The cuts, which equate to roughly
150 jobs, are the largest in the firm’s
history and are expected to signifi-
cantly impact its London and New
York offices.
DE Shaw’s decision to scale back on
staff numbers came as part of a
lengthy review by the fund manager’s
senior staff after it suffered from a
large outflow of investors this year.
A statement from the group said:
“The DE Shaw group has taken steps
to strengthen our business and max-
long-term.”
At the start of the month, DE Shaw
managed around $21bn (£13.2bn)
across its funds.
The New York based firm, however,
has suffered from roughly $7bn in
redemptions made during the last
few months.
The cuts comes after one of the
worst periods for the hedge fund sec-
tor.
DE Shaw, which was founded in
1988 by David Shaw, currently
employs 1,500 people in the US, UK,
Europe, Middle East and Asia.
Shaw no longer manages the day-
to-day functions of the firm.
 4 News
Paragon set
for a return
to buy-to-let
▲
HOUSING
BY VICTORIA BATES
PARAGON, the buy-to-let mortgage
provider, has returned to new lending
after pulling out two years ago due to
the global economic turmoil.
Paragon chief executive Nigel
Terrington said the company would
specifically target professional land-
lords – an area of the market which it
believes is underserved by buy-to-let
lenders.
Terrington said there were two pri-
mary reasons for Paragon’s decision
to return to lending at the current
time, namely very high levels of ten-
ant demand in the UK and a more sta-
ble funding environment.
Tenant demand is being driven by
weakness in the wider housing mar-
ket, difficulty in securing mortgages
for first-time buyers, and high levels
of demand from immigrants,
Terrington said.
“Fourteen per cent of all properties
in the UK are privately rented,” he
added. “That’s a figure that is only
going to keep growing as the popula-
tion rises.”
Paragon has secured a new ware-
house debt funding facility with
Macquarie.
“Our model is to finance ourselves
via the securitisation markets, which
went through a very disrupted period
through the credit crisis,” Terrington
said. “But today, we’re seeing it per-
forming at a better level than at any
time since 2007. The core of the mar-
ket is now dominated by traditional
long-only bond investors, who under-
stand the market thoroughly and
aren’t highly leveraged.”
Paragon hopes to build its book
back up to the kind of market share it
had before the crisis – around 10 per
cent, or £1bn, by the end of next year.
Paragon struck out at the previous
government, saying specialist lenders
suffered when big banks were shored
up in the crisis.
“Buy-to-let is an increasingly impor-
tant part of the UK housing market
and competition is vital for a healthy
and vibrant market,” Terrington said.
Stephen Hester spoke at the BoA Merrill Lynch conference yesterday
Hester: Banks to impose
strict self limits on capital
BANKING
▲
BY VICTORIA BATES
ROYAL Bank of Scotland chief execu-
tive Stephen Hester yesterday sig-
nalled his faith in the banking sector
to act prudently in setting rigorous
capital standards for itself above and
beyond the scope of regulatory
requirements.
Hester, speaking yesterday at a con-
ference organised by Bank of America
Merrill Lynch, said he was not expect-
Picture: GETTY
ing a “one-off golden pot” to emerge
from the banking industry as organi-
sations release capital right down to
the bare minimum set by regulators
and leverage up as far as possible.
“I think that’s unlikely,” Hester
said. “It’s certainly unlikely from an
RBS standpoint.”
The RBS boss added that he
believed current changes to regula-
tion are falling in “sensible territory”.
“The extremes are being cut off,”
he said.
CITYA.M. 29 SEPTEMBER 2010
David Davis to
call for faith in
the free market
POLITICS
▲
PROMINENT backbench Conservative
MP David Davis will today sound a ral-
lying call to an audience of 150 City
and political leaders, calling on them
to reinvigorate Britain’s faith in capi-
talism and private wealth creation.
Davis will be speaking at the London
Forum, hosted by pro-market think
tanks the Legatum Institute and the
US American Enterprise Institute. He
will tell the gathering, to include fig-
ures from Goldman Sachs, easyJet and
the American and German embassies,
that a downbeat message of deficit
reduction and public sector job cuts
will not be enough to win over voters.
Instead, he will say that cuts must
be allied with deregulation to jump-
start Britain’s competitiveness: “We
need to create more entrepreneurs –
people who will risk their money and
their reputation on a wealth-creating
idea.” Davis is known as a flag-bearer
for the right wing of his party, having
served as the Tories’ shadow home sec-
retary under Michael Howard.
In a veiled reference to the
Conservatives’ Liberal Democrat allies,
he will warn that “foolish friends are
even more dangerous than deadly ene-
mies” and will tell the government to
stand firm on cuts in the face of a com-
ing “storm of protest” from unions,
activists and media critics.
 EUR/USD
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CITYA.M. 29 SEPTEMBER 2010
Ireland finds that less bad isn’t good enough
COMMENT
MARC SIDWELL
T
HE Irish parliament reconvenes
today after its summer recess
under distinctly chilly condi-
tions. The markets have spent
the week growing ever more anxious
about tomorrow’s news on the costs
of restructuring Anglo Irish Bank. The
Anglo Irish fears escalate
▲
WORLD ECONOMY
BY HARRY BANKS
IRELAND’S borrowing costs hit a
record high yesterday after two credit
rating agencies warned its debt is at
risk of further downgrades, com-
pounding political jitters over a budg-
et that could break a shaky
government.
The anxiety was sparked by warn-
ings from ratings agency Standard &
Poor’s that if government support for
coalition government has a ruling
majority of just six seats, and must
hope that tomorrow’s numbers will
restore some calm if a tough budget
promising further public sector cuts
in December is to remain on track.
With the yield spread between 10-
year Irish government bonds and
German bunds reaching 4.5 percent-
age points yesterday, what can we see
in Ireland’s fundamentals to help sep-
arate uncertainty feeding on uncer-
tainty from justified caution?
Some of the fears already seem a lit-
tle overdone. Moody’s decision to
downgrade Anglo Irish senior subor-
dinated debt by three notches on
Monday was a rejection of finance
minister Brian Lenihan’s comment
Anglo Irish Bank, set to be unveiled
tomorrow, was more than €35bn
(£30bn), the country would face
another downgrade on its debt rat-
ing.
Rival ratings agency Fitch was also
cautious. “I cannot pretend that the
current rating is totally secure,” Chris
Pryce, a senior analyst with Fitch,
said.
The premium investors demand to
hold 10-year Irish government bonds
rather than benchmark German
last week that a default on senior
debt was “unthinkable”. But the Irish
Independent reported yesterday that
it had learned senior bondholders
would see their debt honoured, con-
tradicting Moody’s take. We shall
soon find out who is right.
Either way, Ireland’s problems are
straightforward. David Haugh,
Patrice Ollivaud and David Turner, in
a 2009 working paper for the OECD,
find that a main driver of Ireland’s
bond spread against the bund was
the sharp relative deterioration of
Ireland’s fiscal position from June
2007 to June 2009. They note “an
increase in expected fiscal deficits is
likely playing a large role in the
increase in spreads across all coun-
bunds hit a euro lifetime high of 475
basis points yesterday, meaning it costs
Dublin some 4.75 percentage points
more than Berlin to borrow funds.
And the cost of insuring Irish sover-
eign debt against default soared to a
record 519 bps from 488.5 at
Monday’s New York close, according
to data monitor CMA.
The Irish government yesterday
confirmed that it will do “whatever it
takes” to support the Irish financial
industry.
tries and particularly Ireland”. Hardly
surprising, but powerful nonetheless.
It’s certainly true that whatever the
figures announced tomorrow the
Anglo Irish bill will help push the
Irish deficit higher, up to around a
quarter of GDP. Still, it is worth bear-
ing in mind that Ireland’s weaknesses
have much to do with the brutal
impact of the financial crisis and less
to do with persistent economic fail-
ings. Carlos Caceres, Vincenzo Guzzo
and Miguel Segoviano, in a 2010 IMF
working paper, point out that coun-
tries hit hard by the crisis like Ireland
were replaced as the greater source of
contagion and default risk by coun-
tries like Portugal, Greece and Spain,
where long-term fiscal sustainability
Ratings agencies under scrutiny
as penalties for mistakes mulled
▲
WORLD ECONOMY
EUROPEAN Union (EU) finance minis-
ters will discuss this week how they
might penalise rating agencies that
pass inappropriately harsh judgment
on countries, a senior EU politician
said yesterday.
Building on remarks that he wants
a new EU markets watchdog to be
able to fine rating agencies, Didier
News 7
remains in greater question. According
to the European Economy Statistical
Annex, Ireland’s deficit may be high
but its debt to GDP ratio in spring 2010
was 77.3 per cent, lower than the UK’s
at 79.1 per cent and utterly different
from the Greek ratio of 124.9 per cent
or the Italian ratio of 118.2 per cent.
Still, as Haugh, Ollivaud and Turner
also point out, the relationship
between fiscal performance and bond
yield spreads appears to be non-linear,
with incremental deteriorations in fis-
cal performance bringing ever larger
increases in the spread. Financial mar-
ket reaction constrains fiscal policy
more than ever, a lesson that all
economies need to remember, not just
Ireland.
Reynders, the finance minister of act-
ing EU president Belgium, said: “It
must be possible to penalise. If after
some weeks or months it is possible
to say it (a downgrade) was a wrong
signal, what is the responsibility of
the rating agency?
“It is quite difficult to say that
there is no responsibility if it is possi-
ble to prove it was a wrong analysis, a
wrong signal.”
 8 Miliband speech
Red Ed? Come
off it: A pitch
for the centre
DAVID CROW
POLITICAL EDITOR’S ANALYSIS
E
D Miliband’s inaugural leaders’
speech will not be remembered
for its rhetorical flair. There was
none of the barrister’s flourish
that characterised Tony Blair’s excel-
lent performances. For all its talk of
optimism, it lacked the hopeful orato-
ry that Barack Obama offered the US
electorate in 2008. When David
Cameron gave his first conference
speech, the Tory party knew they had
a leader for keeps, but Labour is still
unsure. It was overly long, with a few
too many gaffes. The jokes were barely
passable, delivered by a man who
knows little about comic timing.
This was not a washout, however –
far from it. Labour’s new leader did
exactly what he needed to. Miliband,
virtually unknown off the
Westminster stage, had to give the
public a sense of himself. The passages
m today on his parents’ persecution at the
tarts 10 a hands of the Nazis were useful in pro-
viding a political back story, some-
s thing he did far more successfully
than Gordon Brown (no mean feat
when your father was a Marxist intel-
lectual, not a protestant minister).
Still, it’s hard to plead strong family
ties when you’ve just knifed your elder
brother in the back.
BIG BAD BUSINESS
He managed to articulate what he
stands for more clearly than Cameron
did in the election campaign, with his
talk of the “Big Society”, a concept that
continues to puzzle voters. There is no
Offers are limited; once they’ve gone, they’ve gone. 24 hour sale starts at 10am on Wednesday 29th September and finishes 10am Thursday 30th September 2010.
Prices correct at time of going to print, subject to availability and conditions. 50% off hotels: based on selected hotels + dates only. Kenya deal: Price includes flights, doubt that Miliband’s leadership will
take the party leftwards. He champi-
@
13 nights accommodation and based on 2 sharing in October 2010. Rome deal: Price includes flights, 2 nights accommodation and based on 2 sharing in October 2010.
lastminute.com acts as an agent for ATOL protected operators. See www.lastminute.com for full terms and conditions.
oned the low-paid, but had only accu-
sations and recriminations for
highly-remunerated bankers and com-
pany executives. Small firms and
entrepreneurs are Labour’s friends, he
said, but big business is not. It is simply
impossible to imagine these senti-
ments from Messrs Mandelson, Blair
and even Brown, but we live in quite
different times. Envy is back.
The speech was firmly pitched at
www.cityam.com the centre ground, however, or at least
Miliband’s version of it. Red Ed? “Come
off it,” retorted the new leader. He
spoke with pride of a failing local
school that improved after it was
taken over by an academy sponsor;
promised to be tough on crime; and
admitted the party had lost its reputa-
tion for economic credibility by con-
ceding he had to win it back. On the
deficit, however, he prevaricated, giv-
ing just mealy-mouthed support for
former chancellor Alistair Darling’s
plan to halve it in four years.
HOME TRUTHS
“I was elected to be leader, and lead I
will,” Miliband told the delegates, pep-
pering his speech with hard truths for
the right and left of the party. The
shadow cabinet sat in stony silence as
he said they were wrong to go to war
in Iraq while the union barons looked
incredulous as he distanced himself
from their calls for strikes. Labour
would have cut jobs in the public sec-
tor if they had won power he said,
meaning he cannot oppose every
redundancy. The infirm and disabled
must be protected, but the able must
work, he added, using exactly the
same language employed by the coali-
tion. Tory welfare secretary Iain
Duncan Smith, a bête noire of the left,
got the nearest thing to a vote of confi-
dence that a leader of the opposition
can give to a government minister. He
is the first Labour leader in recent
times to admit the party failed its
working class members with its han-
dling of mass EU immigration.
Miliband’s version of the centre
ground differs from Tony Blair’s and
David Cameron’s, however. This was a
speech for the “mainstream majority”,
people on low and middle incomes –
not middle England. Aspirational vot-
ers in the South and East Anglia – the
very people who deliver general elec-
tion victories – will not be impressed.
As a politician who learnt his trade
at the feet of one Gordon Brown, the
speech would have been incomplete
without those famous dividing lines.
Although he barely acknowledged the
deficit – the political issue du jour – he
promised a strategy for growth, a rea-
son to be optimistic. Fiscally irresponsi-
ble but politically shrewd, this tactic
will work. Miliband will try to paint
coalition ministers as grey, autocratic
cutters without vision: “You were the
optimists once but now all you offer is
a miserable, pessimistic view of what
we can achieve.”
Prime Minister Brown – the Tories’
biggest electoral asset – has gone.
Miliband, for all his flaws, is a more
serious opponent. They write him off
at their peril. david.crow@cityam.com
 Miliband speech 9

Ed Miliband
tried to distance
himself from the
trade unions

Picture:GETTY

“Mr Cameron:
you were the
optimist once.
But now all
you offer is a
miserable,
pessimistic
view of what
we can
achieve.”

GRAEME LEACH | INSTITUTE OF DIRECTORS

“ Ed Miliband says that he wants Labour to be the ‘party of

enterprise and small business’. How are these sentiments reconcil-
able with a commitment to new employment regulations for agency
workers and a large hike in the minimum wage? Both measures
would hurt small and large businesses, not support them. It is early

”
days, but we detect a drift away from New Labour’s efforts to
talk up a pro-enterprise agenda.

RICHARD LAMBERT | CBI

“ The message of this speech is that Ed Miliband wants to

position himself on the centre ground of politics. He stressed that
Labour must win back fiscal credibility by the next election and that
it must build prosperity, as well as distribute it. Companies will
worry about some of the issues he raised. For example, the living

”
wage, agency workers and the bank levy. But he was careful

@
not to get into detail.

PAUL KENNY | GMB UNION

“ It was a fantastic and inspiring speech. No one can be

in any doubt that the Labour Party has a new, real leader in
touch with people – a new generation is in town. The speech
provides a first glimpse for the British people of a great new

”
leader, who is humble, honest, dignified and is not afraid to take
on vested interests of all kind for a better Britain. www.cityam.com
 The Capitalist
10
CITY SET TO
APPOINT
ITS LATEST
LORD MAYOR
IT’S ALL change for the City in the tradi-
tional sense this week, with the annual
election of the Lord Mayor taking place
later on today.
As is the way with these things, the
result of the “election” is almost a fore-
gone conclusion before it’s even begun,
since the City of London’s senatorial
group, the Court of Aldermen, has
already published its favoured candidate –
this year, Alderman Michael Bear.
Bear, currently working as a regenera-
tion director at property group
Hammerson, is up against David Wootton
and Roger Gifford in the election, which,
as you’d expect, takes the form of a drawn-
out ceremonial process. The candidates
are required to parade before the gath-
ered liverymen, who then vote on them
via the time-honoured tradition of calling
This year’s Lord out.
Mayor Nick Anstee in Yesterday, the future hopefuls for the
his ceremonial garb, position also got their stint in the lime-
and (inset) his proba- light after Alderman Fiona Woolf and
ble successor Michael
Bear
Richard Sermon took over as the two new
Sheriffs of London. In that role, they’re
tasked with supporting the Lord Mayor in
promoting the Square Mile and wider UK
financial services sector – a role either
CITY EYE
A pair of City gents take time out to have a rest as they get their loafers polished into tip-top condition.
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
“The annual
election of the
Lord Mayor
takes place
today –
though the
result’s almost
a foregone
conclusion”
might take up in earnest in the future,
since only those who have previously
served as a sheriff can become Lord Mayor.
Woolf, a high-flying lawyer at CMS
Cameron McKenna, would be in scant
company if she does eventually manage
that feat – there has only ever been one
woman Lord Mayor, Dame Mary
Donaldson, elected in 1983.
SLIPPERY SUCKERS
Oysters may be delicious, but as anyone
who’s ever tried will know, the slippery lit-
tle blighters are a devil to open up.
That’s why Green’s restaurant on
Cornhill is challenging City workers to get
stuck in at its first ever amateur
Oyster Opening
Championships this evening
– with a bottle of champagne
and £200 dinner voucher as
the star prize.
Tickets to the event –
where competitors need
to open and present 12
oysters as fast as possible,
having been given “train-
ing” beforehand – cost
£14.50, including a glass of
wine or beer, canapés and
three oysters. May the best
man – or woman – win.
SUGAR PUFF
Speaking of competi-
tions, there was a scram-
ble to take a peek yesterday
as the candidates for the latest
CITYA.M. 29 SEPTEMBER 2010
The Apprentice’s Lord Sugar, Brady and Hewer
series of the BBC’s Apprentice were
revealed. The hopefuls, who are out to
impress Alan, Lord Sugar, long-time advis-
er Nick Hewer and West Ham vice-chair-
man Karren Brady in the sixth series of
the show, are a diverse bunch.
They include a former Royal Marine,
Christopher Farrell; the youngest ever can-
didate, 21-year-old entrepreneur Stuart
Baggs; a former PR executive, Alex Epstein;
and three past and present investment
bankers, including ex-JP Morgan staffer
Chris Bates.
HOOK, LINE AND SINKER
The financial world’s providing a lucrative
spell for Hollywood at the moment, what
with Wall Street 2: Money Never Sleeps
and the upcoming Client 9: The Rise and
Fall of Eliot Spitzer, coming to screens in
November.
The former New York governor’s fall
from grace is documented in all its lurid
glory, from his war on Wall Street to the
sudden revelation of his dalliances with
high-class hookers. (“When you’re sending
a girl for $30,000 a night, it doesn’t feel
like prostitution,” says one representative
of the agency Spitzer used, in the trailer
which has just been released on the inter-
net.) Book your cinema date, pronto...
BLOOD BATTLE
A gruesome-looking photograph lands on
The Capitalist’s desk, showing a man with
his shirt covered in blood, sporting an
impressive bruise across his left eye. I hear
the poor chap wasn’t the victim of a ruth-
less street gang, though, but a cricket ball
– Alastair Clayton, a director of gold com-
pany Ortac Resources, had been playing
for Hanson Capital chief investment offi-
cer Edward Collins’ team in a tournament
in the South of France when a rogue deliv-
ery hit him in the face.
Fortunately, our man wasn’t seriously
harmed – and went on to hit a four off the
last ball of the semi-final to win the game
for the team. What a trooper.
Picture: Micha Theiner/City A.M.
CITYA.M. 29 SEPTEMBER 2010
IoD director general Miles Templeman opposes the merger
L'Oréal may
launch rival
Culver bid
▲
CONSUMER
BY STEVE DINNEEN
UNILEVER could find itself embroiled
in a multi-billion dollar bidding war
for hair care specialist Alberto Culver.
Analysts were yesterday bracing
themselves for a rival bid for the firm,
with L’Oreal said to be the most likely
candidate. German consumer goods
giant Henkel is also thought to be
considering its position.
JP Morgan analyst John Faucher
said in a note that “the market seems
to be expecting another bid, as the
stock is trading through the bid... We
think a counter-bid is not impossible.”
And a note by RBS analyst Julian
Hardwick said: “We expect a positive
response to this deal, tempered only
by concern that L'Oreal could counter
bid, particularly given the underper-
formance since the second quarter
results.”
Unilever said on Monday it will buy
US hair and skin care specialist
Alberto Culver, the firm behind
household brands such as V05 and
TRESemme, in a deal worth $3.7bn
(£2.34bn).
It is understood the bid has been
recommended to shareholders and
that a £125m break-clause will come
into play if either party pulls out of
the deal. According to Bank of
America analyst Nico Lambrechts:
“The existence of a break clause
between Unilever and the board
could make a counterbid more com-
plex but not impossible.”
If the Unilever deal goes through it
will follow a yet-to-be completed deal
to buy Sara Lee’s body care division
for $1.3bn. The firm’s largest value
acquisition was the massive $20.3bn
acquisition of Bestfoods in 2000.
The deal would bolster Unilever’s
flagging hair care sales in its core US
market. In the last year Alberto Culver
generated sales of $1.6bn and earn-
ings of $250m.
Boeing wins a $5.3bn US Navy contract Hunt relaxes media rules
▲
AVIATION
BY HARRY BANKS
BOEING has finalised a $5.3bn
(£3.4bn) four-year agreement with the
US Navy to build 124 F/A-18 fighter
jets and electronic attack planes, a
deal creatin savings of over $600m.
The deal, announced yesterday by
Boeing and the Pentagon, calls for the
company to deliver 66 F/A-18 “Super
Hornet” fighters and 58 EA-18G air-
Picture: REUTERS
frames designed for electronic attack
to the Navy from 2012 through 2015.
The Pentagon said the multiyear
agreement was on fixed-price terms,
with an incentive fee – terms that will
limit the government's liability in the
event of any cost overruns.
Boeing also won a $249m contract
for logistics support for the F/A-18
fighters, which operate worldwide
from the decks of 11 Navy aircraft car-
riers --- including ongoing missions in
IoD slates regulation plan
▲
REGULATION
BY MATTHEW WEST
THE Institute of Directors (IoD) yester-
day became the latest organisation to
join the London Stock Exchange (LSE)
in opposing the merger of the
Financial Reporting Council and the
UK Listing Authority (UKLA).
In a statement, Miles Templeman,
director-general of the IoD, said it
Afghanistan.
Boeing said the agreement would
generate more than $600m in savings
by allowing Boeing and its suppliers
to plan further ahead and buy materi-
als in bulk, making production more
efficient than under a single-year con-
tract.
The contract is based on a price of
about $42.7m per airplane, excluding
their engines and other government-
furnished equipment.
made no “sense to leave the UKLA
separate from the body [the
Consumer Markets and Protection
Authority (CPMA)] responsible for the
regulation and supervision of whole-
sale capital markets.”
The IoD also raised concerns about
the “logic” of combining the regula-
tion of wholesale and retail financial
services under the umbrella of the
CPMA. It added both markets present-
▲
POLITICS
BY DAVID CROW
CULTURE secretary Jeremy Hunt yes-
terday outlined plans to scrap cross-
media ownership rules.
The changes mean that holders of
Channel 3 licences like ITV, STV and
UTV will also be able to own regional
papers without restrictions.
An aide to Hunt said: “We’re basical-
ly clearing the decks. The regulations
News 11
ed different regulatory challenges
and required a different approach.
Meanwhile, one City insider told
City A.M. yesterday that he believed
the CBI was close to also coming out
in support of the LSE’s position over
the FRC and UKLA proposals, having
been persuaded by the LSE of the
faults in the plan.
The source added the FRC was itself
lukewarm over the the proposals.
Morgan Stan
puts hold on
recruitment
▲
BANKING
BY MATTHEW WEST
US investment bank Morgan Stanley
has frozen all recruitment for the
remainder of the year, it said yester-
day, offering no guarantees over
when it would begin hiring again.
The bank, which employs around
5,000 people in the UK, sought to
quell fears of job losses, saying
although it had stopped recruiting it
had no plans for large-scale redun-
dancies.
But when asked when it expected
to begin hiring again a spokesman for
Morgan Stanley said: “We will revise
the situation in the first quarter. I
can’t guarantee to you now that we
will begin hiring in the new year but
we have a hiring freeze in place until
the end of the year.”
The investment bank said poor
trading volumes in the third quarter
contributed to the decision to freeze
staff recruitment, amid persisting
uncertainty over global recovery.
However, the bank added that it
was fairly typical for investment
banks to slacken off recruitment in
the fourth quarter.
One City insider added: “People
just don’t recruit at this time of year.
Why would you recruit someone in
October when they are not going to
be able to start until January or
February and then you’ll have to pay
them an annual bonus for work they
haven’t done for you?”
The recruitment freeze comes a
day after Royal Bank of Scotland
announced a further 500 redundan-
cies among back-office staff in its
investment division. It is a month
since Barclays Capital announced up
to 400 redundancies and Credit
Suisse said it was shedding 75 staff.
Meanwhile, in the US, Bank of
America has made around three per
cent of its workforce redundant,
amounting to several hundred jobs.
are outdated. We want to deregulate as
much as possible.”
But industry executives said the
move was unlikely to lead to a wave of
consolidation in the local media sector.
Rob Woodward, chief executive of
STV, told City A.M.: “Removing unneces-
sary restrictions has to be a good thing,
but I’m not sure it will lead to a huge
amount of change. I’m not sure that
regional press and holders of Channel
3 licences are a good mix.”
 12 News
IRN-BRU PUTS FIZZ IN AG BARR PROFIT
IRN-BRU maker AG Barr has seen its profit and revenues fizz in the first half
and is planning to sell more drinks south of the border through advertising
campaigns. The Scottish drinks firm saw pre-tax profit rise 18.8 per cent to
£16m from £13.5m the year before. Chief executive Roger White (pictured) said:
“In Scotland Irn-Bru is drunk by everyone and we would like to see more people
further south drinking it. Our Rubicon juices are also doing very well.”
Thomas Cook sees
dip trigger job cuts
CONSUMER
▲
BY JOHN DUNNE
TOUR operator Thomas Cook yes-
The Halifax Reward terday warned of job cuts as it pre-
pares for “substantial” cost savings.
The group said it would be look-
Current Account. ing at its UK workforce of between
13,000 and 15,000 staff and suppli-
ers as a cuts package was drawn up.
Thomas Cook said it had been
Make the jump to simple, forced into the measures as govern-
ment spending cuts loom.
great value banking. An estimated £10m hole in the
company’s profits was caused by
strike and ash cloud disruption.
Consumers have also been tight-
At Halifax we like to look after our customers. ening their belts as the public sec-
tor faces a cull while the World
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is the right time to climb aboard
I
NVESTORS have lost patience
in trusting Thomas Cook to
deliver an Indian summer.
Yesterday’s £10m downgrade
to full-year profits comes fast on
top of August’s profit warning,
and sent investors scurrying for
warmer climes. The shares’ 6.3 per
cent fall to 171.7p means they now
stand at their lowest point since
December 2008, and are trading at
just 6.6 times 2011 earnings, much
cheaper than peer Tui which
Pay in £1,000 each calendar month to receive £5 (net)/£6.25 (gross) monthly. Reward paid net of income tax (at
trades at 8.9 times earnings.
Yet Thomas Cook offers a
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prospective dividend yield of 6.6
per cent, compared to Tui’s 5.4 per
Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.
CITYA.M. 29 SEPTEMBER 2010
NEWS | IN BRIEF
Jacques Vert sales on the rise
Jacques Vert’s like-for-like sales rose 3.6
per cent for the first 22 weeks of its
financial year. The womenswear group,
which includes the Jacques Vert,
Windsmoor, Planet and Precis chains,
said that gross margin over the period
was in line with expectations, but slight-
ly lower than last year. In a statement
co-inciding with thecompany’s AGM
yesterday chairman Steve Bodger said:
“The new autumn 2010 season collec-
tons have been positively received by
our customers. However, it is still early
in the season and we retain our cautious
outlook for the remainder of this finan-
cial year.”
Aston Martin UK’s coolest brand
Sports car maker Aston Martin is the
coolest brand in Britain, according to a
survey. Renowned for making vehicles
driven by James Bond, it came top of
the annual poll, reclaiming the number
one spot from Apple’s iPhone which
came second. Apple's iPod was named
third coolest, followed by Blackberry
and stereo and TV maker Bang &
Olufsen. The survey was run by The
Center for Brand Analysis which creates
league tables based on the opinions of
marketing experts, business profession-
als and thousands of British consumers.
Key factors in the selection process
included, style, innovation, desirability
and originality.
Cup and the ash cloud crisis also 2010/11 bookings, up 13 per cent in
hit traveller numbers. the UK over the last month and up
Thomas Cook chief executive four per cent cumulatively.
Manny Fontenla-Novoa confirmed Average selling prices of the compa-
there would be job losses, but said
it was too early to reveal numbers.
He said: “The review is looking at
ny’s holidays have risen one per
cent, it said.
everything from the bottom up
and top down. Of course that
ANALYSIS l Thomas Cook
200 p 172.40
includes staff, but also suppliers 28Sep
and our overhead structures.”
Thomas Cook was also hit by
technical difficulties among its
190
100-strong aircraft fleet during the
peak August holiday season, which
it said would impact underlying
180
operating profits.
However, the company said it 170
was seeing encouraging winter 7 Jul 27 Jul 16 Aug 6 Sep 24 Sep
cent. And Thomas Cook’s latest relatively successful with departed
disappointment comes from a load factor, a measure of how full
technical hitch – problems with the group’s planes were, still high
aircraft in August meant that last- at 94 per cent and while £390m in
minute replacements had to be full-year pre-tax profits is lower
hired expensively – and should be than the £420m expected, consen-
a one-off. sus expectations were only £30m
And if chief executive’s Manny higher before the volcanic ash-
Fontenla-Novoa’s claim that trad- cloud emerged.
ing conditions this year have been Analysts believe a fair share
worse than after the 9/11 terror- price lies around 250p – now
ism attacks, then the fact that could be the right time to pick
bookings for next summer are up them up at rock bottom.
nine per cent, with average selling
prices up four per cent indicates
that the only way from here is up.
The 2010 summer season was
BOTTOMLINE
Analysis by Katie Hope
CITYA.M. 29 SEPTEMBER 2010 Consumer News 13

JJB discounts send

share price down
RETAIL Analysts said the promotions Chief executive Keith Jones, who
▲

BY JOHN DUNNE
JJB SPORTS saw is shares slide yes-
terday after it admitted it would be
forced to step up promotions in the
face of the gloomy consumer envi-
ronment.
The retailer said tough times
required slashing prices – but the
stock plummeted after the
announcement closing 14.6 per
cent lower at 9.4p.
The 249-store-group said sales at
stores open at least a year rose 18
per cent from 2 August to 29
August, but that growth slowed to
six per cent from 30 August to 26
September.
could hit profit margins and JJB warned in May it would take three
shares, which have been struggling years to turn the business around,
to recover since the group narrowly said he expected a full-year adjusted
missed falling into administration operating loss within analysts’ exist-
last year. ing forecast range of £20m to £30m.
Singer analyst Matthew
McEachran said: “In light of the ANALYSIS l JJB Sports
worse trading and margin invest- p
ment we expect forecasts to come 9.55
14 28 Sep
under pressure with losses now
likely in the all-important second-
half period.”
JJB made an operating loss 12
before one-off items of £22.5m
from its ongoing business in the
six months ended 1 August, up 10
from a loss of £42.5m the same
time last year. 7 Jul 16 Aug 15 Sep

Travel cover market slow

What is driving this surge in
travel insurance cancellations?
A new insurance report from
YouGov SixthSense shows that poli-
cy-holders are most likely to cite
“coverage-related” reasons (69 per
cent) for policy cancellation rather
than cost (23 per cent), suggesting
BRANDINDEX that they manage to achieve a com-
parable level of cover elsewhere.
STEPHAN SHAKESPEARE Such consumer behavior could be
attributed to the increased pres-
Of those who have annual trip
travel insurance, 34 per cent own
packaged accounts; of those who
opt for single trip travel insurance,
only six per cent own a packaged
account.
Seizing upon the increased
media focus on the issue of travel
insurance, the level of coverage is
destined to become a greater sell-
ing point for packaged accounts.
This summer, Nationwide

T
HE need for comprehensive ence of current account providers announced it was to revamp its
travel insurance has been in the travel insurance market. FlexAccount, and now offers annu-
highlighted this year by the Current account providers al multi-trip European travel insur-
Icelandic volcanic eruption increasingly include annual travel ance to customers aged up to 65
and the travel chaos that ensued. insurance as part of their packaged who fund it with at least £750 each
The plight of Britons without ade- accounts, thereby making stand- month.
quate coverage – often examined in
gruesome detail by the press this
alone travel policies redundant for
their customers.
Stephan Shakespeare is founder and
chief executive of YouGov. The Halifax Reward
summer – has meant that we are
more wary of the need for better
safeguards when going abroad.
ANALYSIS l Reasons for insurance policy cancellation
Private Medical Insurance (PMI)
Credit card or loan PPI
35%
45%
58%
52%
7%
2%
Current Account.
Despite these developments, fig- Pet Insurance 45% 47% 4%
ures show that of all categories of
insurance, annual travel policies
are the most likely to have been
Income Protection (IP)
Combined home
Standalone contents
53%
61%
61%
47%
32%
34%
7%
5%
Make the jump to simple,
cancelled in the last two years. The
chart shows that of those who said
Mortgage PPI
Motor third party only
Travel insurance (annual cover)
Standalone buildings
63%
65%
69%
69%
36%
30%
23%
25%
9%
1%
5%

6%
great value banking.
they have cancelled an annual trav- Motor comprehensive 70% 22% 8%
el policy at some point in the past, Travel insurance (single trip) 72% 23% 5%
two-thirds did so during the reces- 0 10 20 30 40 50 60 70 80 90 100 With our simple, straightforward overdraft fees it’s easy
Cover related Cost Related Other
sion. to work out how much using your overdraft will cost;
s¬a¬FOR¬EACH¬DAY¬YOU¬USE¬YOUR¬ARRANGED¬OVERDRAFT¬ON¬
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Game Group to close 85 AMOUNTS¬UP¬TO¬AND¬INCLUDING¬a¬¬

¬ ¬ ¬
¬
¬
¬
AMOUNTS¬OF¬OVER¬a
¬ ¬ ¬
¬
¬
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¬¬
s¬a¬FOR¬EACH¬DAY¬YOU¬USE¬YOUR¬ARRANGED¬OVERDRAFT¬ON¬
¬ ¬ ¬ ¬ ¬ ¬ ¬

UK stores as sales plunge

s¬a¬FOR¬EACH¬DAY¬YOU¬USE¬AN¬UNARRANGED¬OVERDRAFT
¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬
s¬!S¬WE¬CHARGE¬FEES¬ON¬THIS¬ACCOUNT¬INSTEAD¬
¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬
of interest, the typical rate is 0% EAR.
!ND¬THATS¬IT¬.O¬INTEREST¬TO¬PAY¬.O¬SET¬UP¬FEE¬
¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬
!ND¬NO¬COST¬WHEN¬YOU¬DONT¬USE¬IT¬
¬ ¬ ¬ ¬ ¬ ¬ ¬ ¬
RETAIL it warning in June, made an under- market slumped 17.1 per cent in
▲

BY HARRY BANKS
COMPUTER games retailer Game
swung to a worse-than-expected
first-half loss as it cut prices to hold
market share, and said new tech-
nology products will take time to
benefit its results.
Game, which trades from over
1,300 outlets in nine European
countries and Australia, said 85
UK stores would close because of
difficult trading.
The retailer, having issued a prof-
lying pre-tax loss of £18.8m in the
six months to 31 July.
That compared with forecasts for
a loss of £10-£15.5m and a profit of
£14.5m a year ago.
Revenue fell 9.6 per cent to
£625m, with sales at stores open at
least a year down 10.9 per cent.
The sales fall reflected a sharp
decline in the PC and video games
market globally as well as intense
competition from supermarkets
and online operators.
Game said the overall British
the first-half. It said like-for-like )F¬ONLY¬ALL¬OVERDRAFTS¬WERE¬SO¬SIMPLE¬
¬ ¬ ¬ ¬ ¬ ¬ ¬
sales were down ten per cent in the
34 weeks to 25 September. To find out more, pop
Shares in Game had already lost into branch, call us
nearly two-thirds of their value on 0845 122 1425
over the last year.
But new chief executive Ian or visit halifax.co.uk
Shepherd said new motion sensi-
tive games could turn things
around. “They are innovation and
this is a market that thrives and
grows on innovation,” he said. Call us, go online or visit one of our branches for more information on all fees and interest rates. EAR is the equivalent annual
Game said its online offer would rate. This is the actual annual interest rate for an overdraft. It does not take into account fees and charges. Overdrafts are
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division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.
 14 News
Withdrawals
still a drag on
Man’s profits
▲
HEDGE FUNDS
BY VICTORIA BATES
THE WORLD’S biggest listed hedge
fund, Man Group, has clocked up an
eighth consecutive quarter of net
withdrawals, as an improved per-
formance from its flagship AHL fund
failed to stem the outflow of private
client money.
Man, which in May agreed to buy
GLG Partners in a $1.6bn (£1.01bn)
deal, recorded net outflows of $600m
in the three months to the end of
September, though the rate of with-
drawals slowed from the first quarter.
Institutions regained confidence in
Man over the quarter, injecting a net
$0.1bn of money, but that was offset
by private investors pulling $700m of
cash from the firm’s funds.
Man expects pre-tax profit for the
half year to September to come in at
$215m, 19.8 per cent below the sec-
ond half of the prior year, due to a dip
in net management fees and minimal
performance fees. Though the per-
formance of AHL, which lost 16 per
cent last year, has bucked up to report
gains of 7.6 per cent over the past 12
months, clients are still largely below
the “high water mark” above which
Man can charge performance fees.
Funds under management are
expected to stand at $39.5bn at the
end of September, $1bn higher than
at the end of June, thanks to positive
currency effects.
Man’s acquisition of GLG will com-
plete in mid-October, helping the
group to diversify away from its
reliance on AHL, which lagged far
behind its peers last year.
ANALYSIS l Man Group 214.70
250 P 28Sep
240
230
220
210
200
7 Jul 27 Jul 16 Aug 6 Sep 24 Sep
CITYA.M. 29 SEPTEMBER 2010
Man Group chief
executive Peter
Clarke took over
from Stanley Fink
three years ago
ANALYST VIEWS: WHAT IS THE OUTLOOK FOR MAN GROUP? By Victoria Bates
DAVID MCCANN | NUMIS NIC CLARKE | CHARLES STANLEY
“ “
Flows, performance and fees were This is the eighth quarter in a row of net
weaker than expected in the first half, but we client withdrawals, as investors continue to react
remain positive on the stock as we believe the to the poor performance of AHL in 2009.
combined Man/GLG could become one of the However, AHL has performed well compared to
most powerful forces in both product and distri- the markets this year and the acquisition of GLG
” ”
bution in the alternatives space, in which should offer Man a broader range of prod-
we expect structural growth in the future. ucts to market when the deal is completed.
JONATHAN JACKSON | KILLIK & CO
“
We believe the long-term proposition of alternative investment strategies is positive. The performance of Man’s AHL
”
fund has improved and, in time, this will lead to the generation of high margin performance fees and growth in assets under man-
agement.The acquisition of GLG provides the opportunity to make greater use of the group’s spare capacity in distribution.
CITYA.M. 29 SEPTEMBER 2010
High street sales jump
▲
UK ECONOMY
BY JESSICA MEAD
THE British high street enjoyed a sur-
prisingly healthy September, accord-
ing to the CBI’s distributive trades
survey with the balance of retailers
reporting that sales were higher com-
pared to a year earlier rising to the
highest level since May 2004.
A net 49 per cent said that sales vol-
Germany’s
consumers
optimistic
▲
EUROPEAN ECONOMY
BY JESSICA MEAD
GERMAN consumers are at their most
confident in three years with further
optimism expected next month
thanks to the continued economic
recovery, falling unemployment fig-
ures and only moderate inflationary
pressures, market research firm GfK
said yesterday.
This month, the consumer confi-
dence indicator jumped 6.9 points to
53.5, the highest level for around
three years. Expectations for the over-
all economy and personal income
have increased significantly, while
propensity to buy is at a good level.
GfK said that German citizens also
believe that the domestic economy
will remain on track for recovery
despite an expected slowdown in
growth in the third quarter. “The
decisive factor in the strong senti-
ment among consumers is the
extremely positive development of
the employment market,” it said.
“If the environment continues to
develop in a similarly positive man-
ner over the coming months and the
consumer climate enjoys further
stimulation, private consumption
will perform better than originally
forecast by GfK, with growth of up to
0.5 per cent rather than stagnation as
a realistic possibility,” it added.
ING economist Carsten Brzeski
said: “After almost a lost decade for
German consumption, caused by flat
real wages, high unemployment and
pre-cautionary saving, a trend rever-
sal is materialising and growth
impediments are becoming growth
drivers.”
In a separate report, German head-
line inflation accelerated slightly in
September, with the year-on-year rate
rising to 1.3 per cent from one per
cent in August. This was as a result of
base effects from food and oil and the
monthly rate fell 0.1 per cent.
Takefuji president Akira Kiyokawa has resigned following the court ruling Picture: GETTY
umes were greater than a year earlier
thanks to the bank holiday weekend,
the final discounting in the summer
sales, and the launch of autumn fash-
ion ranges.
Household consumption growth
gave GDP growth a major boost in the
second quarter, with the headline
growth figure confirmed at 1.2 per
cent yesterday. “The CBI survey sug-
gests that retail spending has
ro
m i se
e p
W i
“1
www.cityindex.co.uk
0845 077 1178
1 point spreads available during our market hours only.
Spreads lowered on our rolling and daily future spread bet markets.
Spread betting can result in losses that exceed your initial deposit.
News 15
ANALYSIS l Household saving rate
16
14
12
10
remained firm in the third quarter,
Source: Capital Economics
%
and is supportive of the view that con- 8
sumer demand is solid, notwithstand-
ing concerns about government cuts,” 6
said Barclays Capital’s Simon Hayes. 4
Retailers remained as optimistic
about the outlook for October but 2
some economists warned that house-
holds could not finance consumption 0
by running down the amount they
-2
save forever. 63 67 71 75 79 83 87 91 95 99 03 07
US remains
downbeat
t
n a s ” on economy
,
oi pre
d
es:
p S nd
ic
▲
US ECONOMY
jor
BY HARRY BANKS
on
thes
F
e
T
m
10
SE St
a
y 3 0
US CONSUMER confidence fell to its
lowest level since February in
September, underscoring lingering
worries about the strength of the eco-
nomic recovery, while home prices
dipped in July.
The Conference Board’s index of
consumer attitudes fell to 48.5 in
all an
September from a revised 53.2 in
August, hit by a weak labour market
W rm 40 and business conditions. This was the
Ge nce
lowest level in seven months.
The report also showed inflation
expectations eased with one year
a
Fr
inflation expectations downto 4.9 per
cent from 5 per cent the previous
month. “With unemployment at a 26-
year high and confidence among con-
sumers remaining weak, this decline
in sentiment will give the Fed a
stronger reason to increase stimulus
in November,” said Kathy Lien, direc-
tor of currency research at GFT in
New York.
Meanwhile, the S&P/Case Shiller
composite index of 20 metropolitan
areas, also published yesterday,
declined 0.1 per cent in July from
June on a seasonally adjusted basis.
The dip followed a 0.2 per cent June
rise, which was revised down from a
0.3 per cent increase. Prices remain
27.9 per cent below the peak set in
mid-2006 but are still some seven per
cent above the trough that was hit in
April 2009. The data is the latest in a
slew of poor US housing market fig-
ures and point to further falls.
ING’s Teunis Brosens said: “Home
sales collapsed in July following the
expiry of the homebuyer tax credit.
While demand evaporated, supply
barely budged. In this environment,
price declines are all but inevitable.
With demand low and a still substan-
tial supply overhang, further price
slippage is highly likely in the coming
months.”
Bank lender Takefuji files for bankruptcy
bank, said it had filed with a Tokyo “We made the decision to file
▲
BANKING
BY HARRY BANKS court for protection from creditors, because we were clearly in a situation
citing interest reimbursements, were we were going to default,”
TAKEFUJI said it filed for bankruptcy tighter lending rules and harsh com- Yoshida said at a press briefing in
yesterday owing $5.1bn (£3.2bn), mak- petition. Tokyo.
ing it the biggest Japanese consumer The lender’s president, Akira “It became clear we could not go
lender to fail since a court ruling in Kiyokawa, and executive vice presi- on,” he added.
2006 forced the industry to repay bor- dent Takeru Takei, son of the compa- Takefuji and other consumer
rowers for excessive interest charges. ny’s founder Yasuo Takei, resigned lenders have struggled to survive after
Takefuji, which had been consid- following the court filing. Japanese courts ruled in 2006 that
ered at risk of failing as it lacked the Director Junichi Yoshida, replaces they had charged too much interest
financial backing of a big Japanese Kiyokawa as Takefuji’s boss. and had to repay borrowers.
CITYA.M. 29 SEPTEMBER 2010
Germany outlines
new landesbank
consolidation plan
WORLD ECONOMY
▲
BY HARRY BANKS
GERMANY drew up a framework for
how to consolidate its troubled pub-
lic-sector landesbanks but made little
headway, agreeing to meet again on
the matter in November.
A meeting between Berlin and
regional owners of landesbanks yes-
terday was a constructive start to con-
solidation talks but all options
remain open, said deputy finance
minister Steffen Kampeter.
“All participants committed them-
selves to increasing efficiency in this
sector,” he said.
The landesbanks account for nearly
a fifth of banking market share in
Europe’s largest economy, yet are
seen as the weak link in the sector.
Several were hammered in the finan-
cial crisis and required billions of
Chile quake claims
wreck Lloyd’s profit
INSURANCE
▲
BY MARION DAKERS
INSURANCE market Lloyd’s of
London blamed its 52 per cent
drop in profit yesterday on a spate
of disasters including the
Deepwater Horizon oil spill and
the Chilean earthquake.
Lloyd’s posted a pre-tax profit of
£628m for the first half of 2010,
down from £1.32bn a year earlier.
Lloyd’s insurers including
Catlin, Amlin and Hiscox
absorbed claims in excess of
£100m each for the disasters,
which added 17 per cent to the
group’s accident ratio and meant
the group paid out more than it
earned in premiums.
The group’s total claims ratio
ANALYSIS l Global causes for insurance claims
3.
2.
4.
1.
euros of state aid in bailouts.
Kampeter said Berlin had agreed
with the landesbank owners -- repre-
sented by finance ministers of the
regional states and heads of savings
banks organisations -- on four criteria.
Consolidation should make busi-
ness sense, satisfy European Union
regulatory requirements, achieve
political consensus and protect tax-
payers’ money, he said.
Berlin is seen as having little influ-
ence on the regional, independent
landesbanks, but could help moder-
ate between them and encourage
swift reforms by offering financial
incentives.
“A few concrete proposals were dis-
cussed,” said Kampeter, adding these
were a potential merger between
WestLB and BayernLB, or between
WestLB, Helaba and possibly another
candidate.
stood at 98.7 per cent of premiums
for the period, up from 91.6 per
cent a year ago.
Lloyd’s finance director Luke
Savage said insurance prices
looked set to keep falling, and
most of the syndicates operating
in the market would probably
respond by writing less business
next year.
“In an environment of slowly
declining rates, people are going to
be slowly reining in the amount of
premium they write,” he said.
Lloyd’s generated much of its
profit instead from investments,
though it reported a 15 per cent
drop in returns for the six months
to the end of June.
Savage said the group was re-
examining its investment strategy
5.
News 17
T-Mobile and
GOOGLE MOBILE TO BRING MOST REVENUE
Orange venture
ahead of plan
▲
TELECOMS
BY STEVE DINNEEN
EVERYTHING Everywhere, the newly
formed entity following the joint ven-
ture of T-Mobile and Orange, said it
has completed its merger integration
ahead of plan.
It outlined ambitious plans to con-
solidate its position as the biggest net-
work provider in the UK
The firm announced in its second
quarter results it has grown its con-
tract customer base by 8.6 per cent
year on year. It said Ebitda for the sec-
ond quarter was £309m, with revenue
growing one per cent.
Chief executive Tom Alexander
said: “Everything Everywhere has
made rapid progress in the six
months since incorporation, with a
strong leadership team in place and a
clear strategy based on transforming
the market through network leader-
ship.
GOOGLE expects mobile searches to generate most of its revenue eventually, but it could “We have identified in excess of
take a long time despite growing at a rapid clip, said chief executive Eric Schmidt £3.5bn of synergies, allowing us to
(above) yesterday. Searches made on Android-based smartphones and other mobile further invest in our networks and
devices are growing but will remain immaterial to its bottom line for some time, he said. building our customer offer.”
in the wake of the drop in per-
formance.
“We are not bullish on the UK.
We are considering moving into
emerging markets, as we are still
nervous that there will be a double
dip recession – the US recovery is
still very fragile and it’s the same
here,” he told City A.M.
Central assets at the group,
which act as a form of capital
buffer for member insurers, rose
to a record £2.23bn in June, up
from £2bn a year earlier.
Savage said preparations for the
new Solvency II insurance capital
rules are progressing as planned,
and that the group is on course to
spend between £200m and £250m
on altering its structure before the
regime comes into effect in 2013.
1. EARTHQUAKE
Chile
27 February $1.4bn
2. DEEPWATER
HORIZON OIL SPILL
Gulf of Mexico
20 April
$300m to $600m
3. SNOWSTORMS
USA
January $72m
4. ABAN PEARL
GAS RIG ACCIDENT
Venezuela
13 May $50m
5. AFRIQIYAH
AIRWAYS PLANE
CRASH
Libya
12 May $47m
 18 Media News
ITV chief Adam Crozier said the firm is paying off its debt Picture: Micha Theiner/ CITY AM
DMGT sees jump in market
share as its CFO stands down
MEDIA
▲
BY STEVE DINNEEN
DAILY Mail & General Trust (DMGT)
received a welcome boost from its
flagship Daily Mail newspaper yester-
day, which reported robust trading
amid a gain in market share.
DMGT said that advertising rev-
enues at its national newspaper divi-
sion have risen by 13 per cent
year-on-year in the past three months.
Print revenues at Associated
Newspapers, home to the Daily Mail
and Mail on Sunday, are up 10 per
cent thanks to the rise in display ads.
Roast New Season Grouse
Justerini & Brooks Red Burgundy
Game dish of
the year
For the year to the end of August
underlying, or like-for-like, revenues
at Associated Newspapers were up
three per cent with circulation rev-
enues two per cent down year-on-year.
Total underlying ad revenues were up
six per cent for the period.
The company’s regional arm
Northcliffe Media, which owns more
than 100 papers, reported that total
revenues fell six per cent for the 11
months to the end of August.
Chief executive Martin Morgan was
cautious despite the positive update.
He said: “We’ve really got to see a
Restaurant
Magazine 2008
Boisdale of Bishopsgate
Reservations on 020 7283 1763
Boisdale of Belgravia
Reservations on 020 7730 6922
ITV offloads
50pc stake in
Screenvision
MEDIA
▲
BY STEVE DINNEEN
ITV has offloaded its 50 per cent stake
in cinema advertiser Screenvision to
US private equity fund Shamrock
Capital for $80m (£50m).
ITV chief executive Adam Crozier
called the deal an “important step” for
the firm as it works to consolidate its
broadcasting empire.
He said the deal fits into ITV’s
“transformation plan to focus the busi-
ness on its core objectives of UK multi-
platform broadcasting and global
content”.
The move is part of a wider sale of
non-core assets, including disposal of
its 25 per cent stake in Friends
Reunited to DC Thompson subsidiary
Brightsolid for £25m and its stake in
Liverpool Football Club for £15.75m.
pickup in demand for jobs before
we’re really on solid ground again.”
DMGT said it expects to report
exceptional gains of about £60m in
its full-year results for the year to 3
October. On average, analysts expect
DMGT to report pre-tax profits of
£240m for 2010.
The firm also announced its stal-
wart finance director Peter Williams
will step down in March. Williams
has been with DMGT since 1982 and
has held the position since 1991. He
will be replaced by Dow Jones chief
financial officer Stephen Daintith.
with a glass of
£27.50
The Lamb at Hindon
Reservations on 01747 820 573
Subject to availability from
17th August until 30th September
The money generated by the
Screenvision sale, which is still subject
to US anti-trust clearance, will be used
to pay down the broadcaster’s net
debt. The firm has already paid down
£175m of its debt pile in the last six
months.
ITV reported a £97m first half profit
after limping to a £105m loss in the
first half of 2009.
ANALYSIS l ITV 58.80
28Sep
60 P
58
56
54
52
50
48
46
7 Jul 27 Jul 16 Aug 6 Sep
STEPHEN
DAINTITH
DMGT
DAILY Mail & General Trust’s long-
standing finance director Peter
Williams will retire after 19 years in
the job. He will be replaced by Dow
Jones’s chief financial officer Stephen
Daintith in March.
Daintith, 46, has a wealth of experi-
ence in the field. He has been with
news agency Dow Jones for two
years, serving in the firm’s New York
office from April 2008.
In January he was also appointed
chief operating officer of the firm,
whilst remaining as chief financial offi-
cer.
At the firm he was responsible for
the company's finance functions,
CITYA.M. 29 SEPTEMBER 2010
TIME LINE |
ITV UNDER ARCHIE NORMAN
● August 2009
ITV sells its stake in Friends Reunited,
for which it paid £150m, for just
£25m.
● November 2009
The broadcaster hires former Asda chief
executive and Conservative MP Archie
Norman as its new chairman. The
appointment of high-profile business fig-
ure Norman brings an end to a two-
month search for a successor to Michael
Grade.
● January 2010
It is announced Crozier will leave the
Royal Mail later in 2010 to become the
next permanent chief executive of ITV.
● April 2010
Adam Crozier takes the reins at strug-
gling ITV, which is still reeling from the
worst advertising drought in decades.
● August 2010
ITV reports encouraging figures after
making a loss in the first half of 2009.
Crozier says the beleaguered broadcast-
er – which saw its share price fall
almost 85 per cent during the advertis-
ing drought between June 2007 and
April 2009 – can bounce back under his
leadership.
● September 2010
Crozier offloads Screenvision to a US
private equity vehicle for $80m as he
focuses on ITV’s core broadcasting
operations.
24 Sep
including business unit finance, corpo-
rate accounting, general accounting,
credit, internal audit and tax as well
as corporate technology and general
services.
Before Dow Jones, Daintith was
chief financial officer of News
International, joining the British news-
paper arm of Rupert Murdoch’s News
Corp in 2005.
Before that, he was with British
American Tobacco where he held sev-
eral executive positions since joining in
1996. He was the managing director
of the company’s Swiss unit in 2004
after two years as managing director
in Bangladesh. He also served as a
finance director in Pakistan from
2000, and prior to this in South Africa
as a finance director and strategic
planning and business development
manager.
He led internal audits at Forte after
graduating from Leeds University as
an accountant and working for
PriceWaterhouse.
CITYA.M. 29 SEPTEMBER 2010 Focus on RIM’s Playbook 19

BATTLE OF THE TITANS: PLAYBOOK VERSUS IPAD

PLAYBOOK IPAD

Screen 7-inch multi touch 9.7-inch multi touch

Resolution 1024 x 600 1024 x 768
Thickness 9.7mm 12mm
Weight 0.9lbs 1.5lbs
Camera Front and rear facing No
Operating system BlackBerry Tablet OS iOS 4   
Processor dual-core 1GHz A4 single-core 1GHz
RAM 1GB 256MB
Supports Flash Yes No
The new Supports HTML5 Yes Yes
Playbook was
unveiled on Wi-fi Yes Yes
Monday.
Picture: GETTY 3G or 4G connectivity No Yes

RIM goes toe-to-toe

with Apple’s iPad
The Playbook looks At first glance, it looks like it
can. Its processor and RAM are
enthusiastic, saying: “We believe
the Playbook is well suited for
great but can it both superior, despite its smaller
size. This would seem to be good
enterprise, but could be far less suc-
cessful with consumers.” The mar-
compete with the iPad?, news for users dealing with a lot of
video or multi-tasking between
ket seems to have reacted with a
similar degree of scepticism, with
asks Steve Dinneen. apps. It has been positioned closer
to BlackBerry’s core enterprise
RIM’s stock falling yesterday.
The Canadian firm lacks the cult
market, rather than the consumer- following of Apple and cannot hope

B
LACKBERRY maker Research
In Motion (RIM) finally
launched its much anticipat-
ed tablet PC this week.
In his keynote speech, chief exec-
utive Mike Lazaridis shied away
from direct comparisons with
Apple. That, however, hasn’t
stopped the technology world from
staring straight at the elephant in
the room: can the Playbook com-
pete with the iPad?
facing iPad, which could reel in the
massive following the smartphone
commands.
Goldman Sachs issued a cau-
tiously optimistic note yesterday in
which it said: “RIM’s Playbook
tablet surprised us by being posi-
tioned for enterprise and by having
a robust set of specs. This could
allow RIM to offer a differentiated
product to the iPad.”
But Morgan Stanley was less
to emulate its rival’s overnight suc-
cess, especially given its Playbook is
competing in a market with two
other lauded devices – the iPad and
Samgung’s Galaxy Tab. However, if
it can win over business users it
could be a sleeper success.
Pricing is likely to be the key and
Lazaridis has hinted the device will
undercut the iPad, with figures yet
to be unveiled. This fight is far from
decided.

CITY VIEWS: WHICH DEVICE DO YOU THINK WILL WIN THE

TABLET WARS? Interviews by Matthew West

ALEX GADEMANN | SARAH RICKWOOD | GRANT ROBERTSON|

FOREX.COM AVIVA LIBERTY LIVING

I already own an iPad. It was I have a Blackberry and iPhone You get the Apple fanboys who
the first time I bought an apple but I feel the iPhone is easier to will buy anything that has the
and I bought it use so I would Apple logo
because of the probably look stuck on it, but
novelty. If you for an iPad over if people can
put me in the the Blackberry. produce the
same place If it was cheap- right device at
with the two er I would look the right price
products I at the pros and and make it a
would definitely cons and bit more open
look at what maybe go with source that
Blackberry has the Blackberry. could change
to offer. things.
 20 News
BHP pulls out of Falklands JV
“Falkland Oil and Gas believes,
▲
OIL AND GAS
based on the drilling results from the
BY VICTORIA BATES Toroa well analysed to date, that
SHARES in Falkland Oil and Gas lost these licences are still prospective,”
over a fifth of their value in a single the company said in a statement.
day yesterday after the oil and gas In a further blow to the Aim-listed
explorer said BHP Billiton had pulled firm, it admitted that the next phase
out of a joint venture drilling project of drilling at its northern licence area
in the Falkland Islands. is increasingly unlikely to commence
Falkland Oil and Gas said BHP had before the end of the year, though the
elected not to enter the second phase Falkland Islands government has
of drilling on its southern licence agreed to extend the first phase of the
area, adding that the company will licences by a year.
take back the oil giant’s current 51 “We welcome the Falkland Islands
per cent interest in the project. government’s understanding in
It will now continue work on the agreeing to extend the licence terms.
second phase of the project alone, We intend to continue actively
aiming to drill a single exploration exploring the southern licences and
well by 2015. with our joint venture partner, to
Michelin aims
to raise £1bn
in growth bid
▲
INDUSTRIAL
of one new factory per year in extra
BY HARRY BANKS capacity in the coming years, he said.
FRENCH tyremaker Michelin has Michelin is already due to open
unveiled a deeply discounted €1.2 bn three new factories in 2012.
(£1.02bn) rights issue to fund growth The company said it would achieve
in booming emerging markets and “significantly positive” free cash flow
set new long-term sales and profit in 2010-2015 and would keep its divi-
goals. dend payout ratio at around 30 per
Michelin said yesterday it was now cent over that period.
targeting operating profit before non- Michelin set a subscription price of
recurring items clearly above €2bn by €45 per share for the capital increase
2015, a 25 per cent increase in sales and said investors were entitled to
volumes by 2015, and a 50 per cent buy two new shares for every 11 they
rise in volumes by 2020. held.
Managing partner Michel Rollier Citigroup has been taken on by
confirmed 2010 targets set in July for Michelin to advise on the issue.
positive free cash flow, an operating
margin close to nine per cent, and an ANALYSIS l Michelin
increase of more than 10 per cent in 66
€ 58.60
sales volumes. 28 Sep
Fellow managing partner Jean- 64
Dominique Senard said sales would 62
probably grow 10-12 per cent this
year. 60
Senard said the company saw 45 58
per cent of sales coming from emerg-
ing markets by 2020, compared with 56
an estimated 33 per cent this year.
The group would need the equivalent 7 Jul 27 Jul 16 Aug 3 Sep
CITY MOVES | WHO’S SWITCHING JOBS
Insurance Institute of London
The IIL has elected Stephen Catlin, the chief
executive of the Catlin Group, as its new presi-
dent, taking over from Willis group president
Grahame Millwater. Catlin, who founded the
insurer in 1984, has also previously served as
chairman of the Lloyd’s Market Association and
a member of the Lloyd’s Franchise Board.
In addition, the IIL appointed Marsh UK
chief executive Martin South as its new deputy
president.
LMS Capital Porter, has joined the board of private
Mark Sebba, the chief executive of lux- equity group LMS Capital as a non-
ury online womenwear retailer Net-a- executive director.
To appear in CITYMOVES please email your career
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
updates and pictures to citymoves@cityam.com
secure a deepwater rig to resume
drilling in the northern licences as
soon as possible,” Falkland Oil and
Gas chief executive Tim Bushell said.
The setback for the company came
after rival Rockhopper Exploration
discovered substantial reserves of oil
at its own North Falklands basin proj-
ect, sending the shares leaping to an
all-time high.
However, the extent of available
resources in the region is still far
from clear and drilling has led to
protests in Argentina, which claims
sovereignty over the islands it calls
the Malvinas.
Argentina fought a war with
Britain after briefly taking possession
of the islands in 1982.
BEST OF THE BROKERS
260
ANALYSIS l Carphone Warehouse
p
260.00
28 Sep
240
220
200
180
28 Jun 16 Jul 5 Aug 25 Aug 15 Sep
CARPHONE WAREHOUSE
RBS initiates coverage with a “sell” rating
and a target price of 180p. The broker
believes the company’s mature core retail
operation depends too much on competing
in the crowded smartphone market. RBS
predicts profits of more than ten per cent
below consensus estimates, with earnings
per share in 2012 forecast at 13.5p.
Aegon makes more cuts to UK business
▲
INSURANCE
DUTCH insurer Aegon will close two
more operations in the UK and cut
jobs to improve profitability in its
fourth-largest market.
Aegon, which warned in June it
planned to cut 25 per cent of its
British costs in the coming year, said
it will close its third-party pension
administration and employee bene-
23 Sep fits software businesses.
Edited by Victoria Bates
A chartered accountant and former
investment banker, Sebba has been at
Net-a-Porter since 2003, prior to which
he was finance director at Video
Networks and Golden Rose
Communications.
Syndicate Asset Management
The fund management group has
appointed David de Winton to its sub-
sidiary Savoy Investment Management.
De Winton joins Savoy as an invest-
ment manager from Charles Stanley,
where he co-managed a mature discre-
tionary client base in excess of £100m.
Prior to that, he worked at stockbroker
Killik & Co between 1998 and 2006.
Air traffic growth slows
down as economies stall
▲
AVIATION
GROWTH in air traffic slowed notice-
ably in August as this year’s rebound
from the economic downturn lost
steam, the International Air
Transport Association(IATA) said yes-
terday.
Passenger traffic in August was 6.4
per cent higher than a year earlier,
against a 9.5 per cent year-on-year
increase in July, and freight traffic
was 19.6 per cent higher in August,
down from a 23.0 per cent increase in
July, IATA said in its monthly report.
“The rapid improvements in
ANALYSIS l Songbird
156
p
151.00
28 Sep
152
148
144
140
28 Jun 16 Jul 5 Aug 25 Aug 15 Sep
SONGBIRD
Evolution Securities rates the property
group a “buy” with a target price of 160p.
The broker believes near-term capital
growth will be limited, but a strong devel-
opment pipeline offers medium-term asset
value growth. Evo says it expects the firm
to minimise development risk by securing
pre-lets before commencing construction.
To appear in Best of the Brokers email your research to notes@cityam.com
The divisions currently employ 89
people in London and Cheshire, but
the firm said it would not decide on
job cuts until it had consulted with
trade unions.
A spokesperson for the company
could not say how much the closures
would save the company, but said
that before today’s announcement
the firm had made £22m savings out
of a £80m target before the end of
2011.
in association with
Eversheds
The law firm has expanded its shipping
practice with the appointment of senior
associate Terry O’Regan to establish a
new international trade team.
O’Regan joins from Kuwait
Petroleum Corporation, where he was
the senior legal adviser providing
advice on the English law aspects of the
sale and delivery of Kuwait’s crude oil
and petroleum products.
Aldermore
The banking start-up has hired Ali
Humphries from Nationwide Building
Society as its new head of HR.
CITYA.M. 29 SEPTEMBER 2010
demand that we saw earlier this year
are behind us. The slowdown of
demand (growth) in August is consis-
tent with our forecast for a tougher
end to 2010 as government stimulus
monies run out without having gen-
erated significant improvements in
employment,” said IATA director gen-
eral and CEO Giovanni Bisignani.
Slower demand growth in the sec-
ond half of 2010 was expected to con-
tinue into next year, IATA said.
In August, global passenger traffic
was two per cent above pre-recession
levels of early 2008. International
cargo traffic was up three per cent.
ANALYSIS l Wolseley
1550
p
1,493.00
28 Sep
1450
1350
1250
28 Jun 16 Jul 5 Aug 25 Aug 15 Sep
WOLSELEY
Seymour Pierce has downgraded the sup-
port services group to “underperform”
with a £13.50 target price. The broker
believes a further restructuring is unlikely
in the short-term. Instead, it says, 2011 will
be shaped by the depressed state of the
economy and consumer confidence,
prompting a downgrade.
Aegon earlier this month
announced a reorganisation of its
British sales division, which will cost
106 jobs. The firm said in yesterday’s
statement that more senior roles
face the chop in its surviving UK
business, which includes life insur-
ance and protection operations and
Guardian Financial Services.
Aegon is one of the top life insur-
ers in the United States, where it
owns Transamerica.
Prior to joining Nationwide,
Humphries held the same position for
the retail operations of HBOS and, up
until April 2007, ran her own HR con-
sulting firm advising clients such as
Amex, Dell, ING, Vodafone and Thames
Water.
Premier Asset Management
The asset manager has appointed Chris
Norsworthy as a regional investment
sales manager for south east England.
Norsworthy was most recently
regional sales director at Close Finsbury
Asset Management and, prior to that,
head of UK sales at Sarasin Investment
Management.
+44 (0)20 7557 7245
morganmckinley.com
CITYA.M. 29 SEPTEMBER 2010
Close upbeat
as loan book
boosts profit
▲
BANKING
BY HARRY BANKS
MERCHANT bank Close Brothers
posted a seven per cent rise in under-
lying profits yesterday on the back of
a 23 per cent rise in its loan book and
said it expects further growth in lend-
ing this year.
The group said its underlying oper-
ating profit rose by £7.6m to £121.3m
in the year to 31 July, before impair-
ments totalling £21.5m related to a
revaluation of two investment assets
and a writedown on its asset manage-
ment business, which is being
restructured.
But the banking division business
contributed an adjusted operating
profit of £79.5m, up 47 per cent as it
expanded its reach in retail and com-
mercial lending.
“Although all lending has been
down, there have been opportunities
for specialist lenders like ourselves to
step up,” chief executive Preben
Prebensen said, adding he expected
growth in the loan book to continue.
The group’s core tier one capital
adequacy ratio dipped 0.9 percentage
points from a year ago to 13.9 per cent
but it said a modest improvement in
economic conditions saw a reduction
in loan impairment losses as a per-
centage of the average loan book to
2.4 per cent from 2.6 per cent at the
end of July 2009.
The securities division saw a nine
per cent drop in its operating profit
to £59.3m, with the reduction attrib-
uted to a sharp fall in profits at deriv-
atives trader Mako. The final dividend
was maintained at 25.5p a share.
ANALYSIS l Close Brothers
730P
720.50
28Sep
710
690
670
7 Jul 27 Jul 16 Aug 6 Sep 24 Sep
News 21
Centrica takes
on Connaught’s
gas safety arm
PROPERTY
▲
THE OWNER of British Gas has
bought a chunk of Connaught’s sur-
viving business and taken on 600
employees, the energy giant
announced yesterday.
Centrica paid £11.2m yesterday for
the gas and electrical safety branch of
Connaught Compliance, one of the
few parts of the firm to escape admin-
istration. It has also bought
Connaught’s training academy in
south Wales.
British Gas said the move gives it a
platform to develop its business ener-
gy services. “It is great news for the
people at Connaught, its customers
and for British Gas Business’s existing
customers,” said Kanat Emiroglu,
managing director of British Gas
Business.
The company did not look at the
other branches of Connaught
Compliance, which will continue to
operate as a standalone firm with
1,300 employees after agreeing fur-
ther funding with lenders.
Morgan Sindall is still in talks with
local authorities to take over 93 of
Connaught’s social housing con-
tracts, after agreeing to take on the
work ealier this month. Several coun-
cils have expressed concern that the
deal could breach EU procurement
Things are looking up for Close chief executive Preben Prebensen law.
 22 News
The defence industry boss who is
reshaping his firm for new realities
Cobham’s boss will
sell poor units, buy
better ones and
improve plants over
the next five years
F
OR Cobham’s chief executive Andy
Stevens, life is measured out in five-
year plans. The head of the FTSE 100
defence company first joined the
business in 2003 as head of its aerospace
division and played a key role in the 2005
strategic review that “took a root a branch
look at our operations and decided to sim-
plify the business.”
When the amiable Tipton-born engineer
took over from former chief executive
Allan Cook in January, he decided it was
time to take another hard look at the busi-
ness. He brought back consultants
McKinsey, who had worked on the last five-
year plan. Stevens also called back Peter
Raby, who had been running a Cobham
regional unit, and who joined the Dorset-
based firm from McKinsey after the last
review, to head office.
Raby was given the – somewhat grand –
title of director of excellence in delivery to
push through the current programme.
The result – perhaps unsurprisingly – is
the firm’s “Excellence in Delivery” review,
announced in August alongside the firm’s
half-year results.
The plan breaks down into two broad
areas.
The company, valued at a cool £2.7bn,
plans to sell up to 15 per cent of its hard-
ware businesses, and it will streamline its
80 plants around the world, focusing on
eight to 12.
In the meantime, the business that pio-
neered air-to-air refuelling, and was found-
ed by British entrepreneur Sir Alan
Cobham in 1934, will continue to acquire
units funded by its £1bn war chest.
“We are pushing on with what we start-
ed in 2005,” says a talkative Stevens, speak-
ing in a soft Birmingham accent in the
London office of the firm, just off Park
Lane.
“We always knew that once the business
got to sales of around £2bn and grew
north of 70 plants it would be time to look
at how we would shape it for the next five
years.”
Cobham is looking to sell around 15 per
cent of its hardware businesses across
CV | ANDY STEVENS
Age: 54
Work: Left school at 16 to become an
engineer. Qualified as a chartered engi-
neer at Dowty Group and subsequently
became chief operating officer of Messier
Dowty International.
Joined Rolls-Royce as managing director,
Defence Aerospace. Joined Cobham in
2003 as managing director of Aerospace
Systems. Became chief executive in
January 2010.
Family: Married, two daughters
Lives: Cheltenham
Hobbies: Drives a Maserati Quattroporte.
Also enjoys walking, landscape gardening
and travel .
three of its four divisions.
Units may be sold in its defence systems
department, which makes up half of the
firm’s sales. Or disposals may come at its
avionics and surveillance division, or its
mission systems business. All these units
make high tech communications and sur-
veillance equipment that integrate into
military projects like the Eurofighter or
commercial ventures like the Airbus A380.
Its fourth division, aviation services, is
mainly a training unit.
Stevens says: “The type of units that will
be sold are ones that have become com-
modity businesses, where the margins are
lower.”
Across Cobham the business operates on
a healthy 16 to 18 per cent margin, the
kind of profitability that many other firms
in other industries can only dream of.
But Stevens adds: “But these are not dis-
tressed businesses. This is not a fire sale.
We plan to sell a number of units over the
next two years assuming the conditions
are right. If not we will keep hold of them
until the market picks up.”
However, Stevens adds that the firm sent
out books of information on a number of
units last month and already a few have
“moved pretty far down the line.” He
expects to have made one or two sales by
Christmas.
The company, which employs 12,000
staff over 80 sites across the world, also
plans to streamline its operations over the
next three years.
Stevens says: “We do a lot of good work
at our plants, but sometimes we are guilty
of reinventing the wheel. Sometimes
plants work in a silo. We want to standard-
ise production much more, which we
think will also bring customers better qual-
ity products in a faster time period.”
The Cobham boss wants to concentrate
up to 80 per cent of production across just
eight to 12 plants. He plans to name his
favoured factories at the end of November,
and will then pour up to £150m of new
investment into them to raise production
WORDS BY ROGER BAIRD
Cobham’s standards. As 62 per cent of the firm’s sales
chief executive comes from the US, Steven adds that “the
Andy Stevens in the majority” of his supersites will be based in
boardroom of the America.
firm’s London office, Plants will close, says Stevens, but he has
just off Park Lane no real idea how many at this stage. He
adds that by the end of the three-year fac-
tory programme in 2013, he expects to
Picture: save between £60m and £80m annually.
Micha Theiner Stevens was right to take another look at
/City A.M. Cobham’s operations because the finan-
cial crisis was beginning to penetrate
defence spending, even though its main
customer, the US government, is engaged
in two wars – Iraq and Afghanistan.
Cobham in recent years had reported
double-digit profit rises on the back of
America’s war effort. But in August it post-
ed a modest two per cent rise in pre-tax
profit, excluding one-time items, of
£145m, on sales up only one per cent at
£963m.
Stevens blames the slowdown in US mil-
itary expenditure – it spends $700bn
(£443bn) on its annual defence budget (big-
ger than the next 19 nations put together)
– for Cobham’s sluggish financial per-
formance. He says: “The market has been
slowing for the last 18 months, and I think
it will take another 18 for it to gain real
traction again.”
“US The Cobham chief adds: “What has been
happening is that procurement officers
government are delaying spending after US defence sec-
retary Robert Gates has talked about want-
procurement ing value for money. Procurement officers
are now getting auditors to go over deals
officers are that they would normally have signed off.
And departments are now salami slicing
delaying orders. Where normally they would have
ordered 100 units of something, they will
spending take 20 and wait and see how long they
can get away with this.”
and salami The UK’s £38bn defence budget is also
headed for cuts of up to 33 per cent in real
slicing terms over the next few year, to be
finalised in the government’s October
orders.” comprehensive spending review, but
Stevens is less concerned about this.
CITYA.M. 29 SEPTEMBER 2010
ANALYSIS l Cobham
280 P 230.50p
28Sep
260
240
220
200
Nov 09 Jan 10 Mar May Jul Sep
He says: “The cuts in the UK will be seri-
ous, but we have three ongoing contracts
with the government – the Eurofighter
and electronic warfare and helicopter pilot
training – and we feel these will survive
the cuts.”
But Stevens does not think Cobham’s
run of medium-sized and bolt-on acquisi-
tions – 50 in the last nine years – is over
even in this age of austerity.
Its most recent sizable deal was the
acquisition of the radio business of US
firm M/A-COM from Tyco Electronics for
$425m in cash in May 2008.
And Stevens expects to make deals over
the coming year.
He says: “We constantly track a range of
companies. Many of the smaller ones are
family owned and margins and profits are
not the only thing that motivates them to
sell. Part of my job is to remain close to the
heads of these companies and always keep
talking to them. So when they want to sell,
they sell to us.”
Stevens is buoyed by the fact that since
9/11 warfare has moved in favour of the
light high-tech boxes that Cobham makes.
He says: “Over the last ten years and
going forward, there will be less tanks
made, less manned aircraft and less ships.
“What governments want more of is
sensors that bring voice, video and other
data immediately from the battlefield to
decision makers. We have invested heavily
in this area, because we can’t see that this
need will go away.”
Over the last five years Stevens says the
firm has grown and boosted its brand
recognition.
But over the next five he wants to see
the firm unify its manufacturing process-
ing, keep up its collaboration with larger
players such as the UK’s BAE Systems and
Europe’s EADS, and continue to look for
high margin acquisition targets.
Cost-cutting is tough, but predicting
global geopolitics is even harder. Cobham’s
investors will be hoping that Stevens pulls
all of this off.
 Markets&Investment 23

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .287.00 +0.50 310.00 246.90 Compass . . . . . . . . . . . . . . . . . .541.00 +2.50 574.50 353.30 Jupiter Fnd Mgmt . . . . . . . . . . . .260.50 +8.60 263.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .280.00 +13.70 281.00 208.20
3i Infrastructure . . . . . . . . . . . . . 113.90 +0.10 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .512.50 +1.50 616.00 347.60 Kazakhmys . . . . . . . . . . . . . . . .1460.00* +18.00 1634.00 955.00 Sainsbury(J) . . . . . . . . . . . . . . . .393.00 +2.70 395.60 307.60
A.B. Foods . . . . . . . . . . . . . . . .1061.00 — 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1488.00* +30.00 1529.00 637.00 Kesa Electricals . . . . . . . . . . . . .147.00* +2.80 162.00 98.45 Schroders . . . . . . . . . . . . . . . . .1446.00 +10.00 1454.00 1055.00
Aberdeen Asset Man . . . . . . . . . .161.60 +0.60 163.20 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .517.50 –7.50 539.00 381.00 Kingfisher . . . . . . . . . . . . . . . . . .233.80 +1.30 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1174.00 +9.00 1187.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1625.00 +2.00 1686.00 1003.00 Dana Petroleum . . . . . . . . . . . .1800.00 –1.00 1817.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .137.00* –1.40 166.62 114.60 Scot. & Sthrn Energy. . . . . . . . .1131.00 +6.00 1206.00 357.50
Aegis . . . . . . . . . . . . . . . . . . . . .122.30 –1.10 137.30 103.10 Davis Service . . . . . . . . . . . . . . .400.00* –4.90 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .341.00* –1.00 349.90 157.30
Afren . . . . . . . . . . . . . . . . . . . . .109.00 –1.30 111.10 73.00 Debenhams . . . . . . . . . . . . . . . . .66.90 +0.60 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .560.50* –3.00 567.50 416.70 Scottish Mortgage. . . . . . . . . . . .630.50 — 637.50 475.00
African Barr Gold . . . . . . . . . . . .589.00* +10.50 685.00 520.50 Derwent London . . . . . . . . . . . .1522.00 — 1562.00 1174.00 Land Securities . . . . . . . . . . . . . .639.50* –2.00 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .268.60* +1.10 389.90 244.00
Aggreko . . . . . . . . . . . . . . . . . .1550.00* +14.00 1639.00 664.50 Dexion Absolute . . . . . . . . . . . . .140.10 –0.70 148.00 128.60 Legal & General . . . . . . . . . . . . .103.90* — 105.00 69.05 Serco . . . . . . . . . . . . . . . . . . . . .619.00* –2.00 656.50 485.60
Alliance Trust . . . . . . . . . . . . . . .334.00 +0.20 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . .1095.00* –5.00 1176.00 930.50 Lloyds Banking Gp . . . . . . . . . . . .75.25 –0.59 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1328.00 –2.00 1404.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . . .986.00 +0.50 1002.00 724.50 Dimension Data . . . . . . . . . . . . . 119.60 +0.10 125.50 60.80 Logica . . . . . . . . . . . . . . . . . . . .125.70* –0.50 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .444.90 –0.60 456.00 348.00
Amlin . . . . . . . . . . . . . . . . . . . . .401.30* +6.30 437.60 350.80 Dixons Retail . . . . . . . . . . . . . . . .25.13 +0.26 39.75 23.07 London Stk Exchange . . . . . . . . .699.00 –7.50 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1477.00* +19.00 1532.00 999.00
Anglo American . . . . . . . . . . . .2551.00 +20.00 3015.50 1846.50 Domino’s Pizza . . . . . . . . . . . . . .471.90 +1.40 482.00 273.10 Lonmin . . . . . . . . . . . . . . . . . . .1678.00 –14.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .564.50 –5.00 700.50 525.50
Antofagasta . . . . . . . . . . . . . . .1220.00* +25.00 1222.00 699.50 Drax . . . . . . . . . . . . . . . . . . . . . .401.50 +1.10 479.30 321.50 Man . . . . . . . . . . . . . . . . . . . . . .214.10 –5.20 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .153.90 +0.60 156.00 102.90
Aquarius Platinum . . . . . . . . . . .339.20* –1.10 490.00 211.50 Dunelm . . . . . . . . . . . . . . . . . . . .387.50 –0.40 438.40 303.00 Marks & Spencer. . . . . . . . . . . . .384.30 +5.50 412.70 321.90 Smiths . . . . . . . . . . . . . . . . . . .1214.00 +7.00 1253.00 814.00
ARM Holdings . . . . . . . . . . . . . . .404.30* –5.20 419.50 134.40 Easyjet . . . . . . . . . . . . . . . . . . . .365.30 –9.80 499.90 339.80 Meggitt . . . . . . . . . . . . . . . . . . . .299.20* –1.00 331.00 220.10 SOCO Intl . . . . . . . . . . . . . . . . . .433.60 –1.70 510.00 380.60
Ashmore . . . . . . . . . . . . . . . . . . .334.00 –1.10 338.00 215.00 Edinburgh Inv Tst . . . . . . . . . . . .423.20 –0.80 436.00 338.00 Melrose . . . . . . . . . . . . . . . . . . .274.60* +5.20 278.60 160.00 Spectris . . . . . . . . . . . . . . . . . .1060.00 +17.00 1074.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3300.00 +20.00 3389.50 2668.00 Electrocomponents . . . . . . . . . . .238.90 +7.20 246.30 142.90 Mercantile IT . . . . . . . . . . . . . . . .967.00 +2.00 1002.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .750.50 +5.50 801.00 532.50 EnQuest . . . . . . . . . . . . . . . . . . . 116.70 –0.10 125.90 87.35 Michael Page Intl. . . . . . . . . . . . .455.80* +1.10 470.70 314.40 Spirax-Sarco Eng . . . . . . . . . . .1803.00 +13.00 1817.00 1005.00
Autonomy Corp . . . . . . . . . . . .1806.00 +6.00 2012.00 1278.00 Essar Energy . . . . . . . . . . . . . . .452.70 +14.20 475.90 358.50 Micro Focus . . . . . . . . . . . . . . . .367.80* –17.40 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .139.00 — 145.10 84.35
Aveva . . . . . . . . . . . . . . . . . . . .1467.00 +12.00 1487.00 856.50 Eurasian Nat Res . . . . . . . . . . . .900.50* –6.50 1276.00 781.00 Millen & Copthorne . . . . . . . . . . .520.50* –7.00 547.00 321.40 Sports Direct Intl . . . . . . . . . . . . .137.80 +6.10 139.40 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .396.20* –2.50 474.00 290.20 Euromoney Inst Inv . . . . . . . . . . .613.50 — 630.00 338.00 Misys . . . . . . . . . . . . . . . . . . . . .290.00 +0.60 295.80 192.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1158.00 +1.00 1190.00 616.00
Babcock International . . . . . . . . .551.50 –2.50 660.50 489.00 Experian . . . . . . . . . . . . . . . . . . .685.00 +3.50 686.50 516.50 Mitchells & Butlers . . . . . . . . . . .295.20 –1.10 343.90 228.30 St James’s Place . . . . . . . . . . . . .289.60 +1.30 296.90 203.40
BAE Systems . . . . . . . . . . . . . . .338.30 –8.10 389.90 288.10 Ferrexpo . . . . . . . . . . . . . . . . . . .294.30 +1.10 396.20 138.00 MITIE . . . . . . . . . . . . . . . . . . . . .199.10 +0.10 257.00 187.80 Stagecoach. . . . . . . . . . . . . . . . .185.10 +0.50 204.90 137.00
Balfour Beatty . . . . . . . . . . . . . . .262.60 –6.80 304.80 228.60 FirstGroup . . . . . . . . . . . . . . . . .349.60 +1.00 442.80 331.20 Mondi . . . . . . . . . . . . . . . . . . . . .512.50 +8.00 519.00 300.70 Standard Chartered . . . . . . . . . .1896.50* –14.00 1946.00 1366.50
Barclays . . . . . . . . . . . . . . . . . . .309.05 –1.70 394.25 253.40 Foreign & Col Inv Tst. . . . . . . . . .284.20 –0.90 297.20 248.70 Monks Inv Tst . . . . . . . . . . . . . . .313.00 –4.00 324.80 265.00 Standard Life . . . . . . . . . . . . . . .230.60* –0.50 237.00 170.00
Barratt Development . . . . . . . . . .101.40 –2.60 178.75 89.10 Fresnillo . . . . . . . . . . . . . . . . . .1233.00 +8.00 1240.00 647.00 Morrison Wm . . . . . . . . . . . . . . .304.20 +2.50 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . .1200.00 –23.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .191.10* +0.60 220.00 145.90 G4S . . . . . . . . . . . . . . . . . . . . . .252.40* –0.50 285.70 217.70 Murray Intl Tst . . . . . . . . . . . . . . .879.00 — 907.50 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .147.60 –1.90 150.50 106.60
Bellway. . . . . . . . . . . . . . . . . . . .586.00 –7.50 848.50 510.00 Genesis Emerging Mkts Fd . . . . .503.00 –3.00 511.50 370.00 National Express. . . . . . . . . . . . .238.80 +0.30 258.60 155.86 Talvivaara Mining . . . . . . . . . . . .489.20 +17.20 501.50 341.40
Berkeley . . . . . . . . . . . . . . . . . . .841.50 +23.00 949.50 735.00 GKN . . . . . . . . . . . . . . . . . . . . . .164.20* –0.80 172.60 100.40 National Grid . . . . . . . . . . . . . . .547.00 +4.00 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .473.60 +5.30 509.00 388.00
BG . . . . . . . . . . . . . . . . . . . . . . 1152.00 –14.00 1248.00 966.90 GlaxoSmithKline . . . . . . . . . . . .1265.00* –7.50 1347.00 1088.00 Next . . . . . . . . . . . . . . . . . . . . .2230.00 +30.00 2360.00 1726.00
BHP Billiton . . . . . . . . . . . . . . .2030.00* +20.00 2346.00 1583.50 Great Portland Estates . . . . . . . .343.30 +3.90 346.60 236.60 Northumbrian Water . . . . . . . . . .338.30 +2.90 353.00 225.20 Taylor Wimpey . . . . . . . . . . . . . . .28.87 –0.02 46.34 24.29
BlackRock Mining . . . . . . . . . . . .624.50 –2.50 654.50 474.00 Greene King . . . . . . . . . . . . . . . .413.80 –8.10 484.00 372.50 Ocado Grp . . . . . . . . . . . . . . . . .134.70 –2.10 169.00 132.00 Telecity . . . . . . . . . . . . . . . . . . . .527.00 –5.50 546.00 311.30
BlueBay . . . . . . . . . . . . . . . . . . .346.00 –1.10 393.00 251.00 Halfords . . . . . . . . . . . . . . . . . . .446.20 +6.20 562.50 339.40 Old Mutual . . . . . . . . . . . . . . . . .139.30 +1.00 140.50 94.75 Templeton Emrg Mkts . . . . . . . . .607.50 –2.50 614.00 449.00
Bluecrest Allblue GBP . . . . . . . . .169.00 — 169.00 144.40 Halma . . . . . . . . . . . . . . . . . . . . .309.60 +4.10 320.50 210.30 Partygaming . . . . . . . . . . . . . . . .279.30 –0.80 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .432.30 –1.70 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .47.92 –0.47 49.99 37.50 Hammerson . . . . . . . . . . . . . . . .395.00* –8.60 460.30 332.20 Pearson . . . . . . . . . . . . . . . . . . .990.00 +5.00 1069.00 751.50 Thomas Cook . . . . . . . . . . . . . . .171.70* –11.60 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .405.15 +1.25 658.20 296.00 Hargreaves Lansdown . . . . . . . .441.10* +6.10 478.00 259.40 Pennon . . . . . . . . . . . . . . . . . . . .586.50* +5.50 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .847.00 +7.00 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1027.00 –1.00 1045.00 709.00 Hays . . . . . . . . . . . . . . . . . . . . . . 112.70 +1.20 119.00 82.50 Persimmon . . . . . . . . . . . . . . . . .404.40 –0.10 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .218.40* –2.80 313.90 189.20
British Airways . . . . . . . . . . . . . .245.20 +1.60 255.80 172.40 Henderson . . . . . . . . . . . . . . . . .126.20 +2.70 157.80 112.10 Petrofac . . . . . . . . . . . . . . . . . .1388.00* –3.00 1446.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .406.90 +0.70 436.20 261.20
British Amer. Tob . . . . . . . . . . .2381.50* –13.50 2439.00 1832.00 Heritage Oil. . . . . . . . . . . . . . . . .301.50 –2.30 585.00 296.90 Petropavlovsk . . . . . . . . . . . . . . 1191.00 –35.00 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1283.00 –12.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .459.10 –2.50 467.90 338.50 Hikma Pharma . . . . . . . . . . . . . . 711.50* –7.50 813.00 445.00 Phoenix Group . . . . . . . . . . . . . .683.00* +3.00 775.00 550.50 UK Commercial Prop. . . . . . . . . . .78.60 –0.55 84.90 69.30
British Land . . . . . . . . . . . . . . . .471.80 –0.40 515.00 416.00 Hiscox . . . . . . . . . . . . . . . . . . . .359.30* –5.60 371.60 299.60 Premier Farnell . . . . . . . . . . . . . .259.20* +1.10 272.60 140.60 Ultra Electronics . . . . . . . . . . . .1739.00 +17.00 1774.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .483.40 +7.80 518.00 340.00 Hochschild Mining . . . . . . . . . . .445.00 — 449.90 220.00 Premier Oil . . . . . . . . . . . . . . . .1658.00 — 1703.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1835.00 +19.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .238.20 +1.10 284.30 204.80 Home Retail . . . . . . . . . . . . . . . .207.40 –0.80 326.30 204.10 Provident Financial . . . . . . . . . . .829.50 +9.50 986.00 795.00
BSkyB . . . . . . . . . . . . . . . . . . . .708.00 –2.00 732.00 521.00 Homeserve . . . . . . . . . . . . . . . . .480.10 +1.70 502.00 435.40 Prudential . . . . . . . . . . . . . . . . . .637.50 +22.00 665.00 475.70 United Utilities . . . . . . . . . . . . . .571.50 –0.50 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .140.50 –0.20 151.00 108.40 HSBC Hldgs . . . . . . . . . . . . . . . .659.50* –1.40 766.80 595.20 PZ Cussons . . . . . . . . . . . . . . . .369.30* +5.30 382.70 231.70 Utd Business Media . . . . . . . . . .621.50* –3.00 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .763.50 +3.00 784.50 613.50 Hunting . . . . . . . . . . . . . . . . . . .621.50 –1.00 659.50 429.10 Qinetiq . . . . . . . . . . . . . . . . . . . .109.40 –2.80 179.10 103.50 Vedanta Resources . . . . . . . . . .2261.00 –31.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . .1002.00 +4.00 1007.00 483.90 ICAP . . . . . . . . . . . . . . . . . . . . . .434.60 +1.90 478.30 291.70 Randgold Resources. . . . . . . . .6510.00 +140.00 6620.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1286.00 +20.00 1320.00 726.50
Cable & Wire Comms . . . . . . . . . .59.10 –0.05 150.00 53.00 IG . . . . . . . . . . . . . . . . . . . . . . . .508.00* +4.50 532.00 291.00 Reckitt Benckiser . . . . . . . . . . .3504.00* –11.00 3667.00 2945.00 Vodafone . . . . . . . . . . . . . . . . . .158.40 –0.65 164.95 126.50
Cable & Wire Wwide . . . . . . . . . . .74.80 +0.25 94.80 60.05 Imagination Tech Gp . . . . . . . . . .386.10 –2.20 399.00 154.00 Reed Elsevier . . . . . . . . . . . . . . .539.50 +4.00 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1403.00 –2.00 1459.00 635.00
Cairn Energy. . . . . . . . . . . . . . . .460.10 –4.20 497.60 306.80 IMI . . . . . . . . . . . . . . . . . . . . . . .762.50* –2.50 786.00 410.00 Regus . . . . . . . . . . . . . . . . . . . . . .77.65* +0.15 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .760.00* –15.00 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1628.00 +3.00 1759.00 1496.00 Imperial Tobacco. . . . . . . . . . . .1905.00 –18.00 2159.00 1728.00 Renishaw . . . . . . . . . . . . . . . . .1028.00* –11.00 1048.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .450.00 +0.10 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .771.00* +5.00 829.50 693.00 Inchcape. . . . . . . . . . . . . . . . . . .307.20 –0.40 347.00 235.00 Rentokil Initial . . . . . . . . . . . . . . .103.80 +1.30 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1625.00 –3.00 1650.00 1141.00
Capital & Counties . . . . . . . . . . .133.40 +0.90 137.50 99.60 Informa . . . . . . . . . . . . . . . . . . . .424.30 +3.40 439.40 263.30 Resolution . . . . . . . . . . . . . . . . .244.20* +8.30 264.80 220.10 William Hill . . . . . . . . . . . . . . . . .170.00 –2.40 217.80 160.50
Capital Shopping Centres . . . . . .373.00 +3.00 533.50 300.10 Inmarsat . . . . . . . . . . . . . . . . . . .680.50 –8.00 831.00 526.00 Rexam . . . . . . . . . . . . . . . . . . . .310.00* +0.50 348.80 253.40 Witan Inv Tst . . . . . . . . . . . . . . . .464.00 +0.70 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .319.10* +1.50 361.90 263.90 Intercontl Hotels . . . . . . . . . . . . 1142.00* +9.00 1244.00 762.50 Rightmove . . . . . . . . . . . . . . . . .732.50 –2.50 796.50 456.90
Carnival . . . . . . . . . . . . . . . . . .2497.00 +12.00 2937.00 1876.00 Intermediate Capital . . . . . . . . . .301.10 +2.70 308.30 233.50 Rio Tinto . . . . . . . . . . . . . . . . . .3751.00 +47.50 4104.00 2435.00 Wolseley . . . . . . . . . . . . . . . . . .1495.00 –25.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .339.10 –2.00 394.60 303.20 Intertek . . . . . . . . . . . . . . . . . . .1820.00 +7.00 1863.00 1136.00 RIT Capital Partners . . . . . . . . . 1110.00 –8.00 1215.00 940.00 Wood Group (John). . . . . . . . . . .426.00 –4.30 432.80 279.60
Centamin Egypt . . . . . . . . . . . . .177.40 –4.60 194.40 92.00 Intl Personal Fin . . . . . . . . . . . . .277.50* –0.60 283.00 137.00 Rolls Royce . . . . . . . . . . . . . . . .591.50 +2.50 631.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .716.50 –3.50 744.00 520.50
Centrica . . . . . . . . . . . . . . . . . . .328.10 +0.60 347.00 236.30 Intl Power . . . . . . . . . . . . . . . . . .385.80 –1.20 396.80 248.20 Rotork . . . . . . . . . . . . . . . . . . .1728.00 +12.00 1732.00 1095.00 Xstrata . . . . . . . . . . . . . . . . . . .1249.00* +28.50 1344.50 815.00
Charter Intl . . . . . . . . . . . . . . . . .687.50 +4.00 855.50 563.50 Invensys . . . . . . . . . . . . . . . . . . .297.50 +3.10 350.30 224.90 Royal Bank Of Scot . . . . . . . . . . . .48.05 –0.76 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .2992.00 –8.00 3711.00 2365.00 Investec . . . . . . . . . . . . . . . . . . .503.50 +3.50 565.00 411.50 Royal Dutch Shell A . . . . . . . . .1914.00 +3.00 2068.50 1621.00
Close Bros . . . . . . . . . . . . . . . . .723.50 –3.50 806.50 657.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .58.80 +0.10 71.75 41.04 Royal Dutch Shell B . . . . . . . . .1856.00 +7.00 1997.50 1550.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .233.00 –0.40 278.60 205.50 Jardine Lloyd Thompson. . . . . . .580.00* +8.00 604.50 420.70 RSA Insurance . . . . . . . . . . . . . .131.10* +0.50 142.00 114.10
COLT Group . . . . . . . . . . . . . . . .122.10 –0.20 144.20 107.70 Johnson Matthey . . . . . . . . . . .1776.00 +16.00 1814.00 1302.00 SABMiller . . . . . . . . . . . . . . . . .2012.50 –0.50 2090.00 1450.00 www.interactivedata.com

Mining lifts Latecomers

FTSE while run to join
banks drag stock rally
THELONDON THENEW YORK
REPORT REPORT
B
RITAIN’S top share index closed

U
slightly higher yesterday as S stocks rose yesterday as late-
stronger mining stocks offset comers jumped onto the
falls from banks still dogged by September bandwagon, buying
investor concerns over sovereign debt. up sectors that have outper-
The FTSE 100 closed 5.02 points, or formed during the month.
0.1 per cent, higher at 5,578.44 in skit- The S&P 500 has risen 9.4 per cent
tish trading, with the index having so far in September, historically the
dipped as low as 5,506.07. worst month for stocks.
Miners were in demand, boosted by The Dow Jones industrial average
firmer copper as the dollar fell after Risk-sensitive banks exerted down- ond quarter of 2010 and first-quarter heavy loser, shedding 2.4 per cent gained 46.10 points, or 0.43 per cent,
unexpectedly weak consumer confi- ward pressure on the index, with the growth was revised slightly higher, after it said clients had pulled out to end at 10,858.14. The Standard &
dence data from the United States. sector off 0.5 per cent. the Office for National Statistics said. assets for an eighth straight quarter. Poor’s 500 Index rose 5.54 points, or
Randgold Resources was among “The economic data across the And British retail sales rose much 0.49 per cent, to 1,147.70. The Nasdaq
the top blue-chip risers, up 2.2 per western world is so contradictory more than expected – at their fastest ANALYSIS l FTSE Composite Index advanced 9.82
cent, as gold hit a record high. still,” Jim Wood-Smith, head of pace in over six years – in September, 5,800 5,578.44 points, or 0.41 per cent, to 2,379.59.
Concerns about the debt situation research at Williams de Broe, said. a survey by the Confederation of 28 Sep With only two days left in
in peripheral Eurozone countries “There’s not enough bad news to British Industry showed. 5,600 September, the Dow is up 8.4 per cent
kept investors wary, but these fears persuade the bulls that the double- The Bank of England should start 5,400 for the month.
were offset by data showing Britain’s dip is going to come, and there’s not pumping more money into the econ- Only 7.63bn shares traded on the
recovery is on track and retail sales enough good news to persuade the omy in order to prevent Britain 5,200 NYSE, Amex and Nasdaq.
were stronger than forecast. bears that 2011 is going to be any bet- falling into the same kind of slump 5,000 Advancing stocks outnumbered
Standard & Poor’s warned it may ter, so we’re stuck in limbo at the Japan did in the 1990s, Monetary declining ones on the NYSE by a ratio
cut Ireland’s credit rating if the coun- moment.” Policy Committee member Adam 4,800 of about seven to three. On the
try poured more than €35bn into Britain’s economy grew at its Posen said. 4,600
Nasdaq, two stocks rose for every one
Anglo Irish Bank. fastest pace in nine years in the sec- Hedge fund firm Man Group was a 28 Jun 16 Jul 5 Aug 25 Aug 15 Sep that fell.
 24 Markets & Investment | Foreign Exchange
EURO-DOLLAR
TRADE IS AN
UGLY CONTEST
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
L
ET’S just retrace Tuesday’s euro-dollar
price movements. First, the pair rallied in
early Asian trade when a Wall Street
Journal article reported that the Fed is
considering a quasi-permanent QE policy, rais-
ing fears that the central bank will eventually
monetise more than a trillion worth of US debt.
Then, before anyone had a chance to take a
breath, the pair tumbled on rumours that
Moody’s would soon downgrade Spain’s AAA
rating by possibly two notches. After consoli-
dating for less than an hour at $1.3400, the
euro once again raced back to $1.3500 as an
ex-Chinese central bank advisor Yu Yongding
said China is worried about the safety of the
dollar, only to fall once again after chancellor
Merkel said that Germany would not agree to
an extension of Eurozone rescue measures.
Confused? You are not alone. In the euro-
dollar trade, market sentiment quickly lurches
from shunning one currency to despising the
other. Yet away from the intra-day noise it is
important to understand that trade in the pair
is driven by two competing considerations. On
the one hand the market is worried about sov-
ereign debt issues in Europe and the chance
that the union could fragment if Greece and
Ireland are unable to restructure their debts.
On the other, the threat of never-ending QE
raises the spectre of serious dilution for the dol-
lar and the possibility of high inflation as for-
eign buyers reduce demand for US debt,
forcing the Fed to hike rates to attract capital.
At present the market appears to be less
concerned with the sovereign debt fears in the
Eurozone than the dilutive prospects of the
Fed’s QE2 program. Still, it is difficult to deter-
mine how this scenario will resolve itself.
Therefore I prefer to sidestep the whole affair
for now and focus on other currencies such as
the Swiss franc and the Australian dollar.
After all, there is a reason why euro-dollar
trade has been dubbed the “ugly contest”.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read com-
mentary at www.GFTUK.com/commentary or
e-mail borisandkathy@gftuk.com.
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CD03UK.113.073010
CITYA.M. 29 SEPTEMBER 2010
Brazil’s central banker
denies a currency war
But devaluations will
cause real problems,
reports Jessica Mead
B
RAZIL’S central bank president
Henrique Meirelles yesterday
warned that there is a serious prob-
lem of competitive currency devalu-
ation among central banks but refused to
join the Brazilian finance minister Guido
Mantega in saying that an international
currency war had broken out.
Speaking to journalists at the Brazilian
ambassador’s Mayfair residence, Meirelles
said countries should not have to pay the
price for weaker currencies elsewhere,
whether it was caused by the economic sit-
uation or by specific measures to retain
competitiveness. “We can’t have some
countries having their currencies weak-
ened. We are going to have a few countries
pay the price for that. There is a very seri-
ous problem which should be addressed,”
he said. He added that discussion should
probably take place at the G20 meeting, to
be held in Seoul in November.
On Monday, Guido Mantega said we are
in the midst of an international currency
war. South Korea, Japan and Taiwan have
all recently intervened in currency mar-
kets to make their currencies cheaper and
safeguard their economic strength.
Politicians, who face a general election
on Sunday, are desperately trying to Henrique Meirelles
appease suffering exporters which have Picture: Micha
been stung by a four-month rally in the Theiner/City A.M.
Brazilian real against the US dollar. This
has been caused by foreign investment as
well as speculative foreign exchange
inflows seeking high yield. The real has upward pressure from here will provoke rather than a relapse to non-market friend-
strengthened some 10 per cent against the an increasingly strong response from the ly practices.” Meirelles said it remained an
dollar since mid-May and 33 per cent since authorities. What’s more, the heavy costs open possibility that the Brazilian govern-
the start of December 2008. of sterilising intervention in the foreign ment would raise taxes on capital inflows
Many emerging market economies, both exchange market suggests that policymak- but added that the decision rested with
in Asia and Latin America, have been seek- ers may rely on less conventional methods the finance minister. Last October the gov-
ing to prevent their currencies from appre- to tame the currency. In short, capital con- ernment imposed a 2 per cent tax on for-
ciating in order to mitigate large-scale trols are moving back onto the agenda.” eign purchases of equities and bonds.
capital inflows and to avoid asset bubbles But investors would be wrong to see this Meirelles refused to be drawn on what
from emerging. Although the Brazilian as Brazil moving away from market-friend- he thought was an ideal value for the real.
authorities have recently intervened in the ly policies, Shearing points out. “Brazil will Shearing believes that the fair value is
spot FX markets by buying up to $1bn a remain dependent on capital inflows to around $1.80-$1.90. But with high interest
day, they have stopped short of unconven- fund its huge investment needs. In this rates, a booming economy and competitive
tional intervention to weaken the real, says context, the debate over capital controls currency devaluation, it may be some time
Neil Shearing at Capital Economics. should be welcomed as a sign of an increas- before Meirelles and his colleagues suc-
But he adds: “It seems that any further ingly mature approach to policymaking ceed in returning the real to fair value.
Get started at
gftuk.com.
CITYA.M. 29 SEPTEMBER 2010 Investment | Foreign Exchange 25

THE
Yen to stay still TIPSTER
GOOD DATA
SUPPORTS
despite Japan’s STERLING

T
HERE has been a slew of good news for
sterling: the UK’s second quarter GDP

FX intervention growth rate posted a nine-year-high

and retail sales figures have bounded
higher too. The pound could finally be back in
reach of the big $1.6000 level, which hasn’t
been seen sensibly since January. The current
IG Index price on cable is $1.5885-$1.5887.
The greenback lost significant ground
US quantitative easing sets the tone for safe against the Swiss franc in the early part of
last week but the pair now seems to have
haven currency pairs, says Donata Huggins reached a plateau. Central bank intervention
has been ongoing for some months but
there's speculation that there could be a

E
XPECTATIONS of further Japanese
stimulus are high. Many believe that
the Bank of Japan (BoJ) will decide to
pump $55bn into the flagging econo-
my next week. Those looking to the Bank’s
meeting for a shake up in the dollar and
euro against the yen are likely to be left
wanting.
Firstly, traders should not be so sure
that Japan will actually introduce further
quantitative easing (QE). On Wednesday,
the governor of the BoJ, Masaaki
Shirakawa, said that while QE has helped
stabilise financial systems in Japan in the
past, it has only had a limited impact on
boosting the economy. Analysts are specu-
lating that this could mean that the BoJ
will seek alternative solutions to QE.
But even if the BoJ goes ahead with QE,
$55bn is not actually a lot of money in
terms of an economy the size of Japan.
Neil Mellor of The Bank of New York
Mellon says “The Japanese stimulus would
have to be far larger to make waves”, and
that currency traders should be more
interested in the impact of the US’s QE
programme when looking for changes in
dollar-yen and euro-yen.
Existing US QE has already had an
impact by diluting the strength of the dol-
lar. Mellor says much of the recent trends
in currencies have been the result of this:
“People need to do something with their
dollars, so they have put them in euros.
The euro is a sort of default currency.”
Since May the euro has moved sideways
against the yen (see chart below).
Considering that Greece’s sovereign debt
crisis and last week’s Irish bank down-
grade fell during this period, the stability
of the euro-yen has been impressive. For
this reason Mellor predicts greater down-
side for dollar-yen than euro-yen in the
next few quarters. He says: “The only thing
stopping the euro going up in the near-
term is nervousness over certain levels.”
In fact, Mellor believes that currency
trends at the moment have little to do
with the underlying economies: “Nobody
really knows what’s driving the currencies
at the moment so technical analysis has
taken over.” That is, the psychological
impact of certain numbers are governing
where investors are putting their money.
For example, he thinks that we will only
start to see changes in euro-yen if Irish
credit default swaps hit above 500 basis
points.
Even if Japanese QE makes a substantial
impact on the Japanese economy, curren-
cy experts such as Ian Stannard of BNP
Paribas think that the result could be
increased investment in Japan, which
would keep the yen broadly in the same
range against the dollar and the euro.
So for as long as American QE con-
move through the all-time lows of
SFr0.9648. There is a risk that this could
destabilise the Swiss economy. However, for
as long as investors are looking to switch out
of euros, the Swiss Franc will hold significant
draw. The current IG Index price on dollar-
Swiss franc is SFr0.9851-SFr0.9853.
Following Japanese intervention, the dol-
lar reached a high of ¥86.19 against the yen.
Since then it has been weakening and
rumours of further quantitative easing have
been circulating. If the yen were to slide
below ¥84 this could increase the likelihood
tributes to the devaluation of the dollar, Japanese intervention of further intervention and see the dollar
the dynamic between the euro-yen and will be small scale strengthen again. Cantor Index offers dol-
dollar-yen – regardless of the proposed lar-yen daily at ¥84.12-¥84.14.
Japanese QE – is likely to remain broadly Picture: GETTY Australian dollar-US dollar has appreci-
the same. ated some 800 basis points since the begin-
ning of the month as the US dollar has been
ANALYSIS l The performance of the euro against the yen over hammered and commodity currencies are in
¥ the last six months demand. Australian dollar-US dollar has
125
taken out the previous resistance around
US$0.9360 all the way to a new 26-month
high of US$0.9682. As tempting as it may
120 look to sell short it could be a dangerous play
given the momentum behind the pair. It
might be worth waiting to see if it reaches
115 the US$0.98 level – the highs of July 2008 –
before looking to sell this pair. Spread Co
offers a spread on Australian dollar-US dol-
110
lar of US$0.9676–US$0.9678.
Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Donata Huggins

FOREX ANALYST PICKS

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

My pick: Buy dollar-Swiss franc at SFr0.9885
Expertise: Classic technical analysis
Average time frame of trades: 1 week-6 months
Setbacks have finally stalled out ahead of the critical record lows from
2008 by SFr0.9645, with the market finding a bottom in the SFr0.9700s
ahead of the latest minor bounce. Short-term and medium-term studies
are looking quite stretched and longer-term cyclical studies warn of a
major bottom. This sets up the potential for a reversal, with a break and
close back above SFr0.9880 to confirm bias and accelerate gains. Buy at
SFr0.9885 with an objective of SFr1.0500 and a stop at SFr0.9585.
My pick: Pending market moves, long euro-yen above ¥114.25
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day to 1 week
With a time frame of only a week, we don’t have the opportunity to posi-
tion for larger reversals and have to instead position ourselves counter to
fundamental developments. This is not a position I like to be in. Euro-yen
could be a pair that is well positioned regardless. Under constant threat of
Bank of Japan intervention and an upcoming EU debt rollover, I will be
looking for a close above ¥114.25 for entry with a 150 point stop and first
target.
My pick: Short euro-dollar pending the market
Expertise: Global macro, classic technical analysis
Average time frame of trades: 1 week-6 months
Euro-dollar ended last week just below major resistance at $1.3510, the
50 per cent Fibonacci retracement of the Nov to June fall. Prices put in
a shooting star candlestick pattern, hinting a reversal is ahead. Negative
RSI divergence bolsters the case for a downside scenario. I will enter
short following confirmation on a daily close below $1.34 on the current
candle, which would give a bearish evening star candlestick as well as
the bottom of a rising channel set from the start of September.
 26 Investment | Fund Management CITYA.M. 29 SEPTEMBER 2010

The African consumer will

AFRICAN EQUITY
FUNDS

drive growth beyond mining NEPTUNE AFRICA FUND

Launched less than a month ago, this open-
ended offering from Neptune Investment
Low valuations and Management is managed by South Africa-
based Shelley Kuhn. It aims to generate capi-
steady expansion are tal growth by investing mainly in companies
in Africa or companies transacting a signifi-
cant proportion of their business on the
bringing investors to African continent; it will comprise up to 50
stocks. Although the fund is able to invest
the final frontier, across the whole continent, at least half will
be invested in South African equities, in the-
writes Juliet Samuel ory to minimise the volatility and enhance
the liquidity of the fund. Besides South
Africa, larger weightings are expected in

T
HE time of Africa is coming,” says
Renaissance Asset Managers’ Plamen
Monovski. His firm has just launched
two new equity funds that give access
to African stocks (one pan-African, one sub-
Saharan) and to say he is bullish on the con-
tinent would be an understatement.
He argues that with stock so cheap and
foreign direct investment pouring into
Africa, now is the time to buy: “To discover
a market with such potential, where valua-
tions are very low and yet it’s somewhat de-
correlated with global growth, it’s like
finding the philosopher’s stone,” says
Monovski, Renaissance Asset Managers’
chief investment officer.
The funds’ launch reflects that Africa’s
growth story is becoming increasingly
accessible to non-specialist investors. North
and South Africa have long been targets for
high-return investment but, from being the
exclusive preserve of adventurous private
equity investors and national governments,
sub-Saharan Africa is now joining the party.
The IMF forecasts growth of 4.5 per cent
for Ghana next year, 6.2 per cent for
Tanzania and 7 per cent for Nigeria for
example, and predicts that such levels of
growth will be sustained, or accelerate, over
the coming years.
And sub-Saharan growth is not just
about natural resources. Both Renaissance
funds, for example, are primarily a play on
consumer demand and infrastructure,
with 60-70 per cent of their assets invested
in these areas. Monovski says: “The con-
sumer elsewhere is very expensive, but
here, we’re talking about 6-8 times price-to-
earnings ratio. So you get access to a large
consumer pool and you don’t pay very
much for it.”
Charlemagne Capital’s Sharat Dua is sim-
ilarly enthused about the rise of African
consumption. In particular, he is invested
in Zambian company Zambeef, which aims
to become Africa’s largest protein-producer.
“As the economy grows and incomes rise,
ordinary Zambians will start to display
greater choice in their consumption habits,
for example spending more on food.
Currently, in South Africa, per capita chick-
en consumption is 20 kilos per annum. In
Zambia it is only two kilos per annum.”
In addition to this growing wealth, says
Silver Street Capital’s Gary Vaughan-Smith,
the continent’s burgeoning population and
urbanisation should ensure that food pro-
duction is in high demand. Silver Street’s
agricultural private equity fund targets
farmland and related businesses like fer-
tiliser and machinery producers.
Monovski says that this building interest
in the African consumer is in part due to
the financial crisis. “In a period when the
majority of the world saw GDP decline and
commodity prices fall, Africa as a whole
grew 3 per cent. Everyone realised there
was a domestic driver of demand.”
But there are still sceptics. Courtiers
Investment Services’ Gary Reynolds is con-
vinced that statistical analysis shows that
the risks of investing in many African coun-
tries are not worth the benefits. He plotted
GDP per capita against countries’ scores in
the World Economic Forum’s global com-
petitiveness report and concludes: “Africa is
virtually uninvestible.” This is in part due to
political risk and lack of transparency and
in part due to liquidity concerns.
While many countries have made signif-
icant progress in improving their gover-
nance, investors would still be best-advised
to stick with fund managers who have
experience doing business in Africa. Dua,
for example, insists on going to meet the
management of any company in which he
invests, while Renaissance’s Africa fund
managers have managed funds on the con-
tinent since 2005.
As for liquidity issues, investors should
not expect to move in and out of African
stocks as they can in more advanced
emerging markets. But for the right size
of fund and timescale – over years, not
months – there is growing liquidity in
the larger markets. Monovski highlights
that Nigeria’s stock market, for example,
can easily turn over $20m-$25m “on a
good day”.
Even considering the risks, therefore,
there should be room for African stocks in
a portfolio targeting high returns. The
investment world is now used to talking
about the Chinese and the Brazilian con-
sumer. Over the next decade, we will also
become accustomed to considering the
demands of the African consumer.
Nigeria, Egypt and Kenya. There is an initial
charge of 5 per cent and the annual manage-
ment fee totals 1.85 per cent. For institution-
al investors with a minimum investment of
£10m, the annual fee is 1.35 per cent.
JULIUS BAER EF NORTHERN AFRICA
This Luxembourg-domiciled Sicav was
launched in September 2007 and focuses
exclusively on North African companies. It
combines a bottom up stock selection
process and a top-down country and sector
analysis. The fund is a blend of growth and
value and is designed to be high risk and suit-
able for long-term investors so those who do
not want to accept this level of risk and
volatility should look elsewhere. Its biggest
weighting is to Egypt (37.8 per cent) followed
by Sub-Saharan Africa (24.9 per cent). A
third of the portfolio is exposed to financial
stocks and materials account for 27 per cent.
Cash currently makes up 3.8 per cent of the
holdings. It has a total expense ratio of 2.51
per cent and a management fee of 1.6 per
cent. Year-to-date, the fund has gained 20.33
per cent.
Afra Mall, Sudan’s
first mall
Picture: GETTY
JP MORGAN AFRICA EQUITY FUND
Launched in May 2008, this Luxembourg
Sicav is managed by Sonal Pandit and Oleg
Biryulyov and has $252.4m in assets. It aims
to provide long-term capital growth by invest-
ing in a portfolio of African companies. It has
outperformed the benchmark (MSCI
Emerging and Frontier Markets Africa Index)
since June 2009 but in the last three months
has underperformed. Although the fund has
nearly 40 per cent of its assets in South Africa,
the benchmark has 87 per cent. It is over-
weight both Nigeria and Egypt. Although four
of the five biggest holdings are financials or
telecoms, it is underweight both these sectors
and is overweight consumer staples and dis-
cretionary. The initial charge is 5 per cent and
the annual fee is 1.5 per cent. But when the
fund return exceeds the benchmark return,
there is a performance fee of 10 per cent.

FUND MANAGEMENT NEWS

BY JULIET SAMUEL
Pictet’s new China fund aims to reduce volatility
PICTET LAUNCHES LONG-SHORT ASIA FUND
Pictet funds, the fund distribution arm of pri-
vate Swiss bank Pictet & Cie, has launched a
long-short UCITS III-compliant Asia fund. It
will be managed be Lan Wang Simond and
seeks to capture Chinese growth while min-
imising losses during periods of high volatility
and reducing correlation to the broader mar-
ket. It will aim to derive at least 30 per cent
of its earnings from the greater China region.
Lan says: “By using hedging and short selling
techniques we are able to manage impacts
from falling markets and offer investors an
Picture: GETTY improved risk-return profile.”
HIGH INFLOWS TO ASIA FUNDS
Data from EPFR Global shows that the week
ending 22 September saw a 15-month high in
inflows into Asia ex-Japan equity funds as
investors fled funds with exposure to the US
and Europe. Pacific equity funds had their
best week for nearly four months, with overall
emerging market fund inflows hitting
$3.38bn. In terms of asset classes, bond funds
were popular, swelling by $4.8bn, while equi-
ty funds expanded $3.3bn. But while bond
funds are up $306bn year-to-date, equity
funds are still down $37bn, reflecting an ane-
mic attitude to risk.
SCHRODERS’ FUND GETS ELITE RATING
Morningstar, the fund research firm, has
upgraded its ratings for the Schroder
Japan Alpha Plus fund to elite, its highest
possible rating. It is only awarded to funds
that the firm believes can consistently outper-
form their peers for years to come.
Morningstar’s Mark Laidlaw said: “Schroder
Japan Alpha Plus isn’t your typical Japan
equity fund, but we think it’s one of the best.
Nathan Gibbs runs a concentrated go-any-
where portfolio of 30-35 names across the
market cap spectrum, searching out compa-
nies that he sees as undervalued.”
CITYA.M. 29 SEPTEMBER 2010
LLPs are not as safe as you might think
In Limited Liability Partnerships
junior members can have the
same responsibilities as partners
JAMES MATHER
T
HE LIMITED Liability Partnership
vehicle is now a decade old, but its
uptake has reportedly surged amid
economic hard times. Members of
insolvent LLPs are certainly better off
than their counterparts in insolvent part-
nerships, who must routinely dig into
their own pockets to meet creditors’
claims. This summer, though, saw the
first high-profile collapse of an LLP – that
of the law firm, Halliwells – and the jury
is still out on whether this was the
Lehman Brothers or just the Northern
Rock of the legal services market. Either
way, the limits to limited liability for
members of LLPs in all sectors look set to
be thoroughly tested before this recession
is out.
What LLP members may not realise is
that, under insolvency law, even the most
junior of them is treated much like a com-
pany director. In larger firms, that can
work harshly. Junior members are often
kept out of the loop of decision-making.
Under the terms of the members’ agree-
ment, they might even be barred from
receiving information about the LLP.
When they were promoted into the mem-
bership, they were rarely in a position to
negotiate over the small print. But the
law still expects them to look out for the
interests of the LLP’s creditors when insol-
vency beckons.
You cannot be a “sleeping director” of a
company and you cannot be a “sleeping
member” of an LLP. If the LLP should have
ceased to trade earlier than it did, all
members are potentially liable to make
good the loss to creditors where they
should have done more to bring this
Banking regulations
won’t bring stability
Discretionary nature of reforms and countries’ inability
to overrule Europe mean financial rules are ineffective
JACQUI HATFIELD
T
HE BASEL III reforms have now
been formally endorsed by the
Group of Governors and Heads of
Supervision of the G20 countries.
The aim is for the proposals to be agreed
about (although those with specific man-
agement responsibilities will be the most
exposed). All members, too, may poten-
tially have to repay any money received
from the LLP – including salary and prof-
it share – within the two years before it
was wound up, a rule without equivalent
for companies.
Even in large LLPs, personal guarantees
from members for the LLP’s debts are
also widespread and likely to be called
upon if the LLP fails. If the LLP takes steps
to reduce these members’ liabilities
when in financial difficulty, their lawful-
ness is likely to be challenged. The diffi-
culty is that it will involve preferring
these creditors’ interests over the inter-
ests of creditors generally, which cannot
be done.
In the case of Halliwells, parts of the
business were sold to other firms and the
proceeds used to release some members’
personal bank guarantees. This undoubt-
edly preferred these members’ interests
in November 2010 and to take effect from
1 January 2013 – albeit with long transi-
tional periods.
Under the reforms, banks will now
need to hold up to 4.5 per cent core tier
one capital made up of shares and
retained earnings by 2015, and a cushion
of up to 2.5 per cent (up to 7 per cent in
total) between 2016 and 2019. Significant
banks will need to hold more capital,
thought to be around 10 per cent core tier
one.
Also included in the reforms is a lever-
age ratio of 3 per cent of unweighted
assets imposed to prevent excessive trad-
ing (a test phase will end in 2017) and a
City Focus | Law
over the general creditors, but the High Protected? Maybe not
Court nonetheless blessed the “necessary
evil” involved. The reason was that the Picture: GETTY
sale of the business could not otherwise
proceed. If the guarantees survived, the
guarantors would have faced personal
bankruptcy, and they could not practice
as solicitors. Their business would then
evaporate.
This decision reprieved the individuals
concerned, but may prove a curse for
LLPs. Banks who thought they had the
comfort of personal guarantees independ-
ently of the value of the business may in
practice be forced to elect between the
two. Inevitably, the guarantees and securi-
ty called for to support future lending
will become more exacting as a result.
As a shareholder of a company, it is pos- All of a failed LLP’s members could potentially
sible to enjoy the benefits of ownership
without bearing the responsibilities of have to pay back all salary and profit share
management. In an LLP, there is no such
thing as care-free ownership. Not all paid for the two years before it was wound up
members are equal and not all even have
requirement to maintain a liquidity
cushion made up of high-quality sover-
eign debt and corporate bonds, with
applicable cuts, to allow banks to sur-
vive acute stress scenarios lasting one
month.
These requirements may not look that
high. However, the costs of meeting them
will be, which will impact on the avail-
ability and costs of lending.
The long transitional periods are unfor-
tunate and it is conceivable that there
may be another crisis before the reforms
are implemented – as well as a danger
that the laws will become fragmented in
the interim.
Germany has won a 10-year transitional
period to meet the requirements due to
the fact that its “silent participations”
would no longer be able to be used to
meet the test. It is likely that without this
transitional period, Germany would not
have signed up to the proposals.
FATTER CUSHION
The UK wanted higher capital require-
ments from the reforms and has stated
that it intends to impose the full 2.5 per
cent cushion, as well as higher capital
requirements than those proposed by the
Basel Committee.
In addition to being potentially harm-
ful to competition, it is questionable
whether the UK will be able to impose
higher capital requirements than Basel
when the Capital Requirements Directive
27
a stake in the LLP’s profits. All, though,
have a potential liability for its losses, in
spite of the limited liability epithet. The
unavoidable potential liabilities attached
to membership place a heavy onus on
sound governance within the LLP.
In boom times, this was easier to
ignore. The widespread transition from
traditional partnership to LLP helped
encourage a greater concentration of
decision-making in professional service
firms. These times of bust will underscore
the dangers for LLP members of trusting
too much to others.
James Mather is a barrister practising at Serle
Court, Lincoln’s Inn. jmather@serlecourt.co.uk
4 reforms (CRD4 reforms) are implement-
ed. There is a definite move toward full
harmonisation of rules within Europe
and it is becoming more difficult to gold-
plate. We should expect the UK to fall in
line with the rest of Europe when CRD4 is
implemented.
A concern for Europe is that all the pro-
posals for reform are amendments to the
Basel Accord, which is a voluntary accord
– and therefore does not have any teeth.
As the accord and amendments to it are
made mandatory in the EU for all banks
and investment firms, it is important that
all the G20 countries commit to imple-
menting the reforms within the dead-
lines; otherwise competition will be
adversely affected in the EU.
While the US has committed to the
reforms and the Basel III reforms are
either set out or provided for in the Dodd
Frank Act, there is concern with Asia, as
Japan and China did not implement the
Basel II reforms and Singapore is not a
member of the G20.
The leverage ratio, capital require-
ments and capital cushions in the
reforms should all help to prevent anoth-
er crisis; however, it is important that all
the G20 countries move together in order
to provide a global solution to what is a
global crisis and to prevent regulatory
arbitrage.
Jacqui Hatfield is a partner and head of the
financial services advisory group at Reed Smith
LLP. Jhatfield@ReedSmith.com
 Lifestyle
28 CITYA.M. 29 SEPTEMBER 2010
WORDS BY
| Motoring RYAN BORROFF

It shrieks and

Fast
&
speeds like a
Ferrari. But
surprise: the Skoda
Fabia is an

furious
economical little
hatchback

I
T’S ALWAYS a little strange when
you get the impression you’re driv-
ing a Ferrari when you’re really hit-
ting 40mph in a small hatchback.
Powering along the north Kent coast in
the Fabia vRS, towards a particularly
excellent gastro pub, the car shrieked
and howled so loudly you’d think there
was a V12 under the bonnet.
But the Skoda Fabia vRS has the power
to back it up, in this case VW’s excellent
1.4 TSI engine which has won so many
awards it’s a wonder the bonnet isn’t see-
through. The engine has a supercharger
for low engine speeds and a turbocharger
for higher ones which translates into a
great deal of power, 180bhp in fact – yet
the car still remains economical. It’s a
feisty little beast, surprising you with
acceleration that feels so spritely you
need to be measured the first few times
you do a parallel park. It’s swift to move
through the auto 7-speed DSG gearbox
and if you feel like you want to get a bit
more hands-on when you’re hitting
country road corners, there are some
rally-style paddle shifters behind the
leather steering wheel. The suspension
has had a makeover which includes low-
ering the car and tautening the ride from
the standard Fabia. The result is that the
Fabia vRS darts around corners quite
happily.
In fact, this hot hatch version of the
Fabia has a lot of features inspired by THE FACTS:
Skoda’s S2000 rally car, including rear SKODA FABIA VRS
and front spoilers, tinted rear windows,
17-inch alloys, red brake callipers and optional Bluetooth was really easy to use ble. Another Lilliputian surprise was the PRICE: £15,700
twin exhausts, plus a leather covered and for £220, a bit of a must-have, or at skinny cupholders – as if you’re only ever 0-60MPH: 7.3secs
handbrake, gearknob and steering wheel. least, a why-not. The screen was a treat going to drink Red Bull when you’re cruis- TOP SPEED: 139mph
This means that the Fabia – which is a too, with very pleasing lime green fea- ing in this car – although maybe that’s
small, boxy, unglamorous compact – has tures tastefully laid out and nice intuitive the case for the target driver of a Fabia CO2 G/KM: 148g/km
improved looks all round in vRS guise. buttons to help you select your radio sta- vRS. MPG COMBINED: 45.6mpg
With the contrast roof it’s obviously pret- tion, amongst other things. The Skoda Fabia vRS feels well built,
ty eye-catching, three friends – albeit
with untrained eyes – mistakenly likened
The car mainly disappointed in the
places where it felt small, like the boot,
performs well and its undoubtedly great
value for money. But more importantly
THE VERDICT:
the car to a MINI, which has got to be a which would have accommodated a suc- it’s fast, a bit lary and great fun to drive
DESIGN hhiii
pretty flattering comparison. cinct shop from Waitrose but was a real and it gives rivals – like the Polo GTI,
PERFORMANCE hhhii
In-car gadgetry was unexpectedly squeeze for a family overnighter, even Citroen DS Sport and Seat Ibiza Cupra – a
PRACTICALITY hhiii
excellent for a car of this segment; though we’d travelled as lightly as possi- run for their money.
VALUE FOR MONEY hhhhi

CAR TALK BY RYAN BORROFF

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

FERRARI SLEEKEST YET
This is Ferrari's strictly limited edition (pre
sold-out) SA Aperta – to be launched at the
Paris Motor Show. Ferrari will build only 80
SA Apertas in homage to Italian design house
Pininfarina, which is 80 this year. The V12-
powered roadster sits lower to the ground
than other Ferrari models and has a light soft
top and low-slung windscreen to ensure the
best aerodynamic performance yet.
PORSCHE’S THREE-DOOR COUPE
If you think the Porsche Cayenne Turbo is a lit-
tle too pedestrian for your needs, take a look
at this bad boy. Merdad Cars is unveiling its
new three-door Cayenne 902 Coupe at
November's MPH show. The car boasts
750BHP and can reach 0-60 in just 4.4 sec-
onds. It offers a host of “improvements” –
including the loss of a couple of doors.
www.mphshow.co.uk
VAUXHALL’S HOT NEW ASTRA
Is this the new Vauxhall Astra VXR? It’s cer-
tainly Vauxhall's new three-door Astra com-
ing next year. It’s also a phenomenally good
looker, proving Vauxhall design continues to
come on in leaps and bounds – note the
“surface entertainment” on its flanks. When
it goes on sale next year the hot hatch VXR
is rumoured to offer power as high as
300hp.
CITYA.M. 29 SEPTEMBER 2010 Lifestyle | TV& Games 29

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
6.55pm Party Political
Broadcast
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News 10.35pm The National
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French Film 2008 12.55am Sign
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Toby Young tries to set up one
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8pm MasterChef: The
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4: On Track 12.35am Boardmasters Valencia v Manchester United (Kick-off
League: Extra Time Presents Plan B 12.50am 4Play: 11pm Law & Order
12.35am The Zone; ITV News 11.55pm Poker 7.45pm). Coverage of the Group C clash
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Headlines Show Spotlight 1.20am Hung 12.55am SuperCasino 4.05am at the Mestalla, where the teams play
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Musical, starring Doris Day. 1953. Strip 2.35am FILM The Cat’s Rescue Squad 5.10am The New
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5.15am-5.30am ITV Nightscreen Blues 5.25am-6.10am Countdown Wild Challenge

SKY SPORTS 1 2.30am Golfing World 9pm Ghost Whisperer 10pm 1.10am Scrubs 2.05am Life 4.40am Unsolved History
SATELLITE & CABLE

7pm Sky Sports News at
Seven 7.30pm Soccer Special
10pm You’re on Sky Sports!
11.30pm FIFA Futbol Mundial
12am A-League 12.30am
UEFA Champions League Goals
1.30am FIFA Futbol Mundial
2am A-League 2.30am UEFA
Champions League Goals
3.30am Ryder Cup Preview
5am-6am UEFA Champions
League Goals
SKY SPORTS 2
5pm Live UEFA Champions
League 10pm UEFA Champions
League Goals 11pm Transworld
Sport 12am Watersports
World 1am-3am Poker Million
SKY SPORTS 3
7pm How the 2004 Ryder Cup
Was Won 9pm Ryder Cup
Preview 10.30pm How The
2006 Ryder Cup Was Won
1.30am Champions Tour Golf.
The SAS Championship.
3.30am-4.30am Max Power
BRITISH EUROSPORT
6.20pm US Tour Golf 7.20pm
European Tour Golf 7.50pm Golf
Club 7.55pm Sailing 8.25pm
Yacht Club 8.30pm Riders
Club 8.35pm Live Equestrian
10pm Sport Traveller 10.15pm
Cycling
ESPN
6.30pm NHRA Drag Racing
9.30pm 30 for 30 10.30pm
NBA 11.30pm Late Night Poker
12.30am Press Pass 2010 1am
ESPN Kicks Extra 1.15am 30
for 30 2.15am ESPN Serie A
Kicks 2.30am UFC Unleashed
3.30am ESPN Scottish
Premier League Kicks 3.45am
ESPN Kicks Extra 4am-6am
Live Major League Soccer
LIVING
7pm Four Weddings 8pm
Psychic Sally: On the Road
Criminal Minds 12am CSI:
Crime Scene Investigation
2am Medium 3am Charmed
3.50am Girls of the Playboy
Mansion 4.40am The Jerry
Springer Show 5.30am-6am
Home Shopping
BBC THREE
7pm The Real Hustle: Celebrity
Scammers 8pm Don’t Tell the
Bride 9pm FILM Proof of Life
2000 11.10pm Family Guy
11.55pm One Non Blonde Down
Under 12.25am Ideal 12.55am
Him and Her 1.25am The Real
Hustle: Celebrity Scammers
2.25am One Non Blonde Down
Under 2.55am Ideal 3.25am
Him and Her 3.55am-4.55am
Don’t Tell the Bride
E4
7pm Hollyoaks 7.30pm Friends
9pm Ugly Betty 10pm FILM
The Devil Wears Prada 2006
12.10am RuPaul’s Drag Race
Unexpected 2.45am RuPaul’s 5.30am-6am How Does That
Drag Race 3.30am What Work?
About Brian 4.10am
Samantha Who? 4.30am The DISCOVERY HOME &
Hills 4.55am-6am Switched HEALTH
7pm Extreme Pregnancy 8pm SEVEN DAYS
HISTORY Marlie’s New Face: Four Years CHANNEL 4, 10PM
7pm How the Earth Was Made On 9pm Hospital Sydney 10pm Documentary detailing the lives of
8pm Mega Movers 9pm Ax Untold Stories of the ER 11pm people living or working in Notting Hill,
Men 10pm Sliced 11pm The Trauma Team 12am including a hairdresser, a rapper, two
America: The Story of the US Hospital Sydney 1am Untold models, a single mother and a student.
12am Ax Men 1am The Lost Stories of the ER 2am The
Evidence 2am How the Earth Trauma Team 3am Marlie’s
Was Made 3am-5am The Real New Face: Four Years On 4am
Face of Jesus? A Baby Story 5am-6am
Bringing Home Baby
DISCOVERY
8pm How Do They Do It? SKY1
8.30pm How It’s Made 9pm 8pm Emergency Animal
Egypt’s Mystery Chamber Rescue 9pm FILM Cliffhanger
10pm Trawler Wars 11pm Is It 1993 11.10pm Ross Kemp on
Possible? 12am Bear Grylls: Gangs 12.10am Road Wars COWBOY BUILDERS
Born Survivor 1am Deadliest 1.10am Night Cops 2am UK CH FIVE, 8PM
Catch 2am Chris Barrie’s Border Force 3am Oops TV Sheree Murphy and Dominic Littlewood
Massive Speed 3am World 3.30am The 4400 4.20am help a single mother from west
War Two in HD Colour 3.50am Vroom Vroom 5.10am-6am London, sort out the mess left behind
Raging Planet Sell Me the Answer by builder whom she paid £50,000.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
10 34 7 9 36 6 8 14  
28 12

10 27
Place the numbers from 1 to 9 in each empty cell so that each 23
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 9 9
3 37 5 14
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 7 21 13
  
above or to the left of it. 13 18
You can only use the digits 1-9 45
   and you must not use the 15 4    
same digit twice in a block. 6 12 24 16 16
     The same digit may occur 45

  more than once in a row or

column, but it must be in a
13
8
10
21
12
  
11 13
  separate block.
17 10 10 11 
14 11
     29 30
 

  ACROSS DOWN
1 Relating to birds (5) 1 State in north-
 
     WORDWHEEL R C
4 Juvenility (5)
7 Threaded (4)
eastern India (5)
2 Dreadful, terrible (5)
Using only the letters in the Wordwheel, you have 9 Dignity, esteem for one’s 3 And not (3)
   ten minutes to find as many words as possible,
D E own person (4-7) 4 Affirmative
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters R 10 Marine fish widely
caught for food (6)
answer (3)
5 Not consumed (7)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
F U 12 Corrode, as with acid (4) 6 Come out of
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
T A 13 Flesh used as food (4) an egg (5)
8 Large entrance or
14 ___-Herzegovina,
QUICK CROSSWORD 2 3 5 1 4 1 European country (6) reception room (9)

) ( 7 ( 6 $ 3 $ 5 7
8 4 7 2 5 9 6 SUDOKU          17 Painful inflammation of 11 Apprentice (7)
5 8 6 9 7 9 8
( 2 $ 5 (
3 1 9 6 8 3 7 9
         the upper throat (11) 13 Anthem (5)
1 ) , / 7 + , ( 6 7         
1 2 8 1 6 6 ( 1 2 8 4 2 1 7
         20 Adolescent (4) 15 French river (5)
( & $ , 5 2 1 4 3 2 7 1
         21 Divisions of the 16 Illegal setting
/ 8 / 8
3
9
5 + <
1
0 (
8 7 6
2
9 4 7
4 2 1
1 9
6 3
7 6
6 8 9
WORDWHEEL          school year (5) of fires (5)
% , 2 5 ' ( 5         
5 ( & 2 * 1 , 6 ( 5 8 1 9 8 4 1 6 The nine-letter word 22 Country of the Arabian 18 Of a thing (3)
5 8 7 3 4 9 6         
$ 8 6 $ 2
was WEAKENING         
Peninsula (5) 19 Pasture (3)
6 7 $ 6 + 7 + 5 2 : 1 7 1 2 4 3
 30 Sport CITYA.M. 29 SEPTEMBER 2010

Results
UEFA CHAMPIONS LEAGUE GROUP E
Basle.................................(1) 1 Bayern Munich ..............(0) 2
Frei 17 Schweinsteiger 56 (pen), 89
Att: 40,000
Sorry Saracens sweat on ERC decision
Roma................................(0) 2 CFR Cluj-Napoca ...........(0) 1
Mexes 69 Rada 78 unlikely to be enough to avoid a Germany on a team-building trip pre-arranged squad function was
Borriello 71 Att: 40,000 EXCLUSIVE
£4,250 fine from European Rugby of the kind that the club place entirely the club’s decision, and noth-
P W D L F A GD Pts BY FRANK DALLERES
Bayern Munich 2 2 0 0 4 1 3 6 Cup, however, who expressed their great importance on. ing to do with Steve. Nobody can
Roma 2 1 0 1 2 3 -1 3 SARACENS say they are yet to hear disappointment at the player’s City A.M. understands that doubt the professionalism and com-
CFR Cluj-Napoca 2 1 0 1 3 3 0 3 from Heineken Cup chiefs after cap- absence from Monday’s event. although the visit to Munich mitment of perhaps the most pro-
Basle 2 0 0 2 2 4 -2 0 tain Steve Borthwick controversially Yet a club spokesman told City A.M. was arranged three months ago, fessional and committed player in
GROUP F skipped the competition’s launch in last night that no contact had been Saracens knew of the Heineken the country. The clash of dates was
Chelsea...........................(2) 2 Marseille............................(0) 0 order to join his team-mates at the made by ERC. It is thought they may Cup launch eight weeks ago. unfortunate but, at the 11th hour,
Terry 7
Anelka 28 (pen) Att: 40,675 Munich beer festival. now wait until November before However, club chiefs left it late we rationally decided it was
Spartak Moscow.....(1) 3 MSK Zilina.........................(0) 0 The Premiership club yesterday meeting to discuss the matter. before deciding Borthwick’s more important for our captain
Ari 34, 61 issued a public apology, insisting the Former England captain presence at the bonding exer- to take part in a long-arranged
Ibson 89 Att: 33,124 decision had been taken by manage- Borthwick, right, was the only repre- cise was paramount. and highly significant squad
P W D L F A GD Pts
Chelsea 2 2 0 0 6 1 5 6 ment rather than Borthwick himself sentative of the 12 teams not to Chief executive Edward event than to attend a press confer-
S Moscow 2 2 0 0 4 0 4 6 and reaffirming their “total commit- attend the appointment in Cardiff. Griffiths said: “The decision that ence where he was not nominated
Marseille 2 0 0 2 0 3 -3 0 ment” to the tournament. That looks Instead he was with his squad in Steve Borthwick should attend a to be formally interviewed.”
MSK Zilina 2 0 0 2 1 7 -6 0
GROUP G
Ajax...................................(1) 1 AC Milan..............................(1) 1

Harrington’s
El Hamdaoui 23 Ibrahimovic 37
Att: 50,000
Auxerre .........................(0) 0 Real Madrid......................(0) 1
Att: 24,900 Di Maria 81
P W D L F A GD Pts
Real Madrid 2 2 0 0 3 0 3 6
AC Milan 2 1 1 0 3 1 2 4

eagles cheer
Ajax 2 0 1 1 1 3 -2 1
Auxerre 2 0 0 2 0 3 -3 0
GROUP H
Braga...............................(0) 0 Shakhtar Donetsk.......(0) 3
Luiz Adriano 56, 72
Att: 25,000 Douglas Costa 90 (pen)
Partizan Belgrade...(1) 1 Arsenal.................................(1) 3

Montgomerie
Cleo 33 (pen) Arshavin 15
Chamakh 71
Att: 25,000 Squillaci 82
P W D L F A GD Pts
Arsenal 2 2 0 0 9 1 8 6
S Donetsk 2 2 0 0 4 0 4 6
P Belgrade 2 0 0 2 1 4 -3 0
Braga 2 0 0 2 0 9 -9 0
NPOWER CHAMPIONSHIP
Burnley...........................(2) 4 Hull .........................................(0) 0 do and that’s why he was picked.
▲

Cardiff............................(0) 0 Crystal Palace ................(0) 0 GOLF

Coventry........................(1) 2 Doncaster...........................(1) 1 BY FRANK DALLERES “He’s had three eagles already. He’s
Derby................................(1) 3 Middlesbrough...............(1) 1 playing the best golf of my team. He’s
Leeds ...............................(4) 4 Preston................................(2) 6 EUROPE captain Colin Montgomerie a world player, he’s won three major
Norwich..........................(1) 4 Leicester .............................(1) 3 insists Padraig Harrington’s sparkling championships and the stature of the
Nottm For.....................(0) 1 Sheff Utd.............................(1) 1
Portsmouth ................(0) 3 Bristol City........................(0) 1 form in practice has already justified guy is second to none within our
QPR ...................................(0) 0 Millwall ...............................(0) 0 his contentious selection. team.”
Reading..........................(0) 1 Ipswich...............................(0) 0 Harrington hit three eagles yester- Harrington hinted he may be find-
Scunthorpe.................(0) 0 Barnsley..............................(0) 0 day at Celtic Manor as both teams ing form just in time to face the
Watford.........................(0) 2 Swansea .............................(2) 3 began their final preparations for this United States when he carded a 64 at
week’s eagerly-anticipated contest. the Vivendi Cup in Paris on Sunday –
TODAY’S DIARY Such form represents a huge improve- the best closing round.
(Football 7.45pm unless stated)
ment on his indifferent performanc- And it seems Lee Westwood, anoth-
UEFA Champions Lge
Group A es this year, which meant he failed to er player on whom much depends
Inter Milan v Werder Bremen .............................................................................. qualify automatically for the team. but who comes into the match with-
Tottenham v FC Twente............................................................................................ But Montgomerie has taken out form, is also rediscovering his
Group B Harrington to Wales as one of his touch, after shooting three birdies in
Hapoel Tel-Aviv v Lyon .............................................................................................. wildcard picks, provoking much his first four practice holes. A torn
Schalke 04 v Benfica ................................................................................................ debate, and says he has already out- calf muscle has kept Westwood out of
Group C
Rangers v Bursaspor..................................................................................................
shone his colleagues. action since early August, but
Valencia v Man Utd .................................................................................................... “There are reasons why Padraig Montgomerie added: “I know it
Group D Harrington was picked and judge me means very little on Tuesday, but it’s
Panathinaikos v FC Copenhagen .......................................................................... about that selection on 4 October and always good for one’s self-esteem to
Rubin Kazan v Barcelona (5.30) .......................................................................... not on 26 September,” said start off that way. He’s not played in
Montgomerie. “I feel the criticism six or seven weeks and he starts rip-
SPORTS EDITOR JON COUCH was very unjustified to be honest. I ping the ball like he is, so I’m very
email sport@cityam.com know what Padraig Harrington can excited for Lee Westwood this week.” Harrington (left) was a wildcard pick of Montgomerie’s (right). Picture: ACTION IMAGES

Fulham v Spurs
Saturday 16th October
(Kick-Off 3pm)

For a truly memorable matchday experience,

climb aboard our fantastic River Thames Boat
Cruise before Fulham take on Spurs at Craven
Cottage. Combine the experience of top-flight
football with a scenic two-hour voyage along
the river, taking in some of the Capital’s most
famous sights.
Available for just £225 (+VAT) per person
For more information or to book your place,
call 020 8336 7555
or e-mail hospitality@fulhamfc.com
CITYA.M. 29 SEPTEMBER 2010
Chelsea ease
way back into
winning habit
CHELSEA 2 “In the second half we had a few
MARSEILLE 0 ond half but we stayed solid and kept
CHAMPIONS LEAGUE
▲
CHELSEA captain John Terry admit-
ted his relief after helping the Blues
bounce back from successive defeats
to maintain their 100 per cent
European record.
It took Terry just seven minutes to
ease any nerves around Stamford
Bridge, the centre-back meeting Gael
Kakuta’s corner with a faint toe-poke
that crept in at the near post.
Three points were all but safe
before the half-hour when Nicolas
Anelka nonchalantly converted a
penalty after Stephane Mbia had been
punished for handball.
“We’d had two losses which is very
unusual for us, so we’re pleased to
pick up three points, keep a clean
sheet and extend that lead at the top
England blow as Rooney is
ruled out for three weeks
VALENCIA
MANCHESTER UTD
ITV1, ko 7.45pm
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES
ENGLAND will be without striker
Wayne Rooney against Montenegro
next month after Manchester
United manager Sir Alex Ferguson
revealed he needs up to three
weeks to recover from an ankle
Redknapp tips Bale for top but faces
defensive headache for Twente visit
TOTTENHAM
FC TWENTE
Sky Sports 2, ko 7.45pm
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES
TOTTENHAM manager Harry
Redknapp expects Gareth Bale to
become the world’s best left-back –
but is happy to wait while he ter-
rorises defences himself. Bale, 21,
of the group,” said Terry.
chances to make it three or four. We
didn’t start the brightest in the sec-
a clean sheet.
“With Sunday in mind we maybe
took our foot off the gas a little bit,
saving a bit of energy for the week-
end. We’d have liked to have got a
third and killed the game off but they
had a lot of possession.”
Carlo Ancelotti’s men had ample
chance to increase their haul, Florent
Malouda firing over before half-time
and Alex, with a 35-yard free-kick,
and Michael Essien both hitting the
post.
But they rarely looked in danger
after Terry met a right-wing corner
from 19-year-old Kakuta, preferred
over Daniel Sturridge with Didier
Drogba suspended. Mbia was
aggrieved to be penalised for hand-
ball but Anelka showed no mercy,
calmly slotting low to the right to get
Chelsea back to winning ways ahead
of Sunday’s visit of Arsenal.
injury. Rooney’s setback is a blow to
Ferguson ahead of tonight’s Group
C trip to Valencia, with evergreen
duo Paul Scholes and Ryan Giggs
also missing against the Spanish
league leaders.
But the development will also
severely affect the plans of England
head coach Fabio Capello, who now
faces a major forward shortage for
the Euro 2012 qualifier on 12
October, having already seen
Jermain Defoe and Bobby Zamora
ruled out.
“It will be two to three weeks,”
said Ferguson. “But it depends
has carried last season’s scintillat-
ing form into the current cam-
paign and will be expected to pose
much of the Spurs threat when
Dutch champions FC Twente arrive
at White Hart Lane tonight.
“I think in years to come, he’ll be
the best left-back anywhere,” said
Redknapp. “But he’s also a great
left-sided player and it suits me to
play him wide left most of the time
because [Benoit] Assou-Ekotto is
also a top, top-class left-back.”
Redknapp has a defensive injury
crisis, with both William Gallas
Sport | Football 31
Anelka (left) scored from the spot after Stephane Mbia handballed. Picture: ACTION IMAGES
GROUP F
TEAM PLD W D L F A PTS
Chelsea 2 2 0 0 6 1 6
S Moscow 2 2 0 0 4 0 6
Marseille 2 0 0 2 0 3 0
MSK Zilina 2 0 0 2 1 7 0
because Wayne has done quite well
with his recovery from injury in
the past. It is a straightforward
ankle injury. And it is not the same
one he did in Munich [in last year’s
Champions League quarter-final].”
Ferguson could recall England
captain Rio Ferdinand as he goes in
search of his first win in this sea-
son’s competition, having rested
the defender for the 2-2 draw at
Bolton on Sunday.
Midfielder Scholes, who has been
among United’s most effective play-
ers this term, is expected to be out
for 10 days with a calf problem.
and Michael Dawson out, meaning
Sebastien Bassong will be part-
nered by either Ledley King or erst-
while full-back Vedran Corluka.
And he admits he is also struggling
to balance European and domestic
commitments, having won just
twice in six Premier League games.
“The biggest problem you have is
probably getting the players up for
league games after the Champions
League,” he added. “You have to jug-
gle around your team and when
you keep changing your team, it
makes it difficult to get continuity.”
 Sport
32 CITYA.M. 29 SEPTEMBER 2010

BLUES CRUISE
TERRY ON TARGET AS
CHELSEA EASE PAST
MARSEILLE: PAGE 31

You’ve lost
Arsenal shine your aura,
as lights fail McIlroy
tells Woods
in Belgrade

▲
GOLF
BY FRANK DALLERES
straight away after a big disappoint-
PARTIZAN 1 ment against West Brom. It puts us
in a good position confidence wise,”
RYDER CUP newcomer Rory McIlroy
last night fanned the flames ahead of
said Wenger. this week’s contest by declaring that
ARSENAL 3 “Fabianski had a good game, we
have seen the player tonight who we
America’s Tiger Woods has lost his
“aura”.
see in training. He had a faultless United States captain Corey Pavin
game. I know it is in him.” has warned McIlroy he risks goading
▲

CHAMPIONS LEAGUE
BY FRANK DALLERES
ARSENAL manager Arsene Wenger
hailed his team after they overcame
floodlight failure, a boisterous
crowd and two penalties to plunder
maximum points with a nervy
Champions League triumph in
Belgrade.
A power cut plunged dressing
rooms into darkness before kick-off
and threatened to postpone the
game, but play commenced with the
stadium only partially illuminated
and the Gunners were soon in front.
Goals from Andrey Arshavin,
Marouane Chamakh and a first for
Sebastien Squillaci secured three
points, but 10-man Partizan were
level at one stage through Cleo’s
penalty and had another chance
from the spot late on.
Stand-in goalkeeper Lukasz
Fabianski saved that penalty and
enjoyed a confidence-boosting per-
formance, while teenage midfielder
Jack Wilshere dazzled again as
Wenger’s side bounced back from
Saturday’s defeat.
“For us it was important to win
On the power cut, Wenger added:
“I thought it would be terrible to go
home and not play. When they asked
if I wanted to play with one corner
off, I said yes.”
Wenger would not be drawn on
whether Fabianski would retain the
gloves for Sunday’s crunch trip to
Chelsea, and said it was too early to
judge the fitness of captain Cesc
Fabregas.
They will have Wilshere, however,
who set up Arshavin’s 15th-minute
strike with an instinctive backheel.
Arshavin’s lob was then hooked off
the line, while he and Rosicky might
both have extended the visitors’ lead
before Denilson was ruled to have
handballed and Cleo sent Fabianski
the wrong way with a penalty.
Arsenal should have retaken the
lead 10 minutes after half-time when
Chamakh tumbled and Marko
Jovanovic was dismissed, but
Arshavin’s spot-kick was saved.
But with 20 minutes left Chamakh
headed in Rosicky’s cross at the sec-
ond attempt and Squillaci then nod-
ded his first for the club, before
Fabianski saved Cleo’s penalty.
the best out of world No1 Woods, who
is without a top-three finish in what
has been a traumatic year.
Northern Irishman McIlroy, 21,
raised eyebrows last month when he
said any of Europe’s team would
“fancy their chances” against him at
Celtic Manor.
But the debutant yesterday main-
tained his confident stance and
brushed aside Pavin’s suggestion his
comments would only serve to moti-
vate Woods.
“Before I met him, you feel as if he’s
superhuman,” said McIlroy of Woods.
“But once you meet him you realise
he’s a normal guy and works hard on
his game and gets the most out of it.
GROUP H “But after the last 18 months, I sup-
pose a little bit of that aura is probably
TEAM PLD W D L F A PTS gone.
“I said this week and last week: I
Arsenal 2 2 0 0 9 1 6
don’t mind who; I just want to win
S Donetsk 1 2 0 0 4 0 6 points for the team. If that’s against
Tiger or Phil [Mickelson] or Steve
Partizan 1 0 0 2 0 4 0 Stricker or Hunter Mahan or whoever,
Braga 1 0 0 2 0 9 0 you just want to go out there and try
to play as best you can. I feel if I play to
my potential, I’ll win a few points.”
Arshavin (left) scored Arsenal’s first but later missed form the spot. Picture: ACTION IMAGES HARRINGTON CHEERS MONTY: P30