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Fury over UK tax avoidance

Should banks and corporations pay more?
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Time for the Big 4
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Recklessness: how naughty are you?

We asked Gateway readers
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Editors letter
ime flies especially when youre having fun! Not only have I had to come to terms with the fact that Im not a student any more over the past six months (for Gods sake enjoy it while you can), but if youre reading this, my last issue as assistant editor of The Gateway has already gone to press! Im moving on to pastures new, so now Im going to use this opportunity to serve up quadruple helpings of the shocking and filthy secrets that The Gateway team have been hiding for too long Nah, just kidding. Though they do have tendencies to terrify pedestrians with abnormally loud bicycle horns, manufacture homemade leather laptop cases (dont ask), and wear a fluffy sheep tea cosy as a hat around the office while slagging off my dress sense (who knew baggy jumpers could be considered slutty?) Theyre a lovely bunch! Stepping into the unknown can be a scary time, but The Gateways here to help. Possibly the scariest route of all is setting up your own company, and in this issue, we weigh up whether its worth ditching your career path for one (uP11). Or, if youre looking for a route to legal success, take a look at our guide to City law firms (uP20). If you think youre big enough for the Big Four, check out our Consulting and Accounting section (uP23-P32), as weve got articles from all of them in this issue. Well help you get through the gruelling assessment centre process with part four of our series (uP36) and if youre feeling nosy, you can see how reckless you are compared with other Gateway readers (uP43) with our very own poll. And if youre still hungry for more Gateway goodness after that, look out for our issue coming out in the summer term and also for our brand new website, which will soon be live... Bye bye Gateway, Ill miss you! P.S. Check out our fan mail below, and feel free to follow suit if you love The Gateway as much as it loves you. As we spent Valentines Day in a curry house with dodgy wallpaper earlier this month, it will make us happy to know that our feelings are reciprocated!
POLITICS & ECONOMICS

Votes for votes
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Thaddeus Best explains the proposed changes to the UKs electoral system
Inflation
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We explain what it means and uP08 what causes it
Down to the wire

The UKs internet economy explored
uP10
BUSINESS
uP11-12
Corporate ladder vs going it alone

Should you sacrifice a graduate job to start your own business?
A tale of sky high profits?

A chat with the an executive uP11 of a satellite company
uP12
BANKING & FINANCE

Inside Job
The financial crisis on film
uP13-18
uP13
Diary of a Bloomberg analyst

See what they get up to day to day
uP17
Derivatives
The Gateway tells you what you need to know
uP14
City insider
Alex Buchanan on the investment market today and the story of his own career
uP18
LAW
uP19-22
The Bribery Act 2010
Find out about it and when it will come into force
uP19
Katie Morley
Fan mail: Editors pick
The Gateways guide to City law firms Who are the biggest legal
players in the Square Mile?
uP20
Asia: A great place to be a lawyer

We ask Clifford Chance why
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(assistant editor) editor@thegatewayonline.com
CONSULTING & PROFESSIONAL SERVICES

Time for the Big Four
An introduction to the worlds biggest professional services firms
uP23
uP23-31
Dear Gateway, You are an incredible resource which has given me insight to Englands financial sector. As an American studying in London, I initially had little knowledge of how the City functions, who the major players are, and how university students could get jobs there. But The Gateway has given me a wealth of information, which I plan to use to apply for jobs in the City this summer. Im interested in management consulting, and The Gateways coverage on different topics has helped understand more about the field. Ive learned what employers are looking for in their interns, how I can distinguish myself in the competitive application process, and many more lessons. I cant wait for the next issue! By JC Stiassni JC is an American student from George Washington University, currently studying History at Kings College London.
More than a job

Deloittes employees take part in an array of community activities
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A world of opportunities for you

Meet graduates in each department of Ernst & Young
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Professional growth
The Gateway talks to two partners at KPMG about their career paths
uP30
Risk Assurance: a view from the top

The Gateway chats to PwCs Head of Risk Assurance
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CAREERS & EDUCATION

The Gateway meets some bright student entrepreneurs
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Rising stars: Oxbridge tour guides

uP33
Assessment centre tips

Our advice on giving presentations
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About
Working abroad: New York

Whats it like to work in a Manhattan bank?
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www.grant-thornton.co.uk/graduates
Commercial awareness
How do bankers, lawyers, accountants and consultants think?
uP34
Why study for an MSc in Finance?

Business Because.com explain
istributed around campus at the UKs fifteen most prestigious universities, The Gateway is an independent business and careers newspaper read by the most ambitious and business-focused of todays students. As well as providing no-nonsense advice on getting into a chosen career, The Gateway is a more accessible alternative to publications like the Financial Times and the Economist for students keen to boost their commercial awareness.
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OPINION
uP39-43
Matthew Reeves
On expensive drinks and finding a way to pay for them
uP41
Book review
More Money than God by Sebastian Mallaby
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Bath Bristol Cambridge Durham Edinburgh Exeter Imperial College Kings College LSE Manchester Nottingham Oxford St. Andrews UCL Warwick
Youth unemployment
Milkrounds Mike Barnard discusses the problem
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The Gateway poll

How reckless are you?
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March 2011
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NEWS
BANKING & FINANCE

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CAREERS & EDUCATION

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OPINION
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REUTERS/Mohamed Azakir
Bull market
Foxes
Theyre everywhere ! even at the top of Londons Shard towe r, soon to be Europe s tallest skyscraper.
Focus on: Corporation tax
A protester steps on posters with defaced depictions of Libyan leader Muammar Gaddafi during a demonstration organised by students and supporters of the Shiite Amal movement against him and to express solidarity for Libyan protesters, near the U.N. headquarters in Beirut
Water
cent this go up 4.6 per r Bills are set to roviders, not so great fo r l. Great for p ont want to spend ou Apri se. We d on water! everyone el beer money
ollowing the controversy over bankers bonuses, Barclays is again under fire. This time, the amount of tax it pays has been criticised after it transpired that in 2009 it paid only 113 million in UK corporation tax, while generating total pre-tax profits of 11.6 billion. Chuka Umunna, a Labour MP and a member of the Treasury Committee, said that the situation raises serious questions as to whether the government is ensuring banks like Barclays are paying a fair contribution to the deficit they helped create. One reason that Barclays and other similar organisations pay
these low levels of corporation tax is that companies are allowed to bring forward any losses arising from previous years. This means that banks have been able to use their significant credit write-downs of 2008 to reduce their subsequent obligations. In response to allegations that they do not pay a fair amount of tax, Barclays said that it took its responsibilities as a corporate citizen very seriously. The bank commented on its complex tax structure as a multinational corporation, stating that the amount of tax paid in the UK and the size of its global profits should be seen as unrelated. The group declared: The corporate tax affairs of an organisation with the global footprint of Barclays are complex and not reducible to simplistic comparisons.
However the news has prompted UK Uncut, a group opposing government spending cuts, to take over 30 Barclays branches as part of a series of protests around the country. The group objects to not only the size of Barclays tax payments, but also to bonuses paid by it and other banks. Bob Diamond, CEO of Barclays, is in line for a 9.5 million payout. The protests have taken the form of bail-ins, where volunteers set up libraries, forests, hospitals and schools within a bank branch. These demonstrations symbolise UK Uncuts argument that the sums spent on banks bail-out, tax avoidance and bonuses would have been enough to protect the government from cutting essential services. The next target of UK Uncut will be
the Royal Bank of Scotland. Protesters plan to occupy the banks branches to show dissatisfaction with the 1.93 billion bonus pot allocated in a year in which the bank lost 1.3 billion. RBS is 84 per cent taxpayer-owned. Although the protests are on a relatively small scale UK Uncut is hoping for a turnout of 1,000 people countrywide they highlight the resentment still felt towards banks, despite Government efforts to usher in Project Merlin as a peace accord between the public and financial institutions. Other targets of the UK Uncut have included Boots, Tesco and Topshop boss Sir Philip Green. The group was formed last October after ten friends targeted a Vodafone store in an attempt to highlight the issue of corporate tax avoidance.
An engineer repaid his co mp 2 million af ter they accid any entally paid him 1000 in his pay slip times too much ! Good old ho always the b nesty is est policy.
Honest employees
Its becoming very difficult for banks to try and justify their tax avoidance when so much government capital was spent on bailing out the big names during the crisis. They are also rewarding their employees with massive bonuses which is very frustrating to the public. Its very much a question of fairness. Isabella Gerber UCL
It seems unlikely that big public spending cuts could be offset if large businesses paid a bigger share of tax. The UKs tax regime already threatens the countrys position as a global financial centre and tougher taxation rules are likely to encourage more multinationals to relocate.
I dont like the thought of paying taxes, but I do like traffic lights, the BBC and the fact that pensioners can get free flu jabs in the winter. Its the same for big corporations, so why should they be treated differently? Taking advantage of the benefits of this country and then refusing to share profits gained from them is deplorable in every way. Tabassum Rasheed University of Oxford
Words by Marta Szczerba
Masha Kiryanova London School of Economics
Breast milk ice cream

A restaurant in Covent Garden has made a real boob by trying to sell it for 14 per portion. The Gateway can safely say well be sticking to our trusty Ben and Jerrys.
Need to know
World
Thousands killed and injured in Libya
It is thought that thousands of people have been killed or injured in the government crackdown in Libya over the past week and a half. Anti-government rebels have been fighting Libyan leader Muammar al-Gaddafis army in a rebellion that shows no signs of slowing. The UK is bribing Libyan officials in order to evacuate Brits out of the country away from danger. David Cameron has said he is doing everything he can to remove around 500 UK citizens from the turmoil. World leaders from around the world are meeting in Geneva to discuss their response to the situation.
India expects economy to grow at 9% in 2012

The Indian government has revealed that its economy is set to grow at 9 per cent in 2012. Projected rates for the current fiscal year are 8.5 per cent. Finance Minister Pranab Mukherjee also announced that inflation would rise over the coming year, with rapidly inflating food prices (currently at 17 per cent) remaining a concern for the country, as many Indian citizens spend a high proportion of their income on food. Food security has been set high on the countrys list of priorities for action, alongside social spending and education and health funds.
Diors head d esigner was arrested afte anti-Semitic r making remarks at a bar in Pariss Marais distric fashionable t. Not cool.
John Gallian o
David Cameron to rethink the cuts to the UKs defence budget. They claim that the cuts will undermine the Army and Royal Marines abilities to mount crucial operations even against a relatively weak enemy forces. They believe that Britain has lost the ability to mount amphibious operations without putting troops lives at considerable risk. After the turmoil in Egypt, Bahrain and Libya, Labour have already proposed a re-think of the defence cuts.
lion in compensation to 300,000 of its mortgage customers after admitting confusing them about whether a cap on its standard variable rate mortgage applied to them. The bank, owned by Lloyds Banking Group, raised margins on these mortgages by 1 per cent in January 2009. The payout is being made after Halifax reached an agreement with financial watchdog the Financial Services Authority.
Product placement ban lifted for British TV

Advertisers will be allowed to pay for their goods to be seen on British television for the first time. Paid-for references can now be included in shows produced in the UK, including soaps and dramas. The Church of England has opposed the lifting of the ban, claiming that it could promote unhealthy lifestyles. However, programmes will have to inform viewers that an advert is being displayed with the letter P shown for three seconds before the programme starts. ITV 1 show This Morning will show the first paid-for product, which will be a Nescaf coffee machine.
Lloyds profits for the first time since its bailout

Lloyds Banking Group has seen its first profits since being bailed out by the government in 2009, during the height of the financial crisis. It reported a pretax profit of 2.2 billion for 2010. Lloyds Chief Executive Eric Daniels is being offered a bonus of 1.54 million this year. However, whether he will accept the amount has yet to be confirmed.
edIn Link
UK
UK GDP slipped by 0.6 per cent
In the final quarter of 2010, UK Gross Domestic Product (GDP) fell by 0.6 per cent, sinking further than expected. The Office for National Statistics had previously estimated a slump of 0.5 per cent. The difficult conditions caused by the long spate of heavy snow in December is being blamed for the worse than expected contraction in the last three months of 2010.
China with me parts of blocked in so way logged on to its Its been ion. The Gate ese Premier Wen no explanat d Chin d tried to ad we could ask him profile an work so r net got back Jiabao to ou far he hasnt g on, but so whats goin to us.
Major earthquake devastates New Zealand city

A 6.3 Richter scale earthquake rocked Christchurch in New Zealand last week, with over 154 people confirmed as dead as The Gateway went to press. Over 200 are still missing in the aftermath of the quake, with now little hope for their survival. Over 100 people are thought to have been killed in the building which housed broadcaster CTV, and 20 bodies or more are believed to be crushed inside Christchurchs cathedral. Rescue and recovery efforts continue in the city.
Primark sees UK demand slowing

Primark has announced a noticeable slowdown in UK demand in the first months of 2011. The slowdown has been caused in part by Januarys rise in VAT and rising cotton prices. Despite the bad weather, Primark did well in the run-up to Christmas last year. Even though Primark claims to have maintained healthy business in the rest of Europe, shares in its parent company ABF have fallen by 5 per cent. ABF also owns Ovaltine, Ryvita and Twinings.
Business
Halifax mortgage customers to receive 500 million
Halifax will pay out a total of 500 mil-
Bear market
Ex-military chiefs say defence cuts are a mistake

Ten retired military officers have urged
Politics in pictures: Electoral dispute
March 2011
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LAW
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OPINION
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Master the new language of business

The Nottingham MSc
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IN THIS SECTION
Votes for votes
Thaddeus Best explains the proposed changes to the UKs electoral system
uP07
Down to the wire

The UKs internet economy explored
uP10
Inflation
We explain what it means and uP08 what causes it
UK ELECTORAL REFORM
Votes for votes

Thaddeus Best asks what change in the UK electoral voting system could mean for both government and the general public
he coalition government is about to face its second major challenge, just two months after the student fees riots. Over a decade since the Jenkins Commission recommended the abolition of the First Past The Post (FPTP) voting system in 1998, the general public will vote for electoral reform in May as part of one of the key manifesto pledges of the coalition.
REUTERS/POOL New
Prime Minister David Cameron gestures to Deputy Prime Minister Nick Clegg during their joint news conference at 10 Downing Street
Thaddeus Best
All change?
The proposed system, Alternative Vote (AV), is in fact not much of a radical departure from the FPTP system. Its used to elect representatives for single-member constituencies, just like FPTP except that voters have the option to rank the candidates by preference rather than simply marking an X on the ballot paper for their favourite. If a candidate receives a majority of firstpreference votes, then they are elected. If no candidate gains a majority on first preferences, then the second-preference votes of the candidate who finished last on the first count are redistributed. This process is then repeated until someone gets over 50 per cent. This system is currently used in the Australian House of Representatives and the Irish presidential elections, as well to elect the hereditary peers in the House of Lords. Proponents of the AV system argue that it has several key advantages over FPTP. Under the AV system, all MPs would have the support of a majority of their voters. It would retain the same constituency boundaries, penalise extremist parties and eliminate the need
for tactical voting. However, AV was not the system recommended by the Jenkins Commission. It preferred the Alternative Vote Top-Up (AV+) system, a combination of alternative vote and additional member system, which was shelved under Labour on the grounds that it was too complex. Opponents of the AV system have largely fallen into two camps: those who support the status quo, and those who argue that AV is still not proportional enough. FPTP supporters argue that the current system produces the strongest governments by avoiding cohabitation and keeps fringe parties like the BNP out of power. Whether these strong governments are fair is another matter; FPTP can produce notoriously skewed results. Labours second victory in 2001, which awarded them 63 per cent of seats in the House of Commons, was won with just 40 per cent of the vote.
will produce more hung parliaments (much like his own) while Ed Miliband heads the Yes campaign. Meanwhile, Nick Clegg has been forced to take a back seat from spearheading the pro-AV charge because of fears that his current unpopularity will lead the electorate to vote against him rather than the reform itself. The significance of the campaign is intensified by the shaky political alliance that underpins the coalition. After the tuition fees debacle, electoral system reform is seen as one of the only concessions that Clegg has been able to secure for the Lib Dems. Electoral reform has always formed part of the Liberal Democrat manifesto, largely because the current system heavily penalises the party, whose support tends to be spread across constituencies rather than concentrated in particular locations. If he fails to deliver, Clegg could be facing widespread backbench revolt and accusations that he has conceded too much to the Conservatives in the pursuit of office, and gained little for the Lib Dems in the process.
portion of the population could be relied upon to number candidates by preference rather than simply placing a cross in a box. The truth is that the current system has created a rather comfortable two-party state which neither Labour nor the Conservatives have historically been keen to relinquish, which is hardly surprising given the significant advantage it affords them. Despite the controversy, AV isnt really as revolutionary as those in favour of FPTP suggest. In fact, the BBC has even banned the use of the word reform in conjunction with the voting system in the run up to the May elections. AV is still not a proportional system, and the fact remains that in essence it isnt much of a departure from FPTP. Alone, its unlikely to cause that much damage to the two-party structure; studies suggest that the Lib Dems would have only gained around 20 or so more seats in recent elections.
Tough choices
The half-hearted nature of the proposed changes leaves those who feel that AV is
not going far enough in a difficult position. By voting against AV in protest, they risk their vote being recorded as evidence that the public are opposed to electoral reform. By voting for it, they could be stuck with a system that is still not proportional while the government considers itself to have fulfilled its pledge to the electorate. The result is likely to be skewed further by those voting against AV in the hope that it will trigger a fundamental breakdown of the coalition, a serious possibility given its current fragility. In the event of a No result, Clegg will be forced to work extremely hard to hold it and his own party together. Some kind of electoral change is long overdue in the UK. Although it rose for the 2010 election, voter turnout is generally is decreasing, suggesting widespread disengagement with Westminster. So as it forces politicians to look beyond certain sections of the electorate to gain an overall majority, a Yes vote on AV could at least help to restore some much-needed faith in the political process.
One step forward, two steps back

So if the public vote in favour of change in May, how will it affect the political landscape? Camerons claim that AV will lead to more hung parliaments is slightly disingenuous: Australia has used AV for more than 90 years, where it has resulted in just two hung parliaments. Similarly, his claim that we shouldnt replace a system that everyone gets with one thats only understood by a handful of elites borders on insulting, insinuating that only a small
Tories say nay

Recent polling suggests that the race will be a tight one, with the Yes and No camps at 37 per cent each, and the Dont Knows at 27 per cent. However, the campaign has become politically charged as some voters are seeking to punish their leaders by voting against their respective camps. Cameron has thrown his weight behind the No campaign, arguing that AV
Electoral systems across the UK

General elections First Past The Post (FPTP) Scottish Parliament Additional Member System (AMS) Welsh Parliament Additional Member System (AMS) Northern Ireland Assembly Single Transferable Vote (STV) European Parliament Proportional Representation, closed list (PR) London Mayoral elections Supplementary Vote (SV)
Generic MSc 262x370.indd 1
02/02/2011 11:59:03
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ECONOMICS
Blowup: inflation
Inflation is on the up again after 20 years of largely steady prices
Inflation could be described as the biggest economic ill of the 20th century
Will Hodges explains why prices rise
tick or twist? It was the conundrum facing the Bank of Englands Monetary Policy Committee (MPC) this February as it was forced to decide whether to raise interest rates from their current all-time low of 0.5 per cent. A rise would place the UKs economic recovery in jeopardy as it would make the cost of borrowing money more expensive to banks and other businesses. But keeping interest rates unchanged would put the country at risk of an equally unattractive outcome: inflation. With the UK rate of inflation at 4 per cent for January (CPI see box) (considerably above the Bank of Englands 2 per cent target rate) and forecast to rise further in 2011, many urged the MPC to raise interest rates rather than allowing inflation to move any higher. What did they decide? The MPC left interest rates at half a percent with the economys 0.5 per cent contraction in the fourth quarter of 2010 no doubt weighing heavily on their minds. Was it the right decision? Only time will tell.
Inflation could be described as the biggest economic ill of the 20th century. A quick scan of the history books will reveal a lengthy list of the governments and economies it has devastated, among them the Weimar Republic, Hungary, and more recently, Zimbabwe and Venezuela. But broadly speaking, the past 20 years have seen low rates of inflation across much of the world. Rapid advances in technology have made manufacturing and trade cheaper and more efficient than ever before. Machines have limited the need for manual labour, keeping wage inflation (rises in salaries) low, while the trend towards smaller electrical components has reduced expenditure on transportation and fuel, keeping the cost of goods and services down. Furthermore, the arrival of the internet has given us tools of communication which are now instantaneous and largely free.
Will Hodges
Basket case: how is inflation measured?

Only the most vigilant of us are likely to know the price of a loaf of bread from one month to the next, while it takes the most pennypinching of students to keep track of the cost of a can of baked beans. Luckily, government bods are busy behind the scenes keeping record of the cost of everyday goods and services from which it can determine an official rate known as the Consumer Price Index (CPI). Every so often, statisticians carry out surveys on thousands of households throughout the UK to determine the most popular items bought on a regular basis by families, creating what is known as a basket of goods. These items are then divided into categories such as food and beverages, transport, and clothing and are given a weighting to reflect the proportion they comprise of an average household spend. Thousands of price quotations for the goods in the basket are then sourced from a spread of retailers resulting in an average price for each product. This process is repeated every month to track shifts in the price of each good. Each individual shift will have a smaller or larger impact on the overall price on the basket depending on its weighting within its category and then on the basket as a whole. By dividing the current price of the basket by the previous price and then multiplying this figure by 100, a measure of inflation is given. For example, if the basket costs 100 one month and 105 the next, then the monthly rate of inflation is 5 per cent. Since the CPI was first introduced in 1996 the average UK shopping basket has been constantly changing, forcing regularly repetitions of the surveys. Some products such as mortgage payments and council tax which arent included in the index are instead picked up by other price indexes such as the Retail Price Index (RPI). Noticeable rises in mortgage rates since the start of the credit crunch have seen the RPI outpace the CPI over the past few years, which hasnt traditionally been the case.
A lesson from history: Zimbabwe

History is littered with examples of governments making a hash of economic policy, leading to inflation and even hyperinflation (the economic term given to inflation which is deemed extremely high or out of control). From the late 1990s, Zimbabwe served as a textbook case of how not to run an economy with the rate of inflation peaking at an incredible 89,700,000,000,000,000,000,000 per cent a year in November 2008 before the government took the drastic step of abandoning the countrys currency, the Zimbabwean dollar, and replacing it with the US dollar. The origins of Zimbabwes inflation crisis it can be traced back to President Robert Mugabes attacks on the countrys white farming community at the end of the 1990s. Until then Zimbabwe had been known as the bread basket of Africa with an extraordinarily productive agricultural sector which provided the bulk of the countrys export revenues. Through his policy of repatriating white-owned land to veterans from the war of independence, Mugabe crippled the countrys farms and the countrys exports. Without the essential revenues from exports balancing the books, the government was left struggling to pay its foreign creditors and was forced into printing more money to raise the cash required. Doing so diluted the value of the Zimbabwean dollar to the extent that it was almost worthless against foreign currencies and so imported staples such as flour and rice (which were no longer being produced domestically) sky-rocketed. With no option but to pay the extortionate fees being demanded, citizens were forced to raise prices of other essential services such as medical fees and transportation. The result was a vicious circle that would last the best part of a decade. While Zimbabwes experience represents the exception rather than the norm, several other governments in recent decades have wrestled against wayward inflation, including Brazil, Argentina and most recently Venezuela.
on the export of oil to the West. Due to lack of supply, fuel prices in Europe and the US surged and in the UK inflation was as high as 25 per cent in 1975.
How can governments manage inflation?

Governments main weapon against inflation is their ability to control interest rates though in most states this is a power which has been deferred to central banks, which are technically independent from the state. By raising the base rate of interest, the cost of borrowing throughout the economy is increased. This measure serves to limit peoples access to money. With cash less readily available to consumers, demand for goods falls, reducing the previous excess of demand over supply and (in theory) bringing price increases back down to stable levels. But as history has shown, interest rate
What causes inflation?

Economists have identified two main sets of circumstances which lead to inflation of two different kinds: demand-pull inflation and cost-push inflation. Demand-pull inflation can loosely be described as the effect on prices when an economy reaches its full capacity and is no longer able to produce enough goods to meet the demands of businesses or citizens. For example, in a fast-growing economy like Chinas, it may be that there is a higher demand for steel to build new roads or houses
What is inflation?
In the crudest terms, inflation is a rise in the price of goods or services stemming from an imbalance between supply and demand. Prices rise when there are too many people chasing too few goods. Why? People will typically pay over the odds for something when there is not enough of it to go around, which causes retailers to ramp up prices.
than the economy is able to produce given its present capacity. With steel in short supply, the price of steel-based goods is likely to rise as producers are able to push up prices knowing that most people have little option but to pay them, however inflated. Often the situation will resolve itself naturally as some buyers, rather than paying over the odds, are able to wait until prices return to normal levels, which causes demand to subside. When the goods in question are considered essential, food or clothing for example, prices may continue to rise indefinitely until the government, or someone else, intervenes. Cost-push inflation, the other main type of inflation, has invariably carried more negative connotations. An economy does not necessarily have to be growing for cost-push inflation to occur. Rather, all that is needed is for there to be a shortage of goods. For example, a shortage of oil stemming from political unrest in the Middle East would be likely to result in raised fuel prices globally and to have a knock-on effect on the cost of transport and manufacturing. For example, the 1973 Yom Kippur War between Israel and its Arab neighbours led to an embargo
manipulation to counter inflation is often a hit and miss affair there is considerable scope for governments or central banks to overshoot the mark, causing demand to fall further than intended leading to an economic slowdown or even recession. Alternatively, the government may look to tame inflation by artificially stimulating the supply of goods available to potential buyers in an economy. For instance, should India have a problem with food price inflation, its government might take the decision to introduce export quotas on rice, grain and other major food groups. The government would hope that this step would inflate domestic supply, thereby reducing the shortfall in goods and curbing price rises. Governments which have a steadfast anti-inflation policy are described as hawkish, while those with a more
relaxed approach, preferring to keep interest rates low to stimulate economic growth, are known as dovish.
Can there be benefits to inflation?

Despite invariably being criticised in the media, low and stable inflation is generally considered to be a good thing for an economy, though generally only if its origins are demand-pull rather than cost-push. A steady rise in the price of goods (say 1 to 3 per cent a year) will encourage firms to increase production, leading the economy to grow and encouraging the recruitment of more staff, which will keep unemployment low. Likewise, a stable increase in wages will ensure workers are motivated to work and will remain contented even if the real increase in salary is eroded by the rise in the cost of goods they can buy with this income.
IMF inflation forecasts for 2011 (percentage change in CPI)
US: 1 per cent UK: 2.5 per cent China: 2.7 per cent Brazil: 4.6 per cent
India: 6.7 per cent Zimbabwe: 7.8 per cent Argentina: 10.6 per cent Venezuela: 32.2 per cent
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OPINION
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E-COMMERCE
Down to the wire

Marta Szczerba examines the UKs internet economy
BUSINESS
IN THIS SECTION
Corporate ladder vs going it alone

Should you sacrifice a graduate job to start your own business?
uP11
A tale of sky high profits?

A chat with the an executive of a satellite company
uP12
ENTREPRENEURSHIP
it (Ofcom). But few realise that the UKs internet economy is now the fifth largest contributor to gross domestic product (GDP) pumping in 100 million last year. This number is driven primarily by small to medium enterprises (SMEs) selling their products online. According to a report commissioned by Google and written by The Boston Consulting Group, in 2009 the internet economy contributed more to the UKs GDP 100 million or 7.2 per cent of the total figure than the health, construction or education industries. The majority of this contribution comes from website purchases and charges by internet service providers. The rest
o misquote Napoleon, the British have become a nation of digital shopkeepers. The internet is ubiquitous in our lives we communicate through Facebook, shop at asos. com and watch TV through iPlayer. 70 per cent of those with broadband confess that they couldnt live without
Magnificent 7.2
The Government is aiming for the entire UK population to be online by 2015
Is it worth sacrificing a career elsewhere for your business idea?

In the fourth instalment of our series on entrepreneurship, The Gateway discusses how to choose between your start-up and the corporate world
ts fair to assume that you, as a Gateway reader, are smart, ambitious and full of commercial nous. Given these qualities, if you really wanted you could land yourself a corporate job (eg. in banking, law, consulting etc) heck, you may already have done so. But by the same token, if you wanted you could establish your own business prior to, or immediately post, graduation. So how should you decide whether to go with that great start-up idea or to follow a more traditional corporate career track?
Want-repreneur alert!
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comes from government spending and private investment in internet-related technology. Surprisingly, the UK is a net exporter where e-commerce is concerned, which certainly isnt the case with offline trade. But the significance of the internet to the UK economy is even greater than the GDP percentage suggests. It doesnt include business-to-business e-commerce, such as payment providers (such as Paypal), domain-hosting firms or companies that speed up content delivery. The internet also contributes to the UKs economy through
Preparing for growth

SMEs dont only use the internet to take orders. Many report that using the internet has meant recruiting staff is easier, payment systems have been simplified, interaction with customers has increased and their marketing is more effective. Cheap online advertising has transformed many businesses for example it has enabled Wiggly Wigglers, a company that sells composting worms, to grow from a family firm to an enterprise with an annual 2.5 million turnover. The UK leads the OECD countries in online spending per capita, but internet penetration across the nation will need to be improved if the UKs internet economy is to grow effectively. One in five UK adults doesnt use the Internet, and so misses out on its benefits. The government has set a goal of universal access by 2015, appointing Martha Lane Fox (founder of lastminute. com) to spearhead efforts to get the digitally excluded online. However, as Lane Fox herself admits, doing so will be difficult due to spending cuts the government expenditure now devoted to this aim is meagre. The UK also has comparatively slow broadband speeds when 23 OECD nations were ranked, it finished near the bottom at 17. Only 15 per cent of UK subscribers have connection speeds above 5MB per second, compared with 65 per cent in South Korea. In order to improve the situation, the government recently announced that it would use 530m of BBC licence fee funds to roll out superfast broadband to rural areas. By 2015, internet business could represent as much as 13 per cent of the UKs economy. However, whether it does will depend on a multitude of factors. The first consideration is whether the UK will improve the quality of its broadband and get more people online. The growth of the internet economy will also depend on technological development; it will become more prominent once consumers can buy goods from vending machines or pay taxi fares with their smartphones. But customer confidence in online safety and privacy will need to be strengthened. As the internet becomes ever more omnipresent in our lives, serious failings in security systems could alter online consumers current willingness to spend.
By 2015, internet business could represent as much as 13 per cent of the UKs economy
Money
Take two sets of ten graduates. The first set comprises those who will start their own companies. The second set comprises those who will take a corporate job. Zoom five years into the future and how will each be doing financially? Well, something like 70 per cent of start-ups fail within three years, so at best only three of our original ten entrepreneurs are likely to still be in business. Out of these three, the chances that even one will be running a business that makes them millions are slim but not zero. The vast majority of businesses that do survive tend to be lifestyle businesses, ie. they generate a comfortable level of income for their founders but not enough to allow them to ditch their Ford Fiestas for a Ferraris and be to be popping champagne corks every night. Now compare these to our second set of graduates, the corporate ladder-climbers. Five years into the future, the chances that their jobs will be earning them millions is practically zero. But all of them (not just three) will be earning a very comfortable level of income indeed, ie. low to mid six-figure annual pay. In short, an entrepreneurial career offers considerably higher potential financial rewards than a corporate track, but the trade-off is that they have a higher chance of failure.
Some people say starting up a company as something you can always do later. There is some truth and merit in this, but it depends on how late you leave it
of taking a corporate job immediately post-graduation are significant: it will help you build a financial cushion which will be extremely handy if and when you do decide to start your own company; and it will help you build up work experience which can be valuable either as inspiration for your own business or as something to fall back on if your business ambitions do not work out and you want to re-enter the corporate world. But this all comes with a caveat: the later you leave exploring entrepreneurship the harder it will be do so. Once you start climbing up the corporate ladder, a number of factors make it difficult to climb back down, namely: money being used to regular, sizeable paychecks and the standard of living this brings; friendships groups a big part of your social life will revolve around your job; responsibilities rent, mortgage and possibly even dependants may rely on you earning a steady income that starting a company cannot give you. Given these competing issues, one way to have the best of both worlds might be to initially pursue a corporate job with a clear idea as to the specific skills you want to learn and the ideal timeframe in which you ought to acquire those skills (two to three years is common). Then once you have achieved your corporate goals, you can move on into entrepreneurship.
Accenture Boot Camp your toughest test yet

It all starts at Boot Camp. So wherever you are and whatever youre studying if your focus is firmly on the future, register today. Its 48 hours that will stimulate your mind and enhance your career prospects. Youll spend time with other students, as well as some of our top Accenture Consultants and special guests. An inspirational experience packed with intellectual challenges and activities specifically designed to let you discover what it really means to be a high performer in business. We cant tell you everything about Boot Camp, because we dont want to ruin the surprise. But expect a fast-paced, exhilarating and intense learning experience. It could be your toughest test yet, which is exactly what will make it your biggest opportunity. Find out more and apply online.
Visit accenture.com/bootcamp
online advertising, which totalled 3.5 billion in 2009 and enabled many offline companies to sell more of their products. Furthermore, consumers benefit from researching products online and buying them offline (which is especially the case in the retail and travel sectors) and by consuming free online content, from newspapers to movies. The internet has helped British SMEs flourish indeed, many admit that they wouldnt be able to do their business without it. Thanks to the web, many companies have expanded geographically, without buying up bricks and mortar or creating a network of distributors (who often take a large cut of profits). For example, tartan company Scotweb sells 17,500 types of tartan (far more than any shop could stock) to a large base of customers, 80 per cent of whom are overseas. The business brings together craftsmen creating traditional Scottish artifacts, keeping an industry financially viable that might otherwise have disappeared.
In general, it is fair to say that an entrepreneurial career track favours creative people who relish unpredictability. After all, when you are starting up a business your job is literally what you make it. By contrast, the corporate world is much more process driven. There is scope for being creative, but usually within the relatively narrow confines of a specific role. As for unpredictability, investment banks, law firms, management consulting firms and the like are well-developed systems designed precisely to minimise unpredictability. To illustrate the difference in the type of work offered, consider the scenario of a sales pitch. All companies, whether a start-up or an established corporate, will be involved in sales pitches. For these meetings start-up founders will spend a long time creating documents from scratch. They have no choice. In a corporate environment, however, the idea of starting anything from scratch is usually frowned upon and seen as inefficient because with many thousands of employees (globally) and many years of operating it is highly likely that someone, somewhere within the company has created a document which can be used as a template.
Entrepreneurship news
Government goes small
THE PRIME MINISTER has sought to reform the way the government purchases goods and services in order to allow small businesses, social enterprises and charities to compete for these opportunities worth billions. The changes include the launch of a Contracts Finder website where public sector tenders worth over 10,000 will be published.
Youre hired?
LORD SUGAR has announced that the winner of the next series of BBC show The Apprentice will set up their own business rather than work for him. Posting on Twitter, Lord Sugar revealed that the winner emerging from this Mays final will be starting a new business with me on a 50/50 basis, where I inject 250,000.
Personality
So the question of whether to start up a business or join a corporate after university is one without any objective wrong answers. But that said, there are some personalities who tend to thrive more in one environment than the other. If you are one of those people who are not overly concerned with what other people think of you, if you have a bias towards rebelling, and if you are strong-minded, you fit the mould of the entrepreneur and will probably get frustrated rather quickly in a more corporate setting. On the other hand, if job title and prestige are important to you, and you like working within set parameters and do not get hung up on having your own way all the time, then note that people like you do well in corporate settings. Dont worry too much if you feel an equally strong tug pulling you towards entrepreneurship and the corporate world. The good news is that neither is a bad option and, even better, neither need be permanent.
Doing it by the book

AND FINALLY... Novelty gift entrepreneur, Shed Simove, has published a book which aims to identify what men think about other than sex. Spoiler alert: his book contains no words inside whatsoever - just two hundred blank pages. Simoves aim is to get this book, which took just over a week to write, to the top of the bestseller charts. It is currently ranked as the 1,139th most popular book on Amazon but is receiving rave reviews, including from one reader who describes it as the first and only literary and academic work which is entirely without flaw.
Timing
Some people say starting up a company as something you can always do later. There is some truth and merit in this, but it depends on how late you leave it. The benefits
Type of work
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BANKING & FINANCE

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CAREERS & EDUCATION

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OPINION
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SATELLITE TECHNOLOGY
Business from above

The money in satellite imagery
Katie Morley grills Managing Director of Astriums UK Geo-Information Services business, Andy Stroomer, about its products, who uses them and how satellites make money
What does Astrium do?
Astrium is the space division of the European Aeronautic Defence and Space Company (EADS) a group that also consists of Airbus, the leading manufacturer of commercial aircraft; Eurocopter, the words largest helicopter supplier; and Cassidian, provider of global security solutions. We build satellites and space transportation (rockets and launchers), and we also make use of the data that comes from our satellites which we sell to companies to use for a range of purposes.
Astrium/2007
BANKING & FINANCE

even that this data should be made freely available by companies like our own, in return for advertising exposure. As a satellite services provider we need to ensure that the added value we can bring - in terms of data assurance, freshness and quality for example is recognised in a way that allows us to continue to develop our own business model.
Industry news
Diary of a Bloomberg analyst
See what they get up to day to day
uP17
IN THIS SECTION
Inside Job
The financial crisis on film
uP13
Lloyds Banking Group returns to profit

LLOYDS BANKING GROUP last week reported a pre-tax profit of 2.2 billion, the firms first annual profit since it was part-nationalised in 2008. The recovery is largely due to a resurgence in the groups high street banking business which made a profit of 4.7 billion, up from 1.3 billion in 2009. A fall in the cost of bad debt from 24 billion to 13 billion also contributed, despite the firms exposure to rising bad debt in Ireland. However the news was not received well in the City. Shares in the bank, which is 41 per cent state owned, fell 4.5 per cent in Friday trading. Analysts have downgraded their profit forecast for 2011, expecting the recent increase in the banks net interest margin to level off. As one BNP Paribas analyst put it: The main negative is the outlook guidance on the margins. The bulls had [anticipated] revenue growth for 2011 and 2012 [but] the outlook guidance has destroyed that illusion.
Can you tell us more about how your business model works?
The first thing you have to think about in a business like a satellite company which requires a high capital investment is how youre going to recover your investment costs. Satellites have a finite operational life, so you have to recuperate your investment within that time. Typically, a low earth orbit satellite takes two years to build, weighs two tonnes, costs upwards of 100 million to manufacture (without launch costs) and lasts five to seven years, so you have that amount of time to recover investment costs (the biggest outgoing), with running costs to consider on top of that. Data is valuable, but whats much more valuable is understanding it, and being able to utilise that data to support the needs of businesses.
Astrium / A. Ruttloff
Derivatives
The Gateway tells you what you need to know
uP14
City insider
Alex Buchanan on the investment market today and the story of his own career
uP18
FINANCIAL CRISIS
Inside Job:
ts been nearly three years now. The ripples which started with defaults in US sub-prime mortgages have turned into the biggest financial convulsion of the modern era, then into a devastating blow to the real economy globally and now, as most important things do, into a subject for the arts. Inside Job, a documentary about the financial crisis directed by Charles H. Ferguson and on general release in the UK since last week, has been widely lauded, even picking up a Oscar (Best Documentary Feature). But does silver screen treatment add anything to the already extensive commentary on the subject? The answer is yes. If you see this film, take a notebook because youll get both an engaging history lesson and an economic tutorial. First, some scene setting in Iceland, whose economic meltdown was one of the most dramatic examples of how it all went wrong. Next, how the sandcastle was built: the rise of derivatives, banks increasing use of mortgage-backed CDOs, the resulting sub-prime boom and then the use of credit default swaps to make money as the CDOs went sour. Then, the collapse: the Lehmann bankruptcy, the failure of AIG, consolidation in the banking sector, the role of credit rating agencies and last years SEC investigation of Goldman Sachs all these, and many other, key elements of the saga are slotted into place. Ferguson mixes up broad-brush narrative and clear explanations with juicy details from an impressive range of talking heads regulators, financiers, academics, politicians, and even a therapist and ex-brothel madam have their say. If you take away nothing else, the film is a great way to ensure youll be able to put a face and some facts, including the odd fun one, to a name like Lloyd Blankfein, Christine Lagarde or Timothy Geithner next time you read about them in the financial press.
the credit crunch goes Hollywood

Hannah Langworth looks at how the financial crisis translates to the big screen
is a measure of how successful a firms investments are relative to the cost of its debts. A higher net interest margin is an indication of greater profitability. Net interest = margin
Net interest margin
Investment Interest expenses returns Average earning assets
Wheres the industry going in the future?

Over the last two decades weve launched well over 100 satellites (for all types of applications), but most of these have been government funded. The industry has transformed from governments launching the satellites and then us exploiting them, to us building them and exploiting them ourselves. In terms of data prices, the value of raw, low-quality pictures that can be found easily online will decrease in the future, but the value of reliable and accurate data will hold its value in the market. With regards to what the next generation of satellites will do, producing optical imagery at a higher resolution will become possible, which will mean much more accurate and high quality pictures will be produced. It will allow satellites to produce the type of data that aircraft produce today much more cost effectively because a satellite in orbit can cover a much wider area than an aeroplane. So were simultaneously expanding our technology capability and moving towards a better, more sustainable business model.
What kind of images can satellites produce?

Satellites take advantage of a number of imaging modes. First, theres optical imagery which lets you see a county or a region from afar, but these images arent very detailed. The best commercial optical satellites give a resolution of about 50cm so one pixel on an image represents 50cm on the ground. Most of the detailed images that you see on Google Earth are captured by aircraft. Weve also got satellites producing radar imagery that can see through clouds, which is useful for defence purposes and for those looking to detect geographical change, such as disaster response planners. The downside of radar is that its a little harder to interpret.
Farmers are using satellite imagery to monitor crop growth
What data products do you sell?

We sell the basic satellite imagery that we produce, but we can add further value onto that data in a number of ways. We can compile datasets to make predictions, for example, for the purposes of managing disasters like floods or forest fires. For example, we might provide an insurance company with an image of a coastal town and we could then use a broader dataset to map out where policy holders are located on that map, providing them with a risk assessment tool for flooding, for example,
Astrium satellites are being used to build the first radar digital 3D elevation model of the Earth
DLR
that will aid their decision making when creating policies. Farmers are also using our products to monitor their crop growth. We can either provide them with a basic photo (which means fairly little to them), or we can analyse our data to provide them with information for example, how much their crops grew between January and March and to assist them with their farming strategy, helping them work more efficiently and so save money. Detailed satellite imagery is able to identify different rates of growth within individual fields enabling farmers to target resources more efficiently, for instance, by only needing to fertilise or irrigate certain areas. One of the most successful applications of this technology is used by winegrowers to decide when and which grapes should be harvested. The latter option in either scenario is where we can make additional revenues and margins from providing more complex information that has real
added value for our customers and so the real value in our long-term business model lies here. In some cases, particularly if people have very specific projects, theyll request specific up-to-date imagery, and well provide this by specially programming our satellites to detect particular sequences of activity.
Who buys your data?

Its bought by a wide range of clients including the military, police, agricultural businesses and environmental managers. Companies like Google also buy it to use commercially Google Maps pictures are a combination of high resolution satellite imagery, aircraft imagery and also pictures from vehicle mounted cameras. Google Earth also uses imagery from a variety of sources, including our own to produce its pictures by overlaying different types of satellite data from a range of sources. This can lead to a situation where data is seen as a commodity, and sometimes
Will we ever have the capability to produce live maps?

Yes, definitely. Its already possible to embed CCTV imagery in a 3D city model, which will be the next generation of police surveillance. However, privacy is an increasingly important issue as surveillance technology grows and therefore the technology associated with ability to ensure privacy is equally important. The creation of systems that automatically wipe out number plates and the inside of buildings is already with us, and will allow technology to advance without privacy being compromised.
Theres a particular emphasis on the potential conflict of interests that business schools face many economics and business professors are, in one way or another, in the pay of financial institutions and so, the film asks, can they be trusted to analyse Wall Street or the City impartially? This question has been asked before, but never made so prominent the sadistic will enjoy watching the academics interviewed squirm as Ferguson gradually recasts them as defendants rather than witnesses. More radical is Fergusons suggestion that the personal vices of some bankers, namely drug-taking and the use of prostitutes, should be connected to sins they committed on the job. Ferguson adeptly links events in Europe and the US to the fortunes of Asian workers theres a moving moment when a Chinese woman speaks of the good money ($80 a month) that many like her lost as a result of the crisis. But he ignores the time lag before the crisis hit emerging markets, as it took a while for the financial turbulence to translate into lost jobs and lowered consumer demand. A further criticism is that he fails to place the activities of bankers in the wider context of a society that, in the UK and America at least, has demanded more and more cheap luxuries and easy credit over past decades, giving the financial services sector the incentive and the loosened regulatory climate necessary to fulfill these desires. With its focus on the grotesque errors of the bankers, perhaps Inside Job can be seen, in this age of reality TV, as a Godzilla or Night of the Living Dead for our times, presenting societys ills in monster form. It
J.P. Morgan to invest $1 billion in social media

INVESTMENT BANK J.P. Morgan has raised $1.22 billion (754 million) from inverstors for a new fund set to target the social media sector. According to The New York Times the figure far suppasses the $500 - $750 million it was expected raise. The launch of the fund, titled J.P. Morgan Digital Growth Fund, follows Facebooks $1.5 billion fund-raising in January led by Goldman Sachs and its investors. The news also comes as LinkedIn, an online networking tool for professionals, prepares to raise $175 million in a flotation in New York later in the year. As The Gateway goes to press speculation is rife that managers of the fund are already in talks to acquire a minority stake in micro-blogging site Twitter. Rumours are suggesting that a deal could value the site at $4.5 billion. Speaking of which, you can follow us at: twitter.com/gatewayonline
Glencore flotation could be Londons biggest ever

has all the elements youd expect from this kind of flick. Theres breaktaking landscapes Nordic volcanoes and aerial views of the Manhattan skyline and also more intimate shocks in bare office spaces and seemingly innocuous surburban homes. Theres menacing music a-plenty, no shortage of villains and a good batch of saviours too Raghuram G. Rajan a doomsayer no-one would believe, feisty FT commentator Gillian Tett and even a voiceover by the chiselled hero of the Bourne Identity thrillers, Matt Damon. So for those who like to watch the world brought to the brink of destruction at your local cinema, it could be a fun night out. Just dont blame us if you learn something. GLENCORE, the worlds largest commodities trader, is briefing bankers as it contemplates an initial public offering (IPO). Valued at $60 billion (37 billion) by analysts at Liberum Capital, it would rank among the 15 largest FTSE listed companies. Fifteenth position is currently held by Barclays. The Swiss-based firm is currently privately held, owned entirely by its partners roughly 500 of them. A stock market listing, expected in either London or Hong Kong, will bolster Glencores balance sheet and allow it to make major acquisitions using shares as payment. The firm is believed to be working closely with invertment banks Morgan Stanley, Citi and Credit Suisse.
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BANKING & FINANCE

uP13-18
LAW
uP19-22
CAREERS & EDUCATION

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OPINION
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TECHNICAL KNOWLEDGE
ateway guide to the g

What is a derivative?
A derivative is an agreement relating to (or derived from) an underlying asset. Derivatives originated, and are still often used, to protect investors in the underlying assets to which they relate. They are also now traded as independent financial products.
derivatives
Derivatives are some of the most complex financial products on the market, particularly exotics
for example, weather options, a kind of financial instrument used to manage the risk of adverse weather conditions which gives the parties purchasing them the option of payment in the event of particular weather events. Exchange-traded forwards are known as futures. OTC derivatives are derivative contracts which are agreed privately between two parties. Some OTC derivatives contain bespoke terms appropriate to the particular circumstances of the parties entering into them, but some are in standardised forms. Most swaps are OTC agreements. There are OTC options, for example, credit default options. There are OTC forwards. There are benefits to exchange trading: transac tions are standardised and so are quicker and easier; the performance of the counterparty is guaranteed; and its cheaper than OTC trading. But there are also benefits to OTC trading: you can trade any volume of a commodity; no cash collateral is required; any commodity product or derivative can be traded, which is not the case with exchange trading; and transactions are confidential. The volume of OTC derivatives is far greater than that of exchangetraded derivatives. months. When derivatives are used in this way, the asset exchange specified in the swap, option or forward contract is often not carried out and instead there is simply an exchange of cash between the current two holders of the derivative contract to achieve the same effect - for example, cocoa future traders will exchange a sum representing the difference between the market price of the asset and the price agreed in the future contract, rather than quantities of cocoa. However, the underlying asset will continue to play a role as the way in which the price of the derivative fluctuates will bear some relation, even if sometimes a remote one, to the underlying asset. For example, the market price of an option contract will vary depending on the relation of the asset price specified in the option contract to the market price of the asset to be bought or sold under the option contract - if the market price for an asset rises above a price specified in a call option, the call option becomes desirable to purchasers of that asset and so its price rises, and vice versa. To read more about commodity derivatives, see our guide to them, produced with the help of BNP Paribas, on page 14 of Issue 37.
types of derivative?
1) Swaps A swap is an agreement between two parties that they will exchange rights to receive or obligations to pay two particular cashflow streams. 2) Options An option is an agreement that one party has the right, but not the obligation, to buy or sell a given asset at a particular price on a particular date or
What are the main
set of dates. The person gaining the right under the option is known as the holder. The person giving the right under the option is known as the writer, who will usually charge the holder for the option. There are two main kinds of option: a put option gives the holder the right to sell; and
a call option gives the holder the right to buy. 3) Forwards A forward is an agreement that one party will buy or sell a given asset at a particular price on a future fixed date. The two parties to a forward contract assume different positions: the party agreeing to buy in the future (who assumes prices will rise) is taking a long position; and the party agreeing to sell in the future (who assumes prices will fall) is taking a short position.
Why and how are derivatives used?

1) Swaps Generally, swaps are used by a party to exchange an uncertain or inconvenient cashflow into one which is more certain or more convenient. For example: Under a commodity swap an industrial producer or industrial consumer of a commodity will agree to swap the market price they will receive or pay for that commodity for an alternative set price. Under a currency swap one party will agree to swap the obligation to pay or the right to receive principal and interest payments for a loan in one currency for the equivalent in another currency. Under an interest rate swap, one party will agree to swap the obligation to pay or the right to receive a fixed interest rate payment for a floating one or vice versa, or an interest rate payment in one currency for one in another. Swaps can also be used to protect the holder of particular assets against the risks of holding those assets, or to allow investors to replicate the effects of ownership of such assets where they are unwilling or unable to own them. For example: Under an equity swap one party will agree to swap the obligation to pay or the right to receive an income stream related to the performance of a particular equity product for an alternative income stream. Under a credit default swap, the most common kind of debt-related swap, a lender or bond purchaser agrees with another party that that party will repay the lender or bond purchaser in the event that the borrower of the loan or issuer of the bond fails to repay the funds borrowed. 2) Options Generally options, like swaps, are used to give a party flexibility in the face of future uncertainty. In general terms, the key difference between swaps and options is that whereas swaps are used as protection where supply or demand for an underlying asset is certain, options are used where the existence of
ONE YOU One Credit Suisse one you

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such supply or demand is uncertain. For example: Under a commodity option, one party will agree to grant another the option to buy or sell an amount of a commodity at a particular time at a certain price. Commodity put options tend to be used by producers when they are uncertain about their ability to supply a commodity in the future and commodity call options tend to be used by consumers who are uncertain about the extent of their demand for a commodity in the future. 3) Forwards Like swaps and options, forwards are also often used to protect against future uncertainty. For example: A commodity forward is a contract to buy or sell a certain amount of a commodity at a particular point in the future. It might be used by a commodity producer to guarantee a future sale price or by an industrial consumer of a particular commodity to guarantee a future purchase price. A currency forward can be used to protect against adverse fluctuations in exchange rates by fixing a future currency exchange transaction.
Perspective
How does derivatives trading work?

Many parties enter into derivative contracts in relation to investments or interests they have in particular assets. However, derivatives are also tradeable commodities which may well be passed on to parties other than those who originally entered into them. Parties trading in derivatives may have no direct interest in the asset underlying the derivative, but simply want to profit from buying and selling derivatives as assets in their own right. For example, a purchaser of a cocoa future may have no need for cocoa, but wants to speculate on whether the price of cocoa will rise or fall in the coming
What are vanilla and exotic derivatives?

A vanilla derivative means a derivative in a standard or basic form. Exotic derivatives, or simply exotics, are derivatives which have non-standard or complex forms. They are usually varieties of option. For example, a swaption, as the name suggests, is a swap/option hybrid which gives the party entering into it the option to purchase a swap, usually an interest rate swap, at a fixed point in the future. Other exotics, which often have colourful names, include mountain ranges, rainbow options and lookbacks.
STEPHEN WAS LOOKING FOR A BIGGER IT CHALLENGE. WE GAVE HIM GLOBAL RESPONSIBILITY. When we needed someone to manage our new server infrastructure. Stephen was the
Some useful terms

American/European option: American options can be exercised at any time before the expiry date whereas (more unusual) European options can only be exercised on the options expiry date. Contract for difference: An alternative name for a future. Covered/naked: In the context of derivatives, covered means owning an asset you have agreed to sell, whereas naked means not owning it. Hedge: To protect against a financial risk through the use of financial products or strategies. Legs (of a swap): The two elements which are exchanged under a swap contract. Spot price: A sale or purchase price offered for the immediate sale or purchase of an asset. Strike price: The sale or purchase price for an asset specified in a derivative contract. Synthetic position: An investment position which uses derivatives to mirror a position otherwise achieved by asset ownership.
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What are exchange-traded and OTC derivatives?

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March 2011
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DIARY
Looking to expand your CV?

The Gateway is looking for sociable, confident and career-minded brand managers to help us out on campus. This is the perfect opportunity to put some valuable experience on your CV, working for the UKs most prestigious on-campus newspaper. Apply now to start in the autumn. Send your CV and covering letter to us by March 20, 2011.
The diary of... a data analyst at Bloomberg

Rob Keen is an analyst in the energy and commodities division of Bloombergs Global Data department. He is currently working on integrating the data of a leading provider of market information in the green energy sector recently acquired by Bloomberg into Bloombergs own databases. After a busy couple of days, he let The Gateway peek into his diary...
8:00
As the manager of the integration project on which Im working, my inbox is filled with questions, concerns and potential issues from the project team. I split these emails into those about technical bugs and those on other issues. With the bugs, I look at how serious their client impact is, prioritise them and then pass them to our technical people, Research and Development (R&D) to fix. The other issues are generally misunderstandings about how certain data tools are working, so to solve these I get in contact with whoever sent the email. A big part of my role is to make sure we only pass issues to R&D that no-one else can deal with because, as programmers, their time is in great demand. My team leader is on holiday today and Im his backup, which involves providing support to his teams on everyday issues and ensuring were in line with our goals. So the other half of my inbox is full of emails from his four teams and status updates on their projects.
10:00
I look at the headlines on my Bloomberg terminal and see how the markets are doing. I need to know whats going on because clients will ask us questions and also so that we can continually improve our products. For example, if Russia is putting new import taxes on oil wed want to have that information available on the terminal.
11:00
The R&D team on the integration project have released what theyve done on the integration of a particular dataset Funds. I spend some time making sure that its running correctly.
ment team. I follow up the Venture Capital/Private Equity team call earlier by taking a closer look at the scale of work involved and the timeline for this aspect of the project. I get an ad hoc request from the Cape Town office of the green energy information company to have a look at what tools we have here which they could use to measure the performance of their staff. My proposal is passed to management for them to make a final decision.
16:00
Call with the Assets team on incorporating data from the green energy information company into their database, which is due to be completed in the next five weeks. We confirm the timeline, and assign the tasks that need to be completed next week.
12:00
Call with the Venture Capital/Private Equity team because there is data from the green energy information company that we want to get into their databases. Together we sort out a timeline and an action plan.
9:00
Daily meeting with R&D on the integration project. We go over all outstanding issues and make sure were on track to meet our deadlines. At the moment were dealing with some compatibility issues between the green energy data and our Bloomberg data. For example, the stock exchanges specified and the way company names are listed are different. These sound like small points, but they cause problems.
17:00
Call with the manager of those in R&D involved with integration of the Assets data. We confirm that the programming side of the work is on track and go through a few things that he needs from me. Further clarification is needed for some of his requirements, so I spend the rest of the day adding these details to the document listing the requirements for the Assets part of the project.
13:00
Lunch.
14:00
Energy and commodities group weekly team meeting, where we get a status update on the development of new products and processes.
15:00
I send our weekly update on the progress of the integration project to our global manage-
18:00
After-work drinks with the department at a local bar. 8am until 6pm are our official hours, but we often work beyond these, depending on workload and especially when were up against deadlines.
pick-me@thegatewayonline.com
Next day
8:00
My team leader is back from holiday, so I give him an update on developments within each of his teams.
9:00
Daily meeting with R&D.
sections of the green energy database into our own databases. When R&D build something, we test it as if we were a client and make sure that its doing exactly what its supposed to do before the clients see it.
16:00
I take a look at the Bloomberg University courses available and sign up for a course on Advanced Equity Fundamentals taking place over a couple of hours next week. Sometimes there are HR courses on there too, for example, on giving presentations or time management. Generally, anyone can sign up for anything, even if its outside your specialist area. I receive some feedback from the Assets team on the integration of data into their databases. I then clarify some points with R&D and as a result, their work on this section of the project can begin.
13:00
Weekly call with senior management for all those involved with the integration project. Updates are given on problems and solutions are proposed and approved.
10:00
I look at some joint venture deals that could not be transferred from the green energy database to the Bloomberg databases.
14:00
Lunch. I go to a great sandwich shop on London Wall.
11:00
Call with a colleague in the Cape Town office of the green energy information company to confirm the status of some of the data being moved over to Bloomberg as I have a call with senior management in the afternoon.
18:00
Home time.
15:00
I continue with testing and find three issues two are bugs, which I send to R&D, and the other is a training point and so I add a note on it to a sheet about the data integration which we circulate.
12:00
I work on testing the integration of some of the
To find out more about graduate opportunities at Bloomberg, visit: www.bloomberg.com/about/careers/ campus_recruiting/
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BANKING & FINANCE

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OPINION
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CITY INSIDER
Be one of the lucky ones

City guru Alex Buchanan returns to tell The Gateway where the investment market is now, what he does, and how to make a career in the City work for you
LAW
IN THIS SECTION
Find out about it and when it will come into force
Industry news
Legal aid cuts criticised
uP19
JUDGES have been heavily critical of the proposals to slash the legal aid budget announced by Justice Secretary Ken Clarke last year. It is intended that these cuts will reduce the legal aid budget by 350 million by 2015 by no longer granting litigants funding to pursue claims in a range of areas including divorce, employment, immigration and clinical negligence. A stricter means-testing system will also be brought in for the areas still eligible for legal aid to further reduce the amount spent. But senior members of the judiciary have warned that the cuts will lead to a rise in the number of litigants in person that is, individuals acting as their own advocates rather than using lawyers and so increase the courts workload.
The Gateways guide to City law firms Who are the biggest legal
players in the Square Mile?
uP20
Asia: A great place to be a lawyer

We ask Clifford Chance why
ust over a year ago I sat down with my boss and told him I needed a career change. Id been working in equity sales for nearly ten years, and had spent the last seven trying to get out of it. I was finding it difficult to do a job I did for money when there was now much less money to be had from it. Also, Id begun to envy friends in fields like law who had professional
uP22
Im possibly unusual in having taken nearly 12 years to find a job I believe in

opinions that others actively sought and for which they would pay good money. time the first port of call for bankers looking to place private transactions, have retreated rapidly in recent years. Private equity firms have plenty of money (some $350 billion of it at the latest reckoning) that they need to spend if theyre to generate fees for themselves, but they suffer from an image problem. All too often Im told by owners of private companies: I dont want to do a deal with private equity theyll screw me for everything I have. This view is not necessarily accurate, particularly when it comes to the smaller firms who need to incentivise management teams, but dirt takes time to shift. Furthermore, the private equity industry is finding its own access to debt restricted. So who is stepping into the breach? Were seeing the rise of two new breeds of investor: Credit funds looking to lend directly to private companies rather than to other funds. High net worth investors sick of the high fees and poor performance of funds seeking to put their money directly into private companies instead. As long as interest rates remain near zero and fund performance mixed, the attractions of putting money to work directly in private companies are clear.
The plan
What I wanted to do was this: set up a business that gave advice to private companies on finding capital. Why? Many in banking are brilliant at giving advice to companies, but are not so good at dealing with investors and finding money. Capital is in short supply right now, particularly for private companies. Fees raising capital is the most profitable part of the financial services pie. Lets now consider each of these points in turn.
OPPORTU NITIES: LOCATION: SALARY:
Graduate Careers & Internships Nationwide Competitive + benefits
Acting up: why isnt the Bribery Act 2010 law yet?
Hannah Langworth investigates the UKs incoming anti-corruption regime
WHITE COLLAR CRIME
Wikileaks head at risk of extradition to Sweden

JULIAN ASSANGE, founder of leaked document disclosure website WikiLeaks, will be extradited to Sweden to face rape and sexual assault allegations brought against him by two Swedish women, magistrates announced last week. Assange denies the allegations. He is entitled under English law to appeal to the High Court against the ruling and it has been reported that he plans to do so.
AMBITIOUS? MEET YOUR FUTURE At Barclays Corporate we help the worlds businesses achieve their goals. To us, thats what being a financial partner for success is all about. To you, its an opportunity. A chance to combine your potential with the strength of our business to build a career influencing the deals, developments and decisions that help shape the world around us. Visit barclayscorporate.com/graduate to find out more about our range of opportunities on offer.
TH E POW E R TO H ELP YO U S U C C EED
Finding money
Private companies and their bankers will often pursue transactions that serve their own purposes first and those of investors second. But if they dont take account of the wishes of investors then deals might not get done its as simple as that. The best bankers take into account the wishes of both companies and investors. But very few of those advising private companies on raising capital have investor address books that extend much beyond the private equity firms everyone is familiar with, which creates an opportunity for someone prepared to devote the time and resources to build one.
Where I am now
Right now my business is in its infancy, but I have every confidence that its the right path. Im possibly unusual in having taken nearly 12 years to find a job I believe in, and I sometimes wonder if I should have done things differently. But many people will always be in the wrong job, and so perhaps Im one of the lucky ones. Finding the right job is all about attuning your personality and abilities to the demands of a particular role. Work out what a job entails and what makes you tick, and if the two seem complementary then you might want to try it. And well-reasoned arguments as to your personal suitability for a role will put you at an advantage over other applicants at interview. But its not just the interviewer you should consider. Theres someone rather more important you. People overlook this fact in their desperation to land the top jobs. Before you commit yourself, step back and establish what makes you happy. Theres no point trudging to work every day weighed down by the miseries of the world. These days a career may not be for life, but it does last a very long time. Better to get it right than spend the next 30 years wondering what might have been.
Shortage of capital
Across the board companies are finding it increasingly difficult to access funds, especially those at the smaller end of the spectrum. Every week I meet a company management team with the same complaint: We make money, we generate cash, we have a healthy balance sheet. I need to borrow money but no-one wants to know. Right now its easier for a bank and its endless credit committees to say no. Some well-known banks have even embarked on credit reduction programs, cutting the fat from loan books that they gorged on at the height of the precrunch boom (for example, shipping and student loans). But potential investors exist even in this climate you just have to know where to look.
ost would agree that the payment of corporate bribes, for example, giving a sum of money to a foreign government official to win a lucrative contract should be illegal under UK law. But should the company be liable if its senior management have no idea what its agents on the other side of the world are doing? What about paying an official a small amount of extra cash to get a foreign visa issued more quickly? And should payments made by a non-UK company outside the UK come under the scope of UK law? And what about if the company doesnt pay an official any actual cash, but entertains them at a dinner or drinks reception instead? How about on an all-expenses paid holiday complete with private jet?

The Bribery Act 2010 was created to answer some of these questions. At the moment, such issues are dealt with through a complex mixture of statutory (contained in legislation passed by Parliament) and common law (contained in case law judgments), some of which is over a hundred years old. In their place , the Act clarifies two existing offences: bribery and receiving a bribe; and establishes two new offences: bribing a foreign official and (for organisations only) failing to prevent bribery. Pressure to enact the legislation has come from OECD (Organisation for Economic Co-operation and Development) anticorruption initiatives the UK is bound as a signatory to its 1997 anti-corruption convention to take steps against corrupt practices. The Act has also been seen as a response to the BAE Systems bribery scandal, which saw the former Labour Government drop an investigation into accusations that the defence company had engaged in unethical practices while conducting deals in Saudi Arabia.
The Act received royal assent last April, but following pressure from sections of British industry, its implementation date has been delayed. While expressing condemnation of corruption, a segment of British business led by the Confederation of British Industry (CBI) has protested that the legislation is unclear, which has led the Government to halt its commencement while they prepare further guidance. The Act has also met criticism from some in the corporate world who feel that its provisions could hamper the ability of businesses to function at a crucial stage of the UKs economic recovery from recession. They argue that the new legislation will penalise some hospitality activities which should be legitimate. Its worth noting that the Act will make the UKs anti-corruption provisions some of the fiercest in the world.
Bribery distorts markets and increases business costs
What aspects of the Act are causing the most controversy?

The first is the failure to prevent bribery offence. The old legal position was that if one of the companys agents was found guilty of bribery, the company itself was unlikely to face any criminal liability unless a member of senior management was aware of the occurrence of the illegal acts. Now, even if no-one senior is aware that a bribe has been given, a company can still be found guilty if they are deemed to have failed to have put adequate anti-bribery provisions in place in their organisation. The second aspect causing some consternation is the continued illegality of facilitation payments. These are small payments made to a government official or business associate to ensure that a duty is performed an example would be the paying of a sum of money to get a visa issued more quickly mentioned above. These are common in
some parts of the world and the US legislative equivalent to the Bribery Act the Foreign Corrupt Practices Act has a carve-out (an exception specified in legislation or a contract) for small facilitation payments. A third unpopular aspect of the Act is the fact that is has extra-territorial scope which means that any company which carries out some of its business in the UK could be liable under the Act for its activities anywhere in the world. As for whether hospitality activities such as a dinner, drinks reception or all-expenses paid holiday would be deemed to be bribes, lawyers have deemed the current law ambiguous. The test specified in the Act for whether hospitality is bribery is whether a company has an intention to influence an official and could be deemed to cover corporate entertainment most would find acceptable as well as catching that which is clearly not. Companies have been given comfort (that is, unofficial reassurance outside the legislation) that they will not be prosecuted for activity which isnt improper, but many companies are hoping that the government guidance will provide clearer parameters on this issue.
Smoothies
NEW LEGAL DRAMA Silk, written by ex-lawyer Peter Moffat, began last week on BBC One. The series, set in a fictional barristers chambers, stars Maxine Peake and Rupert Penry-Jones as two battlehardened advocates struggling to make silk, that is, attain the elevated rank of Queens Counsel (QC). If youre not sure what a QC is, or even a barrister, this show could be a relatively painless way to brush up on some legal basics. Or perhaps its more likely, as this is TV after all, just to give you an excuse for a break from your books and some great conversation openers for your next legal networking event youll find most lawyers love complaining about how the profession is portrayed on screen.
Next steps for the Act

The anxiety the Act has created is such that justice secretary Ken Clarke spoke out to put the Act into perspective last week, telling The Financial Times that its provisions should not alarm anyone involved in legitimate business. He also reminded corporates of the negative impact corruption has on global trade and of its damaging effects on the worlds poor. However, the OECDs threat last month to place the UK on an export blacklist (with the likes of Nigeria and Russia) may provide the best incentive for UKs corporates to accept this perhaps currently unclear but essential legislation.
Fees
As capital is in short supply, companies have no choice but to pay a premium for it - and larger fees to their advisors.
Ways forward
So who should companies be turning to now for capital? Hedge funds, at one
BCP_417193_218x154_GTWY_2.indd 1 26/10/10 10:40:23
Where does the Act stand now?
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The regional contenders

Alongside the City-centric practices, the Square Mile is also the home of a number of firms with a presence across the UK. Regional networks have not stopped many of these firms from having global ambitions and some of them have international office lists comparable with those of Magic Circle firms. These regional players do complex work for high-profile clients, but it often tends to be in the mid-market arena, or for mainly UK-based organisations rather than the largest international banks and conglomerates. But the training at these firms will be high quality and in some cases may involve less punishing hours than at the largest City practices.
Law firms and the City

Here is The Gateways guide to the biggest legal players in the Square Mile
US firms in London
American firms in the City include those who have grown offices here over the years from scratch and those who have adopted a ready-made UK firm. Either way, American firms tend to promise their junior lawyers all the benefits of training at a large international firm, but in a smaller office with a more informal atmosphere than that found at the Magic Circle firms and their nearest UK rivals. However, the price paid may well be longer working hours.
Addleshaw Goddard
Addleshaw Goddard has a compact national network with offices in Manchester and Leeds and its headquarters just by the Barbican. The firm is strong in corporate and real estate and has a leading position in these areas up north, while holding its own mainly in the mid-market in London.
DLA Piper
DLA Piper has unusual DNA, being originally a northern market leader which morphed into its current global shape through a hook-up with two US firms. Its bread and butter work is a healthy mix of corporate, finance and real estate matters.
The Magic Circle

The five organisations in this group are considered to be the Citys top commercial law firms. They differ slightly in terms of size, strategy and specialisms, but all have a focus on corporate and finance work, a reputation for quality and client lists full of leading corporates and investment banks. They also all have a large number of training contracts on offer around 100 each every year. Joining one of these firms will mean working on the Citys biggest corporate and banking deals. Its also likely to mean some time abroad.
Allen & Overy

A&O is most renowned for its finance work its teams in this area have long held to be some of, if not the, best in the City though its corporate offering is now also strong too. A&O is said to have a particularly supportive and friendly culture, and is also reported to be the only City law firm to have its own office bar.
Baker & McKenzie

Baker & McKenzie has offices in more locations around the world than just about any other law firm and describes itself as international rather than American. Its branches are known for their strong links to their local markets. In London the firm is strong in employment and IT/telecoms.
Mayer Brown
International firm Mayer Brown gained its London office through a merger with respected City outfit Rowe and Maw in 2002. Mayer Brown has particular strengths in corporate, finance, dispute resolution and construction. To read more about Mayer Brown, see page 26 of Issue 37.
Eversheds
Eversheds has long been one of the best-known regional firms with a large number of offices across the UK and over the past decade has also significantly grown its international network. The breadth of the firms network has given it strengths in a very wide range of areas.
Pinsent Masons
Pinsents is a national giant with offices across the UK. It has a few international offices of its own in key locations and strategic links with Paris-headquartered international firm Salans. The firm is a good all-rounder, with strengths particularly in corporate, construction and IT.
Clifford Chance
Clifford Chance is the biggest Magic Circle firm. Its traditional key strength is finance, but its corporate department is very well-regarded and the firm arguably leads the Magic Circle in dispute resolution work. Clifford Chances pioneer instincts have led it to be the only one of the top five to move its entire London operation from the City to Canary Wharf, where it occupies a spectacular skyscraper. To read more about Clifford Chances work, turn to uP22.
Freshfields Bruckhaus Deringer

Freshfields corporate, competition and arbitration teams are among the best in the world, and its finance practice is now not far off this level. Its one of the oldest firms in the City but its heritage hasnt prevented its progress into a global powerhouse. Its brand has been enhanced in recent years by its selection as the official legal services provider for the London 2012 Olympic and Paralympic Games. To read more about Freshfields work, see page 28 of Issue 35
White & Case

White & Case is a New York player whose London office is one of the most well-established US outposts in the City. The firms main focus is finance, particularly acquisition finance and deals in the energy and infrastructure sphere, but its dispute resolution practice is also strong.
Linklaters
Linklaters is perhaps the most well-rounded of the Magic Circle practices, being arguably the only firm of the five with corporate and finance practices of equal strength. However, corporate has historically been at the heart of the firm. The firm also has one of the strongest real estate practices in the Magic Circle.
Slaughter and May

Slaughter and May is most well-known for its calm focus on its outstanding corporate department, regarded by many as the premier practice of its kind in the City and which advises a large number of FTSE 100 clients. The firms international network, consisting of outposts in just Beijing, Brussels and Hong Kong, is considerably smaller than that of other Magic Circle firms as Slaughters instead prefers to nurture best friend relationships with top local partnerships.
The chasing pack

Ashurst
The City also boasts a clutch of firms just outside the Magic Circle which undertake work of a similar type and quality and often also have extensive international networks. These firms tend to not be involved in the biggest corporate and finance deals quite as often, sometimes have their key strengths in areas outside the corpo-
rate and finance arenas on which the Magic Circle firms focus, and in most cases have slightly less extensive international networks. But these firms will all give junior lawyers excellent training in an environment in many ways indistinguishable from those found at the big five.
Know it all
Choosing to train as a lawyer and how to be chosen by Mayer Brown.
We know how important the first steps in your career are, which is why we want you to know as much as you can about the realities of life as a trainee solicitor. If law is for you, we want you to know what we look for in a trainee. Not that we are looking for clones we are a diverse group of people but there are some important skills that we all share.
Know more by contacting our London Graduate Recruitment team: E graduaterecruitment@mayerbrown.com T +44 20 3130 8524
Herbert Smith
Herbert Smith is seen by many as the best large-scale dispute resolution firm in the City. Although historically regarded as a litigation specialist, the firm is now strong across the board and its corporate practice in particular is increasingly seen as able to challenge those of the Magic Circle.
Ashurst is a solid corporate and finance performer which also does well in real estate, energy and infrastructure work and competition. With its traditional strength being in corporate, it has a large number of high-profile FTSE clients.
Where will your talent take you?

Hogan Lovells is one of the worlds top 10 legal practices. Our global reach and exceptional breadth of practice ensures a broad, enriching experience for graduate trainees. With a spectrum of practice areas to explore, a prestigious client list and a positive, open culture, our focus is to enable trainees to become lawyers, and lawyers to become leaders. To see how we help graduates transform ambition and potential into a world-class career, visit our website at:
CMS Cameron McKenna

CMS Cameron McKenna is associated with its excellent work in the energy, infrastructure and construction sectors. These specialities are reflected in the locations of its network of offices it was one of the first firms to enter the resource-fuelled Eastern European market and still has a strong presence there and, unusually for a City firm, in oil-rich Aberdeen.
Norton Rose
Norton Rose has solid corporate and, in particular, finance practices the firm is strong in asset and project finance and has one of the Citys best Islamic finance offerings. The training contract here differs from those of similar firms as its trainees rotate through six four-month seats rather than the usual four six-month stints.
Hogan Lovells
Hogan Lovells formed last May through the merger of long-standing City firm Lovells and Washington-headquarted Hogan & Hartson is a good all-rounder, having excellent teams in corporate and finance but also particular strengths in litigation and real estate. To read more about Hogan Lovells work, see page 31 of Issue 35.
Simmons & Simmons

Simmons & Simmons is a well-regarded City firm with a strong finance practice particularly for capital markets and structured finance deals and an outstanding employment department. The firm is also renowned for its collection of modern art, which includes works by Patrick Caulfield and Damien Hirst.
Little big hitters

SJ Berwin
In the Citys legal landscape, there are some firms that may be smaller than the biggest names but are still high-profile, perhaps because they have an influence
out of proportion to their size, or because of an outstanding reputation in a particular area.
www.hoganlovells.com/graduates
Hogan Lovells or the rm refers to the international legal practice comprising Hogan Lovells International LLP, Hogan Lovells US LLP, Hogan Lovells Worldwide Group (a Swiss Verein), and their afliated businesses, each of which is a separate legal entity. Hogan Lovells International LLP is a limited liability partnership registered in England and Wales with registered number OC323639. Registered ofce and principal place of business: Atlantic House, Holborn Viaduct, London EC1A 2FG. Hogan Lovells US LLP is a limited liability partnership registered in the District of Columbia. The word partner is used to refer to a member of Hogan Lovells International LLP or a partner of Hogan Lovells US LLP, or an employee or consultant with equivalent standing and qualications, and to a partner, member, employee or consultant in any of their afliated businesses who has equivalent standing. Rankings and quotes from legal directories and other sources may refer to the former rms of Hogan & Hartson LLP and Lovells LLP. Where case studies are included, results achieved do not guarantee similar outcomes for other clients. New York State Notice: Attorney Advertising. Hogan Lovells 2010. All rights reserved.
Mayer Brown values diversity and welcomes applications from all sections of the community.
Macfarlanes
Macfarlanes offers a full spread of legal services mainly to large UK companies, but the quality of its corporate practice is so high that this department is often involved on big-ticket cross-border deals that would normally be given to much larger firms. It also has strong real estate and private client practices. The firm has no overseas offices and instead uses a well-established referral network.
SJ Berwin is a solid mid-market performer but with one of the Citys leading practices in private equity, particularly fund formation, and also a strong real estate team. At nearly 30 years young, the firm is one of the newest elite partnerships in the City and is known in the Square Mile for its energy and drive.
Americas
Asia
Europe
www.mayerbrown.com
Mayer Brown is a global legal services organisation comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership (regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. Mayer Brown and the Mayer Brown logo are the trademarks of the individual Mayer Brown Practices in their respective jurisdictions.
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GROWTH IN ASIA
an exciting place to be a lawyer
Asia:
Industry news
Two thirds of UK businesses baffled by tax system
uP28
Around 65 per cent of companies in the UK are confused about the tax system, according to recent research figures. The research, carried out by YouGovStone found that two in three businesses dont know what constitutes legitimate tax planning and whether they could be accused of tax evasion. Stephen Herring, head of tax at BDO International, the worlds fifth largest accountancy network, said: Both HMRC and UK businesses will save time, resources and money if the current tax framework is both clarified and appropriately enforced.
IN THIS SECTION
Time for the Big Four
An introduction to the worlds biggest professional services firms
uP23
More than a job

Deloittes employees take part in an array of community activities
A world of opportunities for you

Meet graduates in each department of Ernst & Young
uP24
Professional growth
The Gateway talks to two partners at KPMG about their career paths
uP30

The Gateway chats to PwCs Head of Risk Assurance
uP26
PROFESSIONAL SERVICES FIRMS
Global law firm Clifford Chances Head of Asia, Peter Charlton, tells The Gateway why
Tax laws prevent Mulberry from opening second UK factory
Hong Kong, with its deep natural harbour, has long been a hub for commerce in Asia and is now also a key global financial centre
he worlds changing. The worlds moving east. So says Clifford Chances Head of Asia, Peter Charlton, who thinks Asia is the most exciting place to be a lawyer in the world right now. Hes clearly enjoying taking charge of a key part of the firms global network. Speaking from his base at the firms Hong Kong office, he describes how Asias economies are driving global growth. Why? Sixty per cent of the worlds population is currently living in Asia and the continent produces a fifth of global GDP. Asias rising economic influence is largely down to China; thanks to its increasing population and industrial output, the nation overtook Japan in summer 2010 to become the worlds second largest economy, and looks set to knock the US off the top spot within the next 15 years. But markets right across Asia are booming: analysts have also highlighted Bangladesh, Indonesia, Iran, Pakistan, South Korea, Turkey, Vietnam, and particularly India, as nations with potential for significant economic growth.
Why are business lawyers looking to Asia?

What does growth in Asia mean for global law firms like Clifford Chance? Peter tells us that Clifford Chance is about helping business to do business and theres a lot of business to be done in Asia. Some of the worlds
leading corporate powers, such as Chinese IT firm Lenovo and Indian conglomerate Tata Group, are Asian, and this continent is where many of the leading corporations of the future are blossoming in five to ten years time, 25 per cent of the top 500 companies in the world will be based here, which means theres no shortage of work for firms like Clifford Chance. As Peter explains, Clifford Chances lawyers in Asia are enabling companies and financial institutions to acquire things, sell things, invest in things or finance investments in things by offering advice on corporate law, mergers and acquisitions, raising funds, tax, intellectual property, employment matters, competition regulation or dispute resolution and more. If you want to be a lawyer in the business world says Peter, Asias the place to be. The current pace of commercial activity in Asia reflects the way in which it has emerged from the global financial crisis in much better shape than other markets. While the US and European economies floundered, the Asian economy has stayed robust standards of living continue to rise and many Asian nations, particularly China, have been able to accumulate large dollar reserves. Peter tells us: All practice areas are pretty busy here, even M&A, which took a big downturn during the global financial crisis and has slowed down worldwide, but has continued in Asia. He goes on to explain why many think Asias econo-
Join Clifford Chance and you could be jetting off to Dubai, Hong Kong, Qatar, Tokyo, Saudi Arabia or Singapore
mies have proved to be healthier than those elsewhere: while the pre2007 boom in Europe and America was driven around very liquid financial markets, Asias prosperity has been built on hard assets paid for with hard money, not with borrowed money they havent got addicted to leverage as the West did. firms expertise: We can help clients right across the range of issues they face as theyre trying to do transactions, says Peter. Finally: Were nice people! We have a laugh and clients enjoy working with us.
What could growth in Asia mean for me?

Clifford Chance exposes its graduate recruits as much as possible to the international dimensions of the work that the firm undertakes and around 80 per cent of trainees get the chance to spend six months in an
Why is Clifford Chance well placed to take advantage of the Asian boom?
Peters first response is simple: Were very good at what we do! which is confirmed by high rankings across the board from Chambers and Partners and other guides to the legal profession in Asia. He explains that Clifford Chance offers its clients the advantages of a broad network of offices across the continent the firm has bases in all the well established centres of Asian commerce such as Hong Kong and Singapore, plus presences in locations of growing significance like Bangkok and Shanghai, and a practice focused on Indian work. The firms clients can also benefit from the breadth of the
overseas office. Peter invites Gateway readers to come to Clifford Chance and to turn eastwards: We have a number of trainee seats in Asia and I would encourage you all to look closely at this option. Join Clifford Chance and you could be jetting off to Dubai, Hong Kong, Qatar, Tokyo, Saudi Arabia or Singapore. Theres attractions for graduates in going to Asia beyond the continents economic potential Peter explains that working in the region can offer trainees a valuable complement to working for the firm in London. Being in one of Clifford Chances Asian offices can mean exposure to challenging work, direct contact with clients and the chance to learn from colleagues of various nationalities and from other legal backgrounds to your own. As Peter says: Being here gives you a quite different view on the world its an exciting place to build a career as a lawyer.
n this issue, we focus on professional services big style. Weve lined up a series of articles which will tell you what the Big Four are all about, and give you some specific insights into each one of them. But before we plunge in to the nitty-gritty of their activities, lets take a step back and sort out the basics.
Are you up for the challenge of joining a leading professional services firm?
environmental impact.
Fashion retailer Mulberrys chief executive Godfrey Davis, has complained that UK tax laws have restricted the company from opening a second factory. Rising National Insurance (NI) rates would create crippling operating costs for the company, making the venture unviable. Employer NI contributions for those earning over 136 per week currently stand at 12.8 per cent, but are set to rise to 13.8 per cent in April.
Tax
Those working in tax at a Big Four firm advise their clients on what they need to do to comply with their tax obligations, the implications of new tax legislation and on tax mitigation strategies, that is, the ways in which they are legally permitted to structure their affairs to minimise the amount of tax they pay.
What is the Big Four?

The Big Four is the collective name for Deloitte, Ernst & Young, KPMG and PwC, the four firms who dominate the professional services world. Between them, they count most of the worlds top companies among their clients. They all have offices across the globe, employing hundreds of thousands of employees and between them they recruit thousands of UK graduates every year.
Advisory
Advisory work covers a broad spectrum of areas. It could involve advising clients on improving the performance of their business, rearranging their corporate structure, or dealing with risks they face.
Other areas
The Big Four firms may also give specialised advice in relation to areas such as mergers and acquisitions, insolvency or human resources.
ties there are in these areas for graduates (uP30). A selection of Deloitte employees show you how Big Four firms dont just use their skills to assist their corporate clients, but are also involved in a range of community and charity activities, both in-house and beyond (uP28). We also zoom in on one area of work in detail we spoke to PwCs Head of Risk Assurance to get a picture of exactly what he does for his clients (uP26). And we also show you where you could fit into things. Some more junior team members at Ernst & Young tell us how their careers at the firm are going and youll also get some application tips from them and one of the firms senior UK graduate recruiters (uP24).
PwC to sell personal insolvency business

PwC will sell its Gloucester and Leeds based personal insolvency division, and is currently looking for buyers. PwC partner Dan Schwartzmann confirmed that they believe that the team would have better prospects working independently from the global firm. Despite selling the practice, PwC will still deal with the personal insolvency of high net-worth individuals and larger, more complex cases. There have been speculations from industry insiders that KPMG, BDO International and Begbies Traynor may be interested in buying the business from PwC.
What do the Big Four do?

These firms work for their clients in three main areas: audit, tax and advisory services. What does each of these mean?
Whats in it for me?

Join a Big Four firm and you can look forward to being involved in fascinating work going to the heart of how major corporate institutions operate. Youll get excellent training, both on the job and through structured classroom programmes that together will usually lead to you becoming a qualified chartered accountant. With some good-looking letters after your name, your skills will be recognised worldwide and will stand you in good stead whether you choose to rise up the ranks at your original firm or a similar one, or switch to a related role within a business a path many Big Four graduate recruits eventually successfully pursue.
Audit
All companies are legally required to conduct audits on a regular basis, usually annually. An audit means investigating all aspects of companys business to ensure that their accounts accurately reflect the real status of that business. Audit work is predominantly financial, but may also cover evaluating a companys health and safety provisions, IT security and
How can I find out more about the Big Four?

Theres more to working with the Big Four, however, than the areas above. In our editorials in this section, weve tried to give you a full picture of what a career with one of these firms might mean. Two KPMG partners one specialising in audit and one in advisory work give us an overview of what they do, how their careers have developed and what opportuni-
Find out more about opportunities at Clifford Chance and its presence in Asia at www.cliffordchance.com/gradsuk
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GRADUATE ROLES
The Gateway catches up with four recent joiners and a senior resource manager at Ernst & Young to get an overview of what its like to work there
Tax
Second year assistant tax advisor, Richard Madden

What tasks to you do on a day-to-day basis?
I do a lot of project management. I make lots of calls to other offices, prepare memorandums, look through legislations and create step plans. The clients I work with are mainly FTSE 100 companies at the moment Im dealing with an aviation company, a telecommunications company and a pharmaceuticals company.
Advisory Senior resource manager, Louise Coops

Louise is responsible for the management of Ernst & Young employees. Her role covers everything from recruitment to making sure that client engagements have the right people working on them. She has been with the firm for over 20 years, having trained to become a chartered accountant with Ernst & Young and progressing to senior manager in Audit before moving into her current role. tion, youll come across as naive and its amazing how many people turn up to their interviews with no idea about the company or accountancy at all. You wont get in purely on the strength of your academic record. Aside from not doing sufficient research, candidates commonly stumble on questions such as why do you want to be an accountant?
Has there been a project youve worked on that youve particularly enjoyed so far?
Ive recently been working on a very complex transaction called the reverse equity transaction. Ive been on the project since the very start and Ill be there until the end, which is really nice as I get to see the whole thing come together. I got to meet the global head of tax to run through the step plan Id created for the project, and I even went out to dinner with him, which was amazing!
Client service associate, Gary Lam

What was it like joining the firm initially?
When we joined in September, the 60 people in my start group went on a trip to a village near Ascot to learn about Ernst & Young values and work ethic. It was a really fun week with lots of social events. of the job are also very challenging at first you have to get to grips with a lot of unfamiliar terminology.
Have you been given a lot more responsibility as a second year trainee than when you first started?
Initially I was doing things like amending letters, drafting fees, billing and filing. But after last summer, when I spent three months out of the office doing my ACA, I have been given much more responsibility. I think it was because my technical knowledge was much improved by that point. Tax legislation is constantly changing, so learning it all is a continual process. Even the partners are constantly updating their knowledge as new rules come in!
What do you find to be the most enjoyable aspect of your job?

I love the international aspect of it and Ive been able to use my language skills from time to time. Ernst & Young is a global firm so youll always be dealing with contacts in other countries. And Ive even come to enjoy getting to grips with the technical stuff when you really start to understand it, you get a real buzz out of it. The dynamic in the office is something that I love about the firm. There are loads of young people here and its great because we get to spend time together outside of work.
What do you do on a day-to-day basis?

My days are very varied in terms of the tasks that I do. Ive been on a secondment since the middle of October, which involved me being up in Edinburgh with a client a lot of the time. I was involved in a form of risk assessment called SOX testing, which was daunting at first, but it was great in the end because I was given lots of responsibility.
Whats the best aspect of working at Ernst & Young?

The people here at the firm are fantastic. When I first joined here it felt like joining university again because everyones so like-minded. I also like the way that everyone sits together in the office. When you walk in, you cant tell who is a partner as they dont hide themselves away in separate offices.
Whats the most challenging aspect of the role?

Becoming comfortable with the technicalities has definitely been the most challenging thing for me, and I think its something that a lot of people find hard particularly in international tax. Not only are you having to consider UK tax consequences, but also international tax consequences as well. On top of this, the tight deadlines mean that youre working in a pressurised environment but you learn to deal with that in time.
Whats your best advice for students considering applying to Ernst & Young?
If you think it could be for you, give it a shot. I didnt really know what I wanted to do at university, but I did an internship and found that I really enjoyed it. Its a great chance to work with some amazing people, to travel abroad and to gain experience dealing with high profile clients.
What is the hardest aspect about being a new starter at the firm?
Getting to grips with the scale of the company is a big challenge for any new starter. It certainly took me a while to get used to the fact that I was a small cog in a very big machine when I started at the firm, but on the other hand it was great being around so many talented people. You also have to find your way around and learn everything from scratch at a very fast pace. Theres a lot of pressure and expectation to deal with, but youll be surprised at how quickly you learn.
What if Im not sure what I want to do career-wise?

Research and reading are important when deciding upon your career path, but internships are the best way to really get to know what the job is all about.
Whats been the greatest challenge so far?

Its difficult at the beginning when you have little experience, but in order to gain it we need to be given an opportunity to do the work which we are here. Certain technical aspects
Whats your best advice to people considering applying?

If you want to apply for Financial Services Advisory, you really need a keen interest in the financial world and more specifically, what financial institutions do so its important to get clued up about whats going on.
What differentiates a good candidate from an excellent candidate?

For me, if people can demonstrate life skills through real life experiences its a major advantage. Many people are reluctant to talk about these things at interview because they think they arent glamorous but we want to know about them! Whether its volunteering or working on the tills at Tesco, we want you to tell us about it because itll mean youll have a broader set of skills than someone without those life experiences.
Audit
What kind of person fits in well at Ernst & Young?

Someone who shares our values that is, someone with a team approach, who treats their colleagues with respect and who can work well as part of a big organisation. The academic bar is very high, but were really looking for someone with a spark who has a hunger to contribute to a team effort and a clear idea of what they want to achieve.
Transaction Advisory
Corporate finance analyst, Roshni Mehta
Is working as a graduate employee different to being an intern at Ernst & Young?
The work is pretty similar to what I did on my internship, as was the way that youre led by someone more senior than you which is great because theres always someone to ask for advice. Its different in terms of the exposure you get to a particular sector, and youre also given a lot more responsibility as youre doing less of the behind the scenes work and more liasing with the clients.
Why is Ernst & Young a great place to work?

The breath of the opportunities we have internally is vast here. There are many different sectors to work in, Geographical locations youll get the chance to visit, and many youll work with and learn from. Our people and their team ethic are really what underpins the firm, and theyre the reason Im still here twenty years on from when I started!
Associate in banking and capital markets, Naomi Giles

Have you been given much more responsibility as a graduate employee than as an intern?
Ive been with the firm for six months, having got the job after doing a summer internship with Ernst & Young. Theres a lot more responsibility doing the full time job than on the internship. During the summer youre working on a less busy stage of the audit process, so theres less pressure during the internship for that reason. there are always first years, second years, third years and above to help you out and answer questions if youre stuck with something. Theres a real team spirit here. If one persons got a particularly heavy workload one day, were all here to help them out.
Why did you choose corporate finance?

We do a lot of work in renewable energy, which I was really interested in as Id come from a geography background having studied it at university.
What are the common mistakes that people tend to make when being interviewed?
If you come into an interview without doing any prepara-
Whats the most challenging aspect of your role?

Getting to grips with all the different types of renewable energy is difficult as its a lot of information to take in at once, and modelling future trends is also very complicated at first. Luckily, Ernst & Young are very supportive and train us on the job Ive just been on a two day modelling course which was really useful.
Whats the best thing about working at Ernst & Young?

Being around my peer group is really great and starting out in college training for the ACA qualification was really sociable as we got to spend loads of time together. I love the communications side of the role as well - talking to clients is something I find really exciting.
What kind of clients do you deal with?

I work with a lot of public sector clients and local authorities and private developers and investors.
Why did you choose Audit?

I chose audit because you get a real overview of how businesses work I think its a great place to start your career.
What kind of tasks do you do on a day-to-day basis?

We either have a main sector that we focus on at one time, or were given tasks helping out people across a range of different sectors. Recently, Ive been mainly doing the latter. Today Im working on prepayments, which involves talking to the client and requesting invoices and information about the payment Im getting quite a lot of client exposure.
What skills do you need to work in Audit?

You need good communications skills and the ability to work well in a team. Good presentation skills are very important because you need to be able to present your work clearly.
What have you enjoyed most so far about the job?

I worked on a financial report for a local authority. We broke down the technical information for them so they could understand it it took me about a week to complete. It was challenging because I wasnt familiar with the content of the report but once Id researched it and understood it, I found it really rewarding.
Why is Ernst & Young a good place to work?

You really get pushed here, and you get a lot of exposure to working with big clients. The people are lovely too!
Whats your best advice for students applying to Ernst & Young?
Be yourself. They dont want you to pretend to be someone youre not. I was quite relaxed during the assessment day, and I think I came across quite well because of it. They also like it if you can identify your own strengths and weaknesses.
Whats your best advice for students applying to Ernst & Young?
Make sure you practise your numerical and verbal reasoning tests, as this is where a lot of people fall down.
We still have graduate and internship opportunities available for 2010. For more information please visit www.ey.com/uk/studentstories
What are the hours like?

We do have to work long hours, but the great thing about it is that
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SENIOR PERSPECTIVE

The Gateway sat down with PwCs Head of Risk Assurance, Marco Amitrano, to learn more about the exciting international business hes been a part of for 17 years
What first motivated you to join PwC as a graduate?
I graduated with an MA in Electronic Engineering, but while I enjoyed the technical aspects of this, and despite achieving a first class honours, I felt that there was something missing. So I joined PwC on the basis that I wanted to learn more about finance and commerce to further my career. I also liked the idea of wearing a suit to work! was a tiny client of ours 20 years ago. Weve helped them through all phases of their growth and development since, which is an amazing process to be part of.
What was it like starting out as a graduate?

Very quickly after joining as a graduate trainee at PwC in Audit, I was visiting different companies every week to audit them. People often think of auditing as a very boring process, but actually to audit something you need to understand it. Therefore, what youre really doing is understanding how different businesses organise, operate and make money, and I found that incredibly exciting. I felt like the job was right for me right from the first week then it was just a matter of how I was going to develop my career.
After the financial crisis and the recession, the demand for professional services around risk control became huge, simply because the price of a mistake became almost unbearable
What exactly do you do for these companies?

There are two broad circumstances in which a relationship with PwC Risk Assurance might begin. Either a proactive approach is being taken to governance, risk and control by organisations, or they come to us for help with a problem. We will engage the right people with the right skills, having listened carefully to our clients views and needs. We will use our knowledge and skills to properly understand a problem or opportunity, design a solution and can in many circumstances be part of implementing that solution. This may involve other parts of PwC to be sure that maximum value can be delivered to our client. We can find ourselves working with different stakeholders at different levels, right up to the Chief Executive or Chairman. Truly inspiring stuff.
Why have you chosen to stay at PwC?

Ive been with the firm for 17 years now, and the reason I have stayed is the amazing variety in the work that we do here in terms of the clients, the people and the levels at which we deal with organisations. Another reason is the fact that PwC is a truly iconic brand. We were chosen to deal with the collapse of Lehman Brothers the biggest bankruptcy of all time. Our depth and size allowed us to handle it, and this is something to be proud of.
Does Risk Assurance have an international focus?

Yes, and increasingly so. We deal with many big global clients, but being able to serve those clients doesnt always mean people flying everywhere from the UK. In reality, you just need to be able to call colleagues in other countries, who will be a team of like-minded people with the same skills who can deliver the same level of quality to the project out there.
Marco first joined PwC because he wanted to learn more about finance to further his career
Can you describe how Risk Assurance helps businesses?

The first thing you need to understand is that risk is inherent to business. All companies take risks, because thats how they make money. For example, a manufacturer might want to invest in a new factory somewhere in the world. We can help identify, understand and evaluate the risks associated with doing that, and then we can assist in the design of controls to address those risks, as well as give independent assurance over them. To have a trusted adviser to turn to in business can be hugely valuable in an uncertain world.
What kind of businesses do you help?

We deal with companies of all sizes and across all sectors. We work with many of the FTSE 100 companies but were not just interested in the global giants of this world. We also work very closely with much smaller companies to help them. The sustainability of our own business depends on having relationships with organisations of all sizes and many of these are an awful lot smaller than you might imagine. Some of our biggest clients today were once much smaller businesses. I can think of one particular FTSE 100 company that
What are the challenges associated with working on a global level?

Keeping consistency in responsiveness and quality on a global level is a constant challenge. PwC is a huge business that attracts top quality graduates in the UK and the US, but not all countries are at the same level of economic maturity as these. We aspire for the same quality in delivery and client service to be met in developing areas such as Eastern Europe and India. All the Big Four firms are renowned for their international network, so we need to ensure that ours is the strongest in order to
differentiate ourselves. Over the past five years weve invested consistently across the globe in both our employees and our brand to make us one of the strongest networks in the world.
What is Risk Assurances strategy and growth plan for the future?
After the financial crisis and the recession, the demand for professional services around risk control became huge, simply because the price of a mistake became almost unbearable. Theres a new term thats been cropping up more and more recently, and thats catastrophic risk. It refers to business risks that, if they crystallise, mean that the company may go under.
This was once only a theoretical concept, but now its a reality that companies in many industries are trying to protect themselves against. We expect the market to continue to grow significantly around risk management, information security and related assurance, not least given the continuing rapid pace of technological change. We continue to innovate around a portfolio of services, indeed we are a portfolio business, which we expect to deliver sustainable revenue growth for us.
Whats a portfolio business and how is it sustainable?

As a portfolio business, Risk Assurance does lots of different things
in different markets as we grow. Its important to recognise and accept that typically not all of what we do will be growing in all of our markets all of the time. So, within our portfolio, weve always got some inflating and deflating bubbles, and the existence of both of those mean that over time we are getting steady, sustainable growth, which makes for healthy careers with plenty of variety. The key to keeping it that way is innovation in relation to market demand. For example, at the moment were seeing a rapidly developing market for services around information security and data management, so were expanding our team of security and data specialists. Were also expanding our team of
financial services experts and oil and gas experts to meet particularly high demand in those sectors.
What are the graduate routes into Risk Assurance in PwC?

There are broadly two types of graduate route into Risk Assurance. One is very specific to some aspects of what we do and that may be technology, for example. Theres also something called The Shared Scheme, which is great if youre coming in as somebody with a lot of intellectual curiosity and agility, who wants to experience different things. You might work on projects for risk assurance, whether that be a technology project or a treasury project or a business continuity and
risk management project, or alternatively you might be part of an audit team. Over the course of around two years youll generally begin to hone in on something that youre really interested in, and then you can begin to specialise.
What kind of people do well at PwC?

People who are intellectually agile and curious. Whether youre working in audit, consulting or anything else, curiosity is something that is really important because it leads to knowledge and self-development, and ultimately, value-add for the organisations youre working for. We live in a rapidly changing world, and in order
to keep up with things, you have to observe and ask questions. You also need to be able to work effectively to do well here its not just about working hard. You also need the capacity to develop yourself. You have to be able to accept feedback, evaluate it and use it to improve. Last but not least, leadership is something that you need from day one at PwC. Even at a graduate level you will be leading in terms of our engagement with clients, and as you progress through your career, youll be managing increasingly large teams of people.
Visit PwCs careers website to find out more about the range of opportunities available. www.pwc.com/uk/careers
Can you describe the ideal PwC candidate in three words?

Intelligent, ambitious and committed.
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More than a job

COMMUNITY
Do you want your future career to be more than your everyday role? If so, listen closely, as theres an array of opportunities at Deloitte
DIVERSITYNETWORKS
AMA AFRIFA-KYEI
ASSISTANT MANAGER/ADVISOR TO EMPLOYEE ENGAGEMENT AND DIVERSITY INCLUSION
LONDON 2012 GAMES

LONDON 2012 COMMUNICATIONS MANAGER
DANNY BOWERIN
COMMUNITY INVESTMENT
COMMUNITY INVESTMENT SENIOR MANAGER
BOB THUST
Why did you get involved with diversity networks?

I grew up in a family thats always been involved in community affairs/investment and Ive always wanted a career that involves these elements. When I was growing up I found the support given at school/college and university, in terms of options, choice and direction, limiting. Mentors werent a big thing back then. This is what motivates me now to get involved and help others, particularly the younger generation.
How is Deloitte involved with the London 2012 Olympic & Paralympic Games?
Deloitte is the official professional services provider to the London 2012 Games so were at the heart of their delivery. We first got involved back in 2003 and by the time weve done, well have been working on it for a decade. So far, weve provided over 250,000 hours of expertise to the Organising Committee, and will have devoted 750,000 by the time were finished. Were also very proud of Deloitte Disability Sport, which weve been working on since 2006.
LAURA HAYES
How do people at Deloitte get involved with community investment?

We have around 350 Champions spread across the departments at Deloitte, who dedicate several hours out of their working week to organising community investment projects. Every office in London has its own champion who will direct people towards opportunities to get involved. More than 3,000 of our employees gave their time to community projects last year and over 50 per cent were actively involved in fundraising activity. We support employees in what they want to do we have a payroll giving scheme that attracts up to 40 per cent matched funding from the firm, we will match-fund individual challenges up to 500 and we allow each employee up to half a day a month to work on approved community programmes.
COMMUNITY INVESTMENT CHAMPION
How does Deloitte invest in the community?

When people think about community investment, many of them imagine us just writing out cheques to people but its not like that at all. We follow a partnership model, so we work hard to deliver real and sustainable impact for both parties: a genuine win:win. We help our partner charities with fundraising, deliver our skills through volunteering and offer our regular services on a pro bono basis to ensure a lasting difference. We also help increase the profile of our partners through connections to our clients and contacts and through high-profile events.
Why is it important to have diversity networks?

Its important to have diversity networks at a firm like Deloitte because people should feel a part of or an affinity to something a shared sense of purpose, and that theres an opportunity to connect with like-minded people, especially because you spend so much of your time at work.
Why is Deloitte sponsoring the London 2012 Games?

Its the ultimate way for us to showcase the breadth and depth of our capabilities. It also provides us with fantastic opportunities to enhance the experience of working for Deloitte. For example, weve just selected 50 people to be Games Makers, to be part of the 70,000 strong volunteer force that London 2012 will call upon during the Games. Volunteers will be the face of London 2012, and will perform a wide variety of roles to ensure the Games go smoothly.
Will getting involved with community investment help my career at Deloitte?

Absolutely. Getting involved with community investment shows that youre a rounded individual and gives you the opportunity to do things that you might not get to do in your day job, for example, managing people, getting exposure to senior people and developing your mentoring abilities. These are valuable transferable skills that you will be able to use to further your career here.
What networks are there at Deloitte?

There are nine diversity networks here. Four of them are faith networks Jewish, Christian, Muslim, and Hindu. Then weve got the multicultural network, womens network, LGBT network (GLOBE), parents and carers network and our disability network (Workability). Im the network lead for the Multicultural Network and a member of the steering committee groups for the womens and disability network.
Who do you work with in the community?

We work with a number of charities, but our three national partner charities for this year, chosen by our employees, are Cancer Research UK, Children with Leukaemia and Help for Heroes. We recently organised an expedition for 100 staff up Mount Kilimanjaro which raised 475,000 for them, which was absolutely amazing. We also held a Strictly Come Dancing style event where people from the firm took to the dance floor, which, as well as raising a lot of money for charity, was really good fun for all involved. As well as these national charities, we also work with ParalympicsGB and SportsAid as part of our commitment to disability sport, the African Rainforest Trust through which we are helping conserve a vital area of bio-diverse rainforest in Tanzania and a range of smaller, local charities through each of our regional offices.
Why did you decide to get involved with the London 2012 Games?
Ive always wanted to work in sport; its always been a big part of my life. The professional services side of the work is great as well. I really like the combination of sport and what we can contribute as a sponsor and being involved in the London 2012 Games is a once in a lifetime opportunity.
Is there any formal recognition of involvement in community investment?

For significant projects and programmes those involved will receive formal feedback that forms part of their year-end appraisal. Weve also recently set up our Leader in Society Awards, which recognise involvement in community investment. Winners get commendations, bronze, silver or gold awards and receive extra funding for their project or passion. Last year we gave out over 100 awards to people across all departments and at a variety of levels across the firm.
How do they help people?

Our networks help drive and shape the firms diversity and inclusion agenda. They are involved in a lot of things; for example hosting events which range from internal, to client or graduate recruitment events. Most of our networks are also involved in mentoring programmes internally or as part of community investment, or both.
What is Deloitte Disability Sport?

Deloitte Disability Sport works in three areas participation, performance and podium. At grassroots level, we worked with ParalympicsGB to set up a website called Parasport (www.parasport.org.uk), which helps young disabled people discover which sports suit them best and where they can play them. We provide hundreds of bursaries to talented disabled athletes, and Deloitte Ride Across Britain, which sees 600+ people every year cycling the length of the country, is raising money for ParalympicsGB.
How big are the networks?

With more than 2,500 members, our networks provide our people with a shared sense of belonging, help them balance their working and non-working lives and help to build bridges between our talent and the world outside the firm. Each network is sponsored at partner level, has a network lead and steering committee. Our networks are pretty big! A snapshot example - our womens network has over 1000 members, the multicultural and Hindu network each have over 400, and the faith groups have a few hundred each. Theres a flexible approach to the networks you can be as involved as you like.
How many people get to work on sports projects at Deloitte?

Around 500 people at Deloitte already have Olympic or Paralympic work on their CVs because of the firms involvement with the London 2012 Games. Weve got people at every level and from every department working on it.
How do I decide whether to join one?

When you join the firm, you can do a bit of window shopping to see what you might like to get involved with. Participation is not confined to just the members or exclusive groups. Our networks are open to/ for everyone to take part in and contribute to its an open forum for all to come and share, learn and network, enhancing diversity & inclusion within the firm. If you find out who the key people are in a network youre interested in, you can contact them and ask them questions. Theyll be more than happy to go for a coffee and a chat.
What has been your personal highlight so far of the firms involvement with the London 2012 Games?
June 20 last year. I stood at Lands End and watched the riders complete their nine day journey from John OGroats. We raised over 350,000 for ParalympicsGB through the inaugural Deloitte Ride Across Britain, and it was the most beautiful sunny day. Emotions were running high, and there was even a marriage proposal at the finish line! I think that the best is yet to come though the London 2012 Games next year.
With regards to application dates we are open all year round and applications open on July 1 each year for both undergraduates and graduates. All applications need to be made online at www.deloitte.co.uk/graduates
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March 2011
March 2011
Issue 38
uP07-10
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BUSINESS
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BANKING & FINANCE

uP13-18
LAW
uP19-22
CAREERS & EDUCATION

uP33-40
OPINION
uP41-43
Professional growth
Starting your career at KPMG can take you in many different directions. The Gateway spoke to two partners who told us their stories and explained why theyre keen for you to apply to the firm
Adrian Stone
KPMG > Head of Audit, North England & Scotland > Partner Education > BSc Economics, London School of Economics
the heart of a business seeing how it works. Youre learning things that you cant learn in a university classroom, but only by doing. that Ive seen used elsewhere to solve a particular problem. Im able to share best practice in this way because I work with lots of different businesses.
CAREER PROGRESSION
Whats the best thing about working in auditing?

I love the variety of the work. Today Im at an industrial company, but yesterday I was at a software company. I also enjoy seeing how my clients react to the challenges that they face. Ive had the privilege of meeting some fantastic business people and I admire the results that they get and their persistence - how they recover from setbacks is fascinating. I really like helping people make their business better. For example, a couple of years ago I was introduced to two medical experts. They were good businesspeople but couldnt get all their interests into a corporate structure that would allow them to borrow the amount of money needed to grow their venture. At the same time, another of my clients with experience in the area had just been made redundant. I put them together, and they are now in the process of reorganising this business, which is on the threshold of being really successful. To give an auditing example, today Ive been telling a client about the methods
Why is it so important for you to recruit graduates at the moment, and what are you looking for?
One of the great challenges we have is that when our graduates have been with us for four or five years and have qualified they become very valuable and so many of them go on to very interesting and fulfilling careers elsewhere, across all aspects of business. As we cant hang on to all our people for the rest of their working lives, our business model relies on recruiting a lot of graduates. We bring in very bright, ambitious people and they have an influence on the way KPMG is set up, and keep the organisation vibrant. We need a lot of graduates now in
particular because many businesses are currently running in very lean ways and so our clients are asking us for extra help. For example, they might want someone on a short-term basis to help them with an acquisition, or a refinancing, or some other project. Were looking for people with an interest in business who want to learn. Theyll have good people skills, and theyve probably already demonstrated that they can handle setbacks and that they are mentally tough.
Marcus Sephton
KPMG > Head of Regulatory Services, Europe > Partner Education > MA Classics, University of Oxford
What attracted you to a career in professional services, and how has your career developed?
My interest came from the fact that the work was analytical - my favourite subjects at school were analytical subjects - and that it was business-related. Also, there seemed to be so much variety - you werent always working in one place doing one job but could go out to different clients. The job has delivered everything it promised and more, beyond my wildest expectations. The pace of change, the challenges and the complexity of the challenges still attract me, and even now there are times when I get up in the morning with butterflies in
my stomach because Im going to do something Ive never done before.
Can you sum up why you think graduates should apply to KPMG?
Were offering a lot of variety, exposure to a whole range of industries and the opportunity to go and learn about all aspects of the corporate world. I think we produce people with very broad business skills.
How would you describe auditing to a student who wasnt familiar with what firms such as KPMG do?
Businesses prepare sets of accounts which tell the story of that business for the year. An auditor goes in and sees whether they agree with that story. You investigate lots of different aspects of a business. In doing so, if you go round with your eyes open, you can learn a lot about different industries, the people who run them and the way they run them - and thats why doing audit is such good training. You are at
What attracted you to a career in professional services, and how has your career developed?
I was interested in getting into business, and I explored both the marketing route and the finance route. I thought that the finance route and the training provided by one of the big accountancy firms would be the right way forward for me. After I trained in London I went to Portugal, which turned me into more of an advisor because that was what the Portuguese market needed. Next, I joined the building societies regulator for two years and then KPMG set up a regulatory practice, which I built up and ran. I then worked on marketing non-audit services to non-audit clients because,
as a result of regulatory pressures, we werent able to sell this kind of work to our audit clients. In 2007, financial sector regulation came to the fore again and I came back into the regulatory team as the chief operating officer for risk and compliance.
another example. Our role is to help clients to turn risk to advantage. We do that by combining deep expertise in a number of different areas. For example, we have accountants who specialise in fraud investigations and actuaries who deal with insurance risk. We have experts in banking who deal with capital liquidity and technology people who deal with data protection and integrity issues. But what really sets us apart is being able to bring all of these people together to address the complex issues that organisations face today, particularly businesses in the financial sector.
Whats the best thing about working in risk and compliance?

What we do is in high demand so the area is growing quickly. The new regulatory climate isnt going to go away. For graduates, the great thing about this area is that youre quickly going to gain skills, get industry knowledge and form networks, which I think makes it attractive.
and delicate state, organisations are turning to trusted advisors to help them navigate the risks and turn those risks to advantages. So at the moment were looking for incredibly bright people who want to engage with our business and learn, and who are energetic and prepared to try new things. Were not that worried about peoples academic backgrounds. If you want to go into certain areas, for example, actuarial work, youll need mathematical skills, but if you go into one of the general routes it doesnt matter what degree you have. You need to be able to present yourself well, think on your feet and not be thrown by unexpected questions. KPMG is a people business, so you have to be able to engage with people, particularly our clients.
Can you sum up why you think graduates should apply to KPMG?
There are a huge variety of things you can do at KPMG and you can easily move to an overseas office, or into another area of work. I began as an auditor, became an advisor, then a regulator, and then started doing work which was more to do with selling to customers. I then returned to regulatory work. We believe in giving individuals the freedom to develop and carve out their own career. At KPMG, most people are not in the office - were with our clients. We move around, go to many locations, and meet various clients, regulators, and different colleagues. Its a huge and wonderful mix!
The pace of change, the challenges and the complexity of the challenges still attract me
How would you describe your work in risk and compliance to a student who wasnt familiar with what firms such as KPMG do?
All organisations have to deal with uncertainty and the risk that unexpected things will happen, as the airlines saw with the volcanic ash cloud, or BP with the deep sea well explosion. The financial crisis is
Graduate opportunities at KPMG

KPMG recruits in three specialist areas: Audit, where youll be involved in analysing whether a companys accounts reflect the realities of their business. Graduate programmes include: Audit Public Sector Audit Tax, where youll be interpreting tax legislation to give strategic advice to clients. Graduate programmes include: Tax Japan Practice in Tax Pensions Investment Advisory Advisory, where youll work with businesses on financial and corporate strategy. Graduate programmes include: Performance and Technology Risk and Compliance Accounting Advisory Services Risk and Compliance Actuarial Risk and Compliance Economics and Regulation Risk and Compliance Financial Services Risk and Compliance Forensic Risk and Compliance Internal Audit Risk and Compliance Technology Transactions and Restructuring
Why is it so important for you to recruit graduates at the moment, and what are you looking for?
As the economy is in an uncertain
At KPMG, individuals have the freedom to develop their own career
Visit www.kpmg.co.uk/careers to find out more, including details of KPMGs graduate programmes, profiles, case studies, videos - and hints and tips on applying.
March 2011
Issue 38
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BUSINESS
uP11-12
BANKING & FINANCE

uP13-18
LAW
uP19-22
CAREERS & EDUCATION

uP33-40
OPINION
uP41-43
CAREERS & EDUCATION

IN THIS SECTION
Rising stars: Oxbridge tour guides
The Gateway meets some bright student entrepreneurs
uP33
Assessment centre tips

Our advice on giving presentations
uP36
Working abroad: New York

Whats it like to work in a Manhattan bank?
uP37
Commercial awareness
How do bankers, lawyers, accountants and consultants think?
uP34
Why study for an MSc in Finance?

Business Because.com explain
uP39
Walk
T
wo Cambridge students have found an imaginative way of meeting the rising costs of studying by launching a company offering walking tours of Oxford and Cambridge, which uses students as tour guides. Oxbridge Tours, which was formed last year by Christopher Dobbing of Pembroke College and Andrey Pronin of Fitzwilliam College, already employs 26 students from both Cambridge and Anglia Ruskin University. The tour guides give tourists, schools and corporate conference groups an insight into academic life, both past and present, by showing them around the city. The pair have even received a thumbs-up from the MP for Cambridge, Julian Huppert. He attended one of their student-led tours last week and seemed very
RISING STARS
The Gateway turns the spotlight on Christopher Dobbing and Andrey Pronin, who founded a tour guide company that helps students at Oxford and Cambridge fund their way through university
With tips, guides can often earn enough in a week for a weeks accommodation and living costs
time. Its really important to us that fellow students are able to meet the costs of studying and also meet their academic commitments. With tips, guides can often earn enough in a week for a weeks accommodation and living costs. The company offers a Walk of Fame tour which focuses on the famous members of the university and what
this way
they accomplished at Cambridge. It includes everything from the invention of the computer to the discovery of DNA and even the development of the modern rules of football. They also offer private tours for prospective students and their parents. The pair are hoping to expand their business model to other university towns such as Edinburgh, Bath, Bristol and York to support students across the country. of education rises, and I am pleased to see Cambridge students leading the way on this issue. Cambridge colleges are known for their strict rules about students having part time jobs, but Christopher explains: We restrict our guides to four hours per week during term
impressed by what he experienced. Julian said: Oxbridge Tours is an innovative and entrepreneurial way to help students meet the rising cost of higher education without detracting from their studies. It is important that students have access to study-friendly employment opportunities as the cost
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Issue 38
March 2011
March 2011
Issue 38
uP07-10
35
BUSINESS
uP11-12
CAREERS & EDUCATION
BANKING & FINANCE

uP13-18
LAW
uP19-22
CAREERS & EDUCATION

uP33-40
OPINION
uP41-43
COMMERCIAL AWARENESS
Thinking like a
With commercial awareness youll shine at that assessment day, but need to know how to use the news? Here The Gateway tells you what a banker, lawyer, accountant and management consultant want to talk about in a big business story
...lawyer
Mile-high club: With oil prices this high, Im not surprised that Walsh has called a halt for now to his plans to hook up with another merger partner. But if he does resurrect his ambitions, he may well find he has some tricky legal hurdles to overcome. EU competition clearance was required for the BA/ Iberia merger to go ahead and its likely that the process would need to be repeated for any other significant acquisition deals IAG contemplates. And if IAG looks beyond Europe (I hear theyre considering approaching American Airlines or Qantas), itll find that governments worldwide are pretty strict about what they allow their airlines to do. US and Australian law discourages tieups between domestic and overseas players. Unhappy bunnies? With yet another strike threatened at a busy time of year, itll be interesting to see what effect this dispute has on UK law in this area. David Cameron has already threatened individual employment rights by proposing reforms to the way employment tribunals operate and in January suggested that the rights of unions to declare strikes should be curtailed. The union-backed staff campaign against the airline could backfire if it leads to a crackdown on collective labour rights.
...accountant
Long story: I found IAGs first results announcement (publicly available on their website) a riveting read. Fascinating to see the impact that events such as the ongoing dispute with staff, the harsh UK winter and the Spanish air traffic controllers strike had on profits. Deficient pensions: Like many big UK companies, BA has struggled in recent years with a large pension deficit. Many formerly publicly owned companies are locked into final salary deals with their more senior employees. The problem is that the changing profile of the UK population put simply, therell be more oldies and fewer younguns in the future means that pension pots will struggle to meet their obligations. But now the government has decided to change the inflation measure to which final salary pensions are linked, switching from the retail prices index to the lower consumer prices index meaning that BAs pension obligation is lessened and the resulting hole in its accounts reduced. BA is not quite in the clear though, still having a 2.4 billion deficit and, of course, the change is not good news for retiring BA employees who will now get less money when they leave their jobs.
Flying high
Is British Airways on the up again?
...banker
Buying some time: Well, well these oil prices really could put IAG in a sticky situation. Of course, traders at banks like mine will have helped BA and Iberia to hedge their exposure to oil price fluctuations with derivatives (turn to uP14 to find out more), but the word on the street is that European airlines have only managed to protect about 60 per cent of their fuel requirements for 2011. And remember hedging cant shelter purchasers of a commodity from sustained price rises long-term, only give them a few months to come up with a plan. Whats really worrying me is that if BA ticket prices rise much higher, I might have to cut back on my business trips to New York and Tokyo, or worse fly cattle class. No thanks! Share nicely? IAG shares got off to a flying start when they started trading in January, but since then have descended in value. Looks like investors arent sure at the moment where theyll end up if they go with the new airline group.
he airline group formed earlier this year by the merger of British Airways (BA) and Spanish airline Iberia has announced a pre-tax profit of 21 million for the last quarter of 2010 in its first set of results. The new entity, International Airlines Group (IAG), may eventually boost its profits even more through further mergers. Last September, IAG chief executive and former BA head Willie Walsh announced that IAGs management had drawn up a shopping list of 12 airlines to be considered as acquisition targets, thought to include Finlands national carrier Finnair and, to tap further into rapidly developing markets for air travel in Asia and South America, Indias Kingfisher and
Chiles LAN Chile. But recently Walsh suggested that any acquisition plans are on hold for the moment. This halt to IAGs merger ambitions may well be due to the financial problems IAG is currently facing due as a result of continued rises in oil prices. The OPEC average spot price for crude oil increased from $35 a barrel in January 2009 to around $75 a barrel in January 2010 and by mid-February this year was even higher, at nearly $100 a barrel (EIA). The latest rises are partly due to the current political instability across the Middle East, where a large proportion of the worlds oil supply comes from. Rises in oil prices may force BA to pass on their added costs to their passengers in the form of higher fares. In February, British Airways raised the
price of long-haul journeys in economy and premium economy classes by 24 and that of long-haul journeys in business and first class by 34. Last week chief executive and former BA head Willie Walsh announced that ticket prices would continue to be kept under review. Ongoing industrial disputes may also mean trouble ahead for BA. A new cabin crew strike ballot is due to open on March 1. The result could lead to disruption to travel around the Easter holiday, likely to be particularly busy this year as travellers take advantage of the extra bank holiday granted for the royal wedding. BA had to tackle a new controversy last week as a website created by a passenger to draw attention to a complaint against the airline gained extensive publicity. Yahoo manager Zane Selkirks blog about her encounter with a bed bug-infested blanket on a flight from Los Angeles to Heathrow is estimated to have been viewed by thousands of people since its launch.
...strategy consultant
Two heads are better than one? Like my banker friend, Ive been watching the journey of IAGs share price with interest and I agree that the market is not yet sure about the new entitys future prospects. Its worth noting that, despite the hype that often surrounds them, many mergers are not successful that is, they cost more to complete than they ever bring to the merging parties. IAGs recent results state that the tie-up cost 26 million. Only time will tell whether the expense has been worth it. Reality bytes: My industry loves all things computer-related we think you simply cant ignore IT, whatever area of a business youre working on. But BAs Blanketgate is an IT bug issue in a league of its own. This scandal shows that, in this age of Twitter, Facebook and a plethora of other lightning-fast ways to spread a message, if a company slips up on customer service it can get bitten very quickly and pretty badly (as anyone whos checked out Miss Selkirks photos will attest - ouch!). My advice to BA? Talk to a firm like mine about some ways to make social networking and the blogosphere work for them. And get in pest control, sharpish!
Some useful terms

Blogosphere: A collective term referring to blogs and the connections between them. Inflation: A rise in the cost of goods or services over time. To read more about inflation, turn to uP08. OPEC: Short for the Organisation of Petroleum Exporting Countries, an intergovernmental organisation of 12 major oil-exporting nations. Spot price: A price quoted for a commodity or other asset for immediate sale or purchase. Hedge: A form of protection against financial risk, often through the use of derivatives. To read more about how derivatives are used to hedge against risk, turn to uP14. Merger: The coming together of two companies by which both cease to exist and instead become part of a new corporate entity. To read more about mergers and acquisitions, see page 22 of issue 37. Pension deficit: The extent to which a companys obligations to pay the pensions of its staff outweigh the funds it has available to do so.
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March 2011
Issue 38
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37
BUSINESS
uP11-12
CAREERS & EDUCATION
BANKING & FINANCE

uP13-18
LAW
uP19-22
CAREERS & EDUCATION

uP33-40
OPINION
uP41-43
APPLICATIONS
WORKING LIFE
The assessment centre circus
Working in...
With its sky-high office blocks and bustling streets, New York is among the worlds most renowned business hubs. Business Management student Rhoda Egharevba shares her tales of interning in investment banking in the Big Apple
New York
Id spend four hours per day travelling, which was gruelling to say the least!
long on the train, but all the bussing and waiting around I had to do to get across town held me up so much, adding hugely to my commuting time. Id spend four hours per day travelling, which was gruelling to say the least! It was much better when I was working in New York, as I could get the 8.20am ferry across the Hudson River and be in the office before nine. My department within the bank was more laid-back than some of the other departments, but we all worked hard. If we were busy, it was manic. But if we werent I was sometimes allowed to go home early. I was very fortunate with my manager she was amazing. She wasnt the sort of person that made me feel like I had to pretend that I was working when we both knew there wasnt a lot going on. I could also have proper discussions with her which was lovely because Id never had a boss like that before. The way that people dressed really varied between departments. I was in a middle office role so-to-speak, meaning that I had to meet with external stakeholders from time to time, so the dress code was business dress. I wore tailored trousers or a skirt with a shirt most of the time, but it wasnt so formal that I always had to have my top button done up. Some of the other departments were allowed to dress more casually if they werent meeting with clients ours was more strict in that sense. I was pleasantly surprised about how multicultural the office was. Most people were American, but there were lots of people from other countries there as well, so I wasnt the only one without an American accent. I often went for lunch with my colleagues especially on Fridays. Id normally eat with the other interns, as we were all split onto other departments so lunch was a good opportunity to get to know each other. There was a canteen at the office but wed often go out into Manhattan to eat. There were quite a few Chinese places around which were good - and there was a British pub nearby too, where we celebrated St. Patricks Day. They made a big deal out of St. Patricks Day in the US, which I didnt expect. Everyone was walking around the city wearing green!
T
Part 4: Presentations
Well show you some presentation acrobatics and how to avoid a fall
h no. Oh yes! Dim the lights, drum roll please... its time for your presentation! As part of your assessment day marathon, its highly likely that you (yes, you!) will be asked to give an individual presentation to your assessors and sometimes the other candidates too. Having to do so can feel like torture, but never fear by the time weve finished with you, youll be performing in the ring like a show pony (though The Gateway does not condone cruelty to animals). So lets get down to business. Its typical for you to be asked to prepare for this part of the day in advance which, incidentally, is yet another reason why you should scrutinise that pack of information your potential future employer will send you very carefully indeed. The Gateway once heard of one young candidate who failed to do so and had to cobble together their five minute showpiece on the train on the morning of the big day. You do not want this person to be you. Just like a virtuoso trapeze performance or a dazzling tumbling act, your presentation may end up looking easy and smooth when you give it, but will in fact be the product of careful and extensive preparation. Where does this preparation start? First step choose your topic. You may be given some parameters, but often youll have a free hand recruiters are generally more interested in the how than the what of what you say. So how do you pick? The golden rules are: dont be too obvious or boring (nothing about your employer unless specifically asked, please), choose something that
Your assessors will be scrutinising your demeanour, body language and rapport with your audience, so put as much or more time into getting this right as into finding your material
interests you (otherwise how can you interest your audience?) and dont be too ambitious as its surprising how little you can say in five minutes My trip to Mount Etna is good, The rise and fall of the Roman Empire is not. As youve picked something that interests you and youre keeping the focus tight, the next step research and fact-finding should be the easy bit. In fact, the challenge is likely to be limiting your information rather than extending it. But do spend some time checking your key nuggets of wisdom and filling in any gaps. Then structure your information. Put it into a logical order and ruthlessly purge it of anything irrelevant or uninteresting. Dont be afraid of repetition. In fact, its a good thing plan to tell them what youre going to tell them, tell them and then tell them what youve told them. (Phew!) Once you have your information sorted, here comes the most important bit performance (ta da!). Your asses-
sors will be scrutinising your demeanour, body language and rapport with your audience, so put as much or more time into getting this right as into finding your material. For example, its crucial that, while you may plan your presentation in longhand, you should never end up reading from a script condense your points as soon as you can into bullets or key words and work from those to ensure that your talk comes across as natural and confident. Then practice! Gather your family and friends around you and show off your tricks you may feel stupid, but remember: if you cant perform in front of your nearest and dearest, how are you going to be able to do so in front of other candidates and assessors? And so, finally, the big moment is here. Its the corporate equivalent of a sparkly leotard and a rope dangling from the ceiling youre in your best suit and that flip chart awaits you. Take a deep breath and walk slowly but purposefully to the front. Dont
feel rushed. Remember that, although it may not feel like it, you have a sympathetic audience few people enjoy giving presentations and no-one likes to see someone struggle in front of them, so theyre all willing you to do well. And if you are getting some hostile vibes, picture everyone in their underwear it may be unconventional, but it works every time for us! When youre feeling calm and cool start! That wasnt so bad, was it! Take things slowly and stick to your plan. Remember to breathe and to make eye contact (though with more than one or two people unless you want to get arrested). Keep an eye on the clock and dont be afraid to drop sections if theres not enough time to cover them or if you think they wont work on the
audience. Dont get fazed by laughter (when youre being deliberately funny, we hope), unexpected interruptions or midway-through questions (we recommend you politely defer these until the end). When you do get to the question stage (and you should always have a question stage), dont worry if no-one asks anything initially have something up your sleeve along the lines of People always wonder.... or Someone once asked me if... and youll find that doing so gives people time to gather their thoughts. Youre loving it up there now, arent you! But as youre flying through the air with the greatest of ease, remember that theres other people to present too! End clearly with a final flourish or flip, and dust that chalk off your hands. You did it! (Cue applause).
he first thing that you notice when you take your first steps on the streets of New York is the height of the buildings. Its quite staggering. The streets are incredibly busy, but Im from London so I wasnt as blown away by that. Combined with the architecture however, the initial shock was intense but I adapted quickly. It didnt take me long to fall in love with the city. I was based in the New York office, but sometimes I had to go to the Stamford office in Connecticut. If you go from mid-town Manhattan, its about a 40 minute train ride. On days when I was working in Connecticut, I had to wake up at 5.30 in the morning to get to work on time. The most annoying part was that it didnt actually take that
What was the biggest shock to the system? How incredibly tall the buildings were! What do you miss the most? The food especially brunch.
Advice for someone going to work in New York? Dont live in Manhattan - its really expensive. Youre better off living somewhere like Newport which is really close, but cheaper and still nice too.
Here are our key dos - and donts

Do use visual aids and props anything from pie charts to a plate of home-baked brownies can be a great addition to your presentation (particularly the brownies bribery works every time.) Do use stories we hear (anecdotally, naturally) that people will be much more engaged with what youre saying if you tell them a tale or two rather than just presenting them with facts - its simply how the human brain works. Dont overuse Powerpoint. The Gateway is sticking its neck out here, but if youre asked to use this resource, resist the urge to dump all your notes on it. Keep your slides as minimalist as possible how about a key sentence for each section of your talk, or just some great images? You want to keep your audience breathless with excitement and concentrating on what youre saying, so dont give it all away to the big screen!
Rhoda caught the ferry across the River Hudson to work
March 2011
Issue 38
uP07-10
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BUSINESS
uP11-12
Picking a great business school is as easy as 1. 2. 3.
BANKING & FINANCE

uP13-18
LAW
uP19-22
CAREERS & EDUCATION

uP33-40
OPINION
uP41-43
BUSINESS SCHOOLS
Why study for an MSc Finance?
ames Magrane applied to investment banks in London as an undergraduate in autumn 2010, but it quickly became clear that he was acting prematurely: I realised that I was naive to apply and unaware of the amount of work thats really needed to get in. These doubts drove his decision to apply for an MSc Finance at Cass Business School. Now halfway through, James has already had offers from Australian bank RBA and BNP Paribas. The MSc Finance is the reason for his success, he claims.
Learning on the job

The financial job market is in an unusual state post-recession. Although some entrance-level demand remains buoyant, competition is up and recruiters no longer prowl campuses for talent on the scale they used to. Fewer jobs and more competition mean hirers now expect you to come to them, and with solid credentials directly relevant experience or qualifications. For many graduates, the opportunity to gain these is the key appeal of the MSc Finance. They look to the practical orientation many courses have and see the chance to gain both at once. The way MSc Finance courses are taught is a big part of their appeal. Students are often asked to submit coursework which resembles a task you might be given in a job in finance more than an academic exercise. Rather than setting a class an essay
on the theory of financial reporting, a lecturer might ask students to write a financial report using a case study which is then assessed as a piece of professional work. It can be a nervewracking test but the chance to make mistakes in a safe environment first, where the worst that can happen is a bad grade, holds obvious benefits. The pace of work also gives MSc students a taste of the professional environments that they might enter as Calvin Mhembere, studying for his MSc Finance at the University of Exeter, explains: The program is very comprehensive, hence the intense schedule. There are hardly any free weekends, days or nights and this trains you to develop the tenacity and self-management necessary to be successful in the financial services industry.
up against a rival job candidate whod done the same internships but had instead chosen a years practical experience over the MSc, Id have the edge. Most MSc Finance courses have a strong theoretical element training in statistical software like S-Plus, as well as on Bloomberg and Reuters terminals. Module options are likely to include everything from economics to financial reporting and investment management. Some courses even cover up to 70 per cent of the internationally-recognised Chartered Financial Analyst (CFA) qualification, increasing your appeal to employers who prefer graduates to hit the ground running.
Robert Kirby of BusinessBecause.com finds that students point to a wide range of benefits, but agree on the value of the course
Need to know: MSc Finance
The MSc Finance usually requires undergraduate degrees with economics and statistics content. However, some schools allow students of all backgrounds to apply with GMAT test results. A limited number of UK courses have a partnership with the Chartered Financial Analyst Institute (including Imperial, Exeter, Warwick, Durham and Cass). The classes tend to be highly diverse, often with less than 15 per cent of students from the UK. Usually about two thirds of students have finance, accountancy, business or economics undergraduate degrees, and most of the remainder come from science backgrounds. Most full-time courses last 12 months, but many part-time courses can be completed in 18 months. Generally speaking, courses based closer to the City of London have a more practical emphasis, whereas those further away place a higher value on financial theory. Last year, 50 per cent of Durham MSc Finance graduates went into finance jobs and 20 per cent went into consulting. Courses can cost anywhere between 8,000 to 24,000. Scholarships are available for up to 20,000. Many college career services allow students to upload their CVs for potential employers to browse.
High life
But regardless of whether theyre more interested in hard knowledge or practical skills, the biggest benefits students get from an MSc Finance are the contacts they make and the chance to associate themselves with a respected university. Visits to banks for lectures are common, providing an added bonus of scoping out potential employers. James Magrane says a friend even managed to secure an internship after such a class. And, of course, getting to know lecturers who have years of financial networking is a big help for many young aspirants not to mention the classmates wholl soon be in high places. BusinessBecause.com is a news and networking site for business students around the world.
Good in theory
Others study for an MSc Finance to sharpen their knowledge of financial theory. Sebastian Kaufmann had already interned at a few banks before he applied to do his MSc Finance at Warwick Business School. Working at the banks made him see the importance of academic credentials. He now believes its essential to get to grips with the theory behind their work in order to come across as credible in job interviews: Ill have practice when Im working, so I wanted to get into the academic side now, he says. Employers want a mixture of academic and practical experience;
Choosing Strathclyde Business School is a simple decision. With our triple accreditation and global rankings, not only are we the best in Scotland, but we are also in the top 1% of business schools in the world. Pioneers since 1966 with the first one year mba, we have international centres across 9 of the most influential cities in Europe and Asia and offer a flexible and innovative range of MSc and Masters programmes.
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OPINION
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OPINION
IN THIS SECTION
Matthew Reeves
On expensive drinks and finding a way to pay for them
uP41
editor Hannah Langworth assistant editor Katie Morley
Book review
More Money than God by Sebastian Mallaby
uP42
The Gateway poll

uP43
hannah@thegatewayonline.com
Youth unemployment
Milkrounds Mike Barnard discusses the problem
uP41
katie@thegatewayonline.com
creative director Mark Bristow
mark@thegatewayonline.com
Cheers Facebook!
went to a bar the other day one of those nice places where its too dark and you arent allowed to go and get your own drinks from the bar. A girl in a grey skirt, who must have weighed exactly the same as the black napkin she places under each glass, showed me to a table of my own friends, a table I could quite easily have found myself. Its one of those awkward work friends meet-ups where everyones only knowledge of each other comes from the confines of one room and, so as not to come across as miserly, we agree that an overly expensive watering hole is the place to go to get lashed. I dont understand why anyone other than oligarchs and those who like to push themselves and their finances to the limit go to these bars. Everything is designed to push the bill up and slow the drinking down. Youre greeted by someone whose sole job is to walk you to a table. Once there, more waiting. Sit and look at a menu, knowing what
MATTHEW REEVES
Matthew Reeves
you always drink. Then you order and finally, about the time youd be on your third pint in a regular pub, your New York Guinness arrives in a glass more floury than Elton Johns breadmaker. Itd be bad for business if the place wasnt packed fuller than an Egyptian marketplace with work friends trying to prove to each other how well off they are. Luckily for the exclusive watering hole, alcohol and pride bring the credit cards out. Especially when the better halves are involved. No ones significant other wants to look cheaper than anyone elses, so drinks are bought liberally, as if running a tab is cool. Like running Libya, it is for a bit, but eventually itll all end in tears. As I sat there in the near pitch-black, I found myself chatting to a colleagues partner. A man whose whole income
The Gateway is published by Career Gateways Limited Registered in England No. 06354747 All rights reserved MMXI The Gateway was created by Mawuli Ladzekpo, Max Lewis and Chris Wilkinson in 2007
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is earned by the making, maintaining and updating of busy peoples social networking sites. Whether its Twitter, Facebook, LinkedIn or just a plain old, oh-so-90s website, his job is to create and run their online presence. Id have concluded he was a waste of vital resources if he hadnt admitted that all his work is done drunk from the comfort of his own underwear. This is my kind of chap. So social networking is really important for these guys?, I found myself saying, as the P45 for my boring job burned brightly in my mind. No, its just rich old lawyers scared of technology, squawked the work-shy oaf. Thats social media, Web 2.0 and so on explained in a nutshell. The popularity of Facebook, Spotify and Twitter is not due to the fact that they offer a new kind of targeted advertising which can locate an exact, downto-the-day-of-birth demographic as opposed to a plain old age and gender range, or the perfect audience through the breakdown of likes, or when
people check-in at H&M on their iPhones. Its down to the fact that the out-of-touch and thick are blowing money out of fear. They are the equivalents of the punters of my exclusive bar, piling in to be ripped off because of pride. So are we facing a second dot com crash? No.
Its just classic advertising. Whether its cars painted as cans of drink, or people on stilts handing out chewing gum, theres no proof that it works. Facebook and all the guff that comes with it is no different just a new extension of the existing market. So either all the execs choose against it, decide they know their audiences and can reach them themselves, or they succumb to these sites, relax, and have a drink on a tab.
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year since the UK came out of a recession, the jobs market remains a difficult place for young people. The Confederation of British Industry expects unemployment to peak at a level which is higher than previously expected at 2.71 million by the end of the year, but it is youth unemployment that is the most worrying. Figures from the Office for National Statistics show that more than one in five of the UKs 16-to24-year-olds are not in employment, education or training. The number of young people out of work is the highest since records began in 1992. The Recruitment & Employment Confederation has called on the government to offer incentives to private sector employers to hire young people, which would be a good idea. Employers have become increasingly careful about who they hire as recruitment budgets have been cut, and are tending to take on those with job experience rather than school-leavers or graduates fresh
Mike Barnard
at Milkround.com
out of university. And as the cuts to the public sector will see more skilled professionals looking for work again, 16-to-24-year-olds will face even greater competition for work. So, some helping hands for young people seeking work would be welcome. But instead, existing sources of support are being snatched away. This week the Federation of Small Businesses (FSB) revealed that it would struggle to continue to support young people heading into employment, as there has been no indication that the governments Graduate Internship Programme would continue past its original 12 month lifespan next month. Thats a shame. So far, its helped 8,500 graduates find internships with small businesses and the FSB claim that a quarter of these graduates are offered full-time employment afterwards. In addition, theres
The number of young people out of work is the highest since records began in 1992
evidence that young people who start their careers in small firms are more likely to start their own businesses. What will be the results of the difficulties faced by young people looking for work? The unrest seen in the Middle East may be having more serious ramifications on how those countries are run than the tuition fee protests in the UK. But serious disquiet among young people cannot be ignored here either. Aaron Porters resignation from his position as NUS President demonstrates how students will not tolerate leaders who do not stand by them in times of need. These students are an important part of the the newest generation of workers and so their needs must be considered. The coalition must take note.
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BUSINESS
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OPINION
BANKING & FINANCE

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CAREERS & EDUCATION

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OPINION
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THIS IS A BANNER
REVIEW
More Money Than God:

by Sebastian Mallaby
Who should read this?
Those who despise hedgies and those who aspire to emulate them.
POLL
The best bit
Hedge Funds and the Making of a New Elite
How an algorithm can find the perfect seating plan for an investor dinner.
We nosy parkers at The Gateway wanted to know whether youre wild or workfocused... So we conducted a poll to find out!
Main criticism
Mallaby can be overly hagiographic
The Gateway rating
edge fund managers are the Liam Gallaghers of finance the brash, some would say reckless, younger brothers who still somehow come out on top. Because of their unique 20+2 fee structure (a 2 per cent annual management fee and 20 per cent of any annual profit), top hedgies can earn vastly more in a year than even top bankers. And because hedge funds aim to beat both bull and bear markets, such pay packets are usually recession-proof. In 2008, one US manager, John Paulson, earned $3bn in the middle of the credit crunch (albeit from predicting it) while British hedgie Chris Hohn was allegedly the best-paid individual in UK that year, taking home an estimated 400-450 million. These enormous sums made by hedge funds (and their notorious secrecy) will make Sebastian Mallabys analysis of them fascinating even to banker
Ricky Ghosh warms to some daring cash cultivators

bashers. His account is a vindication of hedgies he argues convincingly that their activities do not pose the same systemic risk to the economy as those of casino banks. Because they do not deal directly with consumers, the cost of errors will be borne by professional investors and those funds performing poorly will not be deemed too big to fail (indeed in 2008, 1,500 went bust). Mallabys academic insights are illuminating and persuasive, but do not come at the expense of an engaging read. His argument develops through twelve interlinked stories, a quick tour through the annals of hedge funds short history. Mallaby focuses on individual hedgies who became legends by spotting opportunities, often against prevalent market dogma. In many cases, Mallaby is going over well-worn ground the story of George Soros beating the Bank (of England) in 1992, when his trading forced the Treasury to leave the Exchange Rate Mechanism at a cost (and profit to Soros) of billions, has been told to death. Nevertheless, Mallaby manages to add a new perspective through detailed research. The buccaneering characters he presents often have fascinating backgrounds Alfred Winslow Jones, the original hedgie, was a Marxist and friend of Ernest Hemingway; Chris Hohn is the son of a car mechanic; another was an ex-cowboy. Mallaby does not shy away from relating the personal trials of the career they chose he tells the story of a dejected trader reporting a loss saying All I want to do is kill myself. Such details make his star performers seem all too human, and ultimately hard to dislike, despite their huge wealth.
Would you/have you ever got drunk at a work-related event? no Yes - but I dont go overboard Yes - I get/would get fairly drunk Yes - I get/would get absolutely wasted If you decided to go straightedge (not consume any alcohol, drugs or cigarettes) for a month, do you think youd perform better in your degree/ at work?
58
per cent of people who are expecting/have achieved a 2.1 reckon theyd do better/ would have done if they went/had gone straight-edge. People who skive class regularly are more likely to get drunk at a workrelated event. Female Gateway readers work and party harder than male Gateway readers!
Take part in Gateway polls at: facebook. com/pages/TheGateway/181336015811
mildly agree
moderately agree
strongly agree
no
Im already straight edge
Develop a multi-specialism
Slaughter and May is widely regarded as one of the most prestigious law firms in the world. Our lawyers are coveted for their multi-specialism: they are equipped to advise a wide range of clients on an even wider range of legal issues. If you are looking for a challenging, varied and interesting workload, and have a good 2:1 degree or better (not necessarily in law), then this could be the firm for you. To find out more about career opportunities, visit slaughterandmay.com
How often do you go out drinking/partying when you have an early start the next day?
never
very sometimes occasionally
quite a lot
All the time
46
Issue 38
March 2011
March 2011
Issue 38
uP07-10
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BUSINESS
uP11-12
AND FINALLY ...
BANKING & FINANCE

uP13-18
LAW
uP19-22
ateway the g
Do The Gateways quiz to see how well you really know those headlines
01 02
a.) b.) c.) d.)
Why has the launch of US shuttle Discovery been in the news recently?
a.) Because it will be its last mission into space b.) Because it is the first US mission to the moon in 18 years c.) Because there have been protests over its $1 billion launch cost d.) Because one of the astronauts on board is pregnant with twins
04
a.) b.) c.) d.)
How many people (est.) entered the UK on a long term basis in the year to June 2010?
145,000 572,000 848,000 1,302,000
06
a.) b.) c.) d.)
Which bank has been given a hefty fine after allegedly manipulating South Koreas stock market?
J.P. Morgan Morgan Stanley Rothschild Deutsche Bank
08
FTSE 350 companies have been urged to boost numbers of in their . to 25 per cent by 2015, or face government measures.
a.) Carbon in their fuel b.) Women in their boardrooms c.) Cyber crimes in their online sales d.) Decent magazines in their reception areas
10
a.) b.) c.) d.)
Last week there was a call by the head of Ofqual to end what in schools?
Assessed coursework Pen and paper exams Cyber bullying School dinners with a fat content over 6 per cent
Solving your job-related problems every fortnight

Q. What
ay terw rs clinic ga ee the

ca
Financial term please?
does the te iversity of rm fisca Bristol l year me an? Helen, Un
CAREERS & EDUCATION

uP33-40
OPINION
uP41-43
By how much did UK GDP shrink in the final quarter of 2010?
05
a.) b.) c.) d.)
What has a chemist from Fulham been jailed for making?

Fake weight loss pills Crack cocaine Fake sex-enhancing drugs Teddy bears stuffed with crystal methamphetamine
07
a.) b.) c.) d.)
Shares in Porsche have dropped by 11 per cent after its merger with has been delayed.
Ferrari Chrysler Volkswagen Alfa Romeo
09
a.) b.) c.) d.)
In which New Zealand city did the major earthquake strike last week?
Nelson Wellington Queensland Christchurch
0.2 per cent 0.6 per cent 1.2 per cent 2.6 per cent
03
Why was trading on the London Stock Exchange halted temporarily last week?
a.) Because of a computer error b.) Because traders went on strike c.) Because of a power cut in the City d.) Because its computer MSc matrix was being upgraded Ladders:Layout 1 26/2/09
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6-8 Brain box 3-5 Lame brain 0-2 Brain dead
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Answers
1, a. 2, b. 3, a. 4, b. 5, c. 6, d. 7, c. 8, b. 9, d. 10, b.
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Based in the City of London, the heart of global business, Cass has been called the best located business school in Europe.
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Inside: Find out what graduates do in each department

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Fury over UK tax avoidance

Time for the Big 4

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Recklessness: how naughty are you?

POLITICS & ECONOMICS

We explain what it means and uP08 what causes it

Down to the wire

Corporate ladder vs going it alone

A tale of sky high profits?

BANKING & FINANCE

Diary of a Bloomberg analyst

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Find out about it and when it will come into force

Asia: A great place to be a lawyer

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More than a job

A world of opportunities for you

Risk Assurance: a view from the top

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The Gateway poll

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Focus on: Corporation tax

Words by Marta Szczerba

Masha Kiryanova London School of Economics

Breast milk ice cream

India expects economy to grow at 9% in 2012

Product placement ban lifted for British TV

Lloyds profits for the first time since its bailout

Major earthquake devastates New Zealand city

Primark sees UK demand slowing

Ex-military chiefs say defence cuts are a mistake

Politics in pictures: Electoral dispute

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Down to the wire

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Electoral systems across the UK

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Will Hodges explains why prices rise

Basket case: how is inflation measured?

A lesson from history: Zimbabwe

How can governments manage inflation?