BUSINESS WITH PERSONALITY

PM and King
make plans
for Grexit
TOP GOVERNMENT and Bank of
England figures met yesterday to
bash out a plan of action in case of a
Eurozone breakup, as the crisis in
Greece and Spain intensifies.
Prime Minister David Cameron
and chancellor George Osborne
met Bank boss Mervyn King and
Financial Services Authority head
Adair Turner to decide how the
authorities should protect Britains
financial system and economy
from an implosion of the countrys
biggest trading partner.
Deputy Prime Minister Nick
Clegg and Treasury secretary
Danny Alexander also attended.
The Spanish governments
borrowing costs yesterday crept
back up towards the seven per cent
danger level, raising fears that it
will no longer be able to afford to
fund its spending.
Yields on 10-year bonds briefly
broke the 6.5 per cent mark their
highest level since last December,
when the European Central Bank
pumped 1 trillion (800bn) in
cheap loans into the regions banks
to avert a new credit crunch.
Greece, Ireland and Portugal
were all bailed out after borrowing
costs exceeded seven per cent.
Fears grew over the Spanish
governments ability to bear
growing bank bailout costs, with a
new 19bn rescue being thrashed
out for leading institutions
including troubled Bankia.
Italys government also saw its
borrowing costs rise at debt
auctions.
It sold 3.2bn in two-year bonds,
paying an interest rate of 4.037 per
cent up sharply from the 3.36 per
cent paid just a month ago.
George Osborne had planned to extend VAT at 20 per cent to hot food including pasties
GEORGE Osborne, the chancellor,
was forced into another embarrass-
ing U-turn last night as he watered
down his controversial pasty tax.
Osborne had hoped to iron out
quirks in the tax system when he set
out plans in his March Budget to
extend VAT at 20 per cent to hot take-
away food but failed to predict the
fierce backlash his plan provoked.
The chancellor was accused of hik-
ing the price of affordable lunches at
a time when consumers were already
being squeezed.
David Cameron, the Prime Minister,
defended the tax to MPs in April,
arguing it was unfair for takeaway
outlets such as fish-and-chip shops to
pay the sales tax when other shops
selling hot food do not have to.
But the chancellor has now flip-
flopped, deciding to exempt purvey-
ors of takeaway food who heat up
their produce but allow it to cool
down naturally, such as Britains
biggest bakery chain Greggs.
Meanwhile food that is kept hot,
such as the wraps sold in Pret a
Manger and Eat, as well as the rotis-
serie chickens sold on supermarket
delicatessen counters, will still see
the 20 per cent levy imposed from
October.
Hundreds of thousands of takeaway
fans backed Greggs Save our
Savouries campaign to scrap the tax,
while the high street baker also
urged its customers to write to their
MPs in protest at the unfair and
www.cityam.com FREE
unacceptable tax.
The letter called the governments
plan to tax food served at above ambi-
ent air temperature extremely con-
fusing and impossible to work out.
Greggs suggested that only food
kept hot for sale, cooked or reheated
to order should be taxed a position
the government has now adopted.
Stephen Gilbert, Lib Dem MP for the
Cornish seat of St Austell and
Newquay, welcomed the volte-face.
The Cornish people have won and
there will be dancing in the streets
from Lands End to the Tamar, he
said.
It is not the first time the chancel-
lor has rowed back on an unpopular
tax. He partially reversed his damag-
ing tax raid on North Sea oil and gas
after investment in the sector plum-
meted in 2011.
Osborne has also caved in to pres-
sure over plans to add 20 per cent
VAT to the sale of static caravans. The
sales tax will be levied at five per cent
instead.
MPs had warned tourism in areas
including Wales would be damaged
by the tax, while some manufactur-
ers had called for the plans to be
scrapped, claiming the levy would hit
sales and jobs.
The Treasury said the boundary
between residential and non-residen-
tial caravans was not always clear-cut
and so it was fairer to apply only a
reduced rate of tax. The introduction
of the caravan tax has also been
delayed from October to next April.
BY TIM WALLACE
FTSE 100 5,356.34 +4.81 DOW Closed NASDAQ Closed /$ 1.57 unc / 1.25 unc /$ 1.25 unc
BY TIM WALLACE
OSBORNE FOILED
OVER PASTY TAX
ISSUE 1,642 TUESDAY 29 MAY 2012
CRAFT BEERS
FOR SUMMER
See Page 39
See Page 5
Certified Distribution
02/04/2012 till 29/04/2012 is 100,668
S
W
N
S
DIAMONDS FURY
BARCLAYS BOSS SLAMS RETROSPECTIVE TAX JUDGEMENT
EUROZONE: Pages 6 to 9

ALLISTER HEATH: Page 4

[email protected]
Follow me on Twitter: @allisterheath
IN BRIEF
Clegg: Tories bowed to Murdoch
Britains political class competed to
bow and scrape before media
tycoon Rupert Murdoch, Deputy Prime
Minister Nick Clegg will say today, in
comments aimed at setting his Liberal
Democrats apart from the countrys
two other main parties. The Lib Dems
have had relatively few dealings with
Murdoch and his News Corp media
empire, which paid them little
attention until they came to power in
2010 as part of a coalition
government. In a speech he is
expected to make later today at the
opening of a summit tackling
Britains broken establishment,
Clegg will say: Almost the entire
political class competed to bow and
scrape in front of Rupert Murdoch. The
whole thing was rotten, and it
inevitably came crashing down.
Warsi fights back over expenses
Baroness Warsi has asked the Lords
Commissioner for Standards to
examine allegations she claimed for
accommodation while staying rent
free with a party colleague. It has
been alleged that the Tory party co-
chairman received allowances of
165.50 a night at a time when she
was staying at a friends London flat.
I take these allegations very
seriously," Warsi said yesterday in
Malaysia, where she was on an official
visit. Its why I said right at the
outset that I would fully cooperate
with any investigation, she told ITV,
denying that she had done anything
wrong.
G
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Closure looms for critical
link in Londons oil supply
THE Essex oil refinery that also
supplies around a fifth of the fuel
requirements of London and the
south-east is to close, after PwC
yesterday announced that it had
failed to find a buyer at the 625m
price necessary to sustain the site.
However, concerns over Londons
petrol supply as a result of the clo-
sure were met by government
assurances that supplies were not
under threat and that it would be
business as usual on petrol station
forecourts.
The Department of Energy and
Climate Change said: Continuing
jetty operations at Coryton means
that there should be no loss of sup-
ply through the terminal to
London and the South East...
Theres overcapacity in Europe, so
as far as were concerned there
will be no security of supply
impact.
Petroplus, the Swiss company
which owns Coryton, filed for
insolvency in December after it
could not meet its debt obliga-
tions.
Coryton has been hit by lower
margins in refining following the
record highs reached in 2008.
While margins have risen from
their 15-year lows at the end of
Disclosure reprieve for activist
investors
Activist investors appear to have won at
least a reprieve from new regulation that
would force them to declare their hand
earlier when building a stake in a
company.
The passage of the Jobs Act by Congress
in March has forced the Securities and
Exchange Commission to delay an
examination of changes to the rules
around disclosure of activist positions,
according to people familiar with the
situation.
Fenchurch poaches new chairman
from rival
Fenchurch Advisory Partners has poached
Cliff Hampton to be its chairman from
rival independent advisory group
Evercore to bolster its client relationships.
Cyberwar fears after bug targets
Tehran
The discovery of a malicious computer
programme that appears to be collecting
sensitive information from Iran and
others indicates the global cyberwar has
moved to a new level, warn security
experts.
Fitness First offers plan to trim the
fat
The struggling gym business Fitness First
is to propose a rescue deal with landlords
this week that would give unsecured
creditors a share of the spoils if it
recovers.
Adidas India chiefs accused of huge
warehouse fraud
Adidas has accused executives in India of
using a network of secret warehouses to
siphon off Adidas shoes and clothing.
Richard Desmond claims Channel 5
transformation
Channel 5 has moved back into the black
after a cost-cutting programme at the
broadcaster led it to reverse a 48.4m
operating loss in 2010 to a 26.2m profit.
Ofcom chief neutered by application
to BBC
The chief executive of Ofcom has been
forced to step aside from any discussions
involving the BBC after applying to be its
Director General.
Japanese car makers report strong
sales in April
Japans three biggest car makers
reported April surges in domestic
production and sales, highlighting their
recoveries after last year's earthquake
and tsunami battered supply chains and
hit demand.
Art market bright despite global
gloom, Christies says
Despite global economic uncertainty,
Christies International says its art
business has proved resilient.
WHAT THE OTHER PAPERS SAY THIS MORNING
A CODEINE addict whose drug-
swapping scam ended up costing
Reckitt Benckiser 2.4m in a huge
recall of Nurofen Plus packets was
yesterday jailed for 18 months for
causing a public nuisance.
Christopher McGuire sparked
panic last August when strips of
anti-psychotic drug Seroquel were
found in packets of the pharmacy-
only painkiller Nurofen Plus.
Reckitt spent 2.4m recalling
drugs and trying to find the cause
of the mix-up after a handful of
customers in London reported the
rogue products.
Two men complained of side
effects after inadvertently taking
Seroquel, and the MHRA medicine
watchdog issued a safety alert. Four
packets in south east London were
found to have been tampered with.
A court heard that McGuire had
been swapping his own
schizophrenia medication into
packets of Nurofen because he
could not afford to pay for his 32
painkiller pills a day habit.
He tried to buy Nurofen Plus on
a card that he knew would be
declined, in order to swap over the
pills and hand back the Nurofen
packet containing different drugs.
McGuire, from Bromley in south
London, was arrested in September
after police traced the Seroquel
drugs and he admitted his ruse.
Man jailed for
drug scam that
cost Reckitt 2m
Some 850 jobs are at risk at the Coryton refinery in Essex
4
NEWS
BY MARION DAKERS
JOHN DUNNE AND
MARC SIDWELL
To contact the newsdesk email [email protected]
C
ONGRATULATIONS: youve just
started to work for yourself.
Today is tax freedom day, the day
when Britons stop working for
the chancellor and start working for
themselves. The Adam Smith
Institute has calculated that for the
first 149 days of the year, every penny
earned by the average UK resident
will be taken by the government in
tax. This years tax freedom day falls
two days later than it did in 2011; net
tax hikes mean the government is
taking a larger share of our hard-
earned income than before. That
remains true despite the chancellors
humiliating and confusing partial u-
turn on the pasty and caravan taxes
last night.
Apparently its too tricky to work
out whether a caravan is static or not
so the VAT hike is being cut to five
per cent, not 20 per cent. As to the
EDITORS
LETTER
ALLISTER HEATH
Osbornes U-turn comes as UK celebrates tax freedom day
TUESDAY 29 MAY 2012
pasties, an ultra-complex new rule
means that hot chicken or pies in
warming units in supermarkets will
be taxed at 20 per cent (a massive
hike) but hot pasties left out to cool
wont be (even if they are just as hot).
Greggs will win but other retailers
will lose. So much for tax simplifica-
tion the whole saga has been a disas-
trous joke for the chancellor and his
officials, who have been exposed as
both politically na ve and technically
inept. It still seems that the govern-
ment is doing all of this to avoid an
adverse ruling in the European courts
fish and chips shops pay tax but
for some reason nothing is made of
this by the Treasury.
Britains Tax Freedom Day still falls
long after Americas (17 April) and
most intriguingly of all Australias,
on 4 April. In my view, Australia is the
role model for the UK to follow when
it comes to tax and spend its citi-
zens live in a highly civilised society
with great healthcare and pensions
but with public spending of just 33.8
per cent of GDP this year, compared
with 49 per cent for the UK.
At least our tax burden isnt quite as
high as Frances, which will have to
wait until July to celebrate its own tax
freedom day. There is some good
news: the cost of government day,
which includes the governments bor-
rowing as well as tax, will fall on 23
specify which national scheme will
provide protection.
For banks that are covered by the UK
scheme the overwhelming majori-
ty depositors will have to be remind-
ed explicitly that they are only
protected up to a total of 85,000 by
the FSCS, the UKs deposit protection
scheme. Depositors need to behave
more like investors not put all their
eggs in the same basket and accept
that governments will not always bail
them out. But I would have gone even
further than the FSA and explained
that even governments can go bust
risk cant be abolished completely.
That is especially true of Eurozone
governments, of course: they cannot
print themselves out of trouble. It is
high time everybody understood this.
June, seven days earlier than last year.
Following George Osbornes partial u-
turn on VAT, he should now pay a visit
to Australia to learn how drastically
lower public spending and a great
quality of life can go hand in hand.
YOU CANT ABOLISH RISK
For once, something sensible from
the Financial Services Authority. It is
rightly going to require all banks and
building societies to prominently dis-
play posters and stickers in branches
and on websites explaining which
deposit guarantee scheme applies to
their customers deposits. If cus-
tomers are using the UK branch of a
foreign bank from the European
Economic Area, the posters will have
to set out that those customers are
not covered by the UKs Financial
Services Compensation Scheme
(FSCS). In this case they would have to
2010, they have not recovered suffi-
ciently to save the refinery.
Overcapacity in the face of declining
fuel demand in Europe has forced
the sale or closure of a number of
refineries across the industrialised
world. The site currently employs
500 staff as well as 350 contractors.
The administrator confirmed there
would be substantial redundan-
cies and that the business would be
wound down over the next three
months, although it could stop
refining crude oil soon after the
Jubilee weekend.
It added: The current economic
environment, the challenge of rais-
ing $1bn (625m) of funding for the
refinery, including the $150m capi-
tal expenditure turnaround project
ultimately proved prohibitive in the
face of an oversupplied European
refinery market for both buyers and
investors.
Despite the investment required to
keep the site competitive as a refin-
ery, its good location and jetty serv-
ices mean that talks are ongoing
about converting it into an oil termi-
nal for storage and distribution.
BLAIR AT LEVESON: Page 15

The new jobs website for London professionals
CITYAMCAREERS.com
THE BILLIONAIRE head of BPs part-
ner in Russia resigned yesterday, put-
ting the oil giants relationship with
TNK-BP under further strain.
Mikhail Fridman, the chief execu-
tive of TNK-BP and a key investor, will
stand down at the end of June for per-
sonal reasons, the firm said.
But sources close to Alfa-Access-
Renova (AAR), the group of oligarchs
including Friedman who own 50 per
cent of TNK-BP, said his departure
was a sign of deteriorating relations
between the two investors.
The AAR consortium has lost confi-
dence in BP as a partner. The status
quo cannot continue, the source told
Reuters.
While BP played down Fridmans
role at TNK-BP, saying he had been a
ceremonial leader, the Russian bil-
lionaire has loomed large in many
run-ins with BP management.
AAR managed to scupper BPs ambi-
tions in Russia last year by bringing
legal action to halt its planned 10bn
share swap and exploration deal with
Rosneft.
The two sides are still in arbitration
over whether the failed BP-Rosneft
deal violated an exclusivity clause in
the TNK-BP shareholder agreement,
with further hearings expected
Oligarch leader
of BPs Russian
venture quits
BY MARION DAKERS
towards the end of this year.
But hopes that Fridmans departure
marks an end to boardroom hostili-
ties are likely to be premature. As
long as he owns it, he will de facto run
it, said a well-placed source in
Moscow energy circles.
This is just a way to formally disas-
sociate himself from the manage-
ment. Looks like preparing the ship
for a storm.
His resignation creates another big
hole in TNK-BPs board, after it lost
two independent directors at the end
of last year. The firm cannot pay out a
dividend while its board is inquorate
costing both BP and AAR dearly.
The firm did not comment on
whether Maxim Barsky, a favourite of
AAR who left TNK-BP last year but has
long been touted as Fridmans succes-
sor, could rejoin the firm.
Diamond slams government for
breaking taxpayer confidentiality
BARCLAYS chief executive Bob
Diamond has slammed the
government for hitting the bank
with a huge retrospective tax bill
earlier this year and for damaging
its reputation by effectively
naming Barclays as the culprit in a
tax avoidance scheme.
In a letter to Andrew Tyrie, chair
of the Treasury Select Committee of
MPs, Diamond complains both that
the Treasury applied a change in tax
rules retrospectively, hitting the
banks profits from a 2.5bn debt
BY JULIET SAMUEL
buyback, and that the government
broke its confidence.
We were therefore surprised to be
singled out in the way that occurred,
not only through a retroactive
change of law but the effective
naming of Barclays by the exchequer
secretary... accusing the bank of
entering into a highly abusive
scheme, Diamond writes. We
believe that the confidentiality of
taxpayers affairs is an important
principle of UK tax law.
Treasury minister David Gauke
did not name Barclays directly but
referred to a bank that had recently
avoided 300m of tax on profits
from a debt buyback. Barclays name
emerged quickly because it was the
only British bank to have recently
bought back billions of debt for cash.
Diamond says in his letter:
Unnecessary damage was placed on
Barclays reputation just at a time
when the focus should be on
rebuilding confidence and
accelerating growth, not
undermining it. He also argues that
the bank was treated unduly harshly
given that it proactively disclosed
the scheme to HMRC.
G
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Barclays chief executive Bob Diamond says the bank should not have been identified
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BARCLAYS PROPERTY DEAL: P 15

TUESDAY 29 MAY 2012
5
NEWS
cityam.com
TIMELINE | BPS FRAUGHT RELATIONSHIP WITH ITS RUSSIAN PARTNERS
February 2003
BP establishes $7bn Russian joint ven-
ture with AAR, named TNK-BP. Mikhail
Fridman, one of the four oligarchs that
make up AAR, is one of the founders.
March 2008
Russian police raid the offices of BP and
TNK-BP in Moscow, prompting specu-
lationthat theKremlinwants to buyout
the Russian billionaires. The dispute
forces Bob Dudley, then TNK-BP chief
executive, to flee Russia.
January 2009
BP agrees to cede some influence to
AAR to end a boardroom dispute.
May 2009
Acrimony flares up again as AAR puts
upits owncandidate, MaximBarsky, to
replace Fridman as chief executive.
Fridmanis later kept onfor at least two
more years.
January 2011
BP unveils historic 10bn deal with
Russian oil firm Rosneft to explore the
Arctic. AAR starts injunction proceed-
ings, arguing TNK-BP should have been
given first refusal for BPs activities in
Russia.
May 2011
Rosneft deal flops as BP fails to convince
AAR to drop its injunction. Exxon then
swoops in to take BPs place.
Summer 2011
Ongoingarbitrationhearings between
BP and AAR begin. BP denies rumours it
plans to sell its TNK-BP stake.
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SHARES in bust lender Bankia
plunged 13.4 per cent yesterday after
details emerged of a controversial
bailout plan that will see the Spanish
government take a 90 per cent owner-
ship stake in the bank.
Analysts estimated that the num-
ber of Bankia shares in existence
could rise by a factor of six to nine due
to the 19bn (15.2bn) bailout that
will be paid to unlisted parent group
BFA, with 12bn passed on to Bankia.
Bankias parent BFA last night
restated its 2011 results to account for
the rescue, and now reflects a loss of
3.3bn rather than the previously stat-
ed profits of 41m.
Markets are also worried about the
form the bailout will take. It emerged
over the weekend that Madrid is con-
sidering an unusual plan that would
see it inject capital using its own
bonds rather than cash.
In turn, Bankia would use the
bonds to tap the European Central
Bank for a mountain of cash.
But the ECB has not yet indicated
whether it would authorise such a
Spains unusual
Bankia bailout
spooks markets
BY JULIET SAMUEL
bailout and it would require Bankia to
take out new loans from the central
bank each month because there are
currently no plans to hold another
auction of long-term three-year cash.
It would also be controversial
because it loads the ECB with more
sovereign debt that could fall in value,
making its balance sheet more risky.
It would be a neat solution for the
sovereign, said Berenberg Banks
Holger Schmeidung, pointing out that
it supplies both a buyer for public debt
and a capital source for Bankia.
Yields on Spains ten-year debt
jumped by 16 basis points to 6.47 per
cent yesterday.
Spanish prime minister Mariano Rajoy is mulling bailing out Bankia with government bonds
FOUR Greek banks have received
18bn (14.4bn) in a bid to
recapitalise the stricken sector.
The funds will be divided between
National Bank, Alpha, Eurobank
and Piraeus Bank.
The money has been released by
the European Financial Stability
Fund to the Greek body in charge
of distributing the funds.
It is part of Greeces second
bailout that was signed off by the
Greek banks get 18bn rescue
BY CITY A.M. REPORTER
European Union and the IMF in
March.
That deal was for 130bn and
hinged on an agreement by
Europes major banks and other
financial institutions to write-off a
large part of their loans to Greece.
National Bank, the biggest
Greek lender, has received
7.43bn, the largest share of the
new financing. Piraeus bank will
receive 4.7bn, Eurobank will get
3.97bn and Alpha is to be handed
1.9bn.
TUESDAY 29 MAY 2012
6
NEWS
cityam.com
Q
How will this bailout work?
A
It is not entirely clear, but Madrid
is considering a plan where,
instead of buying a 90 per cent stake
in Bankia for cash, the Spanish gov-
ernment will hand over billions of its
bonds instead.
Q
How will that help when Bankia needs
cash?
A
Thats where the European Central
Bank comes in. The ECB will accept
government bonds as high quality col-
lateral in return for giving out cash.
So Bankia will go straight to the ECB,
post Madrids debt as collateral and
get a big cash injection.
Q
As the rest of Europes banks did earlier
this year?
A
Not quite, because the ECB is no
longer offering three-year cash
though many analysts think it will
do so again. Instead, Bankia will
tap its monthly lending facility.
Q
What is the advantage of doing the
bailout this way?
A
It means that Spain will not
have to tap private markets for
the billions required to bail out its
banks. That is vital because bond
investors are now demanding a
punitive 6.5 per cent interest rate
to lend to Madrid on a ten-year
basis.
Q
What makes this
unusual?
A
It is not that unusual to bail out a
bank via a debt-for-equity swap.
What is unprecedented is the role of
the ECB. The key part that could
make this plan work is that the ECB is
prepared to treat Spanish bonds dif-
ferently from how markets treat
them. Rather than classing them as
an increasingly risky asset, the ECB
still classes Spanish debt as high qual-
ity collateral. So this is, in effect,
another kind of sovereign bailout by
Frankfurt, only it is taking place via
the ECBs collateral specifications
rather than through direct bond pur-
chases.
Q
A
and
Bankias unusual bailout
Bankia SA
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1.70
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Madrid hopes the ECB will play
along in its backdoor bailout
W
E LEARNED on Friday that
the bailout for Bankia and
its parent BFA is to be
about four times the size
analysts were estimating just a few
weeks ago, at 19bn.
In a sense, that is good news. It
shows the bank and the
government are facing up to the
scale of the problem. Whether they
can solve it is another matter.
What is now causing the most
worry is what this means for the
rest of Spains banking sector and
the eventual burden on the
sovereign.
So how far has the rot spread?
Nomura analysts reckon that only
three of Spains major banks can
avoid a bailout: BBVA, Santander
and Sabadell (which all happen to
be among the countrys biggest
diversified banks with significant
international and casino
operations).
As for the others, Nomura
estimates the capital shortfall at
106bn-140bn, versus profit
generation last year of 19bn.
The governments mooted
solution appears to take the form of
the kind of financial jiggery pokery
we have now come to expect from
Eurozone politicians.
That is, recapitalise the banks by
swapping their equity for sovereign
debt and then get the banks to
dump the debt at the ECB in return
for cash. This skips over the
inconvenience of tapping private
markets for cash.
But the ECB has already blurred
the line between liquidity support
and bailouts, both through
government bond-buying and its 1
trillion auction of three-year loans
for banks.
Whether it will be prepared to go
a step further and give the Spanish
government what could be seen as
another kind of backdoor bailout is
unclear.
BOTTOM
LINE
JULIET SAMUEL
International Consolidated Airlines Group SA
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SHARES in British Airways parent
company International Airlines
Group nosedived 2.7 per cent
yesterday on news its largest
shareholder Bankia would need to
dispose of assets to raise cash.
The troubled Spanish bank has a
12 per cent stake in IAG following
the bailout of Caja Madrid, which
was a major stakeholder in Iberia
before its merger with BA to form
IAG.
Bankia, which has called for a
further 19bn from the Spanish
government, is IAGs biggest
shareholder along with another
Spanish bank, Banco Financiero y
de Ahorros.
Bankia chairman Jose Ignacio
Goirigolzarri confirmed over the
weekend that he will logically
look to start a sale process of the
IAG stocks nosedive as major
Spanish investor looks to sell
BY JENNY FORSYTH
7
NEWS
cityam.com
banks assets and will give detailed
plans to shareholders late next
month.
Other companies in Bankias
portfolio include energy firm
Iberdrola, hotel company NH, food
company SOS, and financial
houses Bancofar and Inversis.
Yesterday shares fell 3.8p to
137.1p, making it the FTSEs third-
biggest faller.
G
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Y
THE EUROZONE crisis has forced
pension funds out of risky equity
markets, an industry study showed
yesterday, but the funds are also try-
ing to avoid safe haven bonds
because of the low yields on offer.
Funds are being pushed towards
alternative assets and emerging mar-
kets, according to Mercers asset allo-
cation survey, as they try to maintain
long-term returns for investors.
Of the 1,200 funds studied across
Europe, 21.4 per cent of non-British
funds plan to decrease their invest-
ments in domestic equities, while
just four per cent forecast an
increase.
At the same time bond invest-
ments held steady as funds adopt a
wait and see approach to the mar-
ket.
Meanwhile 50 per cent now hold
some alternative investments, up
from 40 per cent a year ago.
The most popular alternatives
include hedge funds, emerging mar-
ket debt and high yield bonds, with
almost 20 per cent of European
Pension funds
flee risky euro
equity markets
BY TIM WALLACE
schemes having allocations to one or
more of these areas. Larger funds are
particularly keen in these areas 60
per cent of schemes with over 2.5bn
in assets have alternative allocations,
up from 40 per cent in 2011.
As the Eurozone crisis continues
unabated, pension funds are faced
with the dual challenge of managing
portfolio risk brought on by market
volatility, while at the same time
identifying opportunities that will
generate returns to support future
liabilities, said Mercers Nick Sykes.
Liquid asset classes are also
favoured, as investors value access to
their assets in such turbulent times,
he added.
ITALIAN business confidence
plummeted to a near three-year
low in May, official data showed
yesterday, as the country continued
to struggle through recession,
reforms and spending cuts.
Istats manufacturing confidence
index dropped from 89.1 in April to
86.2 in May, its lowest since August
2009.
Employment expectations
worsened further, from minus 13
to minus 19, while the assessment
of order books remained almost
unchanged, up from minus 46 to
minus 45.
Italian business confidence
down on sustained recession
BY TIM WALLACE Meanwhile confidence in the
construction sector fell from 83.7
in April to 81.8 in May, and the
services sector index dropped
from 75.8 to 72.7.
I think business and consumer
confidence will keep falling
because people have been talking
about fiscal austerity since Monti
arrived, but the main impact is
going to be felt from now on, said
Barclays economist Fabio Fois.
Fois said hikes in property tax
will only take effect in June, while
an increase in value added tax has
been pencilled in for October,
further eating into Italians'
dwindling purchasing power.
TUESDAY 29 MAY 2012
8
NEWS
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I CAN PREDICT THE WEATHER
,

GIVE TRAVEL UPDATES AND EVEN
BE AN ACCORDION
.
Italian PM Mario Monti is struggling to maintain confidence as he reforms the economy
IRISH voters are set to approve the
Eurozones fiscal compact in
Thursdays referendum, according to
a range of opinion polls, although
other European leaders are already
pushing to change the treaty.
The compact, which seeks to
impose limits on government budget
deficits to reassure markets and
prevent a re-run of the current
sovereign debt crisis, needs to be
approved by each government before
they can be bound by it.
As voting began in Irelands most
remote areas, a series of opinion
polls have indicated the vote is likely
to pass by a margin of three to two.
Irish politicians have successfully
framed the vote around a clause in
the treaty that states only those who
sign up can access the Eurozones
permanent bailout fund, the
European Stability Mechanism,
warning of unpaid wages and empty
bank machines should voters say no.
Irelands current bailout from the
European Union and International
Monetary Fund expires in 2013, after
which it is supposed to return to
funding itself via bond markets.
But with the Eurozones debt crisis
still far from resolved, it could
struggle to borrow at affordable
rates even if the treaty is approved.
French leader Francois Hollande
has called for the treaty to be recast,
to reduce the pace of spending cuts.
Ireland likely
to vote yes to
fiscal compact
BY TIM WALLACE
Europe's stocks continue to slump
May Mar Apr
2250
2500
2750 Eurostoxx50, points
DIXONS has spent the last few
weeks stockpiling security shutters
to protect its nearly 100 stores
across Greece in case of riots.
Dixons, Europes second biggest
electrical retailer, owns Greeces
market leading but loss-making
Kotsovolos chain, which has a 25-
per cent market share selling iPads
and laptops as well as washing
machines, televisions and air
conditioning units.
Chief executive Sebastian James
said the company has contingency
plans to shutter up its 69 wholly
owned and 29 franchised Greek
stores and close them in the short
term to protect against any threat
of civil unrest and prepare for a
switch to a new drachma.
Greece accounts for just over
three per cent of Dixons annual
sales of around 8.2bn.
Dixons, using its experience of
dealing with riots in London and
other British cities last summer,
has ordered enough shutters to
protect its stores and is working
with the Greek police and security
groups.
The groups sales dipped nine
per cent in Italy, Greece and
Turkey in the year to late April.
The group does not split out Greek
sales, but these three nations
make up around seven per cent of
the groups annual sales.
Dixons braces
for looting and
riots in Greece
BY CITY A.M. REPORTER
G
E
T
T
Y
BRITISH banks will be obliged to dis-
play information in branches about
how the government insures their
deposits up to a value of 85,000, the
FSA said yesterday.
From September onwards, all retail
deposit takers will have to display
posters and stickers letting customers
know they are insured if their bank
goes bust and giving details of the
Financial Services Compensation
Scheme (FSCS), which was beefed up
after the collapse of Northern Rock.
The move comes shortly after a rat-
ings agency downgrade of Santander
UK prompted some customers to
withdraw savings from the bank,
despite the vast majority of them
being guaranteed by the FSCS.
The scheme is funded by a levy on
lenders, although if it were over-
whelmed with demand due to a run
of bank collapses, it is likely the gov-
ernment would bail it out.
Andrew Bailey, head of UK banks at
the FSA, said: Customers need to feel
confident about their money and to
do this they need to know what the
FSA moves to
ward off threat
of bank runs
BY JULIET SAMUEL
compensation limits are and which
scheme would provide cover in the
event of a bank, building society or
credit union failure.
The FSAs aim is to prevent the nega-
tive feedback of customers fear about
their money generating bank runs.
All British banks that are legal sub-
sidiaries in this country are covered by
scheme, which is an industry-funded
insurance plan that bails out cus-
tomers who put up to 85,000 in the
event of a bank going bust.
It also covers depositors putting
money in branches of foreign, non-
European banks. But due to EU law, it
does not cover branches of European
banks that are not subsidiarised here.
So, for example, while Santander
UKs depositors are covered, those put-
ting their money in one of the groups
foreign branches of Santander Totta in
London would not be covered.
Bailey said: Too many people
assume that because their branch is
located on a local high street in the
UK, they are covered by the FSCS. This
is not true for UK branches of [EU]
banks where the home countrys
deposit guarantee scheme applies.
DO YOU KNOW HOW MUCH MONEY IS
COVERED BY DEPOSIT PROTECTION?
I wouldnt like to guess. It should be publicised.
A whole industry has occurred for bank charge
claims and there are no doubt more issues that people
arent aware of so the more information the better.
These views are those of the individuals above andnot necessarily those of their company
RICHARD BARNES
ABERDEEN ASSET
MANAGEMENT

I have no idea. Not a clue at all. But its not

just about protecting deposits - it could be
abused easily. You cant trust people in these cases - they
could crack the law and abuse it.
ZAZA DARILMAZ
EAD
50,000 I think? I hadnt seen any publicity on
it hence I think it needs to be publicised. Id
assumed it was still 50,000.
MIKE COLE
BT

CITYVIEWS
The collapse of Northern Rock has prompted the FSA to beef up bank insurance rules
TUESDAY 29 MAY 2012
9
NEWS
cityam.com
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into a new way to pay with a
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Marubeni president Teruo Asada flew to New York last week as deal talks advanced
IN BRIEF
Misys gets go-ahead for sale
n Financial software firm Misys said
yesterday it had won approval from the
High Court for the scheme that will allow
Vista Equity Partners to complete its
takeover. Misys said it expects its last day
of trading on the London Stock Exhange to
be 30 May, ahead of the official delisting
and implementation of the scheme on 1
June.
Three plead guilty in FSA probe
n The FSA said yesterday that three people
had pleaded guilty to insider trading. James
Sanders, a director of contracts for
difference brokerage firm Blue Index, his
wife Miranda Sanders and co-director James
Swallow pleaded guilty to 10, five and three
charges respectively, and will be sentenced
on 19 June. Christopher Hossain and Adam
Buck were acquitted.
TUESDAY 29 MAY 2012
10
NEWS
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MARUBENI, the Japanese trading
house, is nearing a deal to buy US
grain trader Gavilon for more than
$5bn (3.2bn) and could announce the
transaction as early as today, accord-
ing to people familiar with the deal.
Japans fifth-largest trading company
has been in advanced talks to buy
Gavilon since early May.
The company has confirmed its
interest in Gavilon but also said no
decision had been made.
Although the deal is pending final
approval, the proposed terms value
Gavilon at more than $5bn including
debt, and Marubeni has lined up
financing for the deal, sources close to
the matter said.
Marubeni had earlier dispatched a
team of auditors to Gavilons Nebraska
headquarters to assess its operations
and finances, sources said.
In addition, Marubeni president
Teruo Asada traveled to New York last
week with other executives as discus-
sion of the deal reached the final
stages, a person familiar with the trip
said.
Gavilon, whose owners include bil-
lionaire investor George Soros and
hedge fund manager Dwight
Anderson, is the USs third-biggest
grain handler. The deal would deepen
Marubenis control of grain supplies
from North America and help it
increase its share of the lucrative busi-
ness of exporting grains to China.
A CITY A.M. REPORTER
Marubeni is set to buy
US grain trader Gavilon
biggest player in the market for
cachaa, a spirit made from fer-
mented sugar cane also known
as Brazilian rum, as well as a
cachaa distillery, a bottling
plant and a warehouse.
It is likely to benefit from a
rise in drinks consumption
when the Brazil hosts the
football World Cup in 2014
and the Olympics two years
later.
Brazil is an attractive,
fast growing market for
Diageo with favourable
demographics and
increasing disposable
incomes. The acquisi-
tion of Ypica gives us
the leading premium
brand in the largest
local spirits category,
said Diageo chief execu-
tive Paul Walsh.
Ypica, whose origins
go back more than 160
years, had net sales of
R$177m (57m) last
year.
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per month DRINKS group Diageo is toast-
ing the 300m acquisition of
one of the producers of Brazils
most popular spirit, cachaa.
The maker of Guinness and
Smirnoff has agreed to buy
Ypica from its family own-
ers as it continues to grow
its emerging markets busi-
nesses to offset weak
demand in Europe.
The celebrations for
another, larger deal,
remain on ice, however,
as the group continues
its efforts to take a stake
in Jose Cuervo, the
worlds leading tequila
brand which is valued
at $3bn (1.91bn). It has
held talks but offered
no update on its
progress yesterday.
The purchase of
Ypica, from the fami-
ly-owned Ypioca
Agroindustrial group,
gives Diageo the third-
Spirits rise as Diageo
makes 300m deal
BY PETER EDWARDS
Diageo chief executive Paul Walsh has presided over a series of acquisitions beyond the traditional territories of Guinness and Johnnie Walker
Diageo PLC
28May 22May 23May 24May 25May
1,490
1,500
1,480
1,510
1,520
1,530
1,540 p
1,513.50
28May
TUESDAY 29 MAY 2012
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NEWS
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from London
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bolt-on emerging market deal
positively, offering local premi-
um brand leadership as well as
distribution synergies over the
mid-term for Diageos interna-
tional spirits, said UBS analyst
Melissa Earlam.
She calculated that Diageo
paid a multiple of around 19
times earnings before interest,
tax, depreciation and amortisa-
tion for the business.
Morgan Stanley advised
Diageo on the purchase, which
is due to complete in a month.
Diageos shares closed down
0.03 per cent at 15.30.
TIMELINE | THIRST FOR GROWTH:
DIAGEOS EMERGING MARKETS DEALS
October 2010
Reported to be interested in bid to buy
the66per cent of Moet Hennessyit does
not already own from LVMH.
January 2011
Agrees to pay about 33m for a 23.6 per
cent stake in the Hanoi Liquor Joint Stock
Company, known as Halico, and
Vietnams leading spirits producer.
February 2011
Chief executive Paul Walsh tells the City
that bolt-on acquisitions or acquisitions
in the developing world are very
important to us.
February 2011
Later that monthDiageoconfirms adeal
to buy the Turkish spirits group Mey Iki,
Turkey's leading maker of raki, for 1.3bn.
May 2011
Enters talks to buy tequila brand Jose
Cuervo. It has the first option to buy
Cuervo becauseit has international dis-
tribution rights for the brand.
June 2011
Wins backingfrom Chineseregulators to
buy baijiu brand Shui Jing Fang.
May 2012
Posts a six per cent first-quarter sales rise
with fast-growing emerging markets and
a recovery in North America offsetting
falling sales in Europe.
May 2012
Agrees to pay 300m for Ypica, one of
the producers of Brazils most popular
spirit, from its family owners.
Sumitomo Mitsui admits insider trading probe
THE HEDGE fund set up by star trad-
er David Harding plans to open a
base in Switzerland in order to tap
into the pool of talent which has
been swelled by scientists pursuing
the origins of the universe.
Winton Capital Management,
which uses scientific research to
spot patterns in market behaviour
and currently has about 110
researchers, will open its first
branch in continental Europe in
Zurich in July.
The pure research office will be
run by a German particle physicist
and will tap into Switzerlands bur-
geoning reputation as a home for
advanced science.
Zurich is home to a top class uni-
versity and major maths and science
research centre in the ETH, while
the Large Hadron Collider, based at
the Cern laboratory near Geneva,
was set up to pursue the Higgs
boson, known as the God particle.
We are looking to expand our
research department by some 15 per
cent this year and are focusing on
hiring the very best people, said
Harding.
Our intention remains... to keep
reinvesting in the highest quality
scientific research so that our hard
earned expertise in financial mathe-
matics can continue to grow.
Winton currently has more than
260 staff in Kensington,
Hammersmith, Oxford and Hong
Kong but is bringing its London
teams into one building in
Hammersmith, for its executive,
marketing, back office, research,
risk management and trading func-
tions.
Harding, a Cambridge natural sci-
ences graduate, set up the firm after
leaving AHL. His wealth stands at
800m, according to the Sunday
Times Rich List.
Hedgie Harding looks
for brain gain in Zurich
BY PETER EDWARDS
SUMITOMO Mitsui Trust said
yesterday it was fully
cooperating with a probe by
the Japanese Securities and
Exchange Surveillance
Commission into alleged
insider trading.
Reports emerged over the
weekend that the company
known as Chuo Mitsui Asset
Trust and Banking Company
until a merger in April was
being investigated for allegedly
trading on information ahead
of a share offering by Mizuho
Financial Group in June 2010.
It is true that Securities and
Exchange Surveillance
Commission is investigating
this issue, and we are fully
cooperating with SESC
concerning the investigation,
the company said in a
statement yesterday.
The group also said the
alleged trades were carried out
by a former employee.
Shares of Sumitomo, which is
facing its second fine for
insider trading in two months,
fell 0.5 per cent yesterday.
Shares in Nomura Holdings,
which was an underwriter on
the 780bn (6.25bn) Mizuho
offering, also suffered, after
sources said a Nomura
employee provided the tip-off.
BY ELIZABETH FOURNIER
G
E
T
T
Y
THE SHARD CLOSE TO SIGNING ITS FIRST TWO TENANTS
The Shard,
Europes tallest
building, is said
to be close to
clinching its first
two office
tenants, in deals
likely to involve
two whole floors
of the 1,017 ft
tower. US
management
consultant AT
Kearney and an
unnamed Middle
Eastern bank
have been linked
to Irvine Sellar's
iconic tower in
London Bridge.
TUESDAY 29 MAY 2012
13
NEWS
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The new jobs website for London professionals
CITYAMCAREERS.com
HEFTY increases in premiums could
cause the UK car insurance business
to record an underwriting profit for
the first time since 1994, according
to a new report by Deloitte.
Last year the sector had a
combined ratio of 106 per cent
meaning it paid out 106 for every
100 it earned in premiums,
equivalent to an underwriting loss
of 600m.
But Deloittes James Rakow said
this was a drastic improvement on a
ratio of 120 per cent in 2010 and
further increases this year could
push the underwriting business
into the black.
We expect improved results to be
delivered by motor insurers in 2012
and we could see an underwriting
profit for the industry. The last time
this was seen was in 1994, he said.
With total premiums now
reaching 14bn a year, the market is
still attractive for insurers who are
successful at attracting and
retaining profitable customers or
selling add-ons to basic cover.
Despite the underwriting losses,
returns on investments have
allowed the UK car insurance
business to remain profitable.
Car insurers in
black for first
time since 1994
JAMES WATERSON
PRUDENTIAL yesterday announced
Paul Manduca as its new chairman
even though he initially led the com-
mittee tasked with finding a replace-
ment for outgoing Harvey McGrath.
Manduca founded British fund
manager Threadneedle in 1994 and
has been Prudentials senior inde-
pendent director since January 2011,
as well as being current chairman of
insurance broker Aon UK.
He will resign his existing roles and
take over at the Prudential on 2 July.
Barrie Cornes, an analyst at
Panmure Gordon, told City A.M. that
Manduca is a safe pair of hands
who was initially brought in to
strengthen the financial services
experience on the board.
Cornes also played down concerns
that Manduca was too close to the
recruitment process: As I under-
stand it he stood down and [Lord]
New Prudential
chair led search
for his own job
JAMES WATERSON
Turnbull took over once his name
went into the ring.
One of Manducas main concerns
will be the future of the Prudentials
booming Asian arm, which could be
hit hard by the forthcoming Solvency
II reforms on capital backing.
The company has repeatedly threat-
ened to relocate its headquarters if
the new rules are introduced in their
current form and could be tempted
to split the company in half.
Resource deals make up record
slice of investment bank income
INVESTMENT banks are increasingly
reliant on income from energy and
natural resources deals, according
to new data that shows the sector
has provided 21 per cent of global
investment banking (IB) revenue so
far in 2012.
Research by data provider
Dealogic shows how energy and
natural resources deals are
responsible for a record percentage
of IB revenue on a year-to-date
basis, well above the last decades
15 per cent average.
But although the sector has
JAMES WATERSON
increased its share of total IB
revenue, real earnings from energy
and natural resources deals have
fallen by a fifth on a year-on-year
basis to $5bn.
Nevertheless, the sector has
become more important for banks
because the rest of the market has
dropped at a faster rate.
Substantial deals this year
include Brazilian oil giant Petrobas
decision to issue $7bn of corporate
bonds in February, American
pipeline firm Kinder Morgans
$13.3bn leveraged takeover of rival
El Paso and the $11.8bn of loans
that enabled US refiner Phillips 66
to demerge from parent firm
ConocoPhillips.
On a country-by-country basis,
the US leads the 2012 energy and
natural resources fee rankings with
a 50 per cent share of the market
and $2.5bn in revenue.
Canada is in second with
revenues of $736m, while China is a
distant third with $290m of
income.
For individual banks, Credit
Suisse leads the sector revenue
rankings with 7.6 per cent market
share, followed by JP Morgan with
6.7 per cent and Citi with 6.3 per
cent.
Incoming Prudential chairman Paul Manduca will give up the equivalent role at Aon UK
Prudential PLC
28May 22May 23May 24May 25May
670
675
665
680
685
690
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28May
INVESTORS looking for the next
big opportunity beyond the Brics
have been offered a new place to
put their money Britains 100m
a year divorce industry.
Novitas has launched a divorce
litigation fund to create an
alternative lending source for
people who need help to pay for
divorce costs.
It plans to raise 5m from
investors and is offering them an
annual return of eight per cent.
The reduction in banking
credit, coupled with the
Government cut backs to legal aid,
means that people seeking a
divorce can face a hefty financial
Fund managers head for the
courts to cash in on divorces
BY PETER EDWARDS
burden. We are aiming to provide
an alternative lending source to
help divorcing couples, said Jason
Reeve, fund founder and a
qualified high net worth financial
advisor.
The fund is targeting lending on
individual cases typically of
between 5,000 and 100,000,
although it will lend up to
250,000, with an average loan
lasting 12 months.
Novitas is not the first firm to
invest in this way, however, as
hedge funds have provided
fundings in very high net worth
divorce cases. Hedge funds have
traditionally provided assistance in
personal injury or commercial
litigation cases.
TUESDAY 29 MAY 2012
14
NEWS
cityam.com
HAIRCUTS IN HOXTON
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LONDONS BIGGEST BLACK CAB APP DOWNLOAD HAILO NOW
CASINO firm 888 Holdings yesterday
became the latest online gaming
firm to pay back-taxes to the Spanish
government, part of a cash raid by
the countrys government.
Spain is in the process of issuing
new e-gaming licences for all online
bookmakers and is using the
leverage to extract retrospective
payments from internet gambling
companies that operated between
January 2009 and May 2011.
After completing a self-
assessment tax return 888 has made
a one-off payment of 7.4m (5.9m)
in back-taxes, plus surcharges and
interest of up to 1.3m.
All of the taxes and charges were
funded from the firms cash
reserves.
Following this payment, 888
believes that it has fulfilled all
requirements necessary to receive a
Spanish e-gaming licence, with
awards set to begin at the start of
June, the firm said in a statement.
Last week rival Bwin.party said it
has paid 26.56m to the Spanish
government in back-taxes, while
Sportingbet also announced that it
is in discussions with the Spanish
Ministry of Finance on the matter.
The tax claims are based on
interpretations of laws dating from
1966 and 1977 that had never
previously been applied to online
gambling operations.
Shares in 888 Holdings closed
down 0.7 per cent at 68.25p.
Gambling firm
888 pays 9m
in back-taxes
BY JAMES WATERSON
G
E
T
T
Y
GERMAN real estate group Deutsche
Wohnen said yesterday it has agreed
to buy a real estate portfolio valued
at about 1.24bn (992m) from
Barclays.
The deal comprises about 23,500
apartments with a low average
vacancy rate of 2.7 per cent, most of
which are located in or near cities
including Hanover, Berlin and
Magdeburg, Deutsche Wohnen said.
BY HARRY BANKS
Investors are flocking to the
German property market, attracted
by a steady rise in values in the last
couple of years, which contrasts with
the boom-and-bust of the Spanish
and Irish real estate markets.
Sources had said earlier this
month that other parties interested
in Barclays apartments included
Deutsche Wohnens peer GSW and
former owner Whitehall Funds.
Deutsche Wohnen said it will use
equity and debt to finance the deal,
in which it is paying about 13 times
annualised net rent to boost its stock
of apartments by almost half to
73,500.
Last week Barclays sold its 20 per
cent stake in asset manager
Blackrock at a discount to the
companys closing price, after new
Basel III regulations governing the
amount of capital that banks must
hold against minority stakes in asset
managers and other firms made it
less profitable.
Woodford is said to be considering a deal
888 Holdings PLC
28May 22May 23May 24May 25May
68.5
69.0
69.5
70.0
70.5 p
68.25
28May
AIRPORT owner BAA has been
given permission to appeal against
a competition ruling that forces it
to sell off Stansted Airport.
BAA said it look[s] forward to
presenting our arguments before
the Court of Appeal after it was
allowed to fight against the
Competition Appeal Tribunals
BAA wins permission to appeal
ruling on Stansted Airport sale
BY MARION DAKERS February ruling.
The tribunal had upheld an
earlier case that required BAA to
dispose of Stansted to create more
competition in the UK airport
sector, the latest court case in a
three year dispute.
BAA, owned by Spanish
infrastructure firm Ferrovial, last
month sold Edinburgh Airport to
Gatwick owner GIP for 807m.
TUESDAY 29 MAY 2012
15
NEWS
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IRELANDS oldest stockbroking
firm Bloxham has ceased trading,
on the orders of the central bank,
after the discovery of financial
irregularities.
Bloxham said yesterday that its
income had been overstated over a
number of years.
The firms financial partner was
immediately suspended and
management has hired a firm of
forensic accountants to study its
accounts.
Rival broker Davy said it had
acquired Bloxhams asset
management business, handling
assets exceeding 700m (559m)
in value. It did not disclose terms
of the deal.
As part of the deal Bloxhams
asset management team, led by
Pramit Ghose, will move across to
Davy, which will continue to dis-
tribute funds through existing rela-
tionships with Irish Life and New
Ireland.
When the requirement arose to
address our capital requirements,
Davy, as a well resourced and mar-
ket leading regulated entity was
the obvious party, said Ghose, who
will become managing partner at
Davy.
Referring to the investigation,
Bloxham said that client funds
were safe and would not be affect-
ed.
The broker said in a statement
yesterday that it no longer holds
sufficient capital to meet the
licensing requirements of the
central bank to carry on trade as a
stockbroker.
As a result, on Friday evening
last the central bank issued a
direction to the firm to suspend
trading, it said.
Bloxham said the sale of its
private client business to Davy,
which was agreed last year, had
also been completed. Client assets
will be transferred on 6 June.
Irish broker
Bloxham told
to halt trading
BY CITY A.M. REPORTER
Woodfords $60m job tribunal put on hold
THE $60m (38.3m) tribunal case
brought by former Olympus boss
Michael Woodford was adjourned
yesterday, prompting speculation he
could reach an out-of-court settle-
ment with the disgraced firm.
Woodford, who was ousted as chief
executive and president in October,
declined to comment last night after
the hearing was cut short.
The case is due to resume today at
East London tribunal service.
BY PETER EDWARDS If there is an extra lag, there is
always a chance to settle and it to go
no further, said Jo Keddie, partner
and head of employment law at
Winckworth Sherwood.
But it could also give the judge
needed more time to prepare, or
enable both sides to finalise their
arguments, she added.
Woodford, who has hired Simmons
& Simmons, is seeking up to 10 years
lost salary and says he suffered
unfair dismissal on the grounds of
whistleblowing and discrimination.
Olympus, which is being represent-
ed by Slaughter and May, claimed he
failed to understand the firms man-
agement style and culture.
Any payout is likely to fall short of
$60m but could still prove to be a
record.
Woodford began the tribunal in
Britain because of Olympus signifi-
cant presence here. Its British head-
quarters are in Southend, where the
former boss and his wife have a
home.
Olympus has surprised some legal
experts by failing so far to reach a set-
tlement with Woodford, who has
already published a book in Japanese
about his experiences and plans
another in English in the autumn.
Camera and endoscope firm
Olympus has endured heavy criti-
cism in corporate Japan following the
exposure of a $1.7bn accounting
scandal stretching back more than a
decade.
A series of arrests have followed and
an independent report said Olympus
practices had been rotten.
Barclays sells German property
R
E
U
T
E
R
S
TONY Blair yesterday told the
Leveson inquiry that British politi-
cians have little choice but to court
media tycoons because the alterna-
tive is press attacks that are full on,
full frontal and day in, day out.
The former Prime Minister said
that as a result he chose to manage
relations with newspapers during his
time in office, rather than directly
challenge their authority.
With any of these big media
groups, you fall out with them, you
watch out, because it is literally
relentless and unremitting once that
happens, Blair told the inquiry into
media ethics.
My view is that that is what cre-
ates this situation in which these
media people get a power in the sys-
tem that is unhealthy. I took the
strategic decision to manage this and
not confront it but the power of it is
indisputable.
Blair was consistently criticised by
the left wing of his party for courting
media tycoon Rupert Murdoch and
right wing newspapers during his
leadership of the party.
But he explained that it was a nec-
essary measure to win elections and
Blair claims he
feared wrath of
media barons
BY JAMES WATERSON
implement policies.
If you fall out with the controlling
element of the Daily Mail, you are
then going to be subject to a huge
and sustained attack, he said.
Blair added that Rupert Murdoch
didnt lobby him on media issues
and that his government had never
given an assurance to Mr Murdoch or
anybody else that they would have
seek permission for major policy
changes.
But he admitted that he would
approach appropriate media outlets
to prepare the way for new announce-
ments.
Proceedings were briefly disrupted
when a protestor wearing a white
shirt and chino trousers ran into the
court room from a supposedly secure
corridor. He was removed by security
guards after shouting This man is a
war criminal and JP Morgan paid
him off for the Iraq war.
The man was identified as David
Lawley-Wakelin, 49, a film maker
who made a documentary entitled
The Alternative Iraq Enquiry.
After he was removed Blair said that
what he said about Iraq and JP
Morgan is completely and totally
untrue.
Fighting spreads in Syria as Kofi
Annan begs for end to violence
PEACE envoy Kofi Annan yesterday
called on the Syrian government to
take bold steps to resolve the
countrys crisis without further
bloodshed.
But even as he denounced the
massacre of at least 108 people
including dozens of children in
the Syrian town of Houla, more
violence was spreading throughout
the country.
Assads forces killed at least 41
people in an artillery assault on the
city of Hama, activists said, shortly
BY JENNY FORSYTH after the UN Security Council
condemned the killings at Houla
and put at least partial blame on
Assads heavy weaponry.
The government, however,
continues to blame the atrocity on
knife-wielding Islamists.
Yesterday foreign secretary
William Hagues plea for Russia to
change its stance on Syria appeared
to fall on deaf ears.
Russias foreign minister Sergei
Lavrov insisted that both sides in
Syrias conflict were responsible for
the deaths at Houla. By declining to
blame the government alone,
Russia and China kept their
distance from Western and Sunni-
led Arab countries that say Assad
must step down.
With international criticism
growing of Assads methods in
trying to crush a 14-month-old
uprising, UN and Arab League envoy
Annan visited Damascus for talks
on his faltering peace plan.
He called on the government to
show it is serious in its intention to
resolve this crisis peacefully before
adding: This message of peace is
not only for the government, but
for everyone with a gun.
Tony Blair told the inquiry that Rupert Murdoch didnt lobby him on media issues
RADICAL cleric Abu Qatada will
stay in prison for at least another
five months until his deportation
appeal in October, a judge ruled
yesterday.
The extremist, who has been
described as Osama Bin Ladens
right-hand-man, is fighting
deportation to Jordan, where he is
accused of involvement in several
bomb attacks.
But yesterday a Special
Immigration Appeals Commission
judge denied Qatada bail, on the
Extremist preacher Abu Qatada
will stay jailed during Olympics
BY KASMIRA JEFFORD grounds that the 51-year-old might
abscond if freed and jeopardise
polices ability to protect the pub-
lic when their resources were in
high demand during the Olympic
games.
Lawyers for Qatada also said
yesterday that it was almost
inevitable that the case would go
back to the Europe justice system
if the appeal goes against him in
October.
The preacher lost a last-minute
legal bid to make a final appeal to
Europes human rights judges
earlier this month.
TUESDAY 29 MAY 2012
16
NEWS
cityam.com
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Entertainment One profit rises
as Twilight and Peppa pay off
A TIE-UP with Amazons LoveFilm
helped Entertainment One double
its pre-tax profits last year, the
firm said yesterday.
Profits at the Peppa Pig co-owner
rose to 23.1m in the year to 31
March from 11.4m in the previous
12 months, on revenues that grew
seven per cent to 502.7m.
The firm also confirmed it was
in talks to buy Canadian producer
Alliance, which financed last
years Oscar winner The Kings
Speech.
BY ELIZABETH FOURNIER
Entertainment One said it had
doubled digital sales since last
year after a five-year deal with
LoveFilm to provide films for the
on-demand service.
Big hitters for the company
during 2011 included the latest
installment of the Twilight film
series, and cartoon Peppa Pig.
The firm said US licensing for
the pre-school favourite was on
track for later this year,
including a potentially lucrative
merchandising deal.
The growth in our television
business and doubling of digital
sales have been particular
highlights, said chief executive
Darren Throop.
Entertainment One co-owns the rights to kids favourite Peppa Pig
Entertainment One Ltd
28May 22May 23May 24May 25May
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132
136
138
140
142 p
138.00
28May
TUESDAY 29 MAY 2012
18
NEWS
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ROLLS-ROYCE said yesterday it had
won 100m in engine service con-
tracts with the Royal Air Force the
latest in a string of recent deals.
Under the latest contract wins the
company will provide ongoing sup-
port for the UK militarys C-130
Hercules transport and VC10 tanker
fleets.
Rolls-Royce has also won an exten-
sion to its contract to provide techni-
cal support for Conway engines,
which will power the VC10 tanker
until it finishes service in 2013.
We take pride in supporting the
Royal Air Forces fleet of C-130s and
in our successful partnership with
Lockheed Martin, Marshall
Aerospace and the Ministry of
Defence, said vice president in
charge of defence contracts at the
FTSE 100 company, Paul Craig.
It is particularly pleasing that we
have continued to deliver high levels
of aircraft availability at a time when
both the C-130 and VC10 have recent-
BY JOHN DUNNE
Rolls-Royce Holding PLC
28May 22May 23May 24May 25May
805
800
810
815
820
825 p
815.50
28May
The new
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TUESDAY 29 MAY 2012
19
NEWS
cityam.com
T
HE controversies surrounding
the historic $104bn flotation of
Facebook in the US should have
reminded all of us that
although the New York financial
markets may currently be the place
to go for technology flotations, they
are not infallible.
What is disappointing is that with
so much wrangling about how the
float was handled, very few people
are putting the case for London to
somehow take advantage.
When commentators refer to the
problems of Nasdaq, which closed
down for around 30 minutes at a cru-
cial time in the proceedings, they
talk about Facebook maybe moving
on to the New York Stock Exchange.
Theres no-one cheeky enough to say
it should consider listing on the
London Stock Exchange, not even the
uber-optimistic Mayor of London,
Boris Johnson.
There are many reasons for this.
New York is firmly established as the
place to go for technology listings. It
has the research base and the
investor appetite, as well as the
recent history, with LinkedIn,
Groupon et al recently floating there.
London, alas, has had its own valua-
tion issues, with investing institu-
tions thoroughly fed up by what they
view as companies overpricing them-
selves as they come to the market.
Mention the likes of Ocado, Betfair
or Perform and those names wont
produce much of a smile from UK
institutional shareholders.
But surely now is the time to look at
whether we can do something to be
more competitive in the tech space
area. London needs to be more
issuer friendly, says a technology
banker at a large investment bank.
Its a less flexible market, with less
scope to change pricing late on, for
example, he added.
While companies the size of
Facebook look unlikely to rethink
New York for the time being, there
are a clutch of smaller tech firms that
might be tempted to try here.
We have a clutch of high quality
London based companies, including
Mind Candy and JustEat, that are at
or approaching the point when they
could float here... Im hopeful that a
few success stories will help open the
markets more widely, says Nic
Brisbourne, a partner at DLJ Esprit,
whose recent investments include
LoveFilm and The Cloud.
Post the Facebook debacle, it will
be easier for London to show it is the
best place for those companies to
list.
BLOCK TRADES
While IPOs continue to struggle on
the London markets, there doesnt
seem to be any shortage of buyers for
stock in good quality companies.
When the Reimann family wanted
to sell a five per cent stake in Reckitt
Benckiser it hired Bank of America
Merrill Lynch to do the business, in
what was to be the largest accelerated
placing of shares in EMEA in 2012.
The deal, done at a 6.1 per cent dis-
count to the market price, moved
Merrill up to second place in the equi-
ty capital markets tables.
[email protected]
INSIDE
TRACK
DAVID HELLIER
The Facebook debacle deserves a reaction from London
ly been involved in high tempo opera-
tions.
Our innovative approach, which
continues to ensure availability for
critical operations, has been greatly
appreciated by the RAF.
Rolls-Royce has contracts with 5,000
airlines across the globe, while 160
armed forces are also on its books.
At the end of 2011 the companys
order book stood at 62.2bn. Rolls
employs 40,000 people in 50 coun-
tries.
The companys shares rose one per
cent after the announcement.
Military engine
contract boost
for Rolls-Royce
City A.M.is offering readers the chance
to win a pair of VIP tickets to a fundrais-
ing dinner at Boisdale restaurant in
Canary Wharf.
The event takes place on Monday
week, 11 June, and marks the opening
of Motorexpo, the UKs largest free to
enter motor show.
All you have to do to enter the draw is
email [email protected]
by Friday, quoting City A.M./UK Youth
Gala dinner.
The lucky winners will get the oppor-
tunity to test drive two supercars from
the show, thanks to HR Owen, the
luxury car specialists.
Special guests at the dinner
will include the former
Formula One champion Nigel
Mansell CBE and His Royal
Highness Prince Michael of Kent.
Says Mansell: What could be better
for me than an event which opens
Motorexpo and celebrates the charity
of which I am president?
Tickets for the dinner are priced at
195 and can be booked by calling
0203 137 2914.
Get on the starting
grid for charity night
Join Nigel Mansell at a dinner
to celebrate Motorexpo
Got A Story? Email
[email protected]
20
cityam.com
cityam.com/the-capitalist
THECAPITALIST
IF youre feeling peckish today then head over to Canary Wharf,
Liverpool Street or Oxford Circus. A free lunch yes, it really is
free, according to organiser Barclaycard is being laid on for
10,000 Londoners to mark the wider launch of PayTag, the
contactless way to pay.
PayTag is an extension of a customers credit card account and
only available to Barclaycard Visa cardholders.
To celebrate the lunch offer, food artist Carl Warner has
recreated London landmarks, including the Gherkin and the
Shard, made entirely from everyday foods which were past
their sell by date. Needless to say, the free food is fresh.
For the full list of lunch locations check @barclaycard on Twitter
and #freelunch
TUESDAY 29 MAY 2012
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Putting lunch on Barclaycard
David Hasselhoff helped launch PayTag earlier this month
HARGREAVES Services yesterday
saw its stock plummet after it
issued a profit warning triggered by
problems at its coal mine in
Yorkshire.
It said that between 12m and
16m could be wiped off its profit
in the year to May 2013, sending
investors running for cover.
The lowering for forecasts from
analysts estimates of around
48m was caused by geological
problems at its Maltby coal mine.
Shares in the company, which
specialises in coal supply and deliv-
ery, nosedived by almost 30 per
cent after the companys shock
statement to the market.
Hargreaves believes the incident
at Maltby, which involved pulling
back operations because of safety
concerns after water, oil and gas
seeped into a new section of the
mine, to be a one-off.
Production division director Gerry
Huitson said: This is a very unusu-
al situation and to our knowledge
this has never happened before in
Maltbys long 100-year history.
Shares plunge
at Hargreaves
after coal blow
BY JOHN DUNNE
It is highly unlikely that these
conditions will be found again in
any subsequent panels.
Maltby employs 500 people and its
coal is primarily used to supply the
Drax Power Station, Europes largest
coal-fired power plant in North
Yorkshire, which is owned by British
power producer Drax.
The company also imports coal
and other minerals.
Chief executive Gordon Banham
said in a statement yesterday:
Whilst we are bitterly disappointed
by this development but there was
nothing that could have been done
by the mining team to foresee or
avoid this situation.
Hargreaves Services could see 16m wiped off its profit after problems at Maltby
Hargreaves Services PLC
28May 22May 23May 24May 25May
800
700
900
1,000
1,100
1,200 p
760.00
28May
The group has issued a trading update regarding an unexpected and
unprecedented geological conditions. It acknowledges the impact of this devel-
opment but believes in the long term viability and protability of the
mine and is working to mitigate the results of this occurrence.
ANALYST VIEWS

This is obviously a blow to the company. However it is very well run

and in the medium and long term things will get back on track. It was a geologi-
cal problem and very unfortunate, but any problem like this is going to
hit the stock.

While this kind of incident is rare at Maltby (and Hargreaves, surely one
of the only companies disappointed to nd oil....), it does little to dispel medium
term concerns that issues out of its control may always affect the share
price and protability of the company.

HOW BIG A BLOW IN THE

LONG TERM ARE THE
PROBLEMS AT MALTBY? Interviews by John Dunne
PETER ASHWORTH CHARLES STANLEY

JUSTIN JORDAN JEFFERIES HOARE GOVETT

PAUL JONES PANMURE GORDON

Jonathan
Rowland,
chairman of
Jellybook
TUESDAY 29 MAY 2012
21
NEWS
cityam.com
JELLYBOOK, the Aim-listed
investment company focusing on
social media start-ups, has clocked
up a 300,000 loss in its first 10
months as a company and failed to
make its promised acquisitions.
The vehicle, run by Jonathan
Rowland, son of the property tycoon
David Spotty Rowland, raised
more than 11m in June 2011 to tap
into the growing frenzy for social
networking.
Investors, however, are yet to see
any benefits, with the company
reporting a 295,000 loss in the 10
months to 31 December, including
start up expenses of almost
200,000.
Rowland said the board had
reviewed a number of potential
acquisitions but the majority were
not of a suitable size and scale.
The social media sector
continues to demonstrate extremely
strong growth despite the wider
economic uncertainties
and the number and
range of potential
investments is
expanding
commensurately.
Jellybook cash
shell racks up
300,000 loss
BY KASMIRA JEFFORD
Aveva, led by chief executive Richard Longdon, hopes to expand its presence in China, Latin America and India
OIL explorer Gulf Keystone yesterday
said that its performance in 2012
would build on what it branded
outstanding success last year.
The company said it has been
buoyed by successful operations in
Kurdistan, though its shares fell 2.5
per cent yesterday after the update.
Gulf Keystone said it was
planning the next stage of work
on its Shaikan field, whose oil
estimates have been
increased twice. Chief
executive Todd
Kozel believes the
BY JOHN DUNNE
scale of Shaikan find could be
higher than the 13.4bn barrels of oil
forecast. The company has told
investors that it hopes to produce
40,000 barrels per day from as
early as next year.
Losses before tax widened to
$63.7m (40.6m), from $26.8m a
year ago, as mounting expenses
kept pace with a surge in
revenues, which came in at
$6.9m compared to
$808,000 during 2010.
TUESDAY 29 MAY 2012
22
NEWS
cityam.com




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Todd Kozel is upbeat on
the companys outlook
Gulf Keystone hails booming year
as both revenues and losses soar
ENGINEERING and design software
group Aveva yesterday posted a 14
per cent rise in adjusted profit,
helped by a strong demand at the
end of the year from the oil and gas
industries, increasing its confi-
dence for the current year.
The group reported adjusted pre-
tax profit of 62.3m, ahead of mar-
ket forecasts of 60m. Revenues
were up 13 per cent to 195.9m for
the year to the end of March.
The company, whose software is
used to design ships, oil refineries
and nuclear power stations, said it
expected a better performance in
China after a restructuring.
Chief executive Richard Longdon
said: The strong close to last year
has put Aveva in a very good posi-
tion to deliver against our strategy
and to continue our focused invest-
ment to expand the business in all
areas.
We expect growth in the oil and
gas industry to continue apace
along with our expanding pres-
ence in mining.
Power is set to provide a solid
base of customers continuing to
prepare for the growth in nuclear
whilst marine is expected to
remain slow.
The companys shares jumped by
10.7 per cent to 16.38 after the
announcement.
Longdon said that the prospects
in China and Latin America were
positive, adding that the firm is
developing a much larger organi-
sation in India.
Milan Radia at Jefferies said
Aveva continues to benefit from
strong demand in the integrated
oil and gas sector, supporting his
double-digit organic growth fore-
cast for 2013.
Premium growth is becoming
scarce and Aveva accordingly
deserves an emphatic premium rat-
ing, said Radia.
Growth in oil and gas
fuels Avevas profits
BY JOHN DUNNE
AVEVA Group PLC
28May 22May 23May 24May 25May
1,700
1,600
1,550
1,500
1,650
p
1,638.00
28May
TUESDAY 29 MAY 2012
23
DC Advisory Partners
The corporate finance advisory
firm has appointed Jack Dessay
as an executive director in its
technology, media and
telecommunications team. He
joins from Deutsche Bank, where
has worked for the past six years.
Dessay has also held senior posts
at Citigroup, working from its
New York and London offices.
KPMG
Charlie Patrick has been appointed KPMGs new head of its
anti-bribery and corruption practice. He takes over from
Brent McDaniel, who is returning to the US. Patrick is a
director in the firms risk consulting division and has been
with KPMG for 20 years. He has over 15 years experience
in forensic and accounting matters within the UK and
abroad. He spent two years as a project manager
investigating the fate of the assets of Holocaust victims.
SEI
The provider of outsourced fiduciary management
investment services has appointed David Hickey as a
director within its institutional group. Prior to joining the
firm, Hickey spent the majority of his career at Barclays
Wealth, latterly as head of UK and Ireland pension
origination. He has also worked for PwC.
Northland Capital
Steven Baird has been appointed as a director in the
investment banks sales and broking team. He has over 25
years broking experience, and started his career in UK
equities at James Capel. He has since worked for Nomura
and Societe General, and was one the first employees at
Oriel Securities.
Kleinwort Benson
The private banking and wealth management firm has
announced the appointment of Andrew Wheeler to the
new position of executive director, business development
within private wealth management. He joins from
Absolute Fund Managers, where he was a partner and led
development and marketing of its private client-focused
hedge fund range. Wheeler has previously held senior
roles at Deutsche Bank Private Banking and Dexia Private
Bank.
MN
Walter van Gent has been named as the successor to Dirk
de Heer as head of UK risk and operations at the European
fiduciary manager. He joins the UK team from MNs Dutch
office, where he has been team manager operations since
2008. Additionally, Ross Leighton has joined the firm, as
UK risk and operations manager, from JP Morgans
performance measurement team.
BDO
The accountancy firm has appointed Michelle Carroll and
Neil Griggs as partners in its financial services team. Carroll
joins from Kinetic Partners, where she managed its
international audit practice. Griggs also joins from Kinetic,
where he started as an audit partner in 2007.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
E
UROPEAN shares ended in
negative territory yesterday,
reversing earlier gains in thin
trade as concerns surrounding
Spains banks returned to the
forefront of investors minds.
The FTSEurofirst 300 closed down
0.1 per cent at 984.01, having earlier
reached a high of 993.21 boosted by
opinion polls suggesting Greeces pro-
bailout parties may be able to form a
government committed to staying in
the Eurozone.
But trade was light as a number of
European markets were closed, accen-
tuating the moves, with the
FTSEurofirst 300 trading just two
thirds of its 90-day daily average.
Spains IBEX was the biggest faller,
down 2.2 per cent, weighed by bank-
ing heavyweights Santander and
BBVA, with sentiment dampened by
the growing cost of shoring up
lenders.
CAPITA
UBS has upgraded the outsourcing group from neutral to buy and raised
its target price to 725p from 700p, saying that a buying opportunity had been
created by its recent share issue and that the shares depressed valuation does
not reflect the brokers view of an improving trading momentum.
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B
RITAINS main equity index
ended little changed after
giving away most of its gains in
late trade yesterday, in a sign
investors lacked the confidence to
sustain a recent rally in the absence
of greater visibility on the Eurozone
crisis.
The FTSE 100 closed up 4.81 points,
or 0.1 per cent, at 5,356.34 points, hav-
ing stretched as high as 5,413.83
points in morning trade.
Traders said investors were happy to
book their intra-day profits as uncer-
tainty surrounding the Eurozone,
where concerns about Spanish banks
sent local government bond yields
jumping and the common currency
slipping towards two-year lows, made
it too risky to bet on a sustained mar-
ket recovery.
Most of the people on the buy side
we spoke to are more bearish than
bullish, Oliver Stansfield, director of
equity sales at Fox-Davies Capital, said.
They are also still concerned that
volumes are going to remain fairly
thin over the next few months, with
the summer and the Olympics.
With Wall Street shut for Memorial
Day, the FTSE had traded little over
half of its 90-day volume average by
the close. Low volumes amplify share
price volatility and, with fewer
investors, also make it harder to get in
and out of positions quickly.
The FTSE has so far failed to validate
a bullish trading pattern known as a
double bottom, where two lows of
increasing height are formed.
A support base has shaped around
5,254 and has allowed for a temporary
stabilisation Nicolas Suiffet, a techni-
cal analyst at Trading Central, said.
Suiffet said a push above todays
high of 5,413 would call for a limited
recovery towards the indexs recent
high of 5,465 and the indexs bearish
20-day moving average at 5,495.
Miners added most points, boosted
by hopes of more stimulus from
China, the worlds largest metals con-
sumerte its economy.
LONDONREPORT
FTSE rising but
investors wary
EUROPE REPORT
Spanish woes
weigh markets
HOMESERVE
Peel Hunt has a sell rating on the home emergency repair membership
service, and has lowered its target price on the stock from 220p to 130p.
The broker says the move reflects a 23 per cent downgrade to its 2014
earnings estimates, as well as the impact of an ongoing FSA investigation.
SPORTECH
Panmure Gordon has kept its buy rating on the pool and tote betting supplier
and upped its target price from 67p to 71p, saying the groups US operations are
significantly undervalued, particularly considering the company seems well
placed to benefit from state regulation of online betting.
BESTof theBROKERS
Sportech PLC
22May 23May 24May 25May 28May
p 57
56
53
54
55
52
55.75
28 May
Homeserve PLC
22May 23May 24May 25May 28May
p 180
170
150
160
140
146.00
28 May
Capita PLC
22May 23May 24May 25May 28May
p 635
630
620
625
610
605
615
629.00
28 May
I AM
THE MERCHANT.
I HAVE FOUND
THAT IN TIMES
OF GREAT HEAT,
SANCTUARY IS
A COOL SHADY
PLACE AND AN
ICE COLD BEER.
TUESDAY 29 MAY 2012
25
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IN BRIEF
BoJ fears investors hooked on QE
Bank of Japan policymakers agreed
to ease monetary policy in April to
ensure the economy resumes a
recovery, but signalled a pause by
complaining of misunderstanding in
markets that they will keep offering
monetary stimulus automatically until
one per cent inflation was in sight,
minutes of the meeting showed
yesterday. At the 27 April meeting, the
Bank boosted asset purchases by 10
trillion yen (80.2bn), offering its
second stimulus in just over two
months in a show of its determination
to achieve its one per cent inflation
target set in February. Members
made note of some misunderstanding
that the Bank would continue to
increase the size of its asset-buying
programme automatically until it
judged that one per cent inflation will
be in sight, the minutes showed.
OECD calls for Africa jobs boost
Young people represent 60 per cent
of Africas unemployed, and of these
40m youths around 22m have given up
looking for work, according to a report
out yesterday from the OECD. That rep-
resents a threat both to Africas
chances of reducing poverty, and to
social cohesion, said the report.
Improving education in agriculture as
well as adopting new technologies will
help improve the conditions for busi-
ness growth and boost youth employ-
ment prospects, it explained. Export
diversification beyond raw material and
private sector development are impor-
tant to mitigate the continents suscep-
tibility to external shocks, but that
takes time, added director Emmanuel
Nnadozie.
FEARS over the weak economy and
the chance of a Eurozone collapse
have pushed up risk premiums and
hit lending to such an extent that
interest rate cuts barely affect the
market, monetary policy commit-
tee (MPC) member Ben Broadbent
said in a speech yesterday.
This is hitting investments in
areas such as research and develop-
ment which are designed to boost
productivity, he said, damaging
the supply side of the economy
and so the long-term growth
outlook.
In response to the financial
crisis and recession, the Bank
of England cut interest rates
and printed money in an
effort to stimulate the econo-
my.
This did bring down nominal
interest rates on bank loans,
but credit was still difficult
to obtain as banks cut
Bank: Low rates
cannot counter
Eurozone woes
BY TIM WALLACE
lending to rebuild balance sheets.
Such a re-balancing may have
been expected to have led to recov-
ery, Broadbent explained, but the
ongoing crisis in the Eurozone has
maintained the pressures in the
market.
We are now suffering from a
more general rise in the premium
demanded for all risky investments,
however theyre financed, he said,
pointing to the rising cost of credit
in securities markets.
Broadbent claims that
the Bank of Englands
very loose policy helped
in 2008 and could help
again in certain cir-
cumstances.
But, in terms of
stopping an extreme
Eurozone outcome
for the time being at
least, the most impor-
tant decisions affecting
the UK are being
taken in other
parts of the
c o n t i -
nent.
BRITONS are spending two more
days working for the government
this year than in 2011, the Adam
Smith Institute revealed today in its
Tax Freedom Day report.
Calculating the tax paid by the
average worker over the year, the
institutes figures show that every
penny earned so far this year has
gone to the government, and only
from today are workers earning for
themselves.
The double-dip recession, last
years VAT increase, fuel duty and
high income taxes are all
contributors, said the institute.
Workers are paying two days
more wages in tax this year
BY TIM WALLACE
Once government spending and
borrowing is taken into account,
the cost of government day falls
on 23 June down from 30 June
last year, meaning the deficit
reduction plan has knocked seven
days-worth from state activity.
In the Middle Ages a serf only
had to work four months of the
year for the feudal landlord,
whereas in modern Britain people
have to toil five months for
Osbornes tax gatherers, said ASI
director Eamonn Butler.
Just as the rest of us have had
to cut back, so should the
government. The UK economy
would be a lot healthier for it.
Eamonn Butler is the director of the Adam Smith Institute
Ben Broadbent said
low rates are helping
W
HEN economic crises
strike it can take a while
for economists to keep up.
But one of the confusing
outcomes of events since
2008 has been policymakers
presenting established policies
such as what is now being called
quantitative easing (QE) as being
novel, and policymakers and
commentators using different terms
to mean the same thing (and indeed
the same terms to mean different
things).
When asked if he was engaging in
QE, Mario Draghi, president of the
European Central Bank was right to
reply that every jurisdiction has not
only its own rules, but also its own
vocabulary.
I
F LONDON is to retain its status as
a global capital for business in the
face of technological revolution
and the rise of mega cities in the
South and East of the globe, it is
vital for property developers to
respond to changing business needs.
This is not just building new offices
that are well designed, environmen-
tally efficient, resilient, architectural-
ly excellent and which allow
companies to create a thriving, social
culture; although all these things are
very important. Its about creating
new business locations, fused with
technology and an attractive lifestyle,
that match exactly what businesses
will require in the future.
Of course, predicting the future of
business is difficult, especially
because things happen more quickly
now. It used to take centuries to create
places. At Canary Wharf it took just
20 years to transform a wasteland into
a 100,000-strong business community.
Very few predicted this success at the
outset.
Technological advancement and
seismic shifts in world economies
cityam.com/forum
The onus is on
developers to
accelerate the process
of urban evolution
In association with
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: [email protected]
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

26
TUESDAY 29 MAY 2012
GEORGE IACOBESCU
Londons developers have a prime
role in ensuring its future success
mean the natural evolution of our
cities is too slow. The onus is on devel-
opers to accelerate the process of
urban evolution, using the future
needs of businesses and the talent-
ed people they depend on as the
end goal.
A case in point is the 20 Fenchurch
Street office building, currently
under construction in the City. As
developers alongside Land Securities
we have pressed ahead, despite the
economic uncertainty, with some-
thing completely new and different
in design and technology terms. This
was done knowing there is a relative
shortage of top quality office space
under construction in central
London, and that for world class busi-
nesses, much existing office space is
becoming obsolete.
Any future vision for London must
appeal to the burgeoning technology,
media and telecoms (TMT) sectors.
Seemingly resilient to the downturn,
take-up of Central London offices by
TMT companies doubled between
2010 and 2011. But, even within this
context, the role of banking and
financial services in Londons future
should never be underestimated.
Access to finance is a lure that
attracts businesses of all types. Add to
this the City talent pool and client
immediacy and you can see why
Silicon Roundabouts location on the
City fringe is no coincidence. Tech
Citys physical alignment with a
financial community that stretches
from the hedge funds of Mayfair to
the banking headquarters of Canary
Wharf is part of a synergetic relation-
ship between the TMT sectors and the
labour and capital markets.
It is precisely this synergy that
makes Londons ambitions to be the
digital capital of Europe credible. It is
the clarion call for developers to chal-
lenge the old conventions start with
a blank piece of paper and design a
business location that precisely meets
the requirements of leading global
businesses in 2022 and 2032, not
2012.
Right now we are refining our
vision for Wood Wharf to the east of
Canary Wharf. We want to do some-
thing evolutionary for a diverse range
of tenants, so we are listening to busi-
nesses to understand how they will
need to work in future. We know con-
nectivity will be key both virtual
and physical. Interactive environ-
ments stimulate creativity by
enabling collaboration. The smartest
business is as likely to be done in cafes
as boardrooms. We know this from
Canary Wharf where we have devel-
oped close to 1m square foot of cafes,
bars, restaurants and shops, connect-
ed by parks, plazas and waterfront
walkways.
The modern workplace is fluid and
mobile and it interacts with its local
community. The tablet, the Skype call
and the ability to walk to work will be
as essential as Crossrail and catching
the Boeing Dreamliner to Beijing.
Places can enable business or hinder
it. The challenge for Londons devel-
opers in an increasingly competitive
and fast moving global market is this:
Enable businesses to be where the tal-
ent is, where the money is, where
their customers are and where their
people can work and socialise togeth-
er in a connected, flexible and live-
able way.
Sir George Iacobescu is the chairman and
chief executive of Canary Wharf Group.
Alongside fellow developers, the story of
Canary Wharf will be told at The
Developing City exhibition, which opens in
London in June.
For years, economists have accepted
that something called open market
operations are a key tool in central
banks arsenals even though they
may not have been used especially fre-
quently prior to the crisis.
The typical textbook definition
states that central banks can use such
open market operations to buy and
sell government bonds from commer-
cial banks with newly created money
to influence the interbank market
and hit a target short-term interest
rate. Does that remind you of any-
thing? Open market operations are of
course the old name for our supposed-
ly new friend QE sometimes, giving
an old idea a new name can have a
huge impact on how it is received and
debated, especially when the public
and media are unaware of its history.
Why QE or open market operations?
Simple: short-term interest rates can-
not be negative so at some point a
rate-cutting central bank can become
constrained by their zero lower
bound. But monetary policy doesnt
then become ineffective. There are
still plenty of options available to the
central bank. Here are four.
1. Qualitative easing the central
bank changes the quality of assets
bought and engages in the purchase
of assets other than government
bonds. This could include private
bonds or even junk bonds if they
wish.
2. Credit easing the central bank
changes the list of institutions that it
buys assets from. Instead of only deal-
ing with a particular set of commer-
cial banks they could buy assets direct
from the non-bank commercial sec-
tor, or even from specific businesses
such as SMEs. The central bank essen-
tially becomes an investment vehicle
in private debt.
3. Operation twist the central bank
can change the maturity of the assets
being bought, and can try to flatten
the yield curve by purchasing longer
term assets.
4. Quantitative easing the central
bank targets the quantity of assets
bought rather than the price (i.e. the
interest rate).
If nothing else, this reveals that
quantitative easing is nothing new or
exotic, it is simply printing money to
buy a pre-specified amount of bonds.
But the further question is what type
of bonds, what duration, and who
from? These are the policy discussions
that are taking place right now, and
are less of a ragbag than they appear.
Anthony J. Evans is Associate Professor of
Economics at ESCP Europe Business School.
His website is www.anthonyjevans.com, and
you can email him at
[email protected]
FRONTLINE
ECONOMICS
ANTHONY J. EVANS
Central banks have plenty of ammo but theres confusion on how they fire
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27
Greek insolvency
[Re: Eurozone crisis moves ever closer as
Greek left gains ground, Friday]
Im not sure you can blame the Greeks for
borrowing vast sums on the assumption
that they had the same credit worthiness as
Germany. The financial system was at fault.
Having said that, the point that Greeks now
have to reduce their living standards is of
course right. Insolvency is not new. The
results have been the same since lending
first began. The lender loses money and the
borrower has to immediately cease
borrowing and live within his or her means.
Sadly, readopting the drachma will likely
not make any difference in this regard.
Theres no instant credibilty gain to be had
from leaving the euro.
Peter Kralj
Belgiums burden
[Re: Europes shared currency shouldnt
entail Germany bankrolling a debt union,
Wedensday]
I couldnt agree more with Jamie Whytes
assessment. Another example couldve been
Belgium. A currency union is why there are so
many divisions between the Flemish and the
Walloons. Flanders has long operated under
strict budget management, with a highly
competitive economy. Wallonia is more like
Greece or Portugal. The result is that Flanders
has subsidised Wallonia. Its one of the rea-
sons why break-up of Belgium could happen.
This is a useful comparison to make because,
although break-up sounds virtuous, any divi-
sion would have broader consequences than
simple economics. Belgium still survives.
LodeVermeersch
O
VER the next three years,
82m of taxpayers money
or debt, to be more precise
will be funnelled into a
scheme to provide loans
worth on average 2,500 to
entrepreneurs aged 18 to 24. Cue
politicians, business people and
other sycophants tripping over
themselves to be linked to this
intrinsically popular policy. After
all, who in their right mind could be
against start-up loans for young,
gifted entrepreneurs?
Certainly not any famous entrepre-
neurs. And definitely not James
Caan, ex-star of Dragons Den, who
will chair the body overseeing the
allocation of the loans. Nor the god-
father of entrepreneurship Sir
Richard Branson who has been
pushing for this with his own band
of young entrepreneurs, the Virgin
Media Pioneers, that he so
admirably supports.
And you wont find a politician
with a bad word to say against the
scheme. No wonder. Forget austerity
Britain, it harks back to when things
could only get better. It could easily
have been dreamt up by Tony Blair
or more precisely Alastair Campbell,
with the perfect ingredients for
good press: young bright things,
entrepreneurship and loans to small
businesses. But its a smokescreen
and a wasteful smokescreen to boot.
Although young entrepreneurs are
an inspiring bunch, the government
shouldnt lend them money for the
same reason that you probably
arent digging into your back pocket
to help them out. Most of their busi-
nesses will fail. And the govern-
ments money comes from
taxpayers, or more accurately future
taxpayers.
Every time the government takes
money from private citizens, its also
taking money from the small busi-
TOP TWEETS
With Spain, Greece and Portugal all looking
to the European Stability Mechanism basket,
well need a miracle of loaves and fishes.
@declanganley
Tony Blair at Leveson: The modesty of a rock
star, the sincerity of a politician, and the
ethics of lawyer. The template politician.
@CharlotteGore
Russia vetoed a proposal condemning Syrian
massacres. Dont look to the UN for resolve.
@Lara
Baroness Warsi will cooperate fully with
any expenses investigation. Does she really
have any other options?
@markthomasinfo
Has the time come for military intervention
to topple Bashar al-Assads Syrian regime?
YES
Military intervention in Syria isnt so much a matter of preference
as an inevitability. The Kofi Annan plan has failed, and even Annan
himself has stopped just short of saying so. Last Fridays
horrifying, state-orchestrated massacre of 116 people, including
women and children, in the village of Houla proves that a
negotiated settlement at this stage is a fantasy. Not only will
Bashar al-Assad, President of Syria, not accept it, both the political
and military wings of the Syrian opposition will never agree,
especially if the result is such that the dictator leaves, but the
murderous and torturous institutions of his dictatorship remain
firmly in place. 15 months of inaction have led the country to the
precipice of civil war; nothing short of the removal of this regime
by force can prevent the country from going over the edge entirely.
Michael Weiss is communications director at the Henry Jackson
Society.
Michael Weiss
NO
Lindsey German
Albert Einsteins definition of madness was repeatedly to do the
same thing, even though it had manifestly failed. It describes the
foreign policy of the British and American governments. Military
intervention in Syria is on the agenda again following the massacre
in Houla on Friday. Everyone should condemn this brutal killing. But
we should not allow sympathy for the dead to lead to intervention,
costing far more lives. Recent wars have all been justified as
humanitarian, to save lives and restore democracy. Hundreds of
thousands have died in Iraq, Afghanistan and Libya. The region is no
more democratic and less stable than before. The more outside
powers intervene, the greater the bloodshed will be. Covert
intervention in Syria by western powers and Gulf states has already
begun, with one aim only: illegal regime change. Syrians alone
should decide their future.
Lindsey German is convenor of the Stop the War Coalition.
RAPIDresponses
Cheap money and
more debt wont
help the young
nesses that these very same citizens
would spend of their own volition.
Because they are driven by what peo-
ple actually want, they are genuine-
ly private businesses in the real
economy, and are therefore for
want of a better word more sus-
tainable.
Rather than create viable business-
es, the idea of the scheme may mere-
ly be to prepare young people for a
future of starting businesses. If so,
the scheme is barking up the wrong
tree. Branson like many precocious
young businessmen started out on
the back of orders for things he did-
nt own, in his case audio records.
Start-up capital isnt necessary for
those born to innovate.
We should turn to our schools if
we wish to instil the next generation
with a broad mindset for entrepre-
neurship. The key skill that children
need to build if they are going to be
the next Mark Zuckerberg is their
capacity for risk. And even then they
might fail and fail hard. Not every-
one is cut out to be an entrepreneur.
Its easy to hand over other peo-
ples money. But doing so avoids
tough decisions. Further indebting
the next generation isnt the solu-
tion. Paying down public debt, tak-
ing personal responsibility and
instilling the next generation with
the skills to change the world with-
out state handouts now thats a
policy for entrepreneurship worthy
of the name.
Philip Salter is the Business Features
Editor of City A.M.
TUESDAY 29 MAY 2012
PHILIP SALTER
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DAVID MORRISON
SENIOR MARKET STRATEGIST, GFT
M
ORE than 700 people
turned up last week to the
inaugural City A.M. Active
Trader event at the Grange
Tower Bridge Hotel to listen to our
assembled panels of experts give
their wisdom on everything from
bearish engulfing candlestick
patterns to using twitter for
trading.
We asked some of the Active
Trader panelists for their pick of
the best questions from the audi-
ence, and their responses.
DAVID JONES
IG Markets
Q
We now have so much
technological information
at our fingertips and when
it comes to analysis tools
there are hundreds of different
ways we can chart markets do
you think this has changed the
way that your clients trade?
A
Technological changes in
the last 10 years or so have
meant that retail traders
have much more of a level
playing field than ever before. I
think one of the drawbacks is the
risk of analysis paralysis there
is so much information you can
throw at a price chart that you
can end up confused and not see
the wood for the trees. Although
technology has moved on in leaps
and bounds in the last decade,
markets are the same as they
were a century ago. They still go
up, down and sideways. So I still
think the cornerstone of any
approach to markets has to be the
tried and tested ideas of following
a trend and keeping risk at a
manageable level relative to the
size of your account we can
waste too much time looking for
a magic system and ignore what
the market is actually telling us.
ANGUS CAMPBELL
Capital Spreads
Q
One of my points in my
presentation was how
traders need to be
adaptable for different
market conditions and at the end
I was asked what I meant by being
adaptable.
A
Most strategies tend to
work in trending markets
and since markets only
trend for roughly 30 per
cent of the time, traders should
always have a strategy for when
the markets are also very range-
bound. Their normal strategy
may not work in a range-bound
market and therefore traders
either need to stop trading or
look at their risk-reward ratio and
trade size so that they can tweak
things. After all, the markets are
continually changing and
adapting and so investors need to
be able to know when a strategy
isnt working and its time to
make a change or try something
new.
JOSHUA RAYMOND
City Index
Q
What is your take on
following the strategies of
others through social
trading?
A
I am a fan of giving clients
the option to do this and it
has its merits, particularly
if you can follow someone
with a strong track record of
performance.
The one negative I would point
out is that for me trading is a very
personal experience. If I analyse a
trade scenario, place the trade
and net a profit, for me thats
something I have achieved and I
am proud of. By following some-
one elses trades it can take that
personal experience away from
trading. However, I believe in giv-
ing clients the option so that they
can chose to employ social trading
or trade their own strategies.
Active Trader speakers
give their picks of the
City A.M. conference
BY CRAIG DRAKE
L
A
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A

L
E
A
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C
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A
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Traders came from far and wide to grill our experts
TUESDAY 29 MAY 2012
29
cityam.com
TRADING MANAGEMENT WEALTH
fx360.com
GOLD WILL CONTINUE TO BE
DRIVEN BY UNCERTAINTY
EURO DOLLAR traded around its lowest level in 22 months
2005 2006 2007 2008 2009 2010 2011 2012
400
600
800
1,000
1,200
1,800
1,600
1,400
$
$1,526.2
twitter.com/fx360 facebook.com/fx360
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
E
VEN as euro-dollar traded around its
lowest level in 22 months, global
stock indices managed to stage a
small rally last week. Although it is
wise not to read too much into this
divergence, it marks a break from the
positive correlation between the single
currency and stocks to which we have
grown accustomed. One explanation for
this could be the expectation of further
intervention from the European Central
Bank (ECB). Anything which raises euro
liquidity will hurt the currency while
supporting risk assets. Of course, gold
should also benefit should investors
convince themselves that additional
central bank stimulus is on its way.
After a strong start at the beginning of
the year, gold has fallen sharply over the
past few months. Equities have too, of
course, but gold has fallen around 15 per
cent from its February high while the S&P
500 is down a more modest 7 per cent
from this years best levels back in March.
In both cases, prices rose as the full impact
of the ECBs initial Long-Term Refinancing
Operation (LTRO) was absorbed. But now
it feels as if gold and equities have further
to fall in the absence of further central
bank intervention.
Of course, central banks also buy and sell
gold, and their changing behaviour is one
of the biggest fundamental drivers for
future price action. For over 20 years,
central banks were net sellers of bullion,
but became net buyers in 2009. The
central banks of developed economies,
which hold significant proportions of their
reserves in gold, stopped selling.
Meanwhile, emerging market central
banks, which typically have only a small
percentage of their foreign exchange
reserves in gold, are rebalancing their
reserves in golds favour. Noting the
persistent budget deficits that the US and
other developed countries are running,
there is a wish to diversify out of dollars as
well as other fiat currencies.
If central banks continue to be net
buyers, then gold should find strong
support, at least as far as the physical
market is concerned. However, the paper
(futures and forwards) markets dwarf the
physical in terms of the outright number of
ounces traded each day. In the short-term,
the movements in the gold price correlates
closely with those of other risk assets.
Leveraged investors, such as fund
managers and speculators, use the futures
market and exchange-traded funds (ETF).
These instruments are typically traded on
margin. Consequently, if equity markets
experience a sell-off, there is usually a rush
to liquidate all margined position to raise
cash and limit future losses. Gold has been
caught up in these sell-offs before, and it is
likely to happen again. On the other hand,
physical buyers tend to be long-term
holders who have made the decision to
own gold because it offers a method of
wealth preservation. They view it as a store
of value and a medium of exchange. It
cannot be devalued as it cannot be created
by the press of a button as currency and
debt instruments can. It therefore makes
up an important part of many investment
portfolios.
Many analysts believe that gold was in a
bubble which has now popped. They argue
that it is an unproductive asset as it yields
nothing and pays no dividend. But others
say that gold is nowhere close to bubble
territory. They note that when adjusted for
inflation, the previous record high of $850
achieved back in 1980 would price gold at
around $2,400 today. Gold bulls also argue
that it is destined to rise much further than
this, as the default reaction by developed
world central banks is to inject liquidity
into the markets through quantitative
easing and asset purchase programmes. In
addition, as every country seems intent on
boosting growth by cheapening their
currency to encourage exports, this
simultaneous devaluation of fiat currencies
can only boost golds appeal. Yet one thing
is for certain gold will remain volatile for
as long as economic uncertainty continues
to grow.
G
E
T
T
Y
Pay attention to your stops or it will cost you
It is easy to be right
but fail to profit,
writes Craig Drake
FXCM, using a data set of over 12m
trades conducted between 2009 and
2010. It shows the 15 most popular
currency pairs that clients trade. For
example, in euro-dollar, the most
common currency pair, traders were
profitable on 59 per cent of their
trades and lost on 41 per cent.
Though this data is from FX trades,
you would see a similar chart if you
lined up the 15 most traded UK equi-
ties, or 10 most traded commodities
the trend would remain the same.
Traders often refuse to admit when
theyre in a bad trade.
According to Rodriguez, the easy
QUANTITATIVE STRATEGIST
DAVID RODRIGUEZ
My pick: Sell euro-dollar rallies
Expertise: System trading
Average time frame of trades: 2 to 10 weeks
I remain in "sell rally" mode on euro-dollar, and I would like
to sell any significant bounce in the otherwise fast-falling
currency pair. Recent CFTC Commitment of Traders data
shows large speculators at their most net-short euro-dollar in
history, and any short-covering rallies could be quite sharp.
But selling against major resistance of $1.2832 with a target
of $1.25 and lower is my preference. A minimum 1:1
reward/risk implies entry of $1.2661 or better.
ANALYST PICKS
How to lose money when trading
D
AVID Rodriguez, quantitative
strategist for FXCM, spoke on
the masters of forex panel at
the City A.M. Active Trader
event last week. He pulled up the
two charts to the right, which give a
telling snapshot of the mentality of
many traders, as well as what he
cites as being the number one
mistake made when trading.
As you can see from the first chart,
on average, traders are right more
than half of the time that they
trade. But despite this, many traders
still struggle to turn this winning
ratio into a profit but why? As
Rodriguez explained to the those
attending the conference, while
traders are quick to cash in their
winnings when the trade goes well,
they have the tendency to stay in a
losing trade longer than they should
in the hope that the tide will change
and their trade will come good.
The chart is based on data from
STRATEGIST
ILYA SPIVAK
My pick: Stay short euro-dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I sold euro-dollar on 8 May at $1.3004 as prices broke
support at $1.3025. The Greece fiasco is on hold until
elections in mid-June while headwinds to global growth from
China and the EU are severe but thematically familiar,
meaning the greenback has room to correct lower. I will look
to the bounce as an opportunity to add to short euro-dollar
exposure but have adjusted my stop down to $1.2865 as a
precaution.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Long euro-Swiss franc. Short euro-dollar
Expertise: Combining fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
The heavy risk deleveraging trend through the first half of
May flagged this past week, so I will adjust to it. The euro-
dollar break below $1.2625 was a good setup, but first half
profit should be taken and stop on remainder trailed to
break-even. Euro-Aussie didnt play free of risk-influence, but
Canadian dollar-Swissie looks much better in that regard
above SFr0.9425. I will also stick with euro-Swiss franc
awaiting the SNBs effort.
TUESDAY 29 MAY 2012
MANAGEMENT WEALTH
cityam.com
to prescribe, but sometimes diffi-
cult to adhere to rule is: cut your
losses early, let your profits run.
Avoiding the loss-making problem
is pretty simple. When trading,
always seek a bigger reward than
the loss you are risking. This is a
valuable piece of advice that can be
found in every trading book, says
Rodriguez.
The second chart displayed by
Rodriguez at City A.M. Active Trader
demonstrates the example of a
risk/reward ratio strategy with stop
losses in place.
The raw system follows a fixed
TRADING
30
Prot versus loss
AUD/JPY NZD/USD USD/JPY EUR/GBP EUR/USD AUD/USD USD/CHF EUR/JPY EUR/AUD USD/CAD EUR/CHF GBP/USD GBP/CHF GBP/JPY AUD/NZD
100
90
80
70
60
50
40
30
20
10
0
%
Losing Winning
Stop losses
14Dec2001 1 Feb2004
Raw
Stops and losses
25Dec2005 21 Jun2007 3Mar 2011 12Jan2009
10,000
8,000
6,000
4,000
2,000
0
-2,000
S
O
U
R
C
E
:

F
X
C
M
S
O
U
R
C
E
:

F
X
C
M
strategy, but without any stops and
limits. The trades made using the
raw system are profitable 65 per
cent of the time during the meas-
ured period, but lost an average of
$200 a time on losing trades, while
making an average of only $121 on
winning trades. The red line shows
the same line set with stops set at
115 pips and the limit at 120 pips,
keeping the risk/reward ratio on the
right side of 1:1. The second strategy
did not have quite the same impres-
sive rate of profitable trades, but
still achieved a rate of 59 per cent.
But crucially, its positive trades
made more money than its negative
trades lost, resulting in profits.
MANAGEMENT WEALTH TRADING
31
PAUL STAINES
ACTIVE
TRADER
I
WAS a futures broker in my
twenties, mostly interest rate
futures I did a bit of bond
dealing, mainly in sovereigns
rather than corporates. I got fired
from the Japanese investment
bank I was working at in the late
1990s and a friend of mine said:
Do you know anything about
stocks? So I fell into trading
technology stocks during the
dotcom boom from 1997 to 2001,
ending up in Tokyo trading for a
hedge fund during the six months
long Japanese tech stock boom. I
thought I was a genius trader,
made a fortune, then lost only half
of it in the Nasdaq crash. I realised
I was perhaps mainly just in the
right market at the right time.
Nowadays almost all of my capital
is in real businesses, in which I
have a hands-on management
interest. But I still play the markets
with some risk capital that I dont
tell the wife about.
I am a bit of a closet gold bug.
When my first daughter was born I
bought her a one ounce gold coin.
She has just turned 7 so that invest-
ment is up some 200 per cent.
When she lost her first tooth the
tooth fairy in our house put a
small Canadian Maple Leaf gold
coin weighing about one gram
under the pillow. She came down
the next morning in tears crying
that she had only got a penny and
all her school friends had got a
pound.
My basic political world view is
that the advanced Western democ-
racies are screwed after decades of
deficits and that we will see infla-
tion the Black Swan will be dou-
ble digit inflation. My view is that
Your trading and
politics should be
mixed carefully
TUESDAY 29 MAY 2012
cityam.com
The editor of the popular Guido Fawkes blog gives his tips
A
VOLATILE week for markets
nevertheless saw stock indices edge
up slightly last week, as fears of an
immediate Greek exit receded. We
now move into a waiting period ahead of
the 17 June elections, but a new poll out
from Athens over the weekend puts the
pro-bailout forces in the ascendancy,
although their lead is rather slight. Still, it
does seem as if the prospect of a Greek exit
from the euro scares the Greek population
as much as it does global markets, with
polls showing that Greeks would prefer to
remain in the euro, even if they hate the
austerity measures that go with it. A
European summit meeting was, as usual, a
complete non-event, with Greece barely
being discussed. Such things do not exactly
engender confidence among global
markets. However, as well as the ongoing
Eurozone crisis, we also
have a slowing global
economy to contend with.
Chinese data last week
showed that activity in
manufacturing remains
weak, while export figures
from Japan recorded a
slowdown in April. With all
this going on, sentiment still
remains cautious, although the
rout in global markets seems
to have paused, at least for
now.
The continuing
degeneration of the
Eurozone means that the
INSIGHT
DAVID JONES
THE EUROZONE WOES HAVE
BEEN STERLINGS GAINS
CHIEF MARKET STRATEGIST
IG IS DIFFERENT SEARCH IG MARKETS
sions.
A friend of mine is probably the
biggest trader of short-term inter-
est rate derivatives in the UK. He
too, in private after a few drinks, is
a gold bug. He doesnt read the
news, he just trades his algorithm.
He keeps his politics out and off
the trading floor. However, he is
happy to chat to you about politics
on his private jet. There is a lesson
there.
Secondly, at the beginning of the
year I expected Greece to be out of
the euro by March at the latest. My
trades were predicated on that.
Was that wishful thinking because
Im a Eurosceptic? Im not sure. But
it is important to guard against
your political prejudices influenc-
ing what should be a cold calcula-
tion.
Paul Staines spoke on the City A.M.
Active Trader politics and trading panel.
policy makers particularly in
Washington DC deliberately want
to inflate government debts away
after sticking the Chinese with
their Treasury paper, just as they
did to the Japanese and before
them the Arabs. The problem is
that inflation has a habit of getting
out of hand. Hence gold as the
immortal hedge against inflation
or maybe farmland, if you are real-
ly apocalyptic.
There are two points I would
make about your political analysis
informing your trading. Unless you
dine with central bankers and
trade on the back of what you hear,
it isnt much use for day trading.
Money flows determine minute-by-
minute price moves. You will get
poor if you let your political preju-
dices in particular what you
would wish to see happen influ-
ence your short-term trading deci-
Dont let your political views cloud your judgement
AUD/USD EUR/USD USD/JPY FTSE 100 GOLD
53%
LONG
83%
LONG
53%
SHORT
78%
LONG
52%
LONG
1.2% 0.44% 0.91% 0.48%
0.56% 0.41% 0.42% 0.96% 0.69%
-0.41%
SILVER WALL STREET GERMANY 30
US LIGHT
CRUDE
US SPX 500
87%
LONG
75%
LONG
63%
SHORT
53%
SHORT
57%
LONG
Clients trading this market also have positions on
Client sentiment on sterling-dollar
57% of IG clients with open positions in this
market expect the price to rise
43% of IG clients with open positions in this
market expect the price to fall
53%
LONG
pound becomes more attractive by
default. As a nation with control of its own
monetary policy and government
spending, the UK is one of the more
obvious destinations for money fleeing
the Eurozone, even if the crisis will
inevitably drag us down as well. IG clients
have reflected this move, going from
being short on sterling-dollar to 57 per
cent long this week, an impressive
turnaround when the downward revision
to UK GDP from last week is taken into
account. So long as the Eurozone crisis
continues to fester, sterlings relative
appeal will only increase, suggesting we
could see IG clients become even more
upbeat about the currencys prospects.
May has been a difficult month for the
Aussie dollar, which dropped below parity
against its US counterpart
and continued falling.
However, the selling seems
to have stopped for now,
and clients have been
picking up Aussie dollar-
dollar of late, resulting in
exposure becoming more
bullish in recent days. If
global data picks up, then
another run at parity for the
Aussie is a possibility.
G
E
T
T
Y
Sterling bulls are
being driven on by
euro fear
THE TIPSTER
Kingfisher unlikely to fly
D
IY retailer Kingfisher will
announce first-quarter figures
this week, although dont
expect too much cheer. The
retailer is expected to blame the
weather for a weak performance,
although improved margins will have
helped to prevent things from getting
too fishy. A wet April in France means
that the shares might look a bit soggy
on the day, suggesting further declines
are possible for the share price. IG
Indexs price on Kingfisher is 274.3p-
274.8p.
Defensive stocks have been in high
demand in recent weeks with utilities
like Severn Trent putting on 8.5
per cent since the beginning of April,
while the FTSE has fell 7 per cent. The
water company reports its finals on
Wednesday and Capital Spreads
quotes 1,678.1p-1681.9p.
The Aveva share price soared 10
per cent in early trading yesterday
after the engineering software group
reported an increase in full-year
revenues. The company raised its full-
year dividend by 15 per cent making
it an attractive proposition for
investors who are desperate for yield.
The relatively high price of oil led to
stronger demand for the companys
software which is used in the design
of oil rigs and power stations.
Yesterdays move took the stock back
to within 3 per cent of the price level
before the general equity sell-off
which began at the beginning of May.
GFT quotes Aveva at 1,650p-1,656p.
EasyJet is a company well
equipped to fly through a global
recession as customers seek cheaper
alternatives in the transportation
sector. The reduced turbulence in the
oil markets will no doubt positively
impact the operating costs of the
company and an expansion of flights
should increase market share. The
share price is facing resistance at
533p, however any break above this
and we could see this stock take off.
Spread Co quotes 494.03p-494.53p
for EasyJet.
CRAIG DRAKE
I
NVESTORS have had a rough
2012 thus far. While the bright
start to the US first quarter
earnings season gave cause for
optimism, as did encouraging
French and Spanish debt
auctions, lingering Eurozone fears
and a wait and see policy on
further monetary stimulus from
both the Federal Reserve and the
European Central Bank left
investors nervous. We have also
seen Spain and the UK fall back
into recession and an increased
focus on European politics.
France elected a new Socialist
President and this result,
combined with the forthcoming
polls in Greece and election
results in Holland and Germany,
have seen a public rejection of
austerity coupled with
heightened anxiety among
investors about the fate of the
Eurozone. The Bank of England
recently elected to keep rates on
hold at 0.5 per cent with no
change to its quantitative easing
strategy (although the latter is
currently under review).
Those investors who sell in
May and go away appear to have
it right. Early 2012 FTSE gains
have already been wiped out. Its
nervous times for equity markets
as investors ponder the
repercussions for the Eurozone if
Greece exits. Analysts saw the
failure of the FTSE to hold 5,496
as an indication of a leg down and
focus falls on 5,107 as the next
significant support level with
5,496 now becoming the new
resistance level.
So what does this mean for
investors? For some its an
opportunity, for many its a time
to protect their portfolios. In
such prevailing market
conditions, one of the more
useful tools being adopted is the
trading of equity options and in
particular the writing of covered
calls.
COVERED CALLS
For investors who are unwilling
to sell their shares and reluctant
to commit extra capital to the
markets this is a third option and
a useful investment tool. Investors
can sell a call option against an
existing share portfolio and thus
receive an extra income from
premiums received (as well as the
dividend yield) while keeping
their portfolio intact. This is a
useful strategy and could increase
the return on capital in neutral or
bearish markets. As with all forms
of investing, the key to successful
trading lies in the strategies used
by the investor.
For a complimentary guide on option
strategies please email
[email protected]
Julia Williams is head of private client
services for Sucden Financial.
U
SING options strategies can
allow investors to take a
position on an underlying
asset whatever direction it
goes in.
Though it might sound like the
name of a bad 80s hair metal band,
an iron condor is an options trading
strategy that involves buying and
holding four different options and
taking advantage of their different
strike prices. For call options, the
strike price is where the security can
be bought, while for put options the
strike price is the price at which
assets can be sold.
The strategy is constructed combin-
ing two different strangle strategies,
both with a call and put with differ-
ent strike prices but with the same
maturity and underlying asset. A
strangle is created by buying or sell-
ing a call option and a put option
with different strike prices, but the
same expiration date the strategy
limits potential for profit or loss as
an offset strangle is positioned
around the two options that make
up the strangle at the middle strike
prices. It could alternatively be
viewed as a combination of a bear
call spread and a pull put spread in
doing so you are taking neither a
bearish nor a bullish position, just a
view that the move will not be
strong in either direction. The strate-
gy isnt going to make you huge
gains, but is designed as a limited-
risk strategy for profiting when the
underlying asset has low volatility.
CONSTRUCTING THE CONDOR
A put option is out-of-the-money
when the strike price is below the
current trading price of the underly-
ing asset. Inversely, a call option is
out-of-the-money when the strike
price is above the current price of
the underlying.
The strategy is built by buying an
out-of-the-money put, buying a
lower strike out of the money put
and then constructing the other side
of the trade by selling a higher strike
out of the money call and buying an
even higher out of the money call.
MAKING YOUR MONEY
The iron condor strategy can be
viewed as if you are drawing a box
around the price of the underlying
asset. As long as the price remains
within the box that you have drawn
around it, you stay in profit.
Obviously, if it strays outside this
box, youll make a loss. The greatest
gains are made when the price of
the underlying asset falls between
the strike price of the call and the
put sold. This profit is equal to the
This tried and tested options strategy can make gains in low volatility market conditions
G
E
T
T
Y
Using an iron condor to
swoop to trading profits
JULIA WILLIAMS
The iron condor strategy will not bring huge gains, but is useful for frequent profits and limiting potential losses
TUESDAY 29 MAY 2012
33
cityam.com
In volatile times investors must consider their options
net premium less the commissions
paid in buying and selling the four
options on the asset. Should the
price manage to leap out of the pen
that you have made around it, then
youre in for a loss. And while this
loss is limited, the maximum loss is
much higher than the maximum
profit, so take care when setting up
the trade. When the price of the
underlying asset falls either at or
below the strike price of the put or if
it rises above the second, higher
strike price of the calls bought. The
potential loss is the difference
between the strike prices of the calls
or puts (depending on whether the
price moves above or below the
range) minus the net premium
received on the trade and the com-
missions paid on buying and selling
the options.
KEEPING THE APPLES IN THE BOX
To give an example, Apple is current-
ly around the $560 per share mark
give or take a few dollars and cents
to give us a round number. If you
take the view that Apple is going to
trade between $550 and $650 for the
next month you could sell a 1 June
$650 call, buy a 1 June $660 call, sell
a 1 June $550 put and buy a 1 June
$540 put.
As you sold a $650 call and bought
one at $660, as long as Apple stays in
the box you have drawn below $650,
the trade makes a profit if it goes
above, the $660 limits your losses.
On the other side, the $550 put is
the bottom of the box on the down-
side, with the $540 put limiting your
losses.
The iron condor strategy relies on
the assumption that the underlying
asset is going to see low volatility
whichever direction it travels, you
want to keep it within your ranges.
This isnt something youd want to
be setting up before an earnings
report, for example. But, though it
requires careful planning, it is a
strategy that can allow you to make
non-directional gains from a rela-
tively straightforward strategy.
CRAIG DRAKE
Iron Condor Payof
-$400
$0
$100
ProfitorLoss
Stockprice
atexpiration
35 40 45 50 55
MANAGEMENT WEALTH OPTIONS
the CFA Institute, says that the
programmes aim is to prepare the
investment professional for any
career in the sector.
The curriculum is broad, and this
is of specific design. Its a generalist
F
OR THOSE with four years
work experience in the
investment profession, and
with an undergraduate degree
or equivalent, the Chartered
Financial Analyst (CFA) credential is
a serious opportunity. Its a globally-
recognised standard, a qualification
meant to provide the practical skills,
theoretical knowledge, and
professional outlook to succeed in
any relevant investment position.
And its more popular than ever
according to the CFA Institutes
figures, the number of
charterholders has increased from
37,366 in 2001 to 100,925 in 2012.
A recent survey of 182 wealth
management professionals for Fund
Fire discovered that CFA
charterholders held the most
respected credential in the industry.
On a ranking of 0 to 5, the CFA was
given 4.1, compared to only 3.2 for
an MBA. When asked why it was so
important, 51 per cent named
greater client trust, 33 per cent
general educational benefits, and 10
per cent increased career
advancement.
Why is the source of this
comparative respect? Its an
important question, especially for
those deciding whether the CFA is
appropriate educational route all
the more so when the programme
takes four years of study, concurrent
with full-time work, and there is a
chance that you may be one of the
four in five who doesnt successfully
finish.
When querying its value, theres a
The investment
credential with
valuable assets
G
E
T
T
Y
The CFA charter is adapting to new priorities, writes Tom Welsh
TUESDAY 29 MAY 2012
number of broader questions that
need answers. In what ways does the
CFA provide benefits over and above
an MBA? How can the CFA
contribute towards career
progression and become part of the
wider mosaic of a good investment
practitioner? How and why does the
credential promise such a boon to
credibility? Finally, why is it useful
to have global recognition, an
international standard of quality?
A BROAD EDUCATION
The core of the CFAs value lies in its
educational programme. A three-
tiered course, the CFA teaches
ethics, investment tools (from
quantitative methods to corporate
finance and economics), knowledge
of asset classes, portfolio
management and wealth planning.
Ed Bace, head of education for
Europe, Middle East and Africa at
CFA charterholders can be confident that they have a
BUSINESSEDUCATION
34 BUSINESSEDUCATION THE CFA
Evidence of where charterholders
are working goes some way to
answering this. Statistics from the
CFA Institute show that UK
charterholders work in a array of
positions within the investment
profession. 6 per cent are in
accountancy or audit, for example. 20
per cent are research analysts, 6 per
cent are consultants and 1 per cent
are private bankers.
When taken in isolation, these
figures are meaningless. But as a
patchwork mosaic, they point to the
relevance of the qualification across
most areas of the investment
industry, and certainly dont suggest
a credential only useful to certain
investment practitioners.
Tom Forrest, director of financial
services at Ranstad Financial and
Professional, the specialist
recruitment firm, says that the CFAs
value to a career lies in the signal it
sends to employers. Its a sign of
intellectual rigour, and a sign that
the charterholder is very much
dedicated to his or her career.
It wont necessarily give immediate
career benefits in itself. It doesnt
open doors on its own it wont
magic anyone into a front office role,
says Forrest. But, it is a sign to
employers that the individual is
committed to the profession in the
broadest sense.
REPUTATION AND CREDIBILITY
Forrests comments, the breadth of
the CFA curriculum (and its emphasis
on ethics), the activity and the
membership of the Institute, all of
these point to a central benefit of the
CFA. As the Fund Fire survey shows,
reputation and credibility are
essential to a career in investment.
Trust, openness, the ability to inspire
confidence in clients and colleagues
are all prerequisites to becoming an
effective investment professional. The
CFA has value as a credential that is
seen and believed to be rigorous.
Mark Parsonson, executive director
at Liongate Capital Management, says
that he decided to undertake the CFA
because of the credibility it gives me
with both clients and the investment
professionals that I deal with. The
CFA carries a lot of integrity in the
industry.
Integrity and credibility imply
ability and knowledge, and ethical,
professional conduct. Parsonson
certainly believes that the CFA has
improved his career progression in all
these regards. Its been very helpful
in opening up the right doors, he
says. Its been a recipe for improved
job security and progression the
credibility boost it gave him helps
you to stand out from the crowd.
AN EVOLVING VALUE
The CFA Institute is this year
celebrating its fiftieth anniversary.
Originally a qualification designed for
and predominant in North America,
particularly the US, the Institute and
its credential has ambitions to grow.
To some degree it has already
managed to fulfill these ambitions. As
of February 2012, the CFA Societies in
Europe had 17,178 members out of a
global membership of 107,812. 15 per
cent of members were in Asia Pacific.
The movement towards a globally-
recognised investment credential has
useful implications for
charterholders. A single, unified
investment standard presents an
opportunity for professionals to gain
firm, and constantly updated
recognition of their abilities and their
professionalism, wherever they are in
the world.
There is therefore good reason to
see the CFA as a valuable qualification
for anyone in the investment
professional. But this shouldnt make
the decision to take the exams any
easier. The CFA is seen as rigorous
because its exams are hard. It has
credibility because the CFA Institute
is firm in upholding its standards. Its
potential usefulness to career
progression is large because it is a
sign of lifetime commitment.
The CFA, like any business
qualification, is not an easy,
immediate route to success. It is
useful only insofar as it is used well. A
strong grasp of the fundamentals
will, however, give any investment
professional a firm background from
which to flourish.
course, says Bace. The CFA Institute
thinks that its important to give a
practitioner the broadest possible
view of the profession, rather than
more specialist knowledge.
Its this very breadth that has
proven attractive to some
charterholders. Dr Paul Kaplan, CFA,
quantitative research director at
Morningstar Europe, the
investment research firm, calls the
CFA programme a good all-rounder
and an appropriate foundation for a
career in investment services. He
undertook the course because he
wanted to go beyond his academic
training, a PhD in economics. For
Kaplan, the CFA designation
signifies that the holder has at least
a basic knowledge of key investment
topics and can accommodate a
learning for key must-knows of the
financial markets. It provides a
foundation, a basic standard that
can be built on through practical
experience in the workplace, and
more specialised study outside of it.
Mark Tapley, CFA, former chief
investment officer at West LB Asset
Management, agrees. When
someone from a specialist silo an
economist or an accountant, for
example walks into a room, the
CFA gives you enormous confidence
because youve enough background
to follow what theyre saying and
challenge them.
NOT JUST AN MBA EQUIVALENT
But how could the CFA prove more
useful than an MBA? There are a
host of courses or programmes that
can provide similar fundamental
knowledge.
One difference is the CFAs
practicality. Kaplan says that he felt
it was important to see investment
concepts from the point of view of
clients. The purpose of the CFA
charter, for him, was a route to
understand topics that I already
had an academic understanding of,
from a practitioners point of view.
Secondly, the CFA curriculum
offers an evolving body of
knowledge. One example is a recent,
increased emphasis on financial
reporting and analysis. The CFA
Institute says this is partly in
response to a need for professionals
to have knowledge and awareness of
new International Financial
Reporting standards.
Although MBAs also respond to
industry developments, to some
extent the CFA Institute is different.
To maintain the CFA designation,
charterholders must continually
and consistently engage with their
qualification. Through membership
of the CFA Institute, charterholders
commit to a life-long investment
education.
THE INVESTMENT PROFESSIONALS BODY
Behind the CFA exams sits the CFA
Institute. The Institute is the
Vatican to the CFAs eminent
priesthood. It designs the
programme, upholds and
disciplines the ethical behaviour of
its members, and ensures that its
standards are compliant with, or
correspondent to regulatory
requirements across the world.
The actions of the Institute are
important in several ways. Firstly, it
maintains the value of the CFA
designation by its commitment to
continually updating the
educational programme, and
through ensuring that CFA
members do not transgress
professional boundaries. Secondly,
it acts as a meeting place for the
interchange of investment ideas. To
date, it has 107,812 members
globally, and its publications,
lectures and events are a forum for
the development of broader
investment questions.
Daniel Yates, CFA, associate
director, emerging markets trading
at West LB, says that the CFA
Institute, and its network of CFA
Societies, is useful in itself. The
social and networking aspects are
very valuable, he says. It is an
opportunity for a young investment
practitioner to have access to the
expertise of the broader profession,
the benefit of the experience and
knowledge of its more senior
members.
Similarly, involvement in CFA
Societies can itself be a business
education. Yates sits on the UK
Societys membership committee,
and calls it a fantastic exposure to
sitting on a board-like structure. He
certainly credits his continued
involvement with contributing
towards his careers development.
CAREER VARIATION, CAREER
PROGRESSION
Its all very well to receive a rounded
education, and have access to useful
networking facilities. But these are
only valuable or useful insofar as
they can contribute to a investment
career and its progression.
The reputation of the CFA
designation among some wealth
managers has already been
referenced. But do CFA
charterholders really have a
competitive advantage when
compared to holders of other
business qualifications?
35
BUSINESSEDUCATION THE CFA
TUESDAY 29 MAY 2012
Primary Investment Practice of CFA charterholders worldwide
Equities
Not Applicable
Fixed Income
Other
Private Equity
Derivatives
Hedge Funds
Real Estate
Structured Products
Commodities
Foreign Currency
Indexed
Venture Capital
firm grasp of the fundamentals
THE CFA
The CFA curriculum
is an evolving body of
knowledge, a life-long
investment education

Its a sign that the

holder is dedicated to
the investment sector
in the broadest sense

S
o
u
r
c
e
:

C
F
A

I
n
s
t
i
t
u
t
e

(
F
e
b
r
u
a
r
y

2
0
1
2
)
%
38
18
18
6
4
4
3
2
1
1
1
1
Primary I
3
CFA SOCIETY MEMBERSHIP
WORLDWIDE (FEBRUARY 2012)
Central Africa: 181
North Africa: 116
Southern Africa: 1,244
Eastern Europe: 1,547
Western Europe: 15,631
Middle East: 1,184
Rest of the World: 87,909
CFA SOCIETY STATISTICS
(FEBRUARY 2012)
Number of
societies globally: 135
Number of
countries with a society: 58
Number of societies in
Europe, Middle East and Africa: 34
CFA CANDIDATE
NUMBERS WORLDWIDE
(FEBRUARY 2012)
Africa: 6,336
Europe: 33,505
Middle East: 5,240
Rest of the World: 164,768
Source: CFA Institute
TUESDAY 29 MAY 2012
36
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F
OR investment professionals
with an eye to further their
careers, the Chartered Financial
Analyst (CFA) qualification
provides a broad-based foundation.
Described by the CFA Institute as a
globally recognised, graduate-level
investment credential, the course
takes place on three levels, built
around the idea that all should be
educated in a rigorous corpus of
shared knowledge.
But charterholders are taught over
and above the basic skills and
knowledge to be successful in
investment. To carry the CFA
designation is to uphold and adhere
to a demanding standard of ethics.
As the CFA Institute approaches its
fiftieth anniversary, this aspect is
more appropriate, more relevant,
and more useful than ever.
Ed Bace, head of education for
Europe, Middle East and Africa at
the Institute, describes its primary
purpose as to lead the investment
profession globally for the ultimate
benefit of society. In the eyes of the
Institute, its important for everyone
that investment should be open,
transparent, and conducted fairly
not sold or handled opaquely, and
without concern for clients.
Ethics has been at the centre of
the qualification since inception but
given a recent disconnect between
Main Street and Wall Street, its the
The CFA: A qualification defined by ethics
professions responsibility to
rebuild trust, says Bace.
The cornerstone position of ethics
is more than abstract, not solely
important for the broader profession
but for individual professionals. A
grounding in ethical conduct adds
to the credibility of the professional-
client relationship, Bace says. Its a
competitive advantage to command
a greater degree of trust.
The Institute acknowledges that
ethical standards are not static
especially in a sector in which new
models of client-professional
relationship and investment activity
arise every year. It continuously
updates its professional handbook,
and works with regulators and
authorities to advocate measures to
protect investors.
The strength of the Institute is
intertwined with that of the charter.
The first upholds the latter. Bace
explains that we are strict, we take
ethical transgressions very seriously.
We publish a list of incidents and
disciplinary actions taken. Members
remain aware of our standards, and
how seriously we take them.
Theres a benefit to being part of a
recognised professional body and
one which is active in ensuring its
standards are relevant and upheld.
Engagement with the Institute
provides individual charterholders
with knowledge of the changing
regulatory landscape, and advice on
how to conform to these standards.
Investment professionals need not
imagine or hope that their actions
are ethical. They can be sure
through the critical overview of the
overseeing body.
Crucially, this ethical foundation
is built on close cooperation and
partnership between the Institute,
other professional organisations,
and regulators across the world. The
onus on professionalism, and
recognition of this standard globally,
enables CFA charterholders to
transfer their experience from one
investment environment to another.
There are 107,812 members of CFA
Societies of which only 17,178 are
in Europe. Membership of this body
of globally-recognised ethical
conduct builds on the actions of
those who are already members.
As Nitin Mehta, managing director
Its a clear career benefit for investment professionals to have proof that theyre whiter than white
Industry practitioners benefit from seeing
professionalism reinforced, says Tom Welsh
for Europe, Middle East and Africa,
of the CFA Institute, makes clear,
while hiring in finance and the
investment industry has cooled, the
number of CFA Institute members,
as well as candidates for the CFA
programme, has grown to new
record levels. While industry size
remains uncertain, a visible
commitment to professionalism is
increasingly not just important, but
essential. Its a hallmark of quality.
G
E
T
T
Y
BUSINESSEDUCATION THE CFA
I
FINISHED my MBA at the London Business School in 1974
and joined JP Morgan in New York. As a trainee, one of the
first things the firm did was to slap a CFA application form
on my desk. There was, of course, overlap between my MBA
and the CFA programme, but the main difference was the CFA
programmes emphasis on strong fundamental analysis.
After completing such a generalist course (covering
economics, accountancy as well as fundamental analysis)
when someone from a specialist silo an economist or an
accountant, for example walks into a room, it gives you
enormous confidence because youve enough background
to follow what theyre saying and are able to challenge
them.
Ive stayed very closely involved with the CFA Institute.
Ive held some very tough jobs, particularly as global chief
investment officer for a German bank, but I was always
interested in putting something back into the profession.
And its striking, looking back to when I qualified, that I
understood a body of knowledge as it was in those times.
But that body of knowledge doesnt stand still. The
implication is that you may well have the CFA charter, but
dont think your studying is over. You arent finished yet.
Mark Tapley spent 26 years in the investment management
industry. During his career, he worked for JP Morgan, American
Express Asset Management, and for the New York Life Insurance
Company. He was latterly group chief investment officer at West LB
Asset Management. He is now executive director at the BNP Paribas
Hedge Fund Centre at the London Business School.
An investment
veteran recalls
his CFA journey
Three graduates share their experiences
TUESDAY 29 MAY 2012
BUSINESSEDUCATION THE CFA
cityam.com
David - Passed level I, 2011 Peace - Passed level III, 2011 Stuart - Passed level III, 2011
LONDON NEW YORK DUBAI SINGAPORE
MARK TAPLEY
I
STARTED the CFA exams in 2008, having graduated and
joined West LBs graduate scheme in 2007. I wasnt forced
to take the exams for the CFA charter, it was something I
wanted to do. I wanted to become a more rounded
investment professional.
The CFA programme covers such a wide range of areas, it
changes the way you think about the markets and how you
approach problems. It gives you an holistic understanding
of investing. You can go into a meeting with colleagues, try
to solve a problem, and you have an understanding of not
just your job, but a wide range of knowledge to draw upon.
Ive completed all three levels and the CFA charter has
helped me to stand out among my peers. After completion,
you have a different mentality, a different approach, which
both employers and colleagues find attractive, and which
has indirectly benefited my career and its progression.
Similarly, when I travel abroad to see clients, theres an
inherent respect for the fact Ive completed the charter. Its
quite unique as a globally-recognised investment
qualification.
Im still involved with the CFA Institute and I sit on the
membership committee for the CFA Society of the UK. The
social and networking aspects are very valuable, and the
CFA Institute holds some fantastic conferences, lectures
and seminars. I continue to increase my knowledge and
develop as an investment professional.
Daniel Yates is associate director, emerging markets trading, at
West LB.
A younger CFA
explains why it
helps his career
DANIEL YATES
R
ECRUITERS and employers see the CFA charter as a
stamp of quality, a hallmark of excellence. Its a sign
of intellectual rigour, and a sign that the
charterholder is very much dedicated to his or her
career. Anyone who has completed the CFA programme has
gone out of their way to develop themselves, their body of
knowledge, and their career.
And the kinds of professionals who are charterholders
is changing. In the past, it was mostly relevant for front-
office roles and analysts, but its more and more useful for
those in relationship roles, sales roles, and positions in the
middle office.
After the credit crunch, the ethical aspect has become
so much more important. Clients want credibility, and
employers want to hire people who have a good
understanding of the risks and regulations. They want
employees who care about investment and understand
how important professionalism and ethics are.
A CFA charter doesnt open doors on its own it wont
magic anyone into a front office role. It has more value
when combined with experience. But its really important
for anyone who is looking to distinguish themselves in the
market. As all firms in the City want the very best
candidates to work for them, being a CFA charterholder is
an indicator that youre particularly trying to set yourself
apart.
Tom Forrest is director of financial services at Ranstad Financial
and Professional.
A recruiter says
that the CFA is
valued by firms
TOM FORREST
37
A celebrated historian of Russia, Figess
new book is a collection of letters
between Lev and Svetlana, two Moscow
scientists who met in 1935 but were kept
apart for 13 years by war and internment.
Their letters tell the incredible story of
how they kept communicating through
Levs internment at the Pechora Gulag
where he constantly faced death in the
harshest conditions. Its a story of hope,
faith, incredible fortitude and
determination.
How love triumphed in the Gulag
FIT IN
THE CITY
LAURA WILLIAMS
Orlando Figes tells
Zoe Strimpel about
his new new book
LIFE&STYLE
TUESDAY 29 MAY 2012
38
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EPISODE 58 THE QUARTERLY FINANCIALS
CALDICOTT runs through the quarterly
financials for the Board. I bet he wishes
he could run through them at the speed
of Usain Bolt. The numbers mostly stink.
The seats on either side of Caldicott are
vacant. Hes toxic. Strikes me, though,
that its a case of Dont shoot the
messenger. The real crooks are my
colleagues on the prop desk and in asset
management. They have dropped a
bundle. Or four.
Sir Roderick stares into space, his face
twisted, suggesting that Noel has just let
one of his stinkiest farts ever go in poor
old Rods vicinity. And those bad boys
can linger for an hour. I realise Im
smiling at this thought and immediately
suppress any sign of delight. Not good to
seem to relish ones colleagues failures,
especially as my bonus is partly
dependent on these bozos best
CITY DAD
FITNESS & DIET EXPERT
Harsh but efficient:
the lemon detox
This week I continue my search for the
citys best beach shape-up regimes. Here
I try and test the Lemon Detox
(www.lemondetox.com).
This is one of those diets that if youre
any kind of self respecting weight
watcher, youll want to try once in your
lifetime. Beyonce used it to drop a couple
of stone quick for Dreamgirls; Ashton
and Demi are (were) rumoured to be fans
as is Mariah. So as someone with a sweet
tooth and a couple of pounds to shift
before summer gets into full gear, I was
keen to try the residential Lemon
Detoxnewly launched at the Dolphin
Square Spa in Pimlico
(www.dolphinsquare.co.uk/spa/).
The idea behind the residential
detox three days, two nights is that
theres help on hand to guide and advise,
along with spa treatments that help
facilitate the detox (and provide a much
welcomed distraction from the fact that
youre not eating). I was originally a bit
sniffy about the slimming wrap I
thought these were the remit of 80s
health farms but...wrong again. Comfort
Zones slimming treatment is incredible. I
didnt enjoy the experience to be honest
(the treatment goes on icy cold and then
gets very warm, very quick think Deep
Heat gone wrong) but work it does my
skin looked, and felt, smooth for days, I
kid you not. Other than that, all I had to
do was sit in a thick white towelling robe,
drink the Lemon Detox drink (specially
formulated tree syrup with lemon juice
and cayenne pepper; the idea is to spike
metabolism and keep blood sugar
maintained at the same time).
Verdict: Detoxing on a liquid-only diet
isnt for the faint hearted but its much
easier if youre doing it under
supervision. Did I drop weight? Of course
I did just look at the maths. But a very
surprising, unexpected extra was that I
felt way more energetic too. Go figure.
(NB: Anyone who has any underlying
health issues should always consult a
doctor before undertaking any kind of
detox.)
www.laurawilliamsonline.co.uk
@laurafitness
efforts. Caldicott goes into levels of
financial detail revealing the
incompetence and failure of my esteemed
colleagues t hat leave me losing the will
to live.
I have my unopened credit card bill
tucked in among my Board papers and
surreptitiously I open the envelope. A
couple of very expensive lunches with
Caroline - ehem. And Oh dear. Id quite
forgotten that Emmas and my delightful
single night in the Palazzo St Matteo
involved a weeks rent for the pile, plus
the wages of its 8 retainers. Just north of
50 grand.
Saint Matthew. Hah! Patron Saint of
money, although thats always rather
amused me, as hed been a tax collector.
The very enemy of good old-fashioned
spondoolicks as far as Im concerned.
And turning to corporate finance, in
another strong quarter I look up.
Caldicott is practically beaming. The
stench around Sir Roderick seems to be
diminishing.
And now I allow myself just the very
slightest of gracious smiles.
City Dad will continue next Tuesday. For
previous City Dad episodes, see
www.cityam.com.
Q
How did you come across the
letters?
A
It was just a very lucky find. I had
gone to Moscow to make a radio
programme about an oral history
project I had done with the human
rights organization Memorial and
literally stumbled on the three
trunks which were blocking the
doorway. The 1,500 letters filled one
trunk. They are the sort of discovery
every historian dreams of
beautifully written, emotional, and
telling us exactly what life was like
in Stalins labour camps. Levs letters
are the only real-time record of daily
life inside the Gulag. It is
extraodinary that the letters (which
were smuggled in and out) survived
and in such great number.
Q
As a historian, did you try to
keep some distance or did you
give way to sentimental
attachment/become utterly
emotionally swept up in Lev and
Svetas story?
A
Its a fine balance. Their love story
is incredibly emotional, and I let
that drive the book, but as a
historian you have to remain
objective. I tried to set the letters in
their historical context by using, for
example, the archives of Levs labour
camp in Pechora.
Q
What were Svet and Lev like in
person? Had they managed to
escape deep bitterness?
A
Yes, and thats perhaps the most
extraordinary thing. Theres not
the slightest hint of bitterness or
self-pity in any of Levs letters in
fact, he played down the hardships
of the camp so as not to worry
Svetlana. They were truly wonderful
people. I filmed some interviews
with them in 2008, a few months
before Lev died. He remained
devoted to Svetlana, whose love had
saved him from the camps. She was
ill but still vivacious, and I could see
in her the brave young woman
who at enormous risk had
travelled to Pechora to meet Lev
illegally.
Q
Are there any universal truths to
be got out of the story? What
about truths about love?
A
Yes I think there are. It is a book
about love not only love but
hope, endurance and solidarity. I
think it shows that love can triumph
in the worst of times and places
that people can be saved by love.
Q
Do you think love can keep
people alive through sheer
determination? Or were they just
very lucky?
A
Of course they were lucky Lev
could have easily perished or
disappeared on a convoy to a remote
camp in the Arctic. He was lucky to
be working in the power station
where it was warm and he could
write. But his greatest fortune was to
have Svetlanas love to receive her
letters twice a week, to know that
she would wait for him, even though
she had no certainty that he would
ever return. Her dedication saved
him morally it gave him hope.
And without hope it is hard to live.
Q
Do you think Gulag stories with
miserable endings, the most
common type, are also worth
telling?
A
Yes I do. Twenty million people
endured the Gulag but we know
much less about them than we do
about the Nazi concentration
camps.
Q
Why did you become a Russian
historian?
A
My supervisor at Cambridge,
Norman Stone, warned me off
intellectual history for a PhD. If
you have a hangover or troubles
with your girlfriend, you dont
want to battle with Hegel in the
morning. And he was right. So I
studied the Russian peasantry. And
went to Russia. And fell in love with
it. It was Moscow, 1984, Intellectual
life was high-octane, often vodka-
fuelled, and the women beautiful.
Q
What do you feel towards
modern/contemporary Russia?
A
Sadness mixed with anger, that
so much has been lost, stolen
from so many, by so few.
Q
What do you make of British
popular historian-ism? Do you
feel a pressure to go more
commercial all the time and to be
less academic?
A
But I do write academic
history. My books are based on
research in archives. They have
footnotes. Its just that I write
them in a way that, tests have
shown, attracts more readers
than most academic books. I
dont feel any pressure to write
commercial books. I write the
books I want to write.
Q
Can you explain your contact
with Manny Roman, CEO of
GLG, the investment manager?
Is there a film in the pipeline?
A
Manny is a friend. Hes a great
reader with lots of interests,
among them history, and we
meet from time to time. Luckily
for me, he has great taste in wine.
Manny helped to finance the
project. I dont know about a
film. No offers yet. But one can
hope.
Just Send Me Word by Orlando Figes is
out now, published by Allen Lane (20).
Figes, pictured, and inset, the book.
A
nyone can be a wine expert
these days. For a few quid you
can book yourself on a
tasting course where youll
learn to tell your claret from your
beaujolais. Fine beer, though, tends
to be associated with the Campaign
for Real Ale brigade, which
conjures images of a tweed
jacketted James May the only
man who can make Jeremy
Clarkson look cool.
Indeed, the beer industry hasnt
had an easy few decades. In 1929,
there were over 3,000 breweries in
the US. By 1972 there were just 70,
driven down by mergers and the
dominance of super-brewers
Anheuser-Busch and Miller. Since
then, though, things have been
looking up there are now over
3,000 breweries again, driven by an
explosion in low-level, high quality
craft brewing.
The UK has also seen a resurgence,
with some varieties that had all but
died out such as the traditional
London porter dark beer making a
comeback.
So what exactly is craft beer?
Well, its a very vague term, says
Charlie McVeigh, craft beer pioneer
and owner of The Draft House pub
group. Its anything thats not mass-
produced crap thats made using all
kinds of chemicals to make it go
quicker.
It needs to be made with quality
ingredients, and over which time is
taken. You could make comparisons
with the slow food movement it is
about taking time to make sure
things are done properly. That does-
nt mean it needs to be made in a
cow shed though: Budvar, which is
the closest to a mainstream beer I
serve, is brewed in huge quantities
in the Czech Republic but with
incredible integrity they would
never consider brewing it under
license elsewhere or shortening the
process.
McVeigh has been involved in the
British craft beer movement since it
went crazy in 2007. He says he
began by experimenting with more
varieties in one of his bars and
found his clientele growing week by
week. Eventually he ceased selling
the so-called premium mass-pro-
duced lagers altogether. Premium
lagers are not cheap, he says.
When we cut out the big brands
our margins actually came down.
The explosion in demand for arti-
san beer has been driven by a wider,
cultural shift in our expectations of
what we eat and drink, says McVeigh.
A few years ago, people were happy
eating frozen fish fingers. Now
theyre told that they might want to
make their own fish fingers.
Drinking craft beer is an expression
of the same instinct to be involved
with something thats done properly,
harking back to a better way of doing
things.
I think more people will start to
look at beer like they do wine. The
main difference, though, is that, with
a few exceptions, the greatest beers
cost no more that 9 or 10 a pint,
where wine is unlimited. Beer is very
democratic you can drink the best
without breaking the bank.
Naturally, McVeigh thinks his Draft
House pubs are the ideal way to get
involved in the movement. He is one
of the few publicans to sell beer meas-
ures in thirds, giving you the
chance to sample lots of varieties
without ending up flat on your back.
All of which is great news for beer
lovers.
The Draft House on Lordship Lane is now
open. www.drafthouse.co.uk.
Charlie McVeigh, who owns a chain of pubs specialising in finely crafted beers, has been involved in the movement for years
Steve Dinneen talks to one of the champions of craft beer
39
For four weeks City A.M. and Brewin Dolphin will be shining a spotlight on
a series of City Treasures as we celebrate some of the great places and
institutions around us. Many of them are established with a long
and interesting heritage yet they still exude their core values
based on service and excellence.
Tomorrow is Great Ormond Street.
www.brewin.co.uk
The Viaduct Tavern, built on the site of the Giltspur Street Comptor, was once a gin palace
W
ith the wealth of great
pubs across London, you
need something really
exceptional to stand out
from the crowd. The Viaduct Tavern
at Holborn Viaduct has just that.
The grand old pub has a
somewhat checkered history: it was
built on the site of the Giltspur
Street Comptor, a jail linked to the
infamous Newgate Prison, which
was known throughout the
criminal fraternity as a particularly
nasty place to end up.
Five tiny cells remain in the pub
cellar: dingy, airless cages, which
were mostly used to hold debtors. Of
course, things could be worse
Newgate itself was famed for its exe-
cutions: at least you would, for the
most part, leave Giltspur Street
Comptor alive (if, of course, you sur-
vived the nasty diseases that
abounded in the squalid condi-
tions).
The prison was knocked down in
1855 and both the viaduct and the
tavern were built over the site in
1869, when it became a Victorian
gin palace.
It is now a lively bar selling roast-
ed meat sourced from the nearby
Smithfield market. It also gives a
nod to its history with a great
selection of fine gins. Three paint-
ings of young maidens adorn the
walls, each representing agricul-
ture, banking and the arts. Look
closely at the arts maiden and
youll notice a strange injury to
her bottom the result of a drunk
soldier discharging his rifle during
WWI.
In true timeless fashion, though,
the pub also benefits from its inter-
esting past the spot is now popular
with ghost-watchers, who believe
the site is haunted by the spirits of
prisoners unable to pass on from
their ordeal.
Next time you have a pint there,
think how much one of the prison-
ers sitting underneath you 160 years
ago would have appreciated a sip.
THE HOLBORN PUB WITH A TRULY REMARKABLE HISTORY
Vive la revolution
THE VIADUCT TAVERN

FOOD & DRINK
THREE CRAFT BEERS YOU REALLY NEED TO TRY
Brooklyn Sorachi Ace
One of the best beers on the market, this
dry, unfiltered Belgian-style Saison beer is
made using a rare Japanese-developed hop
that is grown on just one farm in Oregon in
the US. It will set you back 7.50 a pint.
Dark Star Six Hop Ale
This potent ale at 6.5 per cent is essen-
tially an IPA (Indian Pale Ale) with strong,
pungent bitter and sweet flavours. It is cop-
pery in colour and full of textures sure to
keep you coming back for more.
Budvar
This Czech is the most quaffable of all the
mass-produced lagers. It is fizzy but incredi-
bly drinkable. Brewed exclusively in the
Czech Republic, it takes three months to
mature but its worth the wait.
40
TV & GAMES
cityam.com
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Britains Hidden Homeless
E4
7pmHollyoaks 7.30pmHow I Met
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HEALTH
7pmA Wedding Story 8pmI
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BBC2 ITV1 CHANNEL4 CHANNEL5
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10.25pmRegional News;
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10.35pmThe Apprentice: The
Final Five
11.35pmFILMPrime: 2005.
1.15amWeatherview1.20amSign
Zone: The Apprentice 2.20amSign
Zone: Horizon 3.20amSign Zone:
The 1952 Show4.05amSign Zone:
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BBC News
6pmEggheads: Quiz show,
hosted by Dermot Murnaghan.
6.30pmTOTP2: Featuring
Altered Images, the Who and
Belinda Carlisle.
7.30pmGreat British Menu
8pmSpringwatch 2012:
Martin Hughes-Games
investigates pine marten
sightings in Wales.
9pmGreat Ormond Street
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News Headlines
2.35amLoose Women: Topical
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Road to London 2012: That
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Presents Nathan Stephens
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the Sporting Mind: Sheepdog
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12.50am SuperCasino
4amHouse Doctor 4.25amDivine
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5.15amWildlife SOS 5.35am-6am
Wildlife SOS: The work of
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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 24
25
26
27
12 10
28 27
27 10
17 17 16
9 37
15
27 10
13 9 6
19 25
11 13
30 25
8
15
31
16
35
29
4
9
20
14
11
40
11
26
23
11
3
19
34
17
18
12
7
ACROSS DOWN
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4


4
S E R A P H B B
P N A Z A L E A
A W A K E N U B
R B L A S P H E M E
E T H E R E B L
O W E B E
J R I B R A W L
I R R E G U L A R A
F E R E N D E R
F U N G U S G V
Y T A G E N D A
8 9 1 4 9 2
4 2 7 8 9 3 6 1 5
8 9 4 8 3 9
2 1 5 3 1 2
3 8 9 8 5 7 6 9
1 9 4 1 2 2 7
4 7 6 8 9 7 4 8
2 5 2 6 1 3
7 8 4 9 7 9
1 6 3 7 5 4 8 9 2
3 1 9 1 6 4
4
4
4
4
4
4
4
4
4
The nine-letter word was
FORSAKING
4 Loft (5)
8 Sale or purchase of
goods by post (4,5)
9 Bird similar to
an ostrich (3)
10 Fissure (5)
13 Depends on (5)
14 One thousand
grams (4)
15 Branch of physics
concerned with the
motion of bodies (9)
19 Carry (4)
21 Chucked (5)
24 Eagles nest (5)
25 Metal-bearing
mineral (3)
26 Spicy pork and
beef sausage (9)
27 Went down on
the knees (5)
1 Hard slap (5)
2 Concluding part of
a performance (6)
3 Published volume (4)
4 Chief port of
Yemen (4)
5 Fearless daring (8)
6 Faithful (4)
7 Give rise to (5)
11 Edge (3)
12 Young rooster (8)
16 Abundant non-
metallic element (6)
17 Glide over snow (3)
18 Pile (5)
20 Suggestive of the
supernatural (5)
22 Cable (4)
23 Cried (4)
24 Divisible by two (4)
T
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
TUESDAY 29 MAY 2012
SILK
BBC1, 9PM
Clive prosecutes three students
accused of sexual assault, but wavers
in the face of an intimidating defence
counsel.
PRINCE CHARLES: THE ROYAL
RESTORATION ITV1, 9PM
Alan Titchmarsh presents this
documentary tracing the Prince of
Wales attempts to save Dumfries
House.
JIMMY AND THE GIANT
SUPERMARKET CHANNEL4, 9PM
New series in which Jimmy Doherty
tries to manufacture low-cost meat
products while adhering to the highest
animal welfare standards.
TVPICK
G
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Donald and Chapman reap deserved glory in great week for Brits
A
GREAT week or so for Brits
saw Luke Donald reclaim
world No1 status by
defending his PGA
Championship title at Wentworth
and a pair of legends add more
feathers to their caps.
Donald played immaculately to
win by four shots and become only
the third man to win the trophy in
consecutive years. The Englishmans
finish to the third round was
exceptional, with three birdies on
the back nine, and he showed true
class to pull away from Justin Rose
and Paul Lawrie on Sunday.
Its a year since he first climbed
to world No1 and the fact hes been
there or thereabouts for 12 months
is testament to his outstanding level
of performance every week. His
success in underlining his status as
one of the very best over the last
year will have made him more
confident as he looks to take the
natural next step: winning a Major.
Great credit must also go to his
compatriot Rose, who put in a
brilliant performance, and Scot
Lawrie, who tied with him for
second and looks to have secured a
Ryder Cup place with the latest
high point of a comeback season.
Rory McIlroy will be less happy,
after missing the cut for a second
tournament in a row. Right now
when he has a bad week its pretty
awful. Its not the US Open build-up
hed want, but there is nothing he
can do now but get on with it.
Across the pond I was delighted to
see Roger Chapman become the first
Englishman to win the US Senior
PGA Championship. Its a life-
changing victory for the
Englishman and he fully deserved it.
Finally, it was also hugely
pleasing to see Sandy Lyle inducted
into the World Golf Hall of Fame
recently. It gives him guaranteed
entry into any Champions Tour
event he chooses and its a fine way
to honour one of the best players
Britain has produced.
Sam Torrance OBE is a multiple Ryder
Cup-winning golfer and media
commentator. Follow him on Twitter
@torrancesam
GOLF
COMMENT
SAM TORRANCE
TEENAGER Laura Robsons French Open reprieve did not last long as the Briton bowed
out in straight sets to Spains Anabel Medina Garrigues in the first round yesterday.
Robson, who was handed a place in the main draw as a lucky loser having failed to
complete qualifying, said: It was disappointing and I have lots to work on.
NOT-SO-LUCKY LOSER: ROBSON BOWS OUT
BRITAINS Andy Murray insists he is
warming to the French Open with
every passing year as he prepares to
launch his 2012 challenge against
Japans Tatsuma Ito.
The Scot has a poorer record at
Roland Garros than the tennis calen-
dars other three grand slams, hav-
ing only made it past the last 16 on
two occasions. One of those was last
year, however, when Murray fell in
the semi-finals to clay court king
Rafael Nadal progress sympto-
matic, he says, of a growing fondness
for Paris and its attractions.
Each year I have enjoyed it more
and more, said the fourth seed. As I
have got older Ive learned to appreci-
ate it more. Its a very nice place for
us to come to. I stay pretty much on
the Champs Elysees, so its always
busy and theres nice restaurants
and cinemas and lots of stuff to do.
Despite last years breakthrough
performance, clay remains the weak-
est surface for Murray. Recent defeats
to Tomas Berdych, Milos Raonic and
Richard Gasquet all top 25 ranked
Murray warms
to Paris after
frosty courtship
players, but ones Murray would
expect to beat bear this out.
The movement is the thing that
always takes me a while to get used
to, but normally after a few weeks
thats okay, he added. Its some-
thing I always try to work on.
Ito, 24, is in good form, having bro-
ken into the worlds top 100 and
reached a career high 68, but has
never played in the main draw at
Roland Garros before.
Murrays fellow Britons Heather
Watson and Anne Keothavong also
play their first-round matches today,
against Elena Vesnina and Melinda
Czink respectively.
Yesterday world No1 Novak
Djokovic started slowly before over-
coming Italian Potito Starace 7-6 (7-3),
6-3, 6-1, while 16-time grand slam
champion Roger Federer breezed past
German Tobias Kamke in straight
sets. In the womens draw, top seed
Victoria Azarenka suffered a scare
against world No105 Alberta Brianti
before beating the Italian in three
sets, while defending champion Li Na
and third seed Agnieszka Radwanska
both progressed with ease.
BY FRANK DALLERES
SPORT
41
TUESDAY 29 MAY 2012
cityam.com
Up for the
challenge
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Watch international hockey played at its best
Investec London Cup 2012
5-10 June, University of Westminster Sports Ground, Chiswick
Tickets available at www.greatbritainhockey.co.uk
or by calling 0844 499 3222
IN BRIEF
Cook wants answers over snub
nOLYMPICS: Taekwondo star Aaron
Cook has demanded the British
Olympic Association probe his
surprise London 2012 snub. World No1
and European champion Cook has
been omitted from GB Taekwondos
four-strong team, despite him asking
them to reconsider. The BOA has
power to veto governing body
selections for the Games.
Hill hires pal Vickery for Warriors
n RUGBY UNION: Former England
captain Phil Vickery has joined the
coaching staff at Worcester Warriors.
Ex-Wasps prop Vickery, 36, who
retired in 2010 with a neck injury, will
work under head coach Richard Hill,
his former international team-mate.
Match-fix probe hits Italy camp
n FOOTBALL: Italys Euro 2012
preparations have been thrown into
chaos by a probe into allegations of
match-fixing. Police quizzed defender
Domenico Criscito at Italys training
camp yesterday, while Lazio captain
Stefano Mauri was among 14 people
arrested in connection with the
investigation. The probe focuses on 33
games in the last two seasons.
Results
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ENGLAND captain Andrew Strauss
hinted that some of his pace attack
would be rested for the third and
final Test against West Indies after
wrapping up a nine-wicket victory at
Trent Bridge to clinch the series.
The tourists were bowled out for
165 just after lunch on day four and
it took just two hours for England,
for whom Strauss top-scored with 45,
to pass their target of 108 and take
an unassailable 2-0 lead.
With nine days until the third Test
at Edgbaston, Englands key seamers
James Anderson and Stuart Broad
have ample rest, but Strauss admits
he is tempted to rotate with a busy
summer schedule in mind.
Well definitely think about
changes, he said. Weve always
viewed resting and rotating as
something you have to do on a case-
by-case basis so well speak to the
seamers, see how theyre feeling and
see how were looking for the rest of
the summer.
England have two fit and
dangerous pacemen in Steven Finn
and Graham Onions waiting for a
Test chance, should Strauss decide to
temper his desire to complete a 3-0
series whitewash with more far-
sighted concerns.
You have to look quite a long way
ahead when it comes to potentially
resting someone, he added. Its
always a balance to strike because
primarily you want to win every Test
you play thats the starting point.
Well have a conversation about it in
the coming days.
A seventh successive home series
win rarely looked in doubt, despite
Marlon Samuels 76 not out dragging
West Indies second innings into the
afternoon under more brilliant
Nottinghamshire sunshine.
Strauss and Alastair Cook (43 no)
swiftly set about chasing a modest
target and, after the skipper went to
a catch from Darren Bravo off
Samuels, Jonathan Trott (17 no)
eased England to victory with a four.
G
E
T
T
Y
CHELSEA last night pulled off a
major transfer coup by beating the
rest of Europes elite to the 32m
signing of Lille and Belgium forward
Eden Hazard.
Hazard is believed to have agreed a
five-year deal worth 100,000 after
tax with the Champions League and
FA Cup winners and will formally
complete his move once he has
undergone a medical.
The 21-year-old confirmed his
long-awaited decision, which fol-
lowed months of flirting with a host
of top clubs, on Twitter last night,
saying: Im signing for the
Champions League winner.
The playmaker, who can play as a
traditional No10 or on either flank,
had been tipped to join
either Manchester United
or Premier League win-
ners Manchester City
after declaring England his
favoured destination.
But Chelseas unex-
pected Champions
League success earli-
er this month,
which secured them
a place in next sea-
sons competi-
tion, prompted
Chelsea see off
rivals to secure
32m Belgium
starlet Hazard
Hazard to reappraise the merits of
moving to west London.
His arrival comes despite the club
being without a permanent manager
Roberto di Matteo is waiting to
learn whether his historic achieve-
ments merit a contract and points
to owner Roman Abramovich again
driving transfer policy.
Hazard has emerged as one of the
hottest properties on the Continent
over the past two seasons and scored
a hat-trick in his final appearance for
Lille last week. That took his tally for
the campaign to 20, with 15 assists.
Hazard is expected to give English
fans a preview of
his costly talents
when he plays for
Belgium in
Saturdays friendly
at Wembley.
Chelseas next tar-
get is thought likely to
be a forward to replace
Didier Drogba, who
brought an end to his eight
years at Stamford Bridge last
week, while Germany winger
Marko Marins signing has
already been sealed.
Blues goalkeeper Petr Cech
has signed a new four-year con-
tract, following his penalty
heroics in the Champions
League final, while 50m
striker Fernando Torres has
decided to stay after reassur-
ances about his role.
Jagielka in as Barry out of Euros
Cook hit 43 not out as England won the second Test and the series with ease
CONTROVERSIAL England centre
Manu Tuilagi faces being banned
from the summer tour to South
Africa after he was yesterday cited
for an alleged tip tackle in the
Premiership final.
Leicester powerhouse Tuilagi is
accused of executing the illegal
manoeuvre on international
colleague Danny Care during
Harlequins title-winning triumph
in the Twickenham showpiece on
Saturday. The 21-year-old will
discover his fate at a hearing this
evening, with a guilty verdict
carrying a minimum suspension of
three weeks. England depart for a
three-Test series against the
Springboks tomorrow.
Tuilagi earned notoriety for
jumping from a ferry in Auckland
harbour last year, an incident that
followed and typified an
embarrassing World Cup for
England in New Zealand.
The Samoa-born player was
fined 3,000 for that leap, on top
of 4,800 for wearing a branded
mouthguard during the
tournament. A year ago he was
banned for 10 weeks for punching
Northampton and England wing
Chris Ashton during a
Premiership semi-final.
TUESDAY 29 MAY 2012
42
SPORT
cityam.com/sport
BY FRANK DALLERES
BY FRANK DALLERES
ENGLAND manager Roy Hodgsons
plans for his maiden tournament in
charge suffered their first major
setback yesterday when midfielder
Gareth Barry was ruled out of next
months European Championship.
Manchester Citys Barry was
withdrawn after scans confirmed a
torn stomach muscle, suffered in
Saturdays 1-0 win against Norway
in Oslo, Hodgsons first match since
being appointed this month.
He has been replaced in Englands
23-man squad for Euro 2012 by
Everton defender Phil Jagielka, with
Hodgson well stocked for
midfielders and able to deploy the
versatile Phil Jones in either area.
Im very disappointed to lose
Gareth, said the England manager,
who only has until this morning to
register any changes to his party.
Not only was he a member of my
original 23-man squad but he has
featured prominently in the England
team over the last few years.
I know how much he wanted to
be part of the tournament but Im
sure he will still have a part to play
with England after the Euros. I wish
him a speedy recovery.
Jagielkas call-up comes after he
played 90 minutes against Norway
despite only being on the stand-by
list, and provides Hodgson with
further cover at right-back, with his
only specialist, Glen Johnson,
recovering from a toe infection.
Hodgsons decision might have
been different had Manchester
Uniteds Michael Carrick not ruled
himself out of contention because he
did not want to travel without being
a first-team player.
Barrys injury also raises doubts
about his international career. The
former Aston Villa player will be 33
by the 2014 World Cup in Brazil and,
while his game does not rely on
pace, he faces a decision on whether
to commit to another campaign or
focus on prolonging his club career,
as others such as Paul Scholes have.
England play Belgium in a final
warm-up match on Saturday at
Wembley before departing for the
tournament. Their first match is
against France on 11 June.
BY FRANK DALLERES
Hazard had been
set to move to
Manchester
BY SPORTS DESK STAFF
Rebel Tuilagi could miss South
Africa tour after tip tackle citing
Each year I have enjoyed it
more. As I have got older Ive
learned to appreciate it

England wrap
up series and
mull reshuffle
Andy Murray prepares to rekindle slow-buring
love affair with French Open: Tennis Page 41
etihad.com
Congratulations to Manchester City Football Club and Harlequins Rugby Club,
champions of their leagues, from another title holder,
Etihad Airways, voted Worlds Leading Airline 3 years in a row.
CHAMPIONS!