GLOBAL PMI DATA: Page 11

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See Page XX
NEIL BENNETT
ON WHY
BORDEAUX
LIVES UP TO
THE HYPE
See Page 26
BY MICHAEL BOW
UK IS FACING A
LOST DECADE
FOR GROWTH
www.cityam.com
FREE ISSUE 1,774 TUESDAY 4 DECEMBER 2012
THE BOTTLE
OPENER
BY BEN SOUTHWOOD
US manufacturing stalls ahead of looming fiscal cliff
BUSINESS WITH PERSONALITY
Certified Distribution
01/10/12 til 28/10/12 is 129,297
CITY leaders yesterday raised new
concerns about the pace of
growth in the Western
economies after experts warned
countries were facing more than
a decade of economic stagnation.
The gloomy warnings will send
a stark reminder to chancellor
George Osborne ahead of tomor-
rows Autumn Statement of the
growth challenges facing Britain
and its debt pile.
Bank of England policymaker
Andy Haldane told the BBC yes-
terday the economic crisis had
been as devastating as a world
war. If we are fortunate, the cost
of the crisis will be paid for by
our children. More likely it will
still be being paid for by our
grandchildren, he said.
One of the UKs top business
leaders was equally glum. In
western Europe we may just be
halfway through a lost decade,
WPP boss Sir Martin Sorrell told
Management Today.
Sir Martin warned that the out-
look was inspiring an exodus of
workers from western Europe.
Weve got really good people
in excellent companies there
who are asking to go to Brazil or
India. Our people in Spain and
Italy are depressed by the stub-
born lack of growth, he said.
Despite an aggressive push to
delever across the developed
world, the ratio of private and
public debt-to-GDP for G7 coun-
tries has risen further, jumping
from 385 per cent on average in
2007 to 415 per cent today.
This crisis has not even start-
ed, Jamil Baz, partner at hedge
fund GLG, said yesterday.
A country cannot delever by
more than 10 per cent a year
without a great risk of social dis-
location and great risk to politi-
cal harmony. Even if these
countries delever diligently year
in year out, it will take more than
20 years to go back to a reason-
able ratio.
Meanwhile, Scotiabank predict-
ed that the longer-term growth
rate in Britain would turn out to
be much lower than expected.
It said the UK economy would
grow at a lower rate of 1.25 per
cent to 1.5 per cent a year from
2014, lower than the three per
cent predicted by the Office for
Budget Responsibility for 2015-16.
The UK PMI manufacturing sur-
vey yesterday added to the pall,
coming in at 49.1, a level that
suggests continued contraction
in the sector.
US FIRMS yesterday blamed Hurricane
Sandy and the oncoming fiscal cliff for a
plummet in manufacturing activity to its
lowest level since July 2009.
The ISMs widely-regarded purchasing
managers index (PMI) crashed from 51.7
in October to 49.5 in November a level
that shows a contracting manufacturing
sector. Companies cited political
uncertainty as the biggest issue.
The fiscal cliff is the big worry right
now. We will not look toward any type of
expansion until this is addressed, said
one metals firm.
The Republican Party last night sent a
letter to President Obama setting out
proposals for tax reforms in a bid to head
off automatic tax hikes and spending cuts
in the new year, but a White House
spokesperson soon dismissed the offer
because it does not meet the test of
balance.
ISMs index for new orders, a forward-
looking measure, fell even further than
the headline figure, from 54.2 in October
to 50.3 in November a point indicating
that the gloom will continue.
DUKE AND DUCHESS OF CAMBRIDGE EXPECTING BABY
THE Duke and
Duchess of
Cambridge yesterday
confirmed they are
expecting their first
child. The royal
couple, who wed last
April, said they were
delighted by the
news. The 30-year-
old duchess is not yet
12 weeks pregnant,
but St Jamess Palace
was forced to make an
early announcement
as she has been
hospitalised in
London with an acute
morning sickness
called hyperemesis
gravidarum. A
statement said she is
expected to stay in
hospital for several
days and will require a
period of rest
thereafter.
AUTUMN STATEMENT: Page 3

allister.heath@cityam.com
Follow me on Twitter: @allisterheath
UBS prepares to pay Libor
fine of more than $450m
SWISS banking giant UBS is set to be
the next bank to settle with regula-
tors over Libor manipulation claims,
it emerged yesterday, with RBS likely
to follow suit in the coming months.
The bank could take the hit as
soon as next week under negotia-
tions taking place with the authori-
ties in the UK and the US, with the
fine likely to come in at above
$450m (279m).
Such a sanction would put UBSs
punishment on a par with that of
Barclays, which was hit with a
290m fine in June. The fallout from
the scandal led to the departure of
chief executive Bob Diamond and
chairman Marcus Agius.
An RBS settlement is expected to
follow shortly after UBS, and chief
executive Stephen Hester has made
it clear he wants to finalise the sanc-
tion before the banks full year
results in February.
The key interbank lending rate is
thought to have been manipulated
by a range of major banks, which are
believed to have entered false data
either because traders wanted to
change the headline rate, make the
banks borrowing costs appear lower
than they really were or because no
trades had taken place and only esti-
mates could be made as to the hypo-
thetical level of interest rates.
EDF cost rises damp nuclear hopes
EDF, the French utility, said the cost of its
new nuclear power station in northern
France had increased by a third, raising fears
that its planned UK plant may also be
vulnerable to a similar budget blowout. But
EDF Energy, the companys UK subsidiary,
insisted that the cost issues in Flamanville,
Normandy, would have no bearing on its
plans for Hinkley Point in Somerset. The site
on the Cotentin Peninsula, one of the most
closely watched engineering projects in
Europe, is the first nuclear power station in
France for 15 years.
Sirius cuts price of UK potash mine
The price tag for building a large potash
mine in the UK has dropped $1bn
(621m), or more than a third, after Sirius
Minerals, its developer, said it could sell
the mineral raw rather than processed.
Ford shifts up a gear on Lincoln
Alan Mulally, chief executive of Ford
Motor, has promised a revival in its
struggling luxury brand, Lincoln, to match
the one the wider company has
experienced since the financial crisis,
speaking at an event in New York to
reintroduce the brand.
Pickfords goes through insolvency
The owners of Pickfords have put the
removals company through a hurried
insolvency process after buckling under
the strain of a pension fund deficit and a
slump in the housing market.
Ghana looks to sky for energy boost
Cheshire-based Blue Energy is building
Africas largest solar photovoltaic
project for $400m (249m) as the
continents switch to renewable energy
gathers pace.
MoD unveils 25m defence contract
The Ministry of Defence has unveiled a
new 25m contract for more laser-guided
bombs, in a move set to secure hundreds
of British jobs.
Bupa plans to split business in two
Britains biggest provider of private
medical insurance told staff in an internal
memo last week that it planned to divide
Bupa Health and Wellbeing into two
separate business units: Bupa Health
Funding and Bupa Health Clinics.
Democrats urge MF Global action
House Democrats urged regulatory
action against MF Global in a report,
saying the former broker-dealer
blatantly misled a securities regulator
about its exposure to European
sovereign debt in September 2010.
Judge denies patent suit injunction
A Seattle judge has dismissed Motorola
Mobilitys request for an injunction on
Microsoft products because they could
infringe standard essential patents.
Chief Sergio Ermotti only joined UBS in 2010 and so should face little personal pressure
2
NEWS
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
L
IKE many people, I loathe the UK
tax system. It fails to treat
everyone equally and is either
extraordinarily punitive or
pathetically soft. Scandalously, some
big companies pay huge amounts of
corporation tax while other similar
businesses dont. The aim must be
revolutionary tax reform all
streams of income from labour and
capital generated in the UK ought to
be taxed once, with no loopholes,
restoring equality in front of the law.
Where I part company with others is
that I believe a good and fair tax sys-
tem is also a low tax system. I see tax
as a necessary evil, not a good in and
of itself; all extra cash raised by shut-
ting loopholes (and hence hiking the
bill for some) should be allocated to
across the board tax cuts, making the
changes overall revenue neutral.
The idea that there is a David and
EDITORS
LETTER
ALLISTER HEATH
Politicians need to stop moralising and reform our taxes
TUESDAY 4 DECEMBER 2012
Goliath struggle between HMRC and
multinationals is misleading. Firms
have better lawyers. But MPs have
drastic powers of coercion when they
can be bothered to exercise them.
They can jail or seize the property of
those that dont follow their diktats.
Firms can only game the rules as long
as they are allowed to do so.
The only reason Amazon or Google
legally pay less in corporation tax
than some would like is faults in the
tax system set up by governments.
Most of the loopholes are actually
deliberate. They allow companies
such as Amazon to put sales through
a subsidiary based in a lower tax juris-
diction very much a purposeful fea-
ture of the way the European Union
works or Starbucks to make large
royalty payments to a similar sub-
sidiary based overseas, helping to
eliminate UK taxable profits. None of
this is new. It has all been codified for
many years in the tax system and
accepted by HMRC.
Yet some MPs have only just noticed
even though those in office for long
enough probably voted for the legisla-
tion or EU treaties that allowed this
nonsense. Yet instead of trying to con-
vince George Osborne to change the
rules, they are pretending to be pow-
erless and blaming companies that
are duty bound to legally seek to max-
imise post-tax profits for their share-
something worse. Starbucks is offer-
ing to pay more tax voluntarily as a
PR exercise, part of its marketing
budget. Down that road lies an arbi-
trary, unpredictable and illiberal way
of raising revenues, with media savvy
firms and individuals paying little
while the small guy, the powerless or
those who fall foul of public opin-
ion are forced to hand over more. It
smacks of a return to medieval, pre-
democratic, unscrutinised tax collec-
tion: anybody the ruler didnt like saw
his or her assets seized, while those
that curried favour were rewarded.
We need a compulsory but pro-
growth tax system. Mr Osborne, over
to you and no more excuses, moral-
ising or demagogic rabble-rousing
from politicians, please.
holders. The government, needless to
say, is joining in the nonsense.
We live in an increasingly irrespon-
sible society where nobody wants to
accept that the buck stops with them.
The shameless refusal by some politi-
cians to acknowledge that they are in
charge of our rules is sickening.
This is an excellent time to tear up a
faulty tax system and replace it by
something much better. I would scrap
our useless corporation tax and
replace it instead by a tax on all net
distributions to investors (including
the HQs of multinationals) when they
leave the UK corporate system, includ-
ing dividend and interest payments
and share buy-backs. There are other
possible reforms, of course, and now
is the time to hear them.
My big worry is that not only will we
blow the opportunity to change for
the better but actually end up with
Barclays negotiated quickly with reg-
ulators in the hope of benefiting from
a policy of honesty, but received a pub-
lic mauling instead.
As a result the remaining banks are
believed to be jockeying for position,
with none wanting to be the next to
be fined.
But it is understood UBS lost that
argument, in part because the author-
ities want to prove the problem was
not solely confined to British banks.
UBS has been cooperating fully
with the regulatory and enforcement
authorities in connection with Libor
investigations, said a spokesperson
from the Swiss bank.
As we are in the midst of discus-
sions with those authorities, we can-
not comment further.
It is thought that RBS would face less
of a blow to its image as the bailed out
banks chief executive was not a part
of the institution when the wrongdo-
ing took place and he has been very
proactive in cleaning up its business
relatively publicly.
The Financial Services Authority and
RBS both declined to comment on the
ongoing discussions.
The new jobs website for London professionals
CITYAMCAREERS.com
Crosby sorry
for his role in
HB OS failure
FORMER HBOS chief executive Sir
James Crosby yesterday apologised
for his role in building up an
unsustainable bank, which had to be
rescued in 2008 after he left the
helm in 2006.
The session at the parliamentary
commission on banking standards
was Sir James first appearance
before MPs and peers since the
collapse of the bank.
I was horrified and deeply upset
by what happened, he said. I played
a major part in building a business
that subsequently failed. It would be
wrong to disassociate myself from
what happened in the end.
He conceded that he was unlikely
to get FSA approval for a job in
finance in the future. I dont expect
that if I applied I would be approved,
no, given my history, he said.
His successor Andy Hornby said
the banks loans
were too
concentrated in
commercial real
estate, and it
failed because
they studied risk
in too much detail
and missed the
broader picture.
BY TIM WALLACE
WHAT THE OTHER PAPERS SAY THIS MORNING
Sir James Crosby
was CEO from
2001 to 2006
THE US markets watchdog yesterday
hit the Chinese arms of five
accounting firms with charges,
after the affiliates failed to hand
over audit documents the US body
wants.
PwC, KPMG, Ernst & Young and
Deloitte the so-called big four as
well as BDO, have been charged
with securities violations by the
Securities and Exchange
Commission (SEC), as part of an
effort to get hold of documents
from nine firms in total.
The SEC said an administrative
law judge will now schedule a
hearing to decide on the sanctions
the authorities will use against
these Chinese accounting arms.
Back in July the SEC had been
attempting to go through Chinese
regulators to get hold of the
documents, which the SEC says are
necessary to judge whether there
were accounting irregularities.
But this move suggests that
negotiations have come to a
standstill.
[It] is the result of conflicting
laws between the US and China,
said PwC China. This action
involves an issue that needs to be
resolved between the US and
China.
Deloitte and Ernst & Young
echoed calls for officials of the two
countries to come to an agreement.
US watchdog
charges audit
China affiliates
BY BEN SOUTHWOOD
POLITICIANS should target tax avoid-
ance by getting rid of legal loopholes,
not browbeating firms into paying
more, the Institute of Directors (IoD)
said this morning.
It is very frustrating for many com-
panies who pay large tax bills that
some multinationals are able to avoid
doing so, said IoD boss Simon Walker.
The solution must be simplifying the
tax system, not simply hectoring from
Westminster.
If these firms are immoral to take
advantage of tax loopholes, then
politicians are surely immoral for cre-
ating the loopholes in the first place.
This came in tandem with a 10 point
list of policies and initiatives that the
business group said the chancellor
ought to consider for his Autumn
Statement tomorrow.
The government should keep to its
mild programme of fiscal consolida-
tion, the group said, but rebalance
spending towards infrastructure prod-
ucts like speeding up broadband.
Directors slam
politicians for
tax loopholes
BY BEN SOUTHWOOD
As well as boosting broadband, the
government should commit to follow-
ing the recommendations of the
Davies Commission on airport capaci-
ty, when it reports, the directors
group demanded, claiming that
Heathrow is already full.
And while going green is vitally
important the UK needs a cheaper,
more consistent environmental policy,
the IoD said. It pointed to official sta-
tistics showing that British policy will
add 28 to the cost of a megawatt
hour, compared to 17 in Germany,
10 in China and nothing in the US.
Four of its recommendations con-
cerned tax: it called for a more stream-
lined tax system overall, with a 30 per
cent flat income tax rate, a 10,000
personal allowance, an end to capital
gains tax, and corporation tax slashed
to 15 per cent. A freeze in fuel duty
and air passenger duty is also high on
the IoDs wishlist, and it wants the
shale gas industry to be supported
with a generous field allowance and a
supplementary charge significantly
lower than the current 62 per cent.
Chancellor George Osborne will be in the spotlight at tomorrows Autumn Statement
THE CONTROVERSIAL Private
Finance Initiative (PFI) will be
replaced with a new programme
designed to be cheaper and faster,
chancellor George Osborne will say
in tomorrows Autumn Statement.
PFI, which sees the public sector
partner with private companies to
fund and operate long-term
infrastructure projects, will be
replaced with Private Finance 2 (PF2).
The new scheme will include a
greater role for the public sector in
every project, with the taxpayer
having seat on the board of every
project company and a share of any
financial returns. The original PFI
scheme, originally introduced in
1992 by the John Major government,
is used for everything from hospital
Private Finance Initiative to be
replaced in Autumn Statement
BY JAMES WATERSON construction to providing aircraft for
the RAF. But many of the deals with
private firms have been criticised for
a lack of transparency and
substantial cost overruns.
To combat these criticisms PF2
will include encouragements to
attract more money from long-term
investors such as pension funds, in
an attempt to stop partnerships
collapsing due to unmanageable
debts. In addition the total cost for
PF2 deals will be published and all
procurement must be completed
within 18 months or the public
sector body will lose the funding.
The chancellor will also claim that
he has saved 1.5bn from the cost of
existing PFI schemes in the last 18
months, thanks to increasing the
occupancy rate of government
buildings and reducing energy use.
TUESDAY 4 DECEMBER 2012
3
NEWS
cityam.com
Government to put gas at centre
of UKs energy production plans
GAS will be put at the centre of
the UKs energy plans, with a
series of announcements
expected from the government
this week.
George Osborne will use
tomorrows Autumn Statement
to launch a consultation on
introducing substantial new tax
reliefs for investment in gas-
fuelled energy production.
Incentives are expected to be
offered for up to 26 gigawatts of
electricity generating capacity
BY JAMES WATERSON
from gas by 2030 equivalent to
as many as 30 new power
stations.
The government hopes that
this will help keep domestic fuel
bills down.
Last night a Treasury source
said: Well be showing that we
remain committed to solving
todays problems but also
preparing for tomorrows
challenges and equipping Britain
in the global race.
In addition to the publication
of a national gas strategy the
government will set up an Office
for Unconventional Gas, which
will act as a single point of
contact for investors and work
across government departments
to streamline the regulatory
process for shale gas production.
There could be even more gas-
sourced energy capacity if the
government decides to reduce its
tough emissions reduction
targets.
Osborne has previously
suggested that the UK should
instead follow the slightly less
ambitious targets followed by
rival EU countries.
VACANCIES in the City hit their
lowest November level since the start
of the credit crunch, according to
figures published yesterday by
recruiters Astbury Marsden.
Analysts said the government
must slow down its banking reforms
if it wants to stop the slump.
Just 1,790 City jobs were created
last month well below the 3,700
seen in the aftermath of the collapse
of Lehman Brothers in November
2008. That is down on the 2,730
created in October, dealing a major
blow to hopes that the long fall in
City jobs was coming to an end.
City hiring falls
in November
BY TIM WALLACE
BANK lending increased in August
and September after the funding for
lending scheme (FLS) got underway,
according to Bank of England figures
published yesterday.
So far 4.36bn has been drawn
down from the facility, with six of the
35 banks that have signed up taking
money in the first two months.
Overall lending to the private sector
increased by 496m in the period,
while a price war emerged in the
mortgage market and interest rates
on loans to small firms were slashed.
Barclays led the way, taking 1bn
from the scheme and increasing its
lending by 3.8bn, or two per cent of
its stock of lending to firms and
households.
The three other big banks taking
part Santander and state-backed
RBS and Lloyds all took funds from
the scheme but saw lending continue
to fall.
RBS and Lloyds are both shrinking
non-core assets hitting overall lend-
ing, and insisted they had increased
credit in the core business including
both households and businesses.
Bank lending
up on back of
state aid plan
BY TIM WALLACE
Meanwhile Santander is in the
process of shrinking its mortgage loan
book and rebalancing towards small
firms.
But a spokesperson said that decline
in mortgage lending was slowed by
the FLS cash, meaning the scheme has
had an impact even though net lend-
ing by the bank fell.
Over the New Year participating
banks will be evaluated, and those
who have reduced total lending will
see the price of government funding
increase.
Even some banks that did not take
any funding increased lending, in
part because the scheme has had an
impact on the wider lending market.
The scheme is expected to have a big-
ger impact going forwards Lloyds for
example is preparing to take another
2bn from the Bank of England, while
it typically takes three months to
process a mortgage application, so fig-
ures from the first two months of FLS
will not yet show whether a wider
increase in lending is taking place.
HSBC has not signed up to take part,
maintaining its strong depositor base
provides cheaper funding than the
Bank of England is offering.
TUESDAY 4 DECEMBER 2012
4
NEWS
cityam.com
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Floats like
/
Stings like.
The new SL-Class.
The new Mercedes-Benz SL-Class is the perfect balance of agility
and power. The aluminium bodyshell trims up to 110kg off the
weight, while the muscular new V6, V8 and V12 engines pack
a smooth punch. The lithe SL-Class. Beauty with a sting in its tail.
Ocial government fuel consumption gures in mpg (litres per 100km) for the new SL-Class range: urban 16.6 (17.0) - 28.5 (9.9), extra urban 33.6 (8.4) - 46.3 (6.1), combined 24.4 (11.6) - 37.7 (7.5).
CO2 emissions: 270 - 169 g/km. Model shown is an SL 63 AMG at 124,025.00 on-the-road including panoramic vario roof at 735.00 and AMG Performance Package at 12,530.00 (on-the-road price includes VAT, delivery, 12 months Road Fund Licence,
number plates, new vehicle registration fee and fuel). The SL-Class range starts from 72,520.00 on-the-road. Prices correct at time of going to print.
BANK LOANS ROSE 500M IN FIRST TWO MONTHS OF FUNDING FOR LENDING
Stock of loans
at end of June, m
% change on
stock of lending
Net lending in
Aug & Sep, m
Drawdown
from FLS, m
Name
Aldermore 1,567 0 228 14.5
Barclays 188,453 1,000 3,803 2
Clydesdale 33,172 0 -23 -0.1
Co-operative 31,768 0 -5 0
Coventry BS 21,002 0 541 2.6
Cumberland BS 1,190 0 17 1.4
Leeds BS 7,569 100 212 2.8
Lloyds Banking Group 443,255 1,000 -2,769 -0.6
Nationwide BS 152,155 510 1,834 1.2
Newcastle BS 2,705 0 -73 -2.7
Nottingham BS 2,123 0 2 0.1
Principality BS 5,408 0 53 1
Progressive BS 1,301 0 9 0.7
RBS Group 214,816 750 -642 -0.3
Santander 189,339 1,000 -3,473 -1.8
Skipton BS 9,494 0 21 0.2
Tesco Bank 4,826 0 112 2.3
Virgin Money 15,093 0 598 4
West Bromwich BS 4,148 0 -73 -1.8
35 participating banks 1,363,179 4,360 496 0
THE INTERNATIONAL Monetary
Fund yesterday said capital controls
should be used in some
circumstances to promote financial
stability, overturning a long-held
policy that government intervention
is damaging for investors.
Emerging markets have
complained that rich world
investors have flooded their
economies, driving up asset prices
and leading to some overheating.
But the IMF warned the controls
must not be used as an excuse to
postpone vital economic reforms.
IMF endorses
capital limits
BY TIM WALLACE
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Barclays Bank PLC is authorised and regulated by the Financial Services Authority (FSA). Registered Ofce: 1 Churchill Place, London E14 5HP. Registered No 1026167.
We want to know what you
think about home buying
so that we can shape our
banking around you.
Make your voice heard at
barclays.co.uk/yourbank
or in branch.
LONDON hit back yesterday after
French central bank governor
Christian Noyer suggested that
Eurozone governments should take
financial services related to the
single currency away from the City.
Mayor Boris Johnson joined a
chorus of disapproval over Noyers
comments. This is a desperate
French attack in an effort to make
something out of the Eurozone
crisis, the Mayor said. Its nothing
more than a naked attempt to steel
Londons financial crown.
Chris Cummings, head of
TheCityUK, said that political
jostling is unwelcome. This is a time
for calm heads, he told City A.M. We
are about to start negotiations on a
banking union the ramifications of
which will be felt for generations.
City of London Corporation policy
chairman, Mark Boleat, said the
Citys services benefit Europe as a
whole. Protectionist measures will
ultimately damage the perception of
Europe as a place to do business,
Boleat said. Noyer had described the
Citys euro business as offshore.
City hits back
over Noyers
euro warning
BY JULIAN HARRIS
RUPERT Murdoch announced a host
of changes at his media empire yes-
terday, including the hiring of ex-
BSkyB chief operating officer Mike
Darcey as the new chief executive of
UK paper owner News International.
Darceys appointment follows the
weekend resigna-
tion of Tom
Mockridge.
Among other
changes made
were the clo-
sure of the
iPad-only publi-
cation The
Daily, and the
hiring of
Murdoch shuffle
has ex-Sky exec
as News Int CEO
BY JAMES TITCOMB
Robert Thomson the editor in chief
of Wall Street Journal owner Dow
Jones as the head of the new pub-
lishing business Murdoch will create.
The reshuffle came as Murdoch
announced the names of the separate
firms he will form by splitting News
Corp in two. The TV and film busi-
ness, which comprises Fox and a stake
in BSkyB, will be called Fox Group,
while the publishing arm featuring
Murdochs British, Australian and US
papers, and the Penguin book pub-
lisher will retain the News
Corporation name.
The split is seen by some as a move
to distance the highly-lucrative TV
networks from the fallout of the
phone hacking scandal. News Corp is
expected to reveal the details of the
split by the end of the year.
RETAILERS are pinning their
hopes on a late Christmas boost,
after a mixed November that saw
consumers continue to delay
parting with their pennies.
Like-for-like retail sales edged
up 0.4 per cent in November
compared with a year earlier, the
British Retail Consortium (BRC)
and KPMG sales monitor showed
this morning.
While an improvement on the
previous month, when like-for-
like retail sales fell 0.1 per cent,
the rise is unlikely to dilute fears
of a renewed GDP dip in the
fourth quarter.
The data showed like-for-likes
BY KASMIRA JEFFORD
in food rising by three per cent in
the three months to November
compared to 12 months earlier,
while non-food grew 1.7 per cent.
November was a cautious
month of wait and see, said
David McCorquodale, head of
retail at KPMG. It appears that
consumers know they have to
spend before Christmas but are
holding off for as long as they can
to see if there might be bargains
available.
Online sales rose 7.5 per cent
year-on-year the third worst
performance of the year despite
a pick-up on Black Friday, the day
after Thanksgiving when US
shops slash their prices, which
caught on in the UK.
Retailers enter December in a
state of nervousness due to weak top-
line growth and pressure on
margins. Pricing throughout the
month and strategic promotions will
be fundamental in a key month,
McCorquodale added.
Like-for-like sales: 3-month average
Nov12 May12 Nov11 May11 Nov10 May10
-2
-1
0
3
2
1
-3
annual %change
Food
All sales
Non-food
Mike Darcey was Sky COO from 2006
MAGIC Circle law firm
Linklaters announced an
exclusive tie-up with South
African firm Webber Wentzel
yesterday, giving the firm its
first local presence on the
African continent.
The alliance will launch on 1
February next year, and follows
a similar deal earlier this year to
form ties with Allens Arthur
Robinson in Australia.
Over the weekend the firm
filed accounts at Companies
House that showed its top-paid
partner took home 2.5m in the
year to 30 April 2012, a 13 per
cent increase on the previous
year.
For 2011-12, the firms profit
before tax was confirmed at
384,539 up from 372,427
on revenues of 1.2bn.
Links inks tie-up
as top pay rises
BY ELIZABETH FOURNIER
The Tchenguiz brothers Vincent
and Robert yesterday filed a claim
against the director of the Serious
Fraud Office for more than 200m
over the agencys botched pursuit
of the property tycoons last year.
The case, which relates to a high
profile raid on the brothers over
their dealings with failed Icelandic
bank Kaupthing, is the largest
known claim against the SFO and
Tchenguiz brothers to sue fraud
squad for 200m in damages
BY MICHAEL BOW dwarfs its 36.8m annual budget.
The trial is pencilled in for
January 2014 and will last eight
weeks. Vincent Tchenguiz is
seeking 200m in damages. Robert
Tchenguiz has not disclosed the
sum involved but it is thought to be
less than 200m. Significant
financial loss can be proved to have
occurred as a result of the reckless
actions of the former director of
the SFO, Vincent Tchenguiz said.
The SFO did not comment.
TUESDAY 4 DECEMBER 2012
6
NEWS
cityam.com
The Tchenguiz brothers are seeking millions from the fraud squad over its 2011 raid
Retailers post weak sales rise
as shoppers delay Xmas spree
SIR TERRY LEAHY is making a
comeback to the retail sector as
chairman of B&M Bargains after
US private equity firm Clayton,
Dubilier and Rice yesterday
revealed it has bought a stake in
the chain for
around
965m.
The former
Tesco boss is
an adviser to
CD&R, which
has fought
off rivals
such as
Advent, Blackstone, and BC
Partners for a significant stake
in B&M.
The Liverpool-based retailer,
which sells everything from toys
to bikes at knock-down prices,
was acquired by brothers Simon,
Bobby and Robin Arora in 2005
when it had just 21 stores.
Since then it has grown to
more than 300 branches across
the UK and has more than 1bn
sales, benefitting from cash-
strapped consumers seeking
bargain prices.
The sale could catapult the
brothers to become one of the
UKs richest families. Rothschild
advised B&M.
Sir Terry Leahy to
chair bargain store
BY KASMIRA JEFFORD
Terry Leahy, former Tesco chief
OVER a third of the UKs wealthiest
households are located in London
and the south east, according to a
data set released by the Office for
National Statistics (ONS) yesterday.
The official stats body has found
that 891,100 households in the south
east have wealth in excess of
961,000 putting them in the rich-
est ten per cent of the country.
For the UK overall, there are 2.47m
households with this level of wealth.
That means the capital and the
south east make up 36 per cent of
the richest families.
The data which was recorded for
the 2008 to 2010 period revealed a
median average level of household
wealth of 232,000.
The density of wealth is far
stronger in the south east than else-
where in the UK, the figures showed.
In the south east region exclud-
ing London nearly one in six house-
holds are among Britains wealthiest
Over a third of
UKs richest are
in south east
BY JULIAN HARRIS 10 per cent.
In London the figure is 12.5 per
cent, while at the other end of the
scale only around one in 15 Scottish
homes (6.9 per cent) have a level of
wealth that puts them among the top
10 per cent in the country.
Pensions and property are the main
sources of wealth for those at the top.
For the highest decile, private pen-
sions made up over half (56.6 per
cent) of their wealth, with property
contributing 25.9 per cent.
For the bottom half of the country
by wealth, however, private pensions
contributed only 30.4 per cent
unsurprisingly lower, given that two
out of five households (43.3 per cent)
of the bottom half have no private
pension wealth at all.
Property was also revealed as a
strong dividing line between the
those at the top and the bottom of
the scale. Only 41.4 per cent of
households in this group [the bottom
50 per cent] had any value of property
wealth, the report said.
MORGAN Stanley trader Edward
Glenn Hadden is under
investigation by regulators at CME
Group over trades in Treasury
futures four years ago while he was
employed by Goldman Sachs,
according to a regulatory filing.
Hadden is a managing director
and head of global interest rates
products at Morgan Stanley. Prior to
joining Morgan Stanley, Hadden was
a partner at Goldman Sachs, and
head of government bond trading.
The Wall Street traders lawyer
said there was no legal or factual
basis for any suggestion of market
manipulation.
Ex-Goldman
trader probed
BY CITY A.M. REPORTER
TUESDAY 4 DECEMBER 2012
8
NEWS
cityam.com
High frequency trades improve
markets, Bank experts argue
HIGH frequency trades (HFT) help
markets become more efficient by
improving price discovery, Bank
of England researchers argued
yesterday, countering European
politicians who argue the practice
is dangerous and destabilising.
The paper argues that traders
regular interactions in the market
provide a stream of valuable
information a source that would
diminish if HFT were banned.
It also found many HFTs
improve liquidity in markets.
EU plans would see the traders
forced to keep orders in the
market for longer periods of time
BY TIM WALLACE
before cancellation, while
commodities derivatives traders
are set to face caps on their
activities. Fees may also be
increased for such traders.
Members of the European
Parliament have also blamed HFTs
for driving up the prices of food
and energy, and want the practice
banned. But the rules would need
the backing of all EU nations
before it could be implemented.
HFTs trading is, overall,
informationally more efficient
than that of the rest of the traders
in the sense that they have a
higher ratio of information to
noise contribution, according to
the working paper.
13.3 to 15.5
11.2 to 13.2
9.1 to 11.1
7 to 9
0 to 6.9
Percentage of households with total
wealth greater than 967,000
NORTH WEST 7.6
WALES 8.1
SOUTH WEST 11.2
SOUTH EAST 15.5
WEST MIDLANDS 8.7
EAST MIDLANDS 8.5
YORKSHIRE 7.9
NORTH EAST 7.6
SCOTLAND 6.9
LONDON 12.5
EAST of ENGLAND 10.4
THE UK will grow at a slower rate
than expected next year while
inflation will prove stickier than
previously thought, according to
British Chambers of Commerce
(BCC) forecasts published today.
Ahead of chancellor George
Osbornes Autumn Statement,
expected tomorrow, the BCC warns
that public sector borrowing will
total 104.1bn in the current fiscal
year around 12bn higher than
the Office for Budget Responsibility
Business coalition warns over
public debt and slower growth
BY JULIAN HARRIS
forecast in March 2012.
Growth will hit just one per cent
next year, the BCC expects, with
inflation stuck at 2.5 per cent.
BCC chief John Longworth used
the release to call on Osborne to
deliver key infrastructure projects
across the UK and to create a so
called business bank.
Yet there were also some rosier
findings from the BCC economists.
This year the economy will have
shrunk by just 0.1 per cent, the
BCC thinks, softer than its earlier
forecast of 0.4 per cent contraction.
2012 Cisco and/or its affiliates. All rights reserved. All third-party products belong to the companies
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trademarks or registered trademarks of Intel Corporation in the U.S. and/or other countries. All other
trademarks are the property of their respective owners.
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THE EUROZONE edged closer to its
proposed solution to the debt crisis
yesterday, as Spain revealed that it
had formally requested a banking
bailout and Greeces debt buyback
plan impressed its foreign lenders.
Spanish economy minister Luis de
Guindos revealed that the state has
asked for 37bn (30bn) from the
European Stability Mechanism
(ESM) as a means of easing pres-
sure on its troubled economy from
a banking and housing crisis.
The move had been agreed in
principle over the summer.
Spain is yet to request an
official sovereign bailout,
despite the move being
widely expected among
analysts.
The ESM funds come
with a 12.5 year
maturity with a grace
period of 10 years and
an interest rate clear-
ly below one per cent
and, at least in the
first year, will be just
above 0.5 per cent,
De Guindos said.
Spain accepts a
bank bailout of
37bn from ESM
BY JULIAN HARRIS We believe these are advantageous
conditions, that will help heal,
restructure and overcome the prob-
lems in the Spanish banking system.
Its positive, its fundamental, its
vital and we wont make the mistakes
of the past.
The minister explained that the
funds will arrive at Spains so-called
bad bank from around 12
December. Spanish lenders that
have not been nationalised can
apply for some of the funds.
Meanwhile Greece said it
would spend 10bn to buy back
bonds at a price range that
topped market expecta-
tions, boosting hopes
it can cut its balloon-
ing debt and unlock
long-delayed aid.
A successful buy-
back is central to the
efforts of Greeces
foreign lenders to
put the near-bank-
rupt countrys debt
back on a sustain-
able footing and
would clear the
way for the fund-
ing Athens needs
to avoid running
out of cash.
Banks charge for Swissie holdings
n Switzerlands largest banks are to
charge fees and pay negative interest
rates on Swiss franc deposits made by
rivals to encourage them to limit their
holdings of the currency. We invite our
customers to keep cash balances as low
as possible to avoid negative credit
charges, Credit Suisse said in a note to
clients yesterday. To shield the economy
from deflation, the Swiss National Bank
set a floor of 1.20 francs per euro in
September 2011.
Car sales down in France
n New car registrations in France
slumped 19 per cent on last year in
November, figures out yesterday
showed. Sales have been falling year-
on-year for the past nine months. The
US fared better, with car sales near a
five-year high at 15m vehicles, as the
market rebounded from a storm-
ravaged October.
Irish consumer confidence rises
n Irish consumer confidence improved
for the second month running in
November, a survey showed yesterday,
but its authors warned that a tough
austerity budget later this week could
test the sense of optimism. The KBC
Ireland/ESRI Consumer Sentiment Index
recovered to 63.8 in November from
60.9 in October, lifted by a significant
improvement in consumers view of
their current financial situation.
Spains PM Mariano Rajoy
is resisting a full bailout
THE DEBATE: Page 23
n n
TUESDAY 4 DECEMBER 2012
11
NEWS
cityam.com
Download and go
Visit addisonlee.com or scan the QR code to
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16th MONTH OF DECLINE FOR EUROZONE FACTORIES
KEY
Red Economic contraction
Green Economic growth
Arrows showPMI change
on previous month
OVERALL EUROZONE
from 45.4 46.2
IRELAND 52.4
TURKEY* 51.6
AUSTRIA 49.3
CZECH REPUBLIC* 48.2
UK* 49.1
NETHERLANDS 48.2
FRANCE 44.5
SPAIN 45.3
ITALY 45.1
GREECE 41.8
GERMANY 46.8
POLAND* 48.2
ALL FIGURES FOR NOVEMBER
Source: Markit
* Indicates outside Eurozone
Recovery hopes boosted by
easing of manufacturing fall
MANUFACTURING in the Eurozone
contracted for a 16th straight
month in November, data revealed
yesterday, yet the pace of decline
eased to its slowest in eight
months.
And factories are also suffering
outside the single currency, with
the manufacturing sector also
shrinking in the UK.
Yet British factories
performances contracted at a much
slower rate than expected, the
purchasing managers index (PMI)
from Markit showed.
The UKs PMI came in at 49.1, its
highest level since August, from
BY JULIAN HARRIS
Octobers downwardly revised 47.3.
In the 17-country Eurozone area,
meanwhile, rose to 46.2 in
November from Octobers 45.4.
All figures below 50 indicate
economic contraction, however.
Elsewhere in the world, the
manufacturing sector in India grew
at its fastest pace in five months,
rising to 53.7 in November from
52.9 in October separate figures
from Markit and HSBC suggest.
And in nearby China, the pace of
factory expansion climbed for the
first time in 13 months, edging up
to 50.5 in November from 49.5 the
first time since October 2011 that
the survey crossed above 50.
IN BRIEF
HMV, the troubled entertainment
retailer, yesterday sold off a further
chunk of its live music business for
7.3m to help slash debts, and said
more disposals would follow.
The group confirmed that LDC,
the private-equity arm of Lloyds
Banking Group, has bought out the
Mama Group, which owns some of
the UKs best known live venues
including the Jazz Cafe as well as
HMV sells its live music business
Mama to Lloyds arm in 7m deal
BY KASMIRA JEFFORD
festivals including Lovebox and
Global Gathering. Mama boss Dean
James will stay on at the group.
HMV said the sale to LDC
included its 50 per cent stake in
promoter Mean Fiddler. It is still
looking to sell the remaining parts
of its live business, the G-A-Y and
Heaven clubs, it added.
The deal follows the disposal of
Mamas Hammersmith Apollo
venue in May for 32m, bringing
total disposals up to 39m. HMV
paid 46m for Mama in 2010.
TUESDAY 4 DECEMBER 2012
12
NEWS
cityam.com
Mamas stable of festivals includes Lovebox, where artists like Lana del Rey have performed
Waitrose rise in sales
sparks hope for Xmas
WAITROSE, the upmarket
supermarket chain owned by
John Lewis, said shoppers
stocking up their pantries with
Christmas staples helped drive
sales up 7.8 per cent in the week
to 1 December.
Heston Blumenthal-branded
Mulled Cider Gammon and
Cropwell Bishop Potted Blue
Stilton were among the best-
sellers, with sales of the latter up
34.5 per cent.
The supermarket group also
claimed that a year of patriotic
events increased demand for English
and Welsh fizz by 30 per cent in the
last week.
The festivities also helped boost
internet sales up by 58.2 per cent
during the last week of November.
But Waitroses surging online
presence continues to raise doubts
over the future of online grocer
Ocado, which also sells Waitrose-
branded products.
Waitrose has been rapidly building
its online operations since ending its
non-compete clause with Ocado last
summer.
Hestons Waitrose Mulled Cider
Gammon is in demand
BY KASMIRA JEFFORD
Education is essential in
the ght against poverty
But too often poor children in Africa do not have a school to go to.
THE REALITY
THE OPPORTUNITY
RESULT:
More children in Africa get a better education. This gives
children qualications when they leave school and so
more opportunities to get a job.
ACCESS
Our school loans help provide more
private schools in poor rural areas.
QUALITY
We train teachers, which
improves the quality of education.
AFFORDABILITY
We oer school fee loans
that allow parents to send
their children to school.
ACCESS
There are
not enough
schools in
rural areas. QUALITY
The teaching in state
schools is often poor.
AFFORDABILITY
Most parents cant aord to
send their children to private
schools, which oer a better
education and are more accessible.
Many children are unable to attend school and so have little
or no education. The cycle of poverty continues.
THE IMPACT:
30% of primary age children dont complete primary school. Only
36% of them go on to secondary school.
$$$
13
CHRISTMASAPPEAL2012
CITYA.M.
TUESDAY 4 DECEMBER 2012
cityam.com/appeal
368,238
Raised since launch
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donated by City
A.M. readers
will be matched
by the UK
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comments may be printed in future
editions of City A.M.


LONELY City hearts searching for
love this Christmas, look no further
than ex-investment banker Salima
Manji to play Cupid and gently tug
on the heartstrings.
Having worked at JP Morgan,
Credit Suisse and the now-defunct
Dresdner Kleinwort, Manji left
the City to set up a matchmak-
ing supper club for singles,
the London Dinner
Club,and a sister compa-
ny aimed at Asian pro-
fessionals.
She now has over
500 members of
the Asian and
London Dinner
Clubs, from the
likes of Slaughter
& May and Credit
Suisse. The clubs
hold regular
soires at popular
City haunts
Mortons in
Berkeley Square, China Tang at the
Dorchester and even a recent gath-
ering for the jetsetters at Zumas
Dubai outpost.
Matchmaking Manji explained to
The Capitalist: My investment
banking colleagues com-
plained of bad experi-
ences with internet
dating so I came up
with the idea of
asupperclubfor sin-
gles.
Those looking for
true love may be
disappointed as so
far there have been
no marriages.
However Manji
reports there was
one successful match
not so long ago at a
dinner in Chelsea
between a fund
manager and a
girl from Moodys.
Say no more. The
next singles supper
will be at Harvey
Nichols on
Thursday.
14
cityam.com
cityam.com/the-capitalist
THECAPITALIST
Yesterday saw the publication of the 165th edition
of social bible Whos Who. Of the thousand new
additions to the big red book this year, there was a decent
spread of names from finance and property
squeezing their way onto the 2,500 pages
alongside the likes of comedian Tim Minchin
and tennis player Andy Murray. Winning
coveted social notoriety are the chief
executive of Phoenix Group, Clive
Christopher Roger Bannister; chief executive
of Newton Investment Management, Helena
Louise Morrissey; and the page-hogging
James Alexander Gustave Harold Stewart, chairman of
global infrastructure at KPMG. Keeping it in the family
are property moguls the Ritblats, with Sir Johns son
Jamie chairman of Delancey making his debut on the
pages. Also the Mayor of Londons brother Leo, a
partner at PricewaterhouseCoopers, joins Boris, fellow
Johnson brother Joseph and father Stanley, making
them one of the most successful families in the
yearbook. There was also one update to an existing
entry that caught The Capitalists beady eye. Lord
Haskins, former chairman of Northern Foods, has
amended his recreational activities to include only-in-
emergency harvest tractor-driver. A nice variation
on the often cited walking, reading and
skiing.
TUESDAY 4 DECEMBER 2012
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
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Ex-investment
banker is Cupid
for City singles
Exinvestment
banker and founder
of Asian Dinner Club
Salima Manji
PARALYMPIAN David Weir was
awarded the Freedom of the City
of London yesterday in a
ceremony at the Guildhall.
Weir, a winner of six gold
medals, is in fine company with
recent holders of the Freedom of
the City of London having
included author JK Rowling, chef
Raymond Blanc and actress
Joanna Lumley.
The City of London
Corporations charity, City Bridge
Paralympian David Weir given
Freedom of the City of London
Trust, has also launched a new
grants programme, City Sporting
Chance, which aims to widen
sports opportunities for disabled
people.
Although Lord Mayor Roger
Gifford didnt attend the
presentation, he still gave his two
pennies worth, telling The
Capitalist that one of his
favourite sporting moments from
the summer was Weir powering
his way to golden glory.
Left to right: Chamberlain of the City of London Chris Bilsland, David Weir with the
Freedom of the City and Kenneth Ayers, Chief Commoner of the City of London
Former Northern Foods
chairman Lord Haskins
ICELANDS MP Bank, which is part
owned by Tottenham Hotspur owner
Joe Lewis and Tory donor David
Rowland, yesterday confirmed it was
exploring plans to float on the
Icelandic stock market in 2014.
The Icelandic investment bank,
which operates in asset manage-
ment and M&A advisory, is gearing
up for a float on the Nasdaq OMX, a
spokeswoman told City A.M. yester-
day.
MP Bank says it wants to be regis-
tered on the exchange by 2014. It fol-
lows a meeting of its 50
shareholders last week to
approve a Icelandic Krona
2bn (10m) share capital
increase to shore up the
firm ahead of a float.
The company said the
move was a significant step
towards an eventual listing.
MP Bank has been exploring
proposals to list since the
entrance of new investors,
including Lewis and
Rowland, in April 2011.
Lewis, through his
Manastur Holding vehicle,
owns 9.54 per cent of MP
Bank. Mario Espinosa, the
Rowland and
Lewis set to see
Icelandic float
BY MICHAEL BOW
managing director of Lewis invest-
ing firm Tavistock, also sits on the
board of MP Bank.
David Rowland, previously a
Conservative Party treasurer who
also owns Luxembourg-based Banque
Havilland, owns 9.54 per cent of MP
Bank. He is represented at board level
by Michael Wright, who sits on the
reserve board of directors and is a
partner at Rowlands investment
firm Rowland Capital.
It is understood Rowland Capital
backs a float of the firm as Iceland
starts to grow more as an economy.
The bank swung into a pre-tax prof-
it of ISK470m in the first nine
months of 2012 compared to
ISK847m pre-tax loss for the same
period in 2011, it said last week.
We intend to become a clear
and preferred banking partner
for Icelandic businesses,
chief executive Sigurur
Atli Jnsson said.
Lewis Tavistock Group
is a global conglomerate
which owns a variety of
ventures from sports
teams, restaurants and
energy companies.
HSBC said its strategy and
planning boss John Flint is to take
over as head of retail banking and
wealth management (RBWM) next
year to replace veteran banker
Paul Thurston, who is retiring.
The bank said Flint will become
chief executive of the wealth
management unit on 1 January,
one of the bank's four global
businesses. Previously known as
personal financial services, the
unit has more than 50m
customers and made an operating
profit of $4.3bn (2.6bn) last year, a
fifth of the group.
Flint, 44, joined HSBC in 1989
and has worked in Hong Kong,
HSBC promotes strategy boss
to wealth management head
BY CITY A.M. REPORTER Singapore, Indonesia, Thailand,
India, Bahrain, the United States
and Britain. He has been head of
strategy and planning and chief of
staff to the chief executive since
the start of this year.
Guilherme Lima, who joined two
years ago from McKinsey as group
head of strategy, will take Flints
role.
Stuart Gulliver, group chief
executive, is restructuring HSBC to
cut costs and axe unprofitable
areas to lift returns, which has
seen several changes in senior
management.
Gulliver said Thurston, 59, had
wanted to retire two years ago but
stayed on to manage RBWM
during the reorganisation.
TUESDAY 4 DECEMBER 2012
16
NEWS
cityam.com
HSBC has made John Flint the new head of its wealth management division
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HS2 critics tell court coalitions
decision to build was flawed
OPPONENTS of the controversial
High Speed 2 (HS2) rail link
yesterday kicked off a major legal
challenge, in an attempt to force
the government to think again
about the 34bn project.
Lawyers for a group of local
authorities, called 51m, told the
High Court that the government
has not properly consulted on the
benefits and drawbacks of HS2.
Councils and homeowners have
been left to join the dots about
the second phase of the project,
BY MARION DAKERS
which is set to link Birmingham
with Manchester and Leeds, as the
Department for Transport has not
released any detail about the route,
Nathalie Lieven QC said.
But the government appears to
have already committed itself to
building the entire route, starting
with the upgrade between London
and Birmingham, Lieven added.
There has also been no
environmental assessment of the
second phase, which could run
through the Peak District, she said.
When one is removing people
from homes, the standard of
consultation should be at least as
high as it would be to close a
library, or to make a decision about
a few businesses in a shopping
centre... A rigorous approach needs
to be taken, she told Mr Justice
Ouseley.
The judge will hear several
applications for judicial review this
week, including one today from the
HS2 Action Alliance. Lawyers for
transport secretary Patrick
McLoughlin will set out their
arguments on Friday, while a ruling
is expected in the new year.
A victory for the campaigners
could lead to years of delays on the
HS2 project.
Tottenham Hotspur
owner Joe Lewis

MORTGAGE provider Paragon, a buy-

to-let specialist, has confirmed it is
talks to buy Hampshire Trust, a pri-
vate bank offering, in a bid at gaining
a retail banking licence.
Paragon yesterday said it was in
exclusive talks to buy the business,
which offers funding to property
developers and solicitors, from the
National Counties Building Society.
The purchase would enable
Paragon to gain a banking licence
and start offering savings accounts
to customers.
In a statement to the markets,
Paragon said it was in the early
stages of considering the
acquisition of Hampshire Trust.
There is no certainty that a
transaction will be concluded, it
added.
The deal would allow Paragon to
offer other retail products such as
savings bonds, which would give it
an alternative source of funding.
Paragon, which is listed on the
Paragon eyes
bank licence to
boost lending
BY HARRY BANKS
FTSE 250, has performed strongly
during the economic downturn
with buy-to-let mortgages in
demand as landlords take advantage
of a booming rental market while
first-time home buyers struggle to
get on the housing ladder.
The West Midlands based
company has expanded through
acquisitions as mainstream lenders
sell off loans.
Shares in Paragon Group, which
has around 9.6bn of loan assets
under management closed up 0.75
per cent.
Moodys fears Commerzbanks
new direction could be a flop
GERMAN lender Commerzbank is
taking major risks in pushing into
the small business market and by
competing aggressively on price,
according to credit ratings agency
Moodys.
The bank is investing 2bn
(1.6bn) on updating its IT and
processes, while it slashes fees and
rates to attract more business in
the small business sector. The
plan is to reshape Commerzbank,
creating a more competitive
institution for the long run.
But Moodys warned the
proposals are risky.
BY TIM WALLACE
We take the view that
Commerzbank had to take
corrective action in terms of both
strategy and risk-taking, in order
to win back market confidence,
said the ratings agency.
However, the strategic
adjustment entails
disproportionate and extremely
costly asset-rundowns and
divestments alongside the recently
declared 2bn investment into the
core businesses, which implies
limited potential for profit growth
at group level for several years yet.
And it noted the bank is taking
on well-established rivals in the
small business space, meaning
the ultimate success of the new
core bank strategy remains
uncertain.
Commerzbank declined to
comment.
Mortgage firm should use new
ambitions to fund core activity
S
O, it looks like even the buy-to-
let cash cow isnt enough to
satisfy FTSE 250 success story
Paragon anymore. Paragons
share price has been mirroring the
rental market recently. Rents soared
to yet another record high last
month, with the average London
tenant paying 1,102 a month
according to LSL, while mortgage
provider Paragons shares are up 50
per cent over the past six months.
Now, not content with scooping up
loan portfolios from banks
desperate to offload them, Paragon
wants in on the retail banking
market.
At first glance, Hampshire Trust
looks like a good fit. Away from
standard savings accounts it
specialises in short-term bridge
loans and financing for residential
property development. So the
cultural fit is there but whats
next? Hopefully, Paragon will use any
new income stream to do more of
what its good at and grow the buy-to-
let business. But now it has set out its
stall, investors are likely to hold on
tight until a deal is agreed, stemming
any hope of more short-term gains.
BOTTOM
LINE
ELIZABETH FOURNIER
The Paragon Group of Companies PLC
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1.41
1.37
3Dec
PETER LENARDOS
RBC CAPITAL MARKETS
They could want the bank-
ing licence to offer term
deposits to fund their consumer
nance business. This would
diversify Paragons sources of
funding and make it less reliant on
the wholesale funding markets. However,
there would be a duration mismatch.

GARY GREENWOOD
SHORE CAPITAL
I would expect the plat-
form to be used to garner
retail funding in order to back
growth in consumer lending
rather than buy to let. Given the
lack of competition from big banks at present,
we believe that now is a good time for alterna-
tive lenders to grow their loan books.

PHIL DOBBIN
ESPIRITO SANTO
The attraction is that the
banking licence offers
deposit accounts and Savings
bonds which Paragon could use as
a source of retail funding. This
would diversify Paragons sources
of funding and enable it to meet the demand it
is experiencing from retail borrowers.

ANALYST VIEWS
WHY DOES PARAGON WANT TO
BUY HAMPSHIRE TRUST?
By Michael Bow
TUESDAY 4 DECEMBER 2012
17
NEWS
cityam.com
Paragon chief executive Nigel Terrington has led the firm since 1995
HEDGE fund overhead costs for
individual employees differed by
thousands of pounds between
firms last year, with some funds
spending up to 10,000 a day on
each employee, research shows.
Research obtained from Hedge
Forensics shows the most cost-
conscious UK hedge fund has
managed to cut its overhead costs
down to as little as 50p a day for
each member of staff.
The data, taken from the firms
Top 200 Report, which ranks data
on the UKs hedge fund
community, shows some smaller
boutique funds are spending
10,000 a day per person for
prime office space in Mayfair, the
Hedge funds employee cost
overheads differ by thousands
BY MICHAEL BOW
traditional home to the UKs
hedge fund community.
Hedge funds are one of the
biggest contributors to Londons
booming property market,
accounting for over 100m a year
in paid rents due to their prime
office locations.
However, the report claims that
large funds employing lots of
staff can often lose out on
growth, profitability and
efficiency.
Man Group, which has more
than 1bn in turnover and 1,500
employees, fails to make Hedge
Forensics top 20 on the three
metrics. The UKs top 250 hedge
funds made pre-tax profits of
3.1bn last year on the back of
7bn in turnover.
PRIVATE equity house Equistone
Partners yesterday said it had sold
its portfolio company ATPI, a
global travel firm, to management
in a buyout backed by
Intermediate Capital Group.
Terms of the deal were not
disclosed but Equistone Partners
Europe director John Walker said
the exit generated a good return
for investors.
Equistone snapped up ATPI for
73m in 2008 and since then has
overseen ATPIs 2009 acquisition
of business travel company
Instone for 37m from fellow
private equity firm 3i.
ATPI, which sat inside Equistone
Fund III, is the latest travel sector
Equistone exits travel firm ATPI
in ICG-backed manager buyout
BY MICHAEL BOW
exit by the firm following the 1bn
sale of Global Blue and 200m exit
from travel agent Karavel-
Promovacances last year.
ATPI, which provides corporate
travel to executives travelling to
less accessible locations in the
marine and oil sectors, will
continue to be led by its chief
executive Graham Ramsey.
I believe that there are
significant opportunities ahead in
the travel sector and look forward
to working with ICG to explore
these, he said.
The Equistone Fund III has
Barclays as one of its main co-
investors after the firm was spun
out of Barclays Private Equity in
November 2011, in the wake of its
own management buyout.
Guardian owner seeks sale of
Auto Trader to plug its losses
THE OWNER of the Guardian
newspaper is in talks over a sale
of its stake in the parent
company of Auto Trader, in a bid
to prop up its lossmaking papers.
Guardian Media Group (GMG)
could sell its 50 per cent share in
Trader Media Group (TMG) to
TMGs joint owner, the private
equity firm Apax Partners, for
around 600m, sources
confirmed yesterday. TMG owns
the successful Auto Trader
magazine and listing service, as
BY JAMES TITCOMB
well as other marketing
products for car dealers, and
paid out a 100m special
dividend last year.
The business continues to do
well, in stark contrast to
Guardian News & Media, the
publisher of the Guardian and
Sunday paper the Observer,
which saw a 44.2m operating
loss in the last financial year.
GMG has just one shareholder,
The Scott Trust, and although it
will see the Guardian and
Observers widening losses as a
concern, it is not run for profit.
It is understood that the company
is not in any rush to sell TMG, with
it sitting on more than 300m in
cash. One source close to the group
admitted that TMG will be sold at
some point, but put the chances of
the current talks ending
successfully at 50/50.
GMG has sold other assets in a
bid to plug the gaps in the
Guardians finances, disposing of
its radio business, which runs the
Smooth and Real stations, to
Global Radio for around 70m
earlier this year.
GMG did not comment yesterday.
ANDRE Sokol, a founding partner at bou-
tique tech, media and telecoms bank Akira
Partners, advised Cable & Wireless
Communications on the sale of its Monaco &
Islands business, in one of few deals to bring
the low-prole bank into the public eye.
Sokol set up Akira Partners in 2007 after a
position as director of mergers and acquisi-
tions at Vodafone, where he oversaw more
than $33bn (20.5bn) of spending. Before
that, Sokol was a managing director at UBS.
Fellow Akira Partners banker Matthias
Uepping also worked on the deal.
Also on CWCs side of the deal was JP
Morgan Cazenoves head of M&A Dwayne
Lysaght, who had advised News Corp on its
aborted bid for BSkyB. Lysaght headed up a
team that also included managing director
Rupert Sadler, who previously worked at
NM Rothschild & Sons.
Batelcos lead advisers on the deal were
independent investment bank Houlihan
Lokey in tandem with Citigroup. Head of
EMEA in media and telecoms Toby Pearce
lead Houlihan Lokeys team in London,
accompanied by M&A managing director
David Sola. Pearce, who previously worked
for Rothschild and HSBC. Recent work
includes advising international mobile net-
work Vanco on a sale to Reliance.
ADVISERS CWCS MONACO SALE
ANDRE SOKOL
AKIRA PARTNERS
CWC chief executive Tony Rice will use much of the money to expand in Latin America
Datatec Ltd
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385
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395
400 p
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3Dec
Cable & Wireless Communications PLC
3Dec 27Nov 28Nov 29Nov 30Nov
35.5
36.0
35.0
34.5
36.5
37.0
37.5 p
35.10
3Dec
Nokia Oyj
3Dec 27Nov 28Nov 29Nov 30Nov
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2.60
2.50
2.65
2.70
2.75
2.55
3Dec
CULTURE secretary Maria Miller
challenged Britains newspapers to
implement an acceptable system of
self-regulation yesterday, as she
warned that the state may
intervene if the industry does not
respond to the proposals put
forward by the Leveson report.
Clashing with her Labour
counterpart Harriet Harman in the
House of Commons, Miller echoed
last weeks comments from David
Cameron, refusing to endorse Lord
Justice Levesons comments in full
due to grave concerns about
statutory regulation, but saying:
Change can either come with the
support of the press or, if we are
given no option, without it.
Miller supports
self-regulation
BY JAMES TITCOMB
TUESDAY 4 DECEMBER 2012
18
NEWS
cityam.com
IN BRIEF
Ericsson seeks US ban on Samsung
nSwedish telecoms gear maker
Ericsson has filed a request with the
US International Trade Commission to
ban US imports of products made by
South Korean group Samsung. The
request from Ericsson, which said
yesterday the products infringe on its
patents, came after it sued Samsung
for patent infringement in a US court
last week. Samsung said it would
defend itself against the lawsuit.
Computer Sciences sells credit unit
nUS technology services provider
Computer Sciences said yesterday it
will sell its credit services unit to
business information provider Equifax
Inc for $1bn in cash, and record after-
tax proceeds of about $750m to
$800m. CSC, currently valued at
about $5.91bn, said the sale of its
credit services unit would help it focus
on its technology solutions and
services business.
Boeing splits off development arm
nBoeing said yesterday it is creating
a new division to oversee airplane
development, hiving off that function
from production as it seeks to ramp up
factory output. The company named
Scott Fincher, who heads Boeings 777
jet programme, to lead the new
division, airplane development,
which will handle design and flight
certification of planes that are
currently on the drawing board.
CABLE & Wireless Communications
(CWC) has agreed to sell its opera-
tions in Monaco and a number of
island nations for a sum of up to
$1.025bn (638m).
The sale to Bahraini telecoms firm
Batelco frees CWC from control of a
range of dispersed assets in Monaco,
the Channel Islands, the Isle of Man
and a number of former British
island colonies. It will first sell its
Islands business and a 25 per cent
stake in its Monaco operations for
$680m, before selling off its remain-
ing assets in Monaco, pending regu-
latory approval, for $345m.
The sale comes as CWC focuses on
building its telecoms presence in the
fast-growing Latin American and
Caribbean regions. The FTSE 250
company is also in advanced talks to
sell its business in Macau, which
would leave it with just its Caribbean
and Panama divisions.
Chief executive Tony Rice said yes-
terday that he would use part of the
CWC rings the
changes in sale
of Monaco arm
BY JAMES TITCOMB
money to pay down the firms debts
from the current $1.6bn to $937m,
although there is still plenty of
money for expansion, particularly in
Spanish-speaking markets north of
Panama up to the Mexican border.
Shares in CWC rose 1.15 per cent
yesterday, as analysts hailed a clean
disposal of a diverse group of assets.
A deal like this has been perceived as
difficult to execute due to the geo-
graphic spread of the assets and the
requirement to try and align eleven
different governments, Espirito
Santos Nick Brown said.
Nokia JV sells assets
in push to cut costs
Mobile telecoms equipment joint
venture Nokia Siemens Networks,
which is focusing on its core
business, will sell its optical fibre
unit to US investment firm Marlin
Equity Partners.
Up to 1,900 employees, mainly
in Germany and Portugal, will be
transferred to the new company,
the company said yesterday. The
sale price was undisclosed but
estimated at around 200m
(162m).
The company, owned by Nokia
and Siemens, has sold a number
of product lines since it last year
BY HARRY BANKS
announced plans to divest non-
core assets and cut 17,000 jobs,
nearly a quarter of its total
workforce, with many of these cuts
made in the UK.
Shares in IT group Datatec slide
on surprise earnings warning
IT GROUP Datatec yesterday issued
a shock profit warning, owing to a
worse than expected performance
in its biggest division.
The company said that its
technology business Westcon had
been hit by weak conditions in
Europe, disruption in North
America due to Hurricane Sandy
and lower than expected [US]
Federal business, in its third
quarter.
It said that sales at Westcon had
been worse than expected and
comparatively lower than in the
same period last year.
BY JAMES TITCOMB
Datatec, which is listed in
London and Johannesburg, fell by
more than four per cent on the
news yesterday.
Westcon provides IT and
networking technologies in over
100 countries and accounts for
around three-quarters of Datatecs
revenues. Its communications and
security systems have more than
20,000 customers.
Datatec said it is now unlikely
that it will reach its forecasts for
the year, although it did say that
its integration business Logicalis
was trading in line with
expectations.
It had originally expected annual
sales of up to $5.8bn (3.6bn) and
pre-tax profits of around 104m.
The group will make clear the
shortfall at its next interim
management statement in January.
WILLIAM HILLS takeover of
online bookie Sportingbet is being
pushed back again, the companies
will announce today, in the second
extension of the drawn-out deal.
The parties, which also include
William Hills partner GVC
Holdings, had set today as a
deadline but the complexity of the
three-way talks have forced
negotiations back further, sources
close to the deal said.
William Hill and GVC have
agreed to carve up Sportingbets
operations, which include a
lucrative Australian business as
well as a number of less profitable
operations, paying 530m for the
company. This amounts to 61.1p
William Hills Sportingbet deal
delayed further as it hits rocks
BY JAMES TITCOMB
per Sportingbet share, a 39 per
cent premium on yesterdays
closing price of 44p.
However, after Sportingbet
revealed less-than-spectacular
quarterly results on Friday,
sources suggested that William
Hill and GVC would look to revise
the cost of the deal, and could
even walk away.
William Hill executives have
been mulling the value of the
acquisition over the weekend
following Sportingbets 35 per
cent slump in quarterly revenues.
The complications that have led
to the delays are down to GVC,
which does not have the resources
the others do, one individual said.
Neither Sportingbet nor William
Hill commented on talks.
GAMBLING firm Sportech has
underlined its commitment to
growth across the pond by
appointing a chief operating
officer for the Americas
region.
The pools operator has
brought in David Schreff, a
sports and media industry
veteran, to oversee the
fledgling businesses in the
US, Caribbean, and Latin
America.
This senior
appointment represents an
important next step for the
company, in further
consolidating and reinforcing
its market leading position,
Sportech bags veteran Schreff
for executive role in Americas
BY JAMES TITCOMB
Sportech said yesterday.
The 57-year-old Schreff has
worked for Disney, the NBA,
Marvel and Viacom, as well as
running a sports business
consultancy, Bedare.
Sportechs chief executive
Ian Penrose said: Davids
appointment adds
further weight to the
senior management
team, and we are
delighted to have
someone of Davids
calibre and
expertise joining our
group.
David Schreff has been
hired as Sportech COO
BP PLC
3Dec 27Nov 28Nov 29Nov 30Nov
425.0
427.5
422.5
430.0
432.5
435.0
437.5 p
430.99
3Dec
Polymetal International PLC
3Dec 27Nov 28Nov 29Nov 30Nov
1,050
1,060
1,070
1,080
1,090
1,100 p
1,061.00
3Dec
European Aeronautic Defence and Space Company
3Dec 27Nov 28Nov 29Nov 30Nov
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25.00
25.50
26.00
26.50
27.00
26.45
3Dec
ST MODWEN yesterday confirmed
it was searching for a development
partner for the 500m Elephant
and Castle shopping centre
regeneration in south London.
In a trading update for the year
to 30 November, the developer said
it has hired Colliers International
to find a joint venture partner for
the scheme, which is expected to
provide up to 350,000 square feet of
retail and leisure space and 1,000
new homes.
It expects to submit plans late
next year and hopes to start
St Modwen hunts for a partner
on Elephant and Castle scheme
BY KASMIRA JEFFORD
building in late 2015.
St Modwen, which is working on
a number of major development
projects, said it is also on track to
seal its 2bn contract for the New
Covent Garden regeneration
project in Nine Elms, where it is
preferred bidder with Vinci, by the
end of the year.
The FTSE 250 firm, which in
October raised 80m through a
retail bond issue, said it was on
track to meet full year expectations
and that negative valuations at the
end of the year in its retail
portfolio would be more than
offset by value created elsewhere
in its portfolio.
TUESDAY 4 DECEMBER 2012
19
NEWS
cityam.com
St Modwen hopes to submit plans for its Elephant and Castle scheme late next year
IN BRIEF
Lamprell appoints new chief exec
nOil and gas rig contractor Lamprell
yesterday named industry veteran
James Moffat as its new chief executive,
ending speculation over who would take
the reins after Nigel McCue stepped
down in October following a string of
profit warnings. Moffat will join the firm
from 1 March next year, having spent the
last 16 years at KBR Group. Peter
Whitbread will continue to act as interim
CEO until then.
Repsol files complaint over YPF
nSpanish oil major Repsol yesterday
filed a complaint against Argentina at
the World Banks international
arbitration forum over the governments
expropriation this year of Repsols
controlling stake in YPF. Argentine
President Cristina Fernandez
nationalised YPF, the countrys biggest
energy company, in May, accusing
Repsol of slack investment to boost
output at a time of growing demand.
France and Italy rail link on track
nThe leaders of France and Italy
pledged yesterday to push ahead with
a high-speed rail link between Lyon
and Turin despite a row over EU
spending. Despite pressure to slash
billions of euros from the European
Unions 2014-2020 budget, French
President Francois Hollande defended
the rail link between southeast France
and northwest Italy as essential to
economic competitiveness.
RUSSIAN precious metals miner
Polymetal said it would decide next
year whether to double production
capacity at its Albazino gold project
in Russias far east after doubling its
estimate of mineral resources there.
Exploration results at Albazino
highlight the tremendous potential
of this asset and pave the way for the
expansion decision to be taken in the
second half of 2013, Vitaly Nesis,
Polymetal chief executive, said in a
statement yesterday.
The company, controlled by Russian
businessmen Alexander Nesis and
Alexander Mamut along with Czech
private equity investor PPF, is consid-
ering increasing its capacity to 3m
tonnes of ore per year, company
spokesman Andrey Abashin said,
adding that its capital expenditure
had not yet been determined.
Polymetal has already invested
$270m (168m) in the project and
would need another about $150m to
double the concentrator capacity,
Polymetal ups
estimates at
Albazino site
BY HARRY BANKS
analyst Sergey Donskoy at Societe
Generale said, citing previous man-
agement comments.
The company has increased its esti-
mate of mineral resources at Albazino
to 5.7m ounces of gold in five ore
zones and expects to determine a
development plan after completing a
study in the second quarter.
Including Albazino, Polymetal has
increased its total resources estimate
by 30 per cent to 18m ounces of gold
equivalent since the start of the year.
Shares closed down 1p or 0.09 per
cent at 1,061p.
EADS confirms talks to shake up
complex shareholder structure
SHARES in EADS rose yesterday as
European nations raced towards a
deal aimed at overhauling a
convoluted shareholder structure at
Europes largest aerospace group.
The Airbus parent company said
it was in talks on the companys
ownership with France, German
and Spain, confirming press
reports.
People familiar with the matter
said the talks involved a sweeping
re-arrangement of government
stakes, coupled with a staged exit of
its industrial partners, reducing big
shareholder blocks below 30 per
BY CITY A.M. REPORTER
cent instead of more than 50 per
cent.
The company is participating
actively in such discussions ... with
the objective to preserve and
enhance ... the interests of all
stakeholders, EADS said in a
statement.
A German economy ministry
spokesman added that efforts were
being made to reach a deal as
quickly as possible.
EADSs ownership structure has
also become an urgent issue since
$45bn merger talks with BAE
Systems collapsed in October,
exposing the fragility of its existing
shareholder structure.
The BAE discussions caused a lot
of movement and demonstrated to
people like Lagardere that they
could find a way out, said a person
familiar with the discussions.
BP sees off TNK-BP shareholder
claim as it sets out new strategy
MINORITY shareholders in Anglo-
Russian oil firm TNK-BP are
withdrawing a 100bn rouble
(2.01bn) damages suit against BP
after the main stakeholders
agreed last month to sell their
stakes to Russias Rosneft.
A Siberian court in July awarded
the damages against the British oil
major in a case brought by a group
of minority shareholders in TNK-
BPs listed unit TNK-BP Holding. BP
appealed against the verdict.
The case stemmed from BPs
failed attempt last year to forge a
partnership with state oil major
BY CITY A.M. REPORTER
Rosneft, which fell apart after it
was blocked in the courts by AAR,
a consortium that represents four
billionaire co-owners of TNK-BP.
Separately, BP said it is raising
investment and betting its future
on oil over gas, in its first strategy
update since striking a series of
deals aimed at getting its Russian
and US operations back on track.
The shake-up in Russia involves
the sale of its 50 per cent holding
in TNK-BP and a tie-up with
Rosneft.
The company said it would raise
capital spending, excluding
acquisitions, to between $24bn and
$27bn a year in the years 2014 to
2020, from an estimated $22bn in
2012 and $19.1bn in 2011.
Next year and in 2014, spending
will average between $24bn and
$25bn, BP told analysts yesterday.
GOLD miner East African Gold
yesterday announced its plans to
list on Londons Alternative
Investment Market (Aim),
becoming the first Ugandan-
focused company to seek a London
flotation.
East African Gold, which was
formed in September 2011 and
holds more than 800 square miles
of exploration licences in
northern Uganda, said its shares
will begin trading in January.
Uganda is a minerologically
prospective, politically stable
country with an appealing tax
regime, said East African Golds
chief executive Tom Sawyer. Its
government has overseen a period
Ugandas East African Gold to
ring in New Year with listing
BY ELIZABETH FOURNIER
of strong growth in the country
and is in favour of developing the
mining sector.
The firm said that initial
explorations in Uganda have found
four sites that have been deemed
highly prospective, with
concentrations of gold up to 83.6
grammes per tonne. Uganda
borders several gold-rich
countries, and the firm expects
the trends seen in Tanzania, the
DRC and Kenya to continue into
their exploration areas.
We are very excited about this
stage of the companys
development and look forward to
working alongside Londons
investment community to develop
the first notable gold deposit in
the country, added Sawyer.
PIPE and tube maker Tricorns
shares rose 7.35 per cent yesterday
after the Aim-listed group posted
an 18 per cent rise in pre-tax
profits as capital investments start
to pay off.
Tricorn, which makes pipe and
tubing for engines, aircraft and
cars, said revenues fell seven per
cent to 11.55m in the six months
to the end of September.
Pre-tax profits rose from
722,000 a year ago to 855,000,
the firm announced to the market
yesterday.
While rising margins helped the
firms bottom line, it added that
demand had been trailing off in
some markets, and full-year
Pipe maker Tricorn sees softer
markets but improving margins
BY MARION DAKERS
revenues are set to be 10 per cent
lower than indicated in Tricorns
October trading update.
Full year profits, excluding a
new plant in China, are expected
to be flat on last year.
The company splashed out on a
manufacturing plant in China last
year, and hopes to ship its first
products from the site by the end
of the year.
Chairman Nick Paul cheered the
firms continued improvements
in operating margins, strong cash
generation [and] encouraging
progress in establishing our
manufacturing facility in China.
This, alongside the pipeline of
opportunities for new business
positions us well for further
growth, he added.
TUESDAY 4 DECEMBER 2012
20
US stocks sour
after lacklustre
factory figures
U
S stocks struggled to extend
the previous weeks gains,
dropping on Monday as
disappointing US factory
numbers dampened optimism about
Chinas economic growth.
The declines broke a three-day
streak of gains for the S&P 500,
keeping it shy of its 50-day moving
average of about 1,420, a level that
the index has been below since 22
October, and now serving as a key
resistance point for investors.
Manufacturing activity in the United
States surprisingly contracted in
November, the Institute for Supply
Management said, dropping to its
lowest level in more than three years.
Economic data has been mixed in
recent months, fanning worries
about the pace of growth at a time
when investors are already
concerned about the fiscal cliff.
The ISM number was below
expectations that were already
conservative, and that puts an
exclamation point on the concern
many of us have about the cliff's
impact on the economy, said Leo
Grohowski, of BNY Mellon Wealth
Management in New York.
Markets had opened higher as
output by Chinas factories grew in
November for the first time in more
than a year, data showed. Investors
look to strength from China, the
worlds second-largest economy, to
offset weak growth in the United
States and Europe.
The Dow Jones industrial average
fell 59.98 points, or 0.46 per cent, to
12,965.60. The Standard & Poors 500
Index declined 6.72 points, or 0.47
per cent, to 1,409.46. The Nasdaq
Composite Index dropped 8.04
points, or 0.27 per cent, to 3,002.20.
B
RITAINS top shares posted modest
gains yesterday, helped by strength
in heavyweight mining stocks after
data showed Chinas manufactur-
ing sector expanded for the first time in
over a year.
But strong earlier gains were eroded in
the afternoon after disappointing US man-
ufacturing data raised concerns over the
health of the worlds biggest economy just
as politicians haggle over how to avoid the
fiscal cliff at the end of the year.
The FTSE 100 closed up 4.42 points, or 0.1
per cent, at 5,871.24 points, having run
back from an early session peak just above
the psychologically important 5,900 level.
Goodbye Santa Rally for now, as poor US
data mixed with the persistent worries
about the fiscal cliff which remains unre-
solved, said Ishaq Siddiqi, market strate-
gist at ETX Capital.
Traders are taking a prudent approach
here now, as major upcoming data in the
US this week such as the key monthly jobs
report may likely disappoint,
Volumes were very thin at just 44 per
cent of the 90-day daily average on the first
session of the final month of 2013.
Stocks seen as defensive attracted the
most interest, with drugmakers and tobac-
co the two best performing sectors.
Gains in miners helped as the sector ben-
efited along with the copper price on
hopes for improved demand from China,
the worlds top metals consumer.
British manufacturing activity also
shrank much less than expected in
November, although the sector remains in
a precarious state as new orders edged
down.
BESTof theBROKERS
Ashtead Group
26Nov 27Nov 28Nov 29Nov 3Dec
p 390.0
387.5
385.0
380.0
382.5
375.0
372.5
377.5
385.70
3 Dec
ASHTEAD
Bank of America begins
coverage of the industrial
equipment hire firm with
a buy rating and target
price of 460p. Ashtead
will continue to grow
revenue rapidly, the
analysis advises.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
3Dec 27Nov 28Nov 29Nov 30Nov
5,925
5,900
5,875
5,850
5,800
5,775
5,825
5,871.24
3 Dec
Centrica PLC
26Nov 27Nov 28Nov 29Nov 3Dec
p 332
330
328
324
326
320
322
328.50
3 Dec
CENTRICA
Citi has upgraded the
owner of British Gas to
buy with a target price
of 360p. This current
valuation does not
reflect the defensive
profile of the stock or the
potential upside, it says.
Tullow Oil PLC
26Nov 27Nov 28Nov 29Nov 3Dec
p 1,410
1,400
1,390
1,370
1,380
1,350
1,360
1,373.00
3 Dec
TULLOW OIL
HSBC has upgraded the
oil giant to neutral from
underweight while
sticking with a target
price of 1,381p. Concerns
around the Jubilee field
seem to have been
addressed, HSBC says.
Insparo Asset Management
Glenda Levin has been
appointed head of marketing at
the asset management firm. She
joins from Pioneer Alternative
Investments, where she was
head of equity strategy for fund
of funds. Levin has also held
senior roles at Equitable Life and
UBS.
Barclays
Hayley Rees has been appointed head of the banks
infrastructure and structured project finance team. She has
worked at Barclays for 26 years, including 15 years in its
infrastructure and structured project finance team.
Mayer Brown
James Taylor has been appointed as a capital markets
partner in the law firms London office. He joins from Allen
& Overy. Taylor has particular experience advising issuers
and underwriters on debt capital market matters.
Russell Investments
Wouter Sturkenboom has been appointed investment
strategist in the asset management firms global
investment strategy team. He joins from Kempden Capital
Management in Amsterdam, where he was a senior
investment strategist.
KNG Securities
The fixed income specialist has announced the
appointments of Alessandro Vargiu and Filippo Gromo.
Vargiu has previously held roles at Deutsche Bank and
Credit Suisse. Gromo joins from BNP Paribas.
InfraRed Capital Partners
The investment firm has appointed David Watt as a senior
adviser to focus on the development of its real estate fund
business in Asia. He was previously chairman, North Asia
and head of business development and client services,
Asia Pacific at DTZ.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
in association with
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NEW YORK
REPORT
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FTSE lifted by mining stocks but
gains eroded by US economic data
S
LOWER than expected
growth will result in George
Osborne missing his fiscal
targets. In March, the Office
for Budget Responsibility
forecast 0.8 per cent growth in 2012,
2 per cent in 2013, 2.7 per cent in
2014 and 3 per cent in 2015. Now,
the average of independent
forecasters suggests 0.1, 1.2, 1.8 and
2.2 respectively. As a result, tax
revenues have disappointed. The
first seven months of this year saw
receipts grow by 0.4 per cent on the
same period last year, compared to a
3.7 per cent full-year forecast. The
current deficit is therefore rising
again, despite the government
delivering on the spending totals it
promised.
I
N A months time, millions of
Britons will make a New Years
resolution to lose weight. Over the
next year, nearly 80 per cent of
them will find this commitment
too difficult and abandon it. UK
governments of all colours have found
it just as difficult to keep their fiscal
promises over the last decade.
In 2010, George Osborne made a com-
mitment to have the burden of govern-
ment debt falling by 2015-16. He has all
but acknowledged that he will break
that commitment in tomorrows
Autumn Statement. History will repeat
itself: the previous government also
ditched its fiscal rules in 2008 when
the going got tough. When it comes to
fiscal discipline, recent chancellors
have lived by the maxim that rules
are made to be broken. However, the
real problem is that the rules them-
selves have been designed to fail.
The UKs gross debt recently broke 80
per cent of GDP, after averaging only
40 per cent in the pre-crisis years from
2000 to 2007. Under the chancellors
current plans, the Office of Budget
Responsibility (OBR) forecasts gross
cityam.com/forum
Governments have
only had surpluses large
enough to reduce debt
in six of the past 28 years
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

22
TUESDAY 4 DECEMBER 2012
JAMES ZUCCOLLO
We need a new fiscal rule to rid the
UK of its unsustainable debt levels
debt to exceed 90 per cent of GDP by
2013-14. This is likely to be revised
upward in the Autumn Statement.
Debt levels exceeding 85 to 90 per
cent of GDP are bad for a number of
reasons. They reduce the govern-
ments flexibility to respond to contin-
gencies, and also tend to encourage
policies that amplify recessionary
pain. More worryingly, there is
research suggesting that debt levels
over 90 per cent of GDP can lead to a
reduction in economic growth of up to
1 percentage point per year. While
that claim has been the subject of dis-
pute among economists, it is prudent
to stay out of any potential danger
zone if possible.
Unfortunately, successive UK govern-
ments have only had surpluses large
enough to reduce the countrys debt
in six of the past 28 years. This is
despite long periods of steady econom-
ic growth: between 2002 and 2008,
debt rose from 37 to 44 per cent of
GDP, even as the economy boomed.
We need to revise our current fiscal
rules to lift the UK out of the danger
zone and put public debt on a down-
ward trajectory. The rules of the past
decade have been easy to break
because they have been so arbitrary.
Gordon Browns golden rule required
debt to stay below 40 per cent of GDP.
It was a target with no good justifica-
tion; as such it was relatively easy to
abandon. Similarly, Osbornes goal is
to have debt falling as a percentage of
GDP in 2015-16. That target will also be
sacrificed in the face of, in the chancel-
lors words, a Eurozone crisis, an oil
price shock and problems in
emerging markets.
The UK needs a new fiscal rule that
achieves long-run debt reduction,
while still allowing governments the
flexibility to respond to contingencies.
Switzerland, for example, uses a rule
that mandates a small surplus over the
course of the business cycle. It has
caused government debt to fall from
70 per cent of GDP in 2005 to 47 per
cent in 2012, despite the financial cri-
sis.
Browns golden rule was similar in
that it required budget balance over
the business cycle. Its flaw was that it
excluded investment spending. That
gave an opportunity for creative
accounting, which kept deficits high
and debt rising. A spending rule needs
to be comprehensive and include all
government expenditure to avoid that
sort of gaming.
Essential to the success of a new rule
will be the strength of the supporting
institutions. This government has
already recognised the importance of
external oversight to fiscal discipline
by setting up the OBR. This body has a
role in monitoring the current fiscal
targets, but those targets are Osbornes
to discard and change as he sees fit.
The chancellor needs a new fiscal
framework to set achievable, medium-
run rules with the OBR. The present,
short-term targets provide little con-
straint as they are so easily changed,
while achieving long-run debt reduc-
tion requires an enduring commit-
ment. With independent monitoring
and enforcement, fiscal sustainability
can be the OBRs to enforce, and not
the chancellors to abandon.
A long-run strategy is needed to
ensure that the UK escapes from the
present situation and avoids escalating
debt in the future. Appropriate fiscal
rules, supported and monitored by the
right institutions, can achieve that.
James Zuccollo is an economist at the inde-
pendent think tank Reform. Its research
paper Long-term fiscal sustainability is avail-
able at www.reform.co.uk
As he makes his Autumn
Statement tomorrow, the chancellor
is therefore once again faced with
the lose-lose decision of more cuts
or more debt. And the answer to
this is dependent on whether slow
growth is seen as inevitable,
without policy changes or good
fortune.
In the short term, it wouldnt be
the end of the world if Osborne
abandoned his precise fiscal
framework. Adverse reaction in the
bond markets is unlikely, as most
will have factored in that the rules
will not be met. The political
rationale of the debt rule in the
sunny-outlook days of 2010 was
obvious. But, in truth, both this and
the fiscal mandate have little
economic rationale. Getting debt-to-
GDP back on the downward path
sustainably is what matters not
just its movement between two
specific years, as the second rule
implies.
The mandate for the current
structural deficit to be eliminated
within five years is analogous to
the government taking a penalty
without really knowing where the
goalposts are, and then moving the
ball after each miss. It would
therefore be short-termist, and bad
policy, to pluck some new fiddly
cuts or tax reforms to meet the
existing rules (and worse to conceal
failure with accounting tricks).
But it is essential that rule
abandonment is not seen as
reversing austerity. The UK is
walking a fine line, with its primary
deficit still larger than either Greece
or Spain. Abandoning the current
framework should be accompanied
by the chancellor quickly setting out
how the next spending review will
take longer-term measures to ease
the debt burden. With education,
health, debt interest and welfare
now accounting for 72 per cent of
total spending, and a demographic
time-bomb approaching, continued
sluggish growth means big
decisions are due on the essential
functions of government.
Government spending will have to
be lower still (with an aim of 38 per
cent of GDP the average tax-to-GDP
ratio since 2000/01). The next review
must also be willing to re-examine
some big ticket items, like eligibility
for working and retirement age
government benefits, and the NHS
budget. This will no doubt be
politically difficult, but the extent
to which original assumptions were
wrong means it is inevitable, sooner
or later.
Ryan Bourne is head of economic
research at the Centre for Policy Studies.
FRONTLINE
ECONOMICS
RYAN BOURNE
Sluggish growth makes further cuts to spending more essential than ever
MORNING UPDATE
A.M.
23
TUESDAY 4 DECEMBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Capital gains
[Re: Osborne must now face up to his
fiscal failings, yesterday]
As the chief executive of a UK-based
small-to-medium sized business (SMB), I
urge George Osborne to lay out a clear
plan that would support business over the
long term, and therefore kick start
Britains economy. SMBs account for the
vast majority of private sector companies
in Britain, and are playing a major role in
reviving the economy. Yet with the current
tight debt market, and extremely high
capital gains tax rates compared to
countries like the US, some companies will
struggle to get the capital they need to
grow and prosper. We need new policies
to drive competition and restore vibrancy
to Britains banks so that its easier to
access growth capital when we need it
most. We also urge the government to
lower capital gains tax rates to 18 per cent
(or less) to incentivise investment and
drastically increase our ability to compete
on a global scale. This is vital. Investors
who are willing to invest their capital take
a risk because they believe in a business or
management team. They should therefore
be allowed to make a return on this
investment, and not be harmed by
uncompetitive capital gains tax. SMBs
account for 59.1 per cent of private sector
employment. Tax revenues from their
expansion will outweigh any nominal gain
that can be achieved from artificially high
capital gains rates.
Jeff Hughes, chief executive of Omnifone
T
HE Public Account
Committees (PAC) ongoing
criticism of large
multinationals for their
corporation tax payments is
an ill-considered departure from a
more sensible debate.
Multinational companies, like
Starbucks and Google, are by defini-
tion different to domestic businesses
(like John Lewis or Morrisons). This is
especially true of internet retailers
like Amazon. Under the current law,
multinationals can choose where
they locate international operations,
and they often do so in response to
competitive tax policies. If that
means the tax take in the UK is
lower as a result, that is the nature
of competition.
Britains current tax law supports
this system. Companies can deduct
expenses (whether interest pay-
ments, royalties, or management
charges) in computing taxable prof-
its. It is the job of HMRC to examine
whether such payments are
incurred wholly and exclusively for
the purpose of trade. If deductions
are found to be in contravention of
the law, adjustments are then made.
These are fundamental cornerstones
of UK law and are premised on inter-
nationally-agreed concepts that have
developed over several decades.
The PAC should therefore know
better than to argue that throwing
more funds at HMRC is the answer
to getting multinationals to pay
more tax. And it should also realise
that some of the other proposed
solutions to the issue are unlikely to
work. Unitary taxation (a levy on a
corporations worldwide income) is
not the answer. Global domestic tax
systems, and the double tax treaties
that facilitate cross-border trade,
would need to be fundamentally
amended to cater for it. This would
take decades to achieve.
TOP TWEETS
So far the Funding for Lending scheme is
not delivering for profitable businesses that
cant get access to the finance they need.
@ChukaUmunna
Banks have taken 4.4bn through the
Funding for Lending scheme in two months,
but have increased lending by only 496m.
@jennitpk
Starbucks is paying its legal share of tax.
Why should it pay more? Its tax, not
charity.
@p4ulmiller
Im delighted by the news that the Duke
and Duchess of Cambridge are expecting a
baby. They will make wonderful parents.
@David_Cameron
After the turbulence of recent years, has the
Eurozone finally managed to turn the corner?
YES
The process of adjustment in peripheral Europe is starting to
deliver results. The pace of change varies hugely, but some of the
key indicators are moving in the right direction. Greece reduced
its fiscal deficit before interest payments by a hefty 13 per cent of
GDP between 2009 and 2012. Spanish and Portuguese exports
have risen by 22 per cent in the last three years. Labour costs
have been falling in Greece, Portugal, Spain and Ireland (though
not Italy). Costs and trade deficits are, by and large, heading
down. The example of Ireland, which is widely expected to return
to modest growth next year, demonstrates that economies can
achieve significant change. However, the process is patchy and
has much further to run. It is too early to say that the Eurozone
has fully recovered. For that, Europe will need to draw, still
further, on its reserves of political will and public consent.
Ian Stewart is chief economist at Deloitte.
Ian Stewart
NO
Graeme Leach
At the beginning of 2012, I wrote a paper called This suckers
going down. It envisaged Greece, and possibly other Club
Mediterranean economies, exiting the euro in 2012. The paper
was obviously premature in its conclusion, but I dont believe the
end game has changed, despite the announcement of outright
monetary transactions by the European Central Bank (ECB). It
may be the case that outright monetary transactions have scared
off the bond market vigilantes for now. But this wont last
forever. For the ECB to buy bonds, a country will first have to
request more austerity. Can a Greek or Spanish politician really
sell more austerity to his or her voters? German opposition to the
plan should also not be overlooked. In the short-term, the ECB
may be able to hold the line on the euro, but the forces pulling it
apart remain stronger than those holding it together.
Graeme Leach is chief economist at the Institute of Directors.
RAPIDresponses
The company tax
debate must focus
on realistic reform
And if the current system is seen as
fundamentally broken, our response
should not be to simply demand
companies pay more tax. We should
create a simpler system, and under-
stand that companies will pay more
UK tax if our arrangements are seen
as more competitive than our rivals.
One reform could be an overhaul
of transfer pricing rules, which
determine how the costs of services
can be measured. In particular, if we
reduce and streamline the number
of methodologies that can be used
to determine a transfer price, fewer
companies would have the ability to
get around the current system.
More importantly, we could intro-
duce a system whereby HMRC
expands its focus beyond the deduc-
tions that are claimed by the UK
limb of a foreign multinational. It
could instead holistically examine
that companys UK business activi-
ties, with the aim of agreeing accept-
able profit margins on which UK
corporation tax is payable.
The UK has opened its doors to
multinationals on an agreed set of
internationally-accepted policy prin-
ciples. Tax competition is unlikely to
go away and, rather than attacking
specific nations or companies, we
should look at how the likes of
Ireland, Switzerland, Netherlands
and Luxembourg attract and retain
big businesses. So often, the answer
is a simpler system and lower corpo-
rate tax rates.
Miles Dean is founder of Milestone
International Tax Partners.
MILES DEAN
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TUESDAY 4 DECEMBER 2012
24
cityam.com
C
ROP failures in Britain and
globally are pushing grain
prices to record highs. Floods
in the UK have forced it to
depend on foreign grain imports.
The country is expected to import
more than 2m tons of wheat in
the 2012-2013 season a 30 year
high. But prices have also been
driven up by droughts in the
major US grain producing regions
and reduced output in the Black
Sea region.
CHALLENGING CONDITIONS
The Agriculture and Horticulture
Development Board (AHDB)
released a paper stating that, due
to a wet summer and a late har-
vest, autumn 2012 has proven to be
challenging for the establishment
of winter crops in the UK. Very
wet conditions from the end of
September until the end of
November kept fields saturated
with flooding and water logging
in many places, says the AHDB in
its cereal and oilseed crop develop-
ment report. It adds that of the
crops drilled to date around 80
per cent of the 2012 harvest most
were drilled within the optimum
window, but often into wet
seedbeds with high levels of slug
damage. The AHDB estimates that
7 per cent of the wheat drilled, and
20 per cent of the winter barley, is
in an area of questionable viability.
LOW YIELDS ON HIGH PLANES
The US, which accounts for a third
of global corn exports had the
opposite problem. It experienced
its worst drought since 1956, and
winter wheat had its worst yield
since 1985 as dry, cold weather
slowed seed germination and early
plant growth. More than half of
the High Plains the grain produc-
ing regions between Kansas and
North Dakota were in drought.
Crops, which last year survived a
dry summer because of surplus
Flood-hit UK to face
record wheat prices
Floods at home and droughts abroad have hit production
Consumers will need
to rely on imports,
writes Craig Drake
TRADING MANAGEMENT WEALTH
THE TIPSTER
STAGECOACH TO STEAM AHEAD
T
RAVEL firm Stagecoachwill
signal whether its joint venture
with Virgin is on track when it
submits its interim statement
tomorrow. The current
franchise is due to expire this month,
but traders seem positive and shares
have steamed ahead by over 25 per
cent since lows in May. Spreadex quotes
a price of 291.7p-293.8p for
Stagecoach.
The latest traffic numbers from
International Consolidated
Airlines Group(IAG) are expected to
show modest improvement tomorrow.
However, Hurricane Sandy is likely to
have hit long-haul travel. The airline
unveiled a radical restructuring plan
last month. Shares are up by over 11 per
cent in the last year, and traders will
want to see if it can continue to fly high.
ETX Capital quotes a price of 171.06p-
171.54p for IAG.
The share price of budget airline
easyJet has lifted-off in 2012, rising
by over 80 per cent and putting it
within touching distance of its record
high around 740p. A good trading
statement on Thursday may give the
stock price a boost to breach this level.
Capital Spreads quotes a price of
724.5p-727.0p for easyJet.
Tescowill release a fresh set of
numbers tomorrow. But traders arent
holding their breath. The US business is
yet to make a profit, and UK non-food
business is struggling. Analysts only
expect a small rise in like-for-like sales.
IG quotes a price of 322.10p-322.74p
for Tesco.
Mulberrys recent profit warning
has raised concerns over the resilience
of the luxury retail sector. Demand from
emerging markets is starting to slip as
economic growth in Asia cools. The
recent recovery of its shares will be
tested when the retailer issues its latest
trading update on Thursday. CMC
Markets quotes a price of 1,159.11p-
1,180.95p for Mulberry.
YOGESH CHANDARANA
same way as many other com-
modities. This means that a level-
ling off of supply in one region
does not directly draw down UK
prices. As a result, record whole-
sale UK grain prices will filter
down to drive up prices of many
foodstuffs, such as bread and
meat, accelerating food inflation.
To have a net import of grain is an
anomaly for Britain the last time
it happened was in 2001-2002, but
on a much lower scale than this
year. Britain usually sources most
of its wheat imports when needed
from Germany, which has had a
relatively good crop. But British
consumers will still face a premi-
um over domestic wheat produc-
tion. This means that traders
should not just look to the effects
of these prices on wheat and corn
futures, but also on foodstuff pro-
ducers and brewers, which will
likely be hit by drastically
increased production costs.
soil-moisture reserves, were
destroyed by wind and cold dam-
age this time around.
REBALANCING FUNDAMENTALS
Grain prices are expected to rise
for the first half of next year,
before production recovers from
the poor weather conditions of
2012 and drives the market into
surplus. At times of high grain
prices, farmers often ramp up pro-
duction, only to see oversupply
weaken prices over the next cycle.
Last week, Rabobank predicted
that corn prices will average $7.90
a bushel in the first quarter of 2013
and then fall to around the $6
mark during the US harvest in the
fourth quarter. The bank predicts
that wheat prices will rise to $9.10
in the first quarter, before falling
to the $7 a bushel area by the
fourth quarter.
But the problem for the UK is
that grain is not fungible in the
www.gftuk.com
HOW THE US JOBLESS DATA
COULD AFFECT THE MARKETS
twitter.com/gftuk facebook.com/gftmarketsuk
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
NEAL GILBERT
SENIOR MARKET STRATEGIST, GFT
O
NCE a month, the US non-farm
payrolls are released. They typically
bring a bout of volatility to many
asset prices a move that is widely
welcomed by derivatives traders,
who have at times found themselves
contending with relatively flat markets. The
number is usually released on the first Friday
of the month the stats for November will
come out on 7 December and, perhaps
critically, analysts frequently struggle to get
forecasts that come close to the final figure.
The actual readings can easily be 50 per
cent higher or lower than consensus
estimates. This means that, unlike more
obvious headline figures like central bank
decisions on interest rates the market
frequently hasnt accurately priced in the
result before it happens. The upshot is that,
when the number is released, theres often a
frenzy of activity as traders adjust positions to
react to the news, presenting some healthy
short-term trading opportunities.
So which assets tend to give a clear
reaction to the payrolls? The number breaks at
8.30am Eastern Standard Time a full hour
ahead of the start of physical trading on Wall
Street. But futures markets are open through
the night. As a result, having exposure to and
being able to trade the Dow or the S&P 500
becomes a real possibility. The classic
situation, however, is that the market
frequently seems to overreact. Its imperative
that youre aware of this. Otherwise, if you get
in too late, you may find yourself on a losing
position from the outset.
The US economy is the worlds largest
consumer of crude oil, so its unsurprising that
oil prices react quickly to any insight into the
health of the nation. More people at work
means more production, more distribution
and higher demand for oil.
The dollar basket can be another good
play. Granted, you could use another dollar
cross maybe dollar-Canadian dollar. But the
risk is that, if you use a currency pair, an event
that hits the other currency at a similar time to
the payrolls being released could override the
reaction youre hoping to trade. A better than
expected payroll reading is good for the US
economy; tax receipts rise, borrowing falls
and the dollar enjoys some added popularity
across the board as a result.
Gold is one of those classic safe haven
plays that investors will often run to if things
dont go quite as planned. Again, the
correlation is simple. If the payrolls beat
forecasts, some on the margins will look to
sell gold and move into more risky assets.
Conversely, a shock on the other side with a
far worse than expected print would likely
see gold appreciate.
So what about Fridays upcoming reading?
The payroll figure is calculated from what is
known as a reference week in the preceding
month its the week that includes the 12th of
the month. This months figure will be a week
after Hurricane Sandy hit the North East
corner of the US.
Unfortunately, thats likely to be too early
to register any impact from the rebuilding
efforts that come off the back of the disaster.
And with infrastructure disruption taking
some time to resolve, this will likely depress
the figure further. When looking at the post-
Sandy effect, the initial jobless claims,
released weekly, indicated for the week
ending 10 November that 90,000 more
workers claimed unemployment than the
previous week. In addition, some business
owners may have followed through on their
promise to lay off workers if Barack Obama
was reelected. This means that an already
uncertain figure will be prone to even greater
variance this time round.
Even if the print is bad, there wont
necessarily be a negative reaction. One piece
of the puzzle is the consensus heading in to
the event. All the research firms are resolutely
aware of the post-Sandy/ election effect, and
the consensus could be easily cleared if the
bar is set low. Even a negative figure can be a
good thing if it beats forecasts.
Register for GFTs Live Market Analysis
webinar, covering non-farm payrolls, at 1pm
on 7 December at www.gftuk.com
United States non-farm payroll readings
50
0
100
150
200
250
300 Thousands of jobs
2012 Feb
275
Mar
259
Apr
154
May
68
Jun
77
Jul
45
Aug
181
Sep
192
Oct
148
Nov
171
Source: Trading Economics / Bureau of Labor Statistics
Weekly UK rainfall 2012 drilling season
10
20
0
100
0
200
300
400
500
30
40
50
60
70 Rainfall, mm %normal
Avgrainfall 12/13
28Aug 4Sep 11Sep 18Sep 25Sep 2Oct 9Oct 16Oct 23Oct 30Oct 6Nov 13Nov 20Nov 27Nov
Rainfall %of normal
CNBC
COMMENT
STEVE SEDGWICK
How the Grinch stole Christmas from City workers
money, they seem to be keeping a low
profile.
December is also the start of bonus sea-
son, where City workers have been
accustomed to picking up juicy rewards
before they do their Christmas shop-
ping. But the Grinch has well and truly
stolen Christmas this year. The CEBR
estimates that the bonus pool for City
workers will fall by 35 per cent in 2012
to 4.4bn, down by over 60 per cent
since the peak in 2008. And next year is
likely to be worse, as the bonus pool is
forecast to shrink to 1.6bn.
Why is it that when I speak to market
strategists, they tell me they are rushed
off their feet, and yet there is so little
going on in the markets? I reckon the
My pick: Long dollar-yen and gold
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days
I remain long on dollar-yen from 80.65, looking for a move
towards 83.75 before I take profit. To hedge this position, I
opened a long position on gold at $1,705 per troy ounce. As
we move into December, I am more bullish about risk-
correlated assets. This is due to the fact that, since 1950, the
S&P 500 has averaged a gain of 1.72 per cent in December
its best month of the year. Progress on the fiscal cliff will help
this outlook.
ANALYST PICKS
More Yuletide misery for the City
D
ECEMBER signals the advent
of Christmas: a time for
celebration, relaxation, and
over-indulgence. But less so
this year. The last 12 months have
been terrible for those plying their
trades in Londons Square Mile.
Those who still have a job should
be grateful. The City has been
butchered this year, and more than
a few chickens (or turkeys) are com-
ing home to roost. The Centre for
Economics and Business Research
(CEBR) estimates that the City has
shed 11 per cent of its workforce
since 2011, and will lose a further 5
per cent by the end of 2013. Ive seen
some tough years in the quarter of a
century that Ive worked in the mar-
kets, but this year certainly ranks
among the worst.
Few of the talented people that I
know yes there are still one or two
of them left in the City will admit
to making any money this year.
They are suffering from one of the
biggest liquidity droughts in
decades. If they are making any
STRATEGIST
ILYA SPIVAK
My pick: Stay short Aussie-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I went short on the Aussie-dollar on 15 November at $1.0381, as I
saw a bearish trend shift in the S&P 500, which is likely to sink the
Aussie. My price target is $1.0181. Though risk appetite has
recovered, the Aussie has been slow to capitalise on it, amid
expectations that the Reserve Bank of Australia will cut rates. In
this environment, a return to risk aversion is expected to be more
punishing, and I will continue to hold my short position. A stop
will be triggered on a daily close above $1.0479.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short Kiwi-dollar and Aussie-Kiwi, long dollar-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
My picks from last week had mixed success. Risk trends turned
into congestion, and my Kiwi-dollar short at $0.8175 remained
flat. Ill stick with it for now, and place a stop above $0.8300.
Due to risk leveling off, I took profit on my long Candadian
dollar-yen position at 81.50, which was earlier than I had
planned. Away from risk trends, Im taking a conservative long
position on dollar-yen from 81.50. I will also look for a move
below the pivot point on Aussie dollar-Kiwi at NZ$1.27.
answer is fear of not being seen to be
busy, at a time when the axe is falling.
This weeks Autumn Statement
from our divided government will,
once again, show how clueless it is in
its quest to engineer growth. I cringe
when I read about some of the rabbits
that chancellor George Osborne is try-
ing to pull out of his hat.
It looks as though the pick of
Osbornes inept policy ideas is going
to be another raid on private pension
contributions. Of course, lowering
the tax free threshold for higher rate
taxpayers below 50,000 will make
the Liberal Democrats happy, but it
will add explosives to the ticking pen-
sions time bomb. Many middle-
income earners will be hit, and it will
hardly encourage more people to save
for their retirement. Nice work
Osborne.
I apologise for the miserable dis-
course, but I am struggling to see any
festive joy this year for the City. Bah
humbug.
Steve Sedgwick co-anchors Squawk Box
Europe on CNBC.
TUESDAY 4 DECEMBER 2012
25
cityam.com
TRADING
CURRENCY STRATEGIST
CHRIS VECCHIO
LIFE&STYLE
TUESDAY 4 DECEMBER 2012
26
cityam.com
FOOD & DRINK
AMUSE
BOUCHE
BRUCE WILSON
Head chef, Paternoster Chop House
Ditch the tired old turkey this Christmas
O
NE LOMBARD Street is one of
those archetypal City
restaurants like the Mercer
that you go because you work
in the City and, you know, thats just
what you do. It is expected. It is proper
(it is no coincidence it was started by
a former banker, Soren Jessen, in
1998). It could probably start selling
defrosted Iceland burgers and people
would still eat there out of habit.
Now it has opened 1776, a little
40-cover dining room at the back of
the building. Calling 1776 a
restaurant in its own right would be a
little disingenuous. I have eaten in
what is now 1776 when it was still just
the room at the back of 1 Lombard
Street, the haute cuisine section of
the main brasserie. I was there for
lunch and it was, unsurprisingly for a
restaurant located by the steps of
Bank underground, populated
entirely by be-suited City types.
It was a welcome refuge from the
main brasserie, which sits under a
gigantic dome that amplifies even a
dull chatter to the volume of a
medium-sized football stadium. The
food in the dining room was as youd
expect of a City eatery well sourced,
meat-heavy produce that is
guaranteed to leave you too full to do
very much work all afternoon,
especially when you factor in the
obligatory bottle of red.
Now it has had a lick of paint a
pleasant kind of woody green and a
refurb that brings to mind a West End
members club, complete with
chandeliers and abstract paintings. It
has also, apparently, got its own
entrance on Mansion House Place,
although after two laps of the block I
gave up and went in through the
main door to the brasserie.
I took an old school friend who
lives out of town. In retrospect, 1776
isnt ideal for this. It is perfect for a
business meal. It is great for a date it
is flashy and expensive in almost
equal measure. But it isnt really what
youre looking for when youre trying
to impress an old friend. You want
that hidden away little gem that
makes everybody jealous you live in
London. Going somewhere like 1776
looks like youre trying a bit too hard.
The waiter wheeling over a gigantic
polished silver bowl easily big enough
to encase a human head, containing
the days meat carvery, didnt help.
But 1776 isnt stuffy the service is
remarkably, and commendably,
relaxed. The waiter insisted I try the
fallow deer tartare to start, which is
mixed at your table. Im glad he did.
The recipe, which includes
Worcestershire sauce, capers and a
splash of tabasco, was delicious and
the deer gives a much deeper, richer
flavour than steak tartare. I went for
the roasted cte de veau for the main,
which pleased the waiter no end (I
always go for the meat Im a lion).
There is no doubting the quality of
the cut tender and succulent,
although the accompanying
pancetta, braised chicory and potato
nest was rather predictable, if no less
tasty.
The school friend went for the
mint crusted fillet of lamb. It didnt
seem the done thing to start eating
from the plate of someone you
havent seen for a couple of years but
his verdict was unequivocally
positive.
Its not cheap factor in a decent
bottle of wine and youre not getting
much change out of 200 for two
people. But this is a City restaurant.
It has a giant silver bowl. If youre
worrying about the bill, youre
probably in the wrong place.
The food is as good as you expect, if you dont mind splashing the cash, says Steve Dinneen
1776 is old-fashioned City
and its all the better for it Bordeaux is
worth the cash
I
WAS lucky enough to go to a Bordeaux
2010 tasting the other evening,
organised by upmarket wine merchant
Bibendum.
For the uninitiated, this is a sort of vinous
Glastonbury Festival, where the owners and
managers of more than 70 Bordeaux
vineyards allow you to experience their
greatest hits and endure the most asinine
questions with wan smiles.
You can extend this metaphor even further
since, in recent years, Bordeaux has assumed
almost rock 'n' roll status in the world of wine,
with even a fairly middling bottle from a
middling vintage costing more than a ticket to
a Rolling Stones concert.
So my first emotion when presented with a
room full of these wine stars was one of
gratitude that they still bother with the British
market, especially when there are such rich
pickings and rich drinkers to be found in Asia.
Thank you, Bibendum, for persuading them to
continue making the journey across the
channel.
What did I learn? First: that the 2010 vintage
lives up to the hype. It was a wonderful
summer in SW France and the wines have lots
of fruit and lots of tannin and already show
great length. Second: that these are huge
wines that will be with us for years to come.
I've heard of laying down wine for your
children but the Haut-Bailly and Figeac I
tasted will still be going strong for my
grandchildren.
Michael Saunders, managing director at
Bibendum, puts it simply: The 2010 wines
have a density and a purity that is evident
even now. What the good wine makers in
Bordeaux have been able to do is control the
power so that they have great balance.
Lastly: this was a rare occasion to remember
the enormous variety of wines that come
under the claret umbrella, and that while some
may cost a king's ransom (the Figeac I
mentioned above comes in at over 1,600 a
case before taxes), you can start building a
decent cellar with a modest budget by buying
in bond i.e. by not paying the taxes and duty
before you take delivery. A good example was
the Chteau Fourcas Dupr I tasted, which has
the makings of a very drinkable wine at only
96 for a case of 12. If nothing else, buying en
primeur or in bond is an excellent way of
spreading the cost of fine wine, if you have the
patience you pay for the wine now and the
taxes later. The only caveat Saunders gives is
to make sure you know who you are buying
from and that they will still be around in three
or five years, when you expect delivery. Not
every merchant will be, and you don't want to
end up an angry creditor.
For more information on Bibendum's wines
and tastings please contact 0207 4494121 or
www.bibendumfinewine.com.
THREE TO FOLLOW*
Something for the weekend: Chteau Fourcas
Dupr (96). Okay, this will be for a weekend
in 2015 at the earliest, but well worth the wait.
Something to impress: Chteau Doisy Vedrines
(120 for 12 half bottles). A glorious Sauternes,
one of my favourites. A bargain at this price.
Drink with a starter or pudding.
Something to keep: Chateau Leoville Barton
(740). The vintage is expensive but this is top
class and I can't see you losing money on it.
* Prices are in bond and for a case of 12
THE BOTTLE
OPENER
NEIL BENNETT
bottleopener@cityam.com
RESTAURANT
1776
1 Lombard Street, EC3V 9AA
Tel: 020 7929 6611
FOOD hhhhi
VALUE hhhii
ATMOSPHERE hhhii
Cost per person without wine: 55
CALL ME an old Scrooge but the
thought of eating turkey at
Christmas fills me with dread. I
know Im in the minority here but
I find it dry and tasteless, even if
turkeys have come on a lot in
recent years (more succulent birds
include black or bronze turkeys).
Ask most people what it is they
like about Christmas dinner and
its usually not the turkey its all
the trimmings the stuffing, the
bread and cranberry sauces, the
sausages wrapped in bacon even
the sprouts. All these things would
go well with meats like pheasant,
goose, duck, venison or any other
game, which have a stronger (and
more interesting) taste.
Christmassy flavours like sage or
chestnuts will bring out the
earthiness of these meats without
overpowering them, and adding
punchy spices such as cloves,
cinnamon or ginger and a hint of
orange, cranberry or port will
bring a festive feel to everything.
Or you could opt for something
totally different and just add a
Christmas twist. We always used to
use my Irish grandmothers recipe
of braised blade of beef stuffed
with chestnut and thyme, cooked
until it melted in the mouth. A
classic beef Wellington with a
similar stuffing around the meat
(and some wild mushrooms) would
have that special wow factor when
carved at the table. Roast beef with
stilton (either crumbled over the
top for the last 10 minutes of
cooking to glaze or with a stilton
hollandaise), or whole salmon
with thyme, blood
orange and
orange liqueur
could also be
festive,
luxurious, and
unusual,
alternatives.
And for pudding?
Again, Im not a great
lover of traditional
Christmas pudding,
which I find far too
heavy and stodgy
after such a big meal
(although my
mother-in-laws
suet free version,
which I have stolen the recipe for,
manages to be lovely and light). If
you want something to go with
your brandy butter and cream,
why not try a marmalade steamed
pudding or, for something totally
different and a bit special, how
about a champagne syllabub
(basically a boozy whipped
cream)?
Only since Victorian
times has turkey become
the main event at
Christmas in days gone
by, goose or venison
were the most common
choices. People even ate
swan or peacock. Im not
suggesting you go that far (I
dont think eating either swan
or peacock is legal), but it is
possible to eat, drink and
be merry and stay
turkey-free.
The refurb has seen the dining room at 1 Lombard street painted a pleasant shade of green
FIT IN
THE CITY
LAURA WILLIAMS
TUESDAY 4 DECEMBER 2012
27
cityam.com
HEALTH & GROOMING
FITNESS & DIET EXPERT
J
UICE CLEANSING isnt
anything new: just about
every actor has turned to
them to shed pounds for a big
role. But this summer, juicing
went to a whole new level when
group cleansing hit the corporate
world (or at least the trendy set on
Seventh Avenue and Wall Street) as
a new form of corporate bonding.
Now former journalist Karen
Rosen wants to prove that juicing
isnt just a passing fad or simply a
weight loss technique.
After spending the past ten years
flying back and forth between Los
Angeles and New York working at
Cond Nast, Rosen came up with the
idea of launching Plenish Cleanse,
with the aim of reinventing the de-
tox market. If, like me, you tend to
steer on the sceptical side when it
comes to alleged quick fixes, dont
worry: thats the opposite of what
Rosen proscribes.
The five-day program centres on
restoring an exhausted body as a
short-term way to combat the
effects of a hectic lifestyle. The
juices are designed for those who
need to reboot their health, want
to recover from indulgence or sim-
ply those who love the way juices
make them feel, says Rosen.
On the surface, it isnt that differ-
ent from the cleansers already on
the market. Whats new, though, is
the use of a special hydraulic cold
press imported from America,
which keeps the enzymes in the raw
fruit and vegetables intact, rather
than the process in other juices
that essentially cooks the ingredi-
ents, destroying the natural
enzymes to extend the shelf life.
Plenish Cleanse doesnt promise
to cure all of your aches and pains
but youll probably feel refreshed
after giving it a go. Courses cost
from 475. Visit PlenishCleanse.com
for more information. Naomi Mdudu Karen Rosen has launched a new line in detoxifying juices
G
ONE ARE the days where
presents for your fitness-
loving friends meant a toss-up
between a pedometer and the
latest fitness DVD. Now there are
gifts galore for the active, gadget-
happy exec. Here are this years pick
of the bunch.
Perfect for the fitness fanatic
who also happens to be fan of
minimalism, the elegant Ciclotte exercise
bike is designed to reproduce the
dynamics and performance of road
cycling. The Ciclotte bike is the first
to use an epicycloid system the
combination of a concentrated
magnetic field, a fast-rotating copper
ring and six magnets that work
together to produce maximum
resistance levels for the keen indoor
cyclist. With prices starting in excess
of 8,000, it is definitely worth
giving it a test drive before adding it
to your shopping basket.
8,000 at www.ciclotte.com
A healthy stress
busting alternative to
the obligatory Thursday
night Stella session, the
punch bag is ideal for the
regularly exasperated
exercising exec. Lonsdales
Authentic Leather Punch Bags not
only look the part (genuine
cow hide leather
construction), their super
dense shock absorbing
foam lining means
outstanding durability so,
should we head into that
triple dipper, theyll survive
a thrashing. From 199.99 at
www.lonsdale.com
For the time-poor exercise
fanatic who wants a killer
workout using just a few straps and
a kitchen door, the TRX Force Kit: Tactical
is the latest bit of must-have
suspension kit. Dubbed the
ultimate in military training, this
12-week progressive force-inspired
programme provides a workout
that develops functional strength
by engaging muscle chains you
use every day.
239.94 at www.trx-fitness.com
Sleek, wireless tracker FitBit
One gives you a 24/7
picture of your fitness: by day
it tracks steps, distance
(including stairs climbed)
and calories burned, but the
best bit? By night it
measures your sleep cycle. The
tracker follows body movement
during sleep, providing the tracker
with measurements of your
sleep quality. All that
detectable tossing and turning
wont disturb your partner.
Even its silent alarm makes
sure that it wakes you and not
your beloved. 79.99 at www.fitbit.com
Developed by Jaguar and
Team Sky, the Jaguar XF Sportbrake
is the brands first estate and offers
stowage space of 68 by 37 inches.
Golf clubs can be stored sideways,
while a top speed of 150mph will
come in handy should you find
yourself cutting it a bit fine for that
12pm tee-off. With bike carriers, ski,
snowboard and watersports holders
galore, this really is the perfect
luxury item for the active lifestyle
lover.
From 31,940 at www.jaguar.com
Not your average adjustable
dumbbell set, the Technogym
Wellness Rack is that rare flower: an
elegant looking weights system.
With loadable handlebars and discs,
all you need for a top-to-toe home
strength training routine is housed
in one sleek transparent case
handy should you find it becomes a
dust-gatherer. 602 at www.technogym.com
If youre after a gift that calms
rather than revs, you could do
a lot worse than the TenPilates Gift Box.
This years box consists of a gift card
(which can be used for either Tens
Dynamic Pilates classes or their
personal training), their popular
non-skid Pilates socks, and a
selection of REN toiletries.
57 at www.tenpilates.com
Fitness-based Christmas gifts
have never looked so good
Lost your mojo this winter? Plenish
Cleanse might just be your answer
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TV & GAMES
cityam.com
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SKY SPORTS 1
7pmFootball Asia 7.30pmSoccer
Special 10pmSpecial Report
10.30pmRevista De La Liga
11.30pmPremier League Review
12.30amUEFA Champions
League Goals 1.30amFootball
Asia 2amRevista De La Liga
3am-6amLive Test Cricket
SKY SPORTS 2
7pmLive UEFA Champions
League 10pmUEFA Champions
League Goals 11pmPremier
League Poker 1amCarp Academy
1.30amSports Unlimited
2.30amPremier League Review
3.30am-4.30amUEFA
Champions League Goals
SKY SPORTS 3
7pmEuropean Challenge Tour
Golf 8pmTest Cricket 10pm
British Basketball 12amTest
Cricket 2amPremier League
Poker 4am-4.30amCarp
Academy
BRITISH EUROSPORT
7pmLive Snooker: UK
Championship 10pmSnooker: UK
Championship 12am-12.15amGT
Academy: Race to Dubai
ESPN
5.30pmLive Coppa Italia 7.30pm
FIS Alpine Ski World Cup Report
8pmPremiership Rugby Union
9pmEredivisie Review Show
10pmESPN Kicks: FA Cup
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League 10.45pmESPN Kicks:
Serie A 11pmESPN FC Press Pass
11.30pmRussian Premier League
Review12amLive College
Basketball 2amLive College
Basketball 4amFIS Alpine Ski
World Cup Report 4.30amUFC:
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5.30am-6amPlanet Speed
SKY LIVING
7pmCriminal Minds 8pmBones
9pmElementary 10pmChicago
Fire 11pmCriminal Minds
12amBig Trouble in Thailand 1am
Supernatural 1.50am Medium
2.40amBones 4.20amNothing
to Declare 5.10am-6amPassport
Patrol
BBC THREE
7pmCelebrity Total Wipeout:
Star-studded edition of the game
show. 8pmJunior Doctors: One
Year Check Up 9pmInside the
Body Beautiful How Fat Works
10pmSome Girls 10.30pm
EastEnders 11pmFamily Guy
11.45pmAmerican Dad!
12.30amSome Girls 1amInside
the Body Beautiful How Fat
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Impractical Jokers 3am-4am
Junior Doctors: One Year Check
Up
E4
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10pmITV News at Ten
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Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7
8 9 10 11
12 13
14
15 16 17 18
19 20
21
22
23
34 17
17 22
20 15
8 11
6 15 8
45
13 12 13
30 17
13 19
24 33
11 15
10
27
24
29
10
23
9
21
10
12
12
35
7
22
29
21
16
7
18
42
8
14
12
ACROSS
1 Shelters from light (6)
6 Counting frame (6)
7 Delicate, woven and
decorative fabric (4)
8 Frame supporting the
body of a car (7)
12 Experiment (5)
13 Difcult or unusual
feat (5)
14 ___ and buts,
objections (3)
15 Large body of
salt water (5)
18 Communion table (5)
19 Small bunch of sweet-
scented owers (7)
21 Roast (4)
22 Eat greedily (6)
23 Be constantly talking
or worrying about
something (6)
DOWN
1 Answer (8)
2 Repositories for
documents, etc (8)
3 Girdle (4)
4 Area of the body
below the ribs (5)
5 Spice used in
curry powder (5)
8 Hold on tightly (5)
9 Put to the test (5)
10 Portable travelling
bag for carrying
clothes (8)
11 First courses (8)
16 North Atlantic
food sh of the
cod family (5)
17 Fabulist of ancient
Greece (5)
20 Rounded thickly
curled hairdo (4)
A
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M U M P S P I T T A
O R O T E U S
U N I O N W O R T H
L M A N E
D I S S O L U T I O N
E R A F P
S T A R C R O S S E D
C L M K I
A X I O M P A U L A
L O A B E T R
P E N N Y N E E D Y
7 9 8 9 6 8
9 3 5 1 8 7 4 6 2
4 1 3 5 2 4 1
8 2 5 1 9 8
7 4 6 8 9 5 7 3
3 9 2 1
9 4 2 6 1 3 5 4
8 3 9 3 7 1
7 6 9 5 8 8 5
5 1 8 3 7 4 6 9 2
2 3 1 2 1 4
4
4
4
4
4
4
4
4
4
The nine-letter word was
ENCLOSURE
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
TUESDAY 4 DECEMBER 2012
LAST TANGO IN HALIFAX
BBC1, 9PM
Celia and Alans search for a wedding
venue leaves them trapped in a spooky
mansion. Sally Wainwrights light-
hearted drama, starring Anne Reid.
DARA O BRIAINS SCIENCE CLUB
BBC2, 9PM
The comedian and his team of experts
investigate the human brain, with
oceanographer Helen Czerski exploring
cutting-edge therapies.
HESTONS FANTASTICAL FOOD
CHANNEL4, 9PM
Heston Blumenthal builds a pub inside
an edible pie and transforms it into a
fully functioning public house in the
Welsh village of Minera.
TVPICK
SPORT
29
TUESDAY 4 DECEMBER 2012
cityam.com
ENGLAND fast bowler Steven Finn
is determined to not miss out on
another famous victory after
declaring himself fit for the third
Test against India, which starts
tomorrow in Kolkata.
A thigh injury ruled Finn out of
the first two Tests, including
Englands impressive 10 wicket win
last week, but he is in contention to
replace Stuart Broad in the bowling
attack following the vice-captains
failure to take a wicket yet in the
four-Test series.
The 23-year-old hopes to be
picked ahead of Broad after coming
through six overs in the nets
unscathed during training
yesterday, as England search for
their first Test series victory in
India for almost 28 years.
It was difficult knowing that the
lads were there in Mumbai,
celebrating a win and being
together, and I was on the other
side [of the city] watching it on the
TV, said Finn. It was a strange
feeling and something I didnt
enjoy missing out on, so Im
definitely keen to get in on the act
if that happens this time.
Finn hopes to win his 17th
England cap on Wednesday, having
claimed 66 wickets in his previous
16 England Tests.
My recovery has gone well and
Im geared towards playing if
selected, added Finn. I feel
confident running around and
moving about. Hopefully Im fully
fit. Ive been in good rhythm. I had
a good run-out in the EPP [tour]
game the other day; I feel good.
Finn desperate
to gatecrash
England party
G-Mac and Kaymer profit from Ryder effect
Finn missed the first two matches in India but is tipped to replace Stuart Broad in the third Test, which starts tomorrow in Kolkata
IN BRIEF
Proteas reign on Ponting parade
n CRICKET: South Africa spoiled Ricky
Pontings farewell party as they dealt
Australia a 309-run defeat in the third
Test yesterday, securing a 2-1 series
victory. Australia had been set 632 to
win, but were bowled out for 322 on the
fourth day in Perth. Ponting, who had
announced his international retirement
ahead of the Test, ended the match with
a total of just 12 runs after being caught
by Jacques Kallis at slip.
Williams joins top 10 casualties
n SNOOKER: Mark Williams became the
latest big-name casualty at the UK
Championships last night when he lost
6-3 to Mark King. His defeat made him
the fourth top 10 player to fail to reach
the second round, after defeats for
world No1 Judd Trump, Mark Allen and
Ding Junhui. Former world champion
Neil Robertson swept past Tom Ford 6-1.
Brit Wellington retires unbeaten
n TRIATHLON: Four-time Ironman world
champion Chrissie Wellington has
retired from the event in order to pursue
other challenges. The Briton, 35,
remained unbeaten in the event,
winning all 13 professional races and
claiming the world title in 2007, 2008,
2009 and 2011. She missed the 2010
event through illness but also broke the
female world record last year.
GOLF
COMMENT
SAM TORRANCE
WEST Hams hopes of this week
clinching a deal to move into the
Olympic Stadium look to be fading,
raising the likelihood that a decision
will not be made until 2013.
The Hammers have long been
favourites to be the main users of the
arena, but remain at odds with the
London Legacy Development
Corporation (LLDC) over who should
foot necessary conversion costs.
Mayor Boris Johnson is set to chair
a meeting of the LLDC tomorrow in
Hammers stadium bid verdict
likely to be delayed until 2013
which it had been hoped a
compromise would be agreed that
would see the Hammers relocate in
time for the 2016-17 season, however
it is believed that the parties are still
too far apart.
Improvements such as retractable
seating, which would allow football
to coexist with athletics, and a new
roof are expected to cost 160m.
The LLDC would pay around a
third, with Newham Council ready
to pay 60m but West Ham are
thought reluctant to make up the
entire 60m shortfall.
BY ALEX SHARP
BY FRANK DALLERES
Results
C
HRISTMAS dinner will taste all
the sweeter now for two of
Europes Ryder Cup heroes,
Graeme McDowell and Martin
Kaymer, after they claimed their
first individual titles of the year at
the weekend.
McDowell broke his duck for 2012
with an excellent victory at the
World Challenge in California,
where his extraordinary chip out of
the rough at the 17th hole helped
him beat American Bradley Keegan
by three strokes.
That shot saw him save par, while
he followed an equally brilliant
approach at the difficult last, where
Tiger Woods found the water, with a
very good birdie putt to complete a
great win.
Kaymer, meanwhile, maintained
his record of winning a tournament
every season quite an accolade
by taking the Nedbank Golf
Challenge title at the Gary Player
Country Club in South Africa.
In fact the German has won at
least two titles every year since
2008, and made clear how much his
2012 drought had been at the back
of his mind.
It was also nice to hear him speak
highly of Player, who called him to
congratulate him on his maiden
Major triumph at the 2010 US PGA
Championship.
NO COINCIDENCE
His success completed a German
double at the club, after Bernhard
Langer won the seniors event in
seven under par just one off his
countrymans final score and from
one round fewer.
Both Kaymer and McDowell have
definitely benefited from being part
of the team that won probably the
best Ryder Cup ever, and its no
coincidence that their first wins of
2012 have followed shortly
afterwards.
Martin told me last week that his
famous six-foot putt on the last
green against Steve Stricker was the
most important of his life and hes
right, he wont play a tougher one
all his career. But if you can hole
that it makes all other putts feel
just that little bit easier.
Sam Torrance OBE is a multiple Ryder
Cup-winning golfer and media
commentator. He has won 21 European
Tour titles in a career spanning 40 years
and famously sank the putt that clinched
victory for Europe in the 1985 Ryder
Cup. Follow him on Twitter
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NEWCASTLE manager Alan
Pardew insists that striker Demba
Ba wants to stay at the club after
his brace helped the Magpies end a
run of four Premier League defeats
and beat 10-man Wigan.
Ba struck from the spot in the
12th minute after Maynor
Figueroa was sent off for bringing
down Papiss Cisse. The former
Hammers striker then tapped
in a second after Ali Al-Habsi
spilt Davide Santons strike.
Wigan failed to seriously
trouble Tim Krul
before Gael
Bigirimana wrapped
up the victory from
long range with a
spectacular curling
shot on 71 minutes.
Ba is able to
leave Newcastle in
January if a 7.5m
release clause in
his contract is
triggered by a
rival club but
Pardew is hopeful that
the Senegal international, who
has scored 10 league goals this
season, will sign a new deal at
the club.
The situation has never
changed, Demba loves it
here and understands
its a football city, said
Pardew.
Weve tried to do a
deal and take the clause
out, weve not managed it
yet so its always there
hanging over us and that
makes it difficult for me,
for Demba and the club.
TUESDAY 4 DECEMBER 2012
30
SPORT
cityam.com/sport
Abramovich wants
former Barcelona
coach Guardiola to
take charge in the
summer, but faces
increasingly stiff
competition
Ba is the joint top scorer in the
league this season with 10
NEWCASTLE UNITED..................3
WIGAN ATHLETIC.......................0
BY ALEX SHARP
PREMIER LEAGUE
@cityam_sport
UNDER-FIRE Arsenal manager
Arsene Wenger insists he would not
swap places with high-flying
Manchester City, despite the
Gunners suffering their worst ever
start to a Premier League season.
Wenger has the distraction of a
Champions League trip to
Olympiacos tonight, but knows his
team will progress to the last 16
regardless of the result, while City
are out no matter how they fare at
Borussia Dortmund.
No, for one simple reason, he
said, when asked if he would trade
places. We can make up the
distance in the league, but in the
Champions League, you are either
in or out.
Wenger admitted his players had
reacted angrily after Saturdays
home defeat to Swansea left them
10th in the domestic table, but
denied suggestions that No2 Steve
Bould had verbally torn into his
under-achieving squad.
Nothing really happened, he
said. The players were not happy
after the game do you want them
to do a dance after we lost? This
group of players is very strong, very
highly motivated, has a very good
spirit and they want to win. If they
dont win, of course they are upset.
Arsenal have rested a swathe of
first-team regulars for the trip to
Greece, including Jack Wilshere,
Santi Cazorla, Theo Walcott and
Mikel Arteta. While a win could see
them top the group, a weakened
squad indicates Wenger has settled
for second place, while they have
won just two final group fixtures in
the last five seasons.
Id rather be us
than Man City,
says Wenger
BY FRANK DALLERES
Wenger has rested a host of first-teamers
FINAL GROUP GAMES
nOlympiacos 31 Arsenal (2011/12)
Arsenal field an under-strength side
as the top group spot is already secure
nArsenal 31 Partizan (2010/11)
A win is needed to progress to the
knock-out stages. Arsenal deliver
nOlympiacos 10 Arsenal (2009/10)
Wenger decides to rest key players
with the group already won
nPorto 20 Arsenal (2008/09)
Already qualified, Arsenals second
string team hands Porto the group
nArsenal 21 Steaua Bucharest
(2007/08) A win isnt enough to
better second place progression
CHELSEAS managerial crisis deep-
ened yesterday when it emerged that
owner Roman Abramovichs pre-
ferred choice to take charge next sea-
son, Pep Guardiola, is in talks with
Paris Saint Germain.
The Qatari-owned French club are
one of the few who possess the finan-
cial muscle to compete with billion-
aire Abramovich, who is desperate to
lure the former Barcelona coach, 41,
to Stamford Bridge next summer.
Guardiola, currently on a years
sabbatical after quitting the all-con-
quering Spanish outfit at the end of
last season, spent two years playing
in Qatar and strengthened his links
with the oil and gas-rich Gulf king-
dom while Barca boss.
PSG are thought to be considering
sacking former Chelsea boss Carlo
Ancelotti after a disappointing start
to the season and have already
opened dialogue with Guardiolas
representatives, according to reports
in France.
It represents a further blow to
Abramovichs rebuilding plans,
which are currently in disarray fol-
lowing the replacement of fans
favourite and Champions League
winner Roberto Di Matteo with
Rafael Benitez.
The appointment of ex-Liverpool
boss Benitez last month infuriated
supporters, and his failure to win any
of his three games in charge, culmi-
nating in Saturdays 3-1 defeat at
West Ham, has only dented his popu-
larity further.
Chelseas season could get even
worse tomorrow when they will
become the first holders to be elimi-
nated from the Champions League at
the group stage, unless they beat
Nordsjaelland and Shakhtar Donetsk
defeat Juventus.
The crisis has prompted
Abramovich to consider bringing for-
mer manager Avram Grant back to
the club in an advisory role, although
the move would be unpopular with
Benitez and the club played down
suggestions yesterday.
Abramovichs options are set to be
complicated further by the likely
departure of Blues idol Jose
Mourinho from Real Madrid in the
summer, following an apparent
breakdown in relations with presi-
dent Florentino Perez.
Mourinho is expected to rival his
old nemesis Guardiola in June for
some of the most prestigious mana-
gerial vacancies in the world, includ-
ing PSG and possibly Manchester City
and Manchester United.
The Portuguese would be wel-
comed back to Chelsea by fans but,
while his relationship with
Abramovich is thought to have
improved greatly since his departure
in 2007, a return appears unlikely.
Mourinho last night refused to dis-
cuss reports in Spanish sports news-
paper Marca, which is know for its
close ties to Real, that he would leave
the club in the summer.
BY FRANK DALLERES
Romans Pep
plan dented as
PSG set sights
on Guardiola
MANCHESTER City manager Roberto
Mancini has promised that his side
are motivated to beat Borussia
Dortmund in the Champions League
tonight, despite already being
eliminated.
Mancinis side will qualify for the
Europa League if they win in
Germany and Ajax fail to beat Real
Madrid, but have the distraction of
Sundays pivotal Premier League
clash with neighbours Manchester
United on the horizon.
We will try, but we need to win in
Dortmund and it will not be easy,
said Mancini, who has vowed to field
a strong side. There is the Premier
League, and the Europa League if we
can go in it, and the FA Cup. The
season is long and it is important.
Mancini wants
Europa place
BY ALEX SHARP
Pardew fearing Ba departure as
striker ends Magpies losing run
31
ENGLAND
n World ranking: 5
n World Cup appearances: 7
n Best result: Winners (2003)
n Head coach: Stuart Lancaster
n Star man: Manu Tuilagi has the
explosive power and speed to break any
international defence and has become
an integral part of the side. With nine
tries in 17 England caps, the 21-year-old
centre will be essential come 2015
n Form: Beat world champions New
Zealand on Saturday with some dynamic
rugby but careless decisions were costly,
losing narrowly to Australia and South
Africa in the autumn internationals
HOW ENGLANDS POOL MEASURES UP
My recovery has gone well and Im geared
towards playing. I feel good

cityam.com
TUESDAY 4 DECEMBER 2012
Jose Mourinho
nAge: 49 nNationality: Portuguese
nClubs: Benfica; Uniao de Leiria;
Porto; Chelsea; Inter Milan; Real Madrid
nTitles: Portuguese league (2); Uefa
Cup; Champions League (2); Premier
League (2); FA Cup; Serie A (2); Coppa
Italia; La Liga; Copa del Rey
nNext club: Has a track record of
instant, if short lived, achievement,
making him a good fit for PSG, Man
City or Chelsea (relations permitting),
whose owners want quick success
MANAGERS IN DEMAND
Pep Guardiola
nAge: 41 nNationality: Spanish
nClubs: Barcelona B; Barcelona
nTitles: Tercera Division; La Liga (3);
Copa del Rey (2); Champions League (2)
nNext club: Youth development
culture at Man Utd may appeal more
than a blank cheque book. PSG have
opened talks, while Man Citys former
Barca executives could sway him
Wales launch audacious bid to switch 2015
World Cup clash with England to Cardiff
Oaks and Derby comeback on cards
for Dettori after six-month drug ban
WELSH rugby chiefs hope to
persuade World Cup hosts England
to stage the group game between
the Six Nations rivals at the
Millennium Stadium, after they
were both drawn in the same pool
for the 2015 tournament yesterday.
A challenging group also includes
Australia and is likely to feature Fiji
in one of two unconfirmed spots,
with only the top two progressing to
the quarter-finals.
Wales pledged to host eight
matches in Cardiff as part of the
English bid and the Welsh Rugby
Union (WRU) has launched an
audacious attempt to convince
England chiefs to switch the fixture
from Twickenham.
Nothing should be off the table,
said WRU chief executive Roger
Lewis. I would like to think they
would embrace the opportunity to
play at the finest rugby stadium in
the world. It is also important to
remember the eight games is in the
bid document.
England head coach Stuart
Lancaster indicated he would prefer
the home advantage of an 80,000-
strong crowd. I dont know what
the situation is, but from our point
of view, Twickenham is our
preferred venue, he added.
However chief executive of
England Rugby 2015 Debbie Jevans
said: We are not ruling anything in
or out at this stage. Everything must
be put up to discussion.
England lost 19-12 at home to
Wales earlier this year during the
Six Nations and also fell to fellow
Pool A contenders Australia 20-14 at
Twickenham during the autumn
internationals.
Its definitely a pretty tough
pool, said Lancaster. Once we
knew there was a chance of us being
drawn against Wales, I guess it was
fate it was always going to happen.
To win the World Cup you have
to win big games and I have a huge
amount of respect for what Wales
have done recently.
BY ALEX SHARP
NEW Zealand fly-half Dan Carter
has been named the International
Rugby Boards player of the year for
the second time after the All Blacks
swept the board.
Steve Hansen won coach of the
year award while New Zealand
predictably won team of the year,
after going 20 Tests unbeaten
before losing 38-21 to England on
Saturday.
Carter has been instrumental in
New Zealands magnificent year
and now has 94 caps for the All
Blacks. He beat England fly-half
Owen Farrell, who was a surprise
nomination, Frances Frederic
Michalak and All Black team-mate
and three-time winner Richie
McCaw to add to his 2005 award.
All Blacks win
trio of awards
BY ALEX SHARP
WALES
n World ranking: 9
n World Cup appearances: 7
n Best result: Third (1987)
n Head coach: Warren Gatland
n Star man: George North inspired
Wales to Six Nations Grand Slam glory in
March, becoming the youngest player
ever, then 19, to score 10 international
tries. By 2015 the youngsters game
should be more refined and more potent
n Form: Saturdays agonising last
minute 14-12 defeat to the Wallabies
condemned Wales to an autumn
international series whitewash and their
seventh straight defeat
AUSTRALIA
n World ranking: 3
n World Cup appearances: 7
n Best result: Winners (1991, 1999)
n Head coach: Robbie Deans
n Star man: David Pocock captained
Australia to their 3-0 summer series win
over Wales and was becoming an
integral part of the side before injury in
August. The 24-year-old flanker is key
for the Wallabies at the breakdown
n Form: Despite having to deal with a
succession of injuries, defeated England,
Italy and Wales this autumn, bouncing
back after a humiliating 33-6 loss to
France earlier in November
Australia
ENGLAND
WALES
Oceania 1 (qualier)
Play-off winner
South Africa
Samoa
SCOTLAND
Asia 1 (qualier)
Americas 2 (qualier)
New Zealand
Argentina
Tonga
Europe 1 (qualier)
Africa 1 (qualier)
France
IRELAND
Italy
Americas 1 (qualier)
Europe 2 (qualier)
POOL A POOL B POOL C POOL D
JOCKEY Frankie Dettori is hoping
to receive a backdated six-month
ban that will allow him to ride in
the Derby and the Oaks after he
appears before French horse
racing chiefs today regarding his
failed drug test.
It is understood that Dettori is
pleading guilty to taking a banned,
non-performance-enhancing
substance, believed to be cocaine,
causing him to return a positive
test at Longchamp in September.
The British-based Italian is likely
to receive a six-month
international ban, but hopes that
France Galop will backdate the
suspension to his last appearance,
at the Melbourne Cup on 6
November.
That would allow Dettori, the
face of flat racing for the last 20
years, to return to action in time to
compete in the Oaks at Epsom on
31 May and the Derby at the same
venue the following day.
France Galop is not expected to
announce its verdict until
tomorrow, while it is unlikely but
possible that it could decline to
backdate the suspension. A six-
month ban enforced from this
week would see Dettori miss the
Oaks and Derby.
The 41-year-old, who is currently
temporarily suspended while he
awaits the verdict, will appear in
person today in Paris. His positive
test came on 16 September, a day of
major trials for the
Prix de lArc de
Triomphe.
Dettori is
intending to ride
freelance on his
return, having split
from Godolphin in
October, before his
positive test came to
light, after 18 years
with the
thoroughbred
stable.
The three-
time Champion Jockey is keen to
add to his solitary Derby success, in
2007 aboard Authorized, and his
trio of victories in the Oaks, which
he won most recently with Kazzia
in 2002. Perhaps his most famous
achievement came at Ascot in 1996,
when he rode all seven winners on
Champions Day.
France Galop only has authority
to ban Dettori from riding in its
own territory, but other racing
jurisdictions would almost
certainly reciprocate the
suspension.
Dettori tested positive
in September
EXCLUSIVE
BY FRANK DALLERES
England bowler Steven Finn declared fit for third Test: Page 29