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GERMAN chancellor Angela Merkel
yesterday said she would seek a com-
promise agreement to stop Britain
leaving the European Union, following
David Camerons pledge to hold a ref-
erendum on the UKs membership of
the organisation by 2017.
We are prepared to talk about
British wishes but we must always
bear in mind that other countries have
different wishes and we must find a
fair compromise, Merkel said. We
will talk intensively with Britain about
its individual ideas but that has some
time over the months ahead.
However her foreign minister Guido
Westerwelle warned that cherry pick-
ing is not an option with the EU.
French foreign minister Laurent
Fabius was even less enthusiastic: If
Britain wants to leave Europe we will
roll out the red carpet for you.
www.cityam.com FREE
Italian Prime Minister Mario Monti
said he believed Britons would stay in
the EU if they were given a choice,
while the White House restated its
belief that the UK should stay in
Europe.
Cameron yesterday insisted that he
would vote in favour of Britain staying
in the 27-member bloc. However
Labour leader Ed Miliband rejected
the entire concept of a public vote on
membership: Our position is no: we
dont want an in-out referendum.
However, business leaders came out
in support of the Prime Minister with
48 industry and City leaders backing
his plans in a letter to The Times, pub-
lished today.
The Prime Minister delighted
Eurosceptics and angered European
leaders in equal measures with his
long-awaited speech, which was deliv-
ered yesterday morning in the City.
In it he pledged to renegotiate
EXPERT: EURO CHIEFS SERIOUS ABOUT FINANCIAL RULES
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BY JAMES WATERSON
MERKEL: LETSTALK
FOOTBALL BEWARE
ISSUE 1,804 THURSDAY 24 JANUARY 2013
MARK KLEINMAN:
THE INSIDE TRACK
Read our brilliant columist on Page 7
Plus Deloittes top 20 richest clubs: Page 31
MORE: Pages 2, 3, 20, 21
Certified Distribution
from 26/11/12 to 30/12/12 is 127,678
Britains relationship with the EU, and
put the new deal to a vote by halfway
through the next parliament, saying it
is time for the British people to have
their say on Europe.
As part of the renegotiation process
Cameron promised to conduct an
audit of the powers Britain wants to
claw back from Brussels. In the speech
he highlighted working time restric-
tions on doctors in the health service
as an example of the EU restricting
British practices.
Cameron also attacked City leaders
who fear a referendum may negatively
affect the economy: Some people say
that to point this out is irresponsible,
creates uncertainty for business and
puts a question mark over Britains
place in the EU. But the question mark
is already there: ignoring it wont
make it go away.
Yesterday the fiercely Eurosceptic
Ukip party claimed credit for
Camerons decision.
Ukip should be awarding itself a
medal. I dont think we would have got
here with internal pressure alone,
Eurosceptic Conservative MEP Daniel
Hannan told City A.M. Weve got the
thing weve been wanting for over 20
years.
APPLE posted record profits last
night, as sales of the iPhone 5 and
iPad mini in the months since
their releases drove it to new
heights.
However, the companys
performance disappointed Wall
Street, sending Apple shares down
BY JAMES TITCOMB
more than 10 per cent in after
hours trading as it warned of
lower revenue growth in the
coming months.
Apples highly anticipated
results for its crucial first quarter,
which covers October, November
and December, revealed sales of
$54.5bn (34.4bn), an 18 per cent
increase on the previous year.
Profits, which had been
expected to fall due to lower
product margins, rose marginally
to $13.1bn. This was despite the
quarter spanning 13 weeks,
compared to 14 weeks last year.
Apple sold a record 47.8m
iPhones and 22.9m iPad, and this
would have been higher if it had
managed to keep up with demand.
The companys profit margins
were hit, however, due to the
relatively low price of the iPad
mini and the higher production
costs associated with the iPhone 5.
Were very confident in our
product pipeline as we continue to
focus on innovation and making
the best products in the world,
chief executive Tim Cook said.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
THE US House of Representatives
yesterday passed a Republican plan
to allow the federal government to
keep borrowing money until mid-
May, after the top Senate Democrat
and White House endorsed it.
The vote in the Republican-
controlled House drew the
opposition of 111 Democrats, many
of whom labeled it a negotiating
gimmick that would set up a new
fiscal cliff just weeks after the
White House and Congress reached a
deal to avert a package of automatic
spending cuts and tax hikes.
The plan avoids for the time being
a repeat of the 2011 debt ceiling
standoff that rattled markets and
prompted a downgrade of the
governments triple-A credit rating.
The US Treasury is expected to
exhaust remaining borrowing
capacity under the $16.4 trillion
(10.4 trillion) debt limit between
mid-February and early March.
House Speaker John Boehner
warned immediately after the vote
that Republicans would take the
next opportunity automatic
budget cuts set for 1 March to
demand reforms from President
Barack Obama.
Boehner said the automatic cuts,
which were temporarily delayed
earlier this month, are going to go
into effect unless Obama makes
concessions,
Congress votes
to extend US
borrowing limit
BY CITY A.M. REPORTER
Jobs miracle sees record
number of Brits in work
UNEMPLOYMENT plunged again in
the three months to November, offi-
cial figures showed yesterday, defy-
ing fears of a triple dip recession and
bringing fresh hope that the econo-
my is on the mend.
Employment jumped 90,000 to a
new record high of 29.68m while
unemployment dropped again to
2.49m. Full time employment drove
that increase, rising by 113,000,
while the number of people in part
time employment dipped by 23,000.
That sent hours worked soaring 3.3
per cent to 364.9m per week, and the
number of part time workers unable
to get a full time job dropped by
23,000 to 1.38m. But youth jobless-
ness edged up by 1,000.
Despite the positive figures, GDP is
still expected to have fallen in the
final three months of 2012.
It remains a puzzle that an econo-
my showing basically flat growth is
generating a rise in total hours
worked of 2.3 per cent on a year earli-
er. The apparent continued decline
in service sector productivity
remains a bit odd, said BNP Paribas
economist David Tinsley.
Part of the reason for such a sus-
tained rise in employment may be
the low rise in pay incomes rose 1.5
per cent in the year, hitting 472 per
week in November, well below infla-
GMG ends talks to sell Trader stake
Guardian Media Group has called off talks
with interested buyers over the sale of its
half stake in the car classifieds company
Trader Media Group following a failure to
agree a price. Apax, its joint venture
partner in Trader Media, was interested in
buying out the 50.1 per cent owned by
GMG in a deal that would have netted the
publisher of the Guardian and the
Observer around 300m in cash. Apaxs
offer for the stake valued Trader at around
1.2bn including net debt of 600m,
significantly less than GMG had hoped for
Cuts cause General Dynamics loss
General Dynamics yesterday became the
first big US military contractor to take a
significant writedown for declining US
defence spending when it announced a
$2.13bn (1.3bn) fourth-quarter loss at
the start of its reset year.
Chinese fund and Schmidt bank unite
Raine, a boutique merchant bank backed
by Google executive chairman Eric
Schmidt has struck a deal with a Chinese
state-owned fund to work together on
media, sport and entertainment
acquisitions.
Jobs warned rival to stop poaching
workers from Apple
Steve Jobs threatened a patent lawsuit
against Palm, the maker of phone
handsets, unless it agreed to stop hiring
Apples employees, according to court
documents revealed this week.
Dreamliner inquiry lands at Eaton
An aerospace factory in Hampshire has
been drawn into a Japanese investigation
over a fuel leak that caused an emergency
on one of Boeings 787 Dreamliners.
Ladbrokes homes in on 30m Betdaq
Ladbrokes chief executive Richard Glynn is
on the verge of making his first acquisition
since taking the reins at the bookmaker
three years ago with the purchase of
betting exchange Betdaq for about 30m
(25m).
Tea cartel formed to boost profits
The price of a cup of tea could rise after
the world's biggest producers agreed to
join forces to boost profits, a Sri Lankan
minister has announced.
Goldman opposes independent chair
Goldman Sachs is trying to block a
shareholder proposal for an independent
chairman from appearing on the proxy
ballot, following an effort last year
against a similar proposal that saw the
company name a lead outside director.
Judge approves Kodak loan
A judge has approved a financing deal
worth $843.7m (533m) for Kodak, which
the company says should help it emerge
from bankruptcy protection midyear.
RUPERT Murdochs News
International has snapped up the
rights to show online highlights of
Premier League football games.
The three-year deal, which begins
at the start of the 2013-14 season,
means that News Internationals
news outlets the Sun, the Times
and the Sunday Times will be able
to show Premier League highlights
on their websites and smartphone
and tablet apps. Meanwhile, BSkyB
extended a deal to show lengthy
highlights of the 226 games not
shown on live television.
37,000
to 8.1%
ALL FIGURES ARE FOR SEP TO NOV 2012 UNLESS OTHERWISE INDICATED *MONTH TO DECEMBER *YEAR TO NOV 2012
FULL-TIME
EMPLOYMENT
MALE
UNEMPLOYMENT
STAYED FLAT AT
7.7%
FEMALE
UNEMPLOYMENT
PART-TIME
EMPLOYMENT
TOTAL HOURS WORKED
113,000
PUBLIC SECTOR
WAGES
PRIVATE SECTOR
WAGES
EMPLOYMENT HIT A RECORD HIGH IN NOVEMBER
JOB SEEKERS
BENEFIT CLAIMANTS
12,100 to
1.56m
*
EMPLOYMENT
JUMPED 90,000
to 29.68m
UNEMPLOYMENT
FELL 37,000
to 2.49m
NOW 7.7%
1,000 to 957,000
YOUTH UNEMPLOYMENT
INCLUDES THOSE IN FULL TIME EDUCATION
23,000
3.3% to 364.9m
per week
2% to 487 per week
*
1.4% to 468 per week
*
BOTH BELOW INFLATION
OF 2.7%
*
Murdoch scores
with footie deal
2
NEWS
BY JAMES TITCOMB
THE investigation into interdealer
broker Icap in connection with
Libor rate rigging has intensified,
a source close to the probe
confirmed last night.
Seven of the estimated 50 staff
working on the Libor probe for
City watchdog, the FSA are now
focusing on Icap.
Icap, founded by Michael
Spencer, said last year that it had
been asked to provide information
to investigators and said it was co-
operating fully with the
authorities.
FSAs Libor probe
gathers speed
BY CITY A.M. REPORTER
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
G
OOD on David Cameron. He has
finally listened to public
opinion and agreed to seek a
better, renegotiated EU
membership deal for the UK. Nobody
born after 1957 in the UK has ever
had a chance to say what they think
of an organisation that controls more
of UK public policy than ever before.
Of course, the details of the prime
ministers proposed course of action
are not perfect, and all of this could
yet come to nothing as the referen-
dum is due to take place after the
next election, which Labour will prob-
ably win, but this is nevertheless a
hugely important moment. Cameron
deserves to be congratulated for his
courage. He wants to stay in the EU;
but understands that without signifi-
cant repatriation of powers the public
will eventually lose patience.
Those who believe in free trade and
EDITORS
LETTER
ALLISTER HEATH
Camerons decision to call a referendum is absolutely right
THURSDAY 24 JANUARY 2013
open markets should not fear this ref-
erendum. The business community is
divided on the EU, unlike in the 1970s
when it almost universally backed
joining the common market. Now
many, especially smaller firms but
also plenty of large ones, support a
looser arrangement; they realise that
the EU is in terminal decline as a mar-
ket and resent the endless stream of
damaging, job-destroying rules, with
Solvency II for insurers merely the lat-
est in an extraordinarily long list.
In the 1970s and early 1980s, it was
possible to portray the EU as a liberal-
ising, anti-communist force; these
days, it is primarily an engine of anti-
democratic corporatism and social
democracy, with some important pro-
individual freedom elements
drowned out by state-building.
It is sad that most banks remain in
favour of the status quo, which in
reality means progressively greater
centralisation. They have got this ter-
ribly wrong. Yet business as a whole,
like British society is divided; most
want to stay in some much looser
relationship, if it is possible to negoti-
ate one. Thats also clearly Camerons
position, though it remains to be seen
what he exactly has in mind, and
what he is able to negotiate.
A referendum will create uncertain-
ty. But so does holding general elec-
tions or referenda on Scottish
laps with pro-EU integrationists)
argued it would have no impact on
where business chose to locate;
Londons pool of talent, language,
restaurants and culture would sup-
posedly be enough to keep everybody
here. Yet now, suddenly, none of these
matter: business is about to run away
because of the EU question. These
people need to make up their minds.
Above all, the City and business
must stop scaremongering. They
should focus on getting the right kind
of renegotiation which preserves
trade and essential freedoms but lib-
erates us of unnecessary interference.
If they dont engage in this debate in
a constructive manner, they will have
only themselves to blame if they dont
like the final outcome.
independence, events which are gen-
erally backed by opponents of this
particular referendum. Big City firms
have got their priorities wrong: the
prospect of the Labour party winning
the next election and imposing 75 per
cent tax rates on bonuses, or the pos-
sibility of the EU capping them in an
unworkable way, are much greater
threats to their business models. Car
companies should spend more time
worrying about energy regulations or
a further collapse in demand for their
products caused by the dysfunctional
euro. It is strange that these firms
many of which have gone begging for
handouts in recent years are so
vocal about opposing any repatriation
of political powers to the UK but so
quiet on other issues of far greater rel-
evance to their prospects.
There is a parallel with the 50p tax
rate. Supporters (a group which over-
tion at 2.7 per cent.
Recruiters Robert Half forecast a
strong start to 2013, with professionals
particularly likely to benefit from
strong hiring. Its study shows 23 per
cent of directors expect to take on
more staff in the first half of the year
while only nine per cent expect firings.
The Association of Graduate
Recruiters predicts a nine per cent rise
in vacancies for university leavers this
year, as well as a two per cent rise in
average starting salary to 26,500.
And the British Retail Consortiums
latest figures show a one per cent rise
in employment in the sector in the
year to December, despite the indus-
trys problems.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
BUSINESS leaders yesterday broadly
welcomed David Camerons plans to
renegotiate a new deal with the
European Union.
In a letter to The Times, 48 industry
and City leaders said the Prime
Ministers promises of a negotiation
followed by an in-out referendum
within five years was good for busi-
ness and good for jobs in Britain.
The signatories included London
Stock Exchange chief executive Xavier
Rolet, Standard Chartered chairman
Sir John Peace and Diageo
chief executive Paul
Walsh.
Many major UK indus-
try bodies also said they
would be happy to see
Britains current EU deal
renegotiated with a new
focus on free trade.
The vast majority of busi-
nesses across the UK want to
stay in the single market,
but on the basis of a
revised relationship
with Europe that
promotes trade
Business backs
Camerons call
on Europe vote
BY JAMES WATERSON and competitiveness, said John
Longworth of the British Chambers of
Commerce. Announcing plans for a
referendum on British membership
puts the onus on the rest of Europe to
take the Prime Minister seriously, as
they will now see that he is prepared
to walk away from the table.
The Institute of Directors called the
speech realistic and pragmatic and
welcomed any move to curtail large
amounts of costly regulation being
introduced through unaccountable
processes.
But there were concerns over the
timescale of the announcement, with
the vote not likely to take place
until late 2017. This is a political
decision, not an economic deci-
sion, said Sir Martin Sorrell, WPP
chief executive, at the World
Economic Forum in Davos. You
just added another reason why peo-
ple are going to postpone invest-
ment decisions.
WHAT DID BUSINESS LEADERS MAKE OF THE PRIME MINISTERS SPEECH?
n
The Prime Ministers commitment
to reshape the EU from within and
his ambition to secure a better deal for
Britain is right. But this strategy is not
without risk. If the door to a UK exit from
the union is open it will diminish our
ability to influence the reforms that
Europe needs. It is far from certain,
moreover, that the outcome of
negotiations will be clear cut, meaning
that greater uncertainty about UK
membership particularly for business,
will prevail.
TERRY SCUOLER
Chief executive of the
EEF organisation for
UK manufacturers
LSE chief Xavier
Rolet said he
backed Cameron
THE FORUM: Pages 20-21
THURSDAY 24 JANUARY 2013
3
NEWS
cityam.com
n David Cameron has committed to
holding an in/out referendum on Britains
membership of the European Union by
the end of 2017 if the Conservatives win
the next general election.
n Before this he will seek to negotiate a
new deal with Europe but the
referendum will be on membership, not
whether to accept this revised package.
n The referendum could be required as
part of any Conservative coalition deal
after the 2015 general election.
n Cameron will personally campaign for
Britain to stay in the EU but fears a
stronger Eurozone could curtail free trade.
n The Prime Minister wants completing
the single market to be our driving
mission.
n Cameron used the speech to portray
himself as heretic, who wants the EU to
be more flexible rather than act with the
cumbersome rigidity of a bloc.
n Some powers should return from
Brussels to national parliaments. Cameron
did not provide details but hinted the
working time directive is his top target.
n Cameron attacked those who say a
referendum creates uncertainty for
businesses. He said the other option is to
let anti-EU anger build up until the public
vote for complete withdrawal from the
organisation.
n Holding a referendum immediately
would be inappropriate because it is not
clear what form the EU will take following
the Eurozone crisis.
n Cameron rejects complete withdrawal
from the EU in favour of the model
practised by Norway and Switzerland
because they are very different from us.
n The Prime Minister believes the
Eurozone crisis will force the EU to pass a
new treaty, providing the opportunity for
Britain to renegotiate its relationship.
HIGHLIGHTS OF CAMERONS EU SPEECH
n
Free movement of goods and
people is enormously important
for the British economy, and we need to
preserve that situation. At the same
time, there are serious concerns about
large amounts of costly regulation
being introduced through
unaccountable processes. A future
referendum to decide the workings of
our relationship is the best way to
affirm Britains participation in a free-
market Europe which is competitive and
deregulated.
SIMON WALKER
Director general of the
Institute of Directors
n
We support the Prime Ministers
stated goal of keeping the UK
within the European Union albeit on
better terms. Londons position as
Europes leading international financial
and business centre is crucial to
sustaining jobs and growth not just in the
UK but across the continent. Uncertainty
over this relationship with Europe risks
making the UK less attractive as an
international centre across many
industries by making it more difficult to
make long-term investment decisions.
MARK BOLEAT
Policy chairman at the
City of London
corporation
n
Polling has consistently shown that
the British electorate want a better,
looser relationship with the EU rather
than a Brixit or the status quo if thats
on offer. David Cameron has outlined a
clear course towards precisely the type of
slimmed down Europe that most people
and MPs in his party have been calling
for. European partners who feared an
imminent dawn raid on Brussels will be
relieved. He has set out a plausible and
powerful case for EU reform and should
get a fair hearing in national capitals.
MATS PERSSON
Director of Open
Europe, a think tank
calling for EU reform
n
The Federation of Small Businesses
remains neutral on the issue of
being in or out of the European Union,
but recognises there is more certainty
going forward to 2017-18. Nearly a
quarter of FSB members export and the
vast majority do so within the European
Economic Area. Generally FSB members
find it easier to trade with other EU
countries, especially first time exporters.
Governments around the world need to
do all they can to keep markets open and
take barriers away.
JOHN WALKER
National chairman,
Federation of Small
Businesses
GROWTH in the UK will be even
more sluggish than previously
expected in 2013, while the
Eurozones economic output will
shrink again, the International
Monetary Fund (IMF) said yesterday.
The lending body slashed its GDP
projections for regions throughout
the world, predicting that global
growth will slow to 3.5 per cent in
2013 slightly down from its earlier
estimate of 3.6 per cent expansion.
Britains economy will expand just
one per cent this year, the IMF
expects, edging down its previous
forecast of 1.1 per cent growth.
In its last World Economic Outlook,
published last year, the IMF said the
Eurozone could expect 0.1 per cent
growth in 2013. Yet now it predicts a
0.2 per cent contraction.
While there are plenty of candi-
dates vying for the dubious honour
of being the sick man of Europe,
Europe has got the sick man of the
world gong in the bag, commented
IMF expects UK
to grow just 1pc
as forecasts cut
BY JULIAN HARRIS Jason Conibear of foreign exchange
specialists Cambridge Mercantile.
With Germanys economy going
off the boil again, the bloc's laggards
will drag it into contraction for the
second year in a row.
Despite being widely regarded as
the Eurozones powerhouse economy,
German will fare even worse than the
UK in 2013, the IMF said.
German GDP will grow by just 0.6
per cent, its economists believe, down
0.3 percentage points from last
yearss forecasts.
And the IMF expects France the
Eurozones second largest economy
to expand by just 0.3 per cent.
In crisis-struck Italy and Spain, GDP
will shrink by one per cent and 1.5
per cent respectively, the IMF said.
Across the pond the situation is
thought to be more robust, however.
Despite ongoing strife over the US
debt ceiling, the IMF expects the
worlds largest economy to grow by
two per cent throughout 2013 down
by only 0.1 percentage point since its
previous forecast.
JP Morgan boss Jamie Dimon apologised to shareholders yesterday for the $6.2bn loss
THURSDAY 24 JANUARY 2013
4
NEWS
cityam.com
JP Morgan boss Dimon hits out
at accusations of opaqueness
JP MORGAN chief executive Jamie
Dimon made a staunch defence of
the banking industry yesterday
after accusations that big banks are
not transparent enough.
Speaking at the World Economic
Forum in Davos, Dimon warned of
further regulation of the industry.
I think a lot of regulators are
overwhelmed, he said. Theyre
overwhelmed with rules and
regulations.
Responding to accusations from
Paul Singer of hedge fund Elliot
BY HARRY BANKS
Associates that large banks are too
big, too leveraged, too opaque,
Dimon said: Our [company filing]
is 400 pages long. What would you
like to know? With all due respect
hedge funds are pretty opaque too.
Dimon also apologised to
shareholders for the $6bn (3.8bn)
loss associated with a London
trader nicknamed the Whale. He
said the incident was a terrible
mistake, but that the bank has
moved on and is still highly
profitable.
If youre a shareholder of mine,
I apologise deeply, Dimon said.
But we had record results and
life goes on.
Despite a $6.2bn loss from bad
trades in JP Morgans chief
investment office last year, the bank
still managed to earn a record
$21.3bn in 2012.
JPMorgan Chase is the largest US
bank, with $2.36 trillion in assets.
Its chief investment office has since
been restructured and traders and
executives involved with the
whale trade were dismissed.
After an internal review,
Dimons bonus was cut in half to
$11m for 2012.
GREENHILL & CO, the New York
based investment bank and
advisory firm, reported a 6.1 per
cent fall in profits in the fourth
quarter of 2012 on lower returns
from investments.
Despite a 17 per cent rise in
revenues from advising clients, a
poor run of investments pushed
profits down to $15m (9.5m) from
just over $16m in the previous
year.
Greenhill saw investment losses
of $8m in the quarter, compared
with a $9m profit in the same
quarter a year earlier.
The results sent shares in
Greenhill down around 0.8 per
cent in trading yesterday.
Greenhill profits fall as advisory
gains offset by bad investments
BY CITY A.M. REPORTER
Mergers and acquisitions
worldwide fell in 2012 for the first
time in three years, stunting
income from advisory work. For
the full year, Greenhill saw a four
per cent fall in revenues from
advisory work.
However, Greenhills chief
executive Scott Bok said he expects
the market for M&A work to
improve in 2013.
For the near term, it is clear
that we began the new year with a
far more attractive backlog of
announced and pending
transactions than we had a year
ago, Bok said yesterday.
Greenhill was founded in 1996
by current chairman Robert
Greenhill, who was previously
chief executive of Smith Barney.
METRO Bank may not have been
established if founder Vernon Hill had
realised in advance how arduous and
expensive the process of getting a
banking licence would be, the
American billionaire said yesterday.
It is famously difficult to get a new
banking licence issued, as the new
ventures backers must prove they
have enough capital before they can
have the permission, but generally
need the licence before they can
attract the necessary capital.
Hill set up Metro Bank in 2010,
becoming the first new high street
bank in more than 100 years.
But although he had set
up other banks previously
and has ambitions for
Metro to grow to 200
branches in the
south east, he
doubts he could
face apply-
ing for a
licence
to set
up a
Metro boss: I
wouldnt set up
UK bank again
UK bank again.
I had forgotten how hard it is I am
not sure I would do it again, he told a
Westminster Business Council event.
And he added that he does not
believe the regulators are seriously try-
ing to make it easier to get a new
licence, instead simply paying lip serv-
ice to the idea of a more open and
competitive industry.
Martin Wheatley and Andrew Bailey
the leaders of the new Financial
Conduct Authority and Prudential
Regulatory Authority respectively
have both pledged to do more to open
up the sector. Their new plans to
reduce barriers to entry will be
announced in the next month.
They say they are making it easier,
but it is very hard and expensive it is
not at all easy, said Hill.
But it is not only the UKs regulators
that make his life difficult the chair-
man also noted that the EU is respon-
sible for more new regulations than
the domestic authorities.
LLOYDS staff in roles from IT
support to insurance to branch
management were yesterday
notified they will be leaving the
bank as it continued to roll out its
plan to cut another 15,000 jobs.
Lloyds informed 940 staff across
the country they will be losing
their jobs over the next three to six
months, depending on the terms of
their contracts.
The group operations, insurance,
wealth, retail, international and
commercial divisions are all
affected.
That takes the total lost since
mid-2011 to 8,000, more than half
way through the current cost-
cutting plan.
Lloyds renews job cutting plan
with another 940 staff to go
BY TIM WALLACE The groups policy is always to
use natural turnover and to
redeploy people wherever possible
to retain their expertise and
knowledge within the group, said
the bank in a statement.
Where it is necessary for
employees to leave the company, it
will look to achieve this by offering
voluntary redundancy.
Compulsory redundancies will
always be a last resort.
It comes a day after Barclays
informed hundreds of its London
investment banking staff they will
be losing their jobs in a review
which will be announced next
month, while banks across the
globe are also cutting back Citi is
losing 11,000 workers, for example,
while UBS is cutting 10,000.
EXCLUSIVE
BY TIM WALLACE
THURSDAY 24 JANUARY 2013
5
NEWS
cityam.com
Lloyds chief Antonio Horta Osorio is trying to restore the state-backed bank to health
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Eurozones consumer morale
shows some sign of recovery
CONSUMER confidence in the euro
area has jumped sharply in the first
month of 2013, a survey showed
yesterday, while separate data
revealed that the debt ratios of
Eurozone governments are
beginning to stabilise.
And on a rare day of positive
figures for the single currency area,
Portuguese debt yields fell to their
lowest since late 2010. Investors
were heartened by strong demand
at Portugals first bond market
foray since its 2011 bailout. They bid
BY JULIAN HARRIS
around 10bn (8.4bn) for Portugals
reopening of its October 2017 bond,
five times more than the 2bn the
Treasury sold, allowing it to borrow
at a relatively low cost.
Subsequently, Portuguese two-year
bond yields fell 29 basis points on
the day to 3.125 per cent, their
lowest since October 2010.
Meanwhile, across the Eurozone,
consumer morale rose to an index
score of minus 23.9 this month
from a December figure of minus
26.3, the European Commission
said suggesting households can
help boost the blocs economy.
The Eurozone remains mired in a
debt crisis, yet separate figures from
Eurostat show that its states debt to
GDP ratio stood at 90 per cent in the
third quarter of 2012, only slightly
up from 89.9 per cent in the
previous quarter.
There was still some food for
bears in yesterdays data, however,
as the Bank of Spain reported that
Spanish GDP shrunk 0.6 per cent in
quarter four of 2012. And in France
business morale has worsened,
according to statistics group Insee.
Its confidence index fell from 89 to
86 this month.
Vernon Hill prides
himself on US-style
customer service
THE CAPITALIST: Page 15
PROVIDERS of a new high-profile
investment product are actively lobby-
ing to be included in a government-
run compensation programme, City
A.M. has learned.
Oliver Cardigan, a director at Numis
Securities, said his company has had
discussions with top people in gov-
ernment in the hope of extending
consumer protection to retail bonds.
Numis want the FSA-controlled
Financial Services Compensation
Scheme (FSCS) which guarantees up
to 85,000 of personal savings with a
bank or building society to be
extended to cover the balance of an
individuals investment in retail
bonds.
Retail bonds enable individual
investors to buy debt directly from a
company. The UK market has grown
at a fast rate since 2010, with investors
attracted by yields that can be
upwards of 7.5 per cent.
Retail bonds
considered for
compensation
Under current rules the entire
investment is at risk if a company is
liquidated. Including retail bonds in
any compensation scheme is likely to
demystify the product and substantial-
ly push up demand for retail bonds.
Currently the vast majority of these
issues are taken up by discretionary
fund managers, rather than self-
traders, Cardigan explained. There
are ads in the newspaper [but] because
the FSA is so cagey about the risk of
any lawsuits you cant put a Facebook
campaign or a TV campaign because
all the regulatory language would
spoilt the effect.
Numis is preparing to unveil details
of the first retail bond issue of 2013
involving FTSE 250 oil and gas explor-
er EnQuest within the next week.
According to Henrietta Podd, head of
debt advice at Canaccord Genuity,
there were 16 new retail issues in 2012,
raising a total of 1.5bn up 78 per
cent year-on-year. She said the average
ticket bought by investors in retail
issues managed by her company is
around 20,000.
EXCLUSIVE
BY JAMES WATERSON
6
NEWS
cityam.com
NEW LOOK is in talks with banks over refinancing its 1.1bn debt, following improved
trading. The fashion retailer, whose designers include Kelly Brook (above), has
revamped stores in a bid to attract older customers. New Look reported a 3.7 per cent
like-for-like sales rise at Christmas, and is seen to be able to attract lower interest rates.
NEW LOOK BROWSING FOR DEBT RESTRUCTURE
TWO top lawyers were yesterday
appointed to the board of the
Financial Services Compensation
Scheme (FSCS) to bolster the
leadership team after the
departure of two veteran members.
The FSCS acts as a fund of last
resort for depositors in broken
banks and building societies if
they go under, deposits are
guaranteed up to 85,000, with the
rest of the sector bearing the cost.
Former Aegon general counsel
Marian Glen has been appointed by
Banking depositors backstop
beefs up its governing board
BY TIM WALLACE
the Financial Services Authority.
Her experience in the area includes
remediation for Scottish Equitable
customers, working on redress
provision.
And Charles McKenna, formerly
a corporate partner at law firm
Allen & Overy has also joined the
board.
They replace Ros Reston and
Tony Ashford, who were members
of the board through the financial
crisis, when the FSCS was called
upon to compensate the UK
customers of several failed
Icelandic banks.
JUST a week after revealing they
were in merger talks, Tui Travel
and its German parent Tui AG
have called off discussions, send-
ing shares in the FTSE 100 com-
pany tumbling nearly five per
cent.
Tui AG, which owns 56 per
cent of Tui Travel, said the nil-
premium merger on the table
was not attractive based on the
current share prices.
The holiday groups are now
barred from rekindling talks for
six months under Takeover
Panel rules.
Tui AGs major shareholders,
including Russian billionaire
BY MARION DAKERS Alexei Mordashov and Norwegian
shipping magnate John Fredriksen,
have been pushing the companies
to save on costs by sharing
resources.
Sources close to the companies
had talked up the value of syner-
gies, but analysts were sceptical
that the firms could squeeze the
claimed 500m (420.3m) savings
out of two companies that already
work closely together.
With denial well ahead of the
mid-February put-up-or-shut-up
deadline the no-deal announce-
ment may suggest to the markets
that Tui Travel shares are overval-
ued, Accendo Markets head of
research Mike van Dulken said in a
note to clients.
TUI Travel PLC
23Jan 17Jan 18Jan 21 Jan 22Jan
280
285
290
295
300 p
278.00
23Jan
HILCO emerged yesterday as the
front runner to buy the brand of
collapsed camera chain Jessops.
The retail restructuring firm,
which bought HMVs debt from its
lenders on Tuesday, is understood to
be mulling a plan to open Jessops
concessions in HMVs stores.
Administrators PwC have received
around half a dozen expressions of
interest for the brand. All of Jessops
187 stores closed on 9 January.
Jessops brand
eyed by Hilco
BY KASMIRA JEFFORD
AMAZON tightened its grip on CD,
DVD and game sales at Christmas,
taking a quarter of the market at the
expense of the high street.
Research from Kantar Worldpanel
Entertainment found that the online
retailer took 23.4 per cent of
entertainment sales in the 12 weeks
to 23 December, up from 20.3 per
cent last year. HMV rose only
marginally to 17.5 per cent, while
Tesco and Game saw big losses.
Amazon gains
over Christmas
BY JAMES TITCOMB
THURSDAY 24 JANUARY 2013
7
NEWS
cityam.com
NEW8 FROM THE
CTY OF LONDON
ADVERT8EMENT
News, info and offers at www.cityofIondon.gov.uk/eshot
City of London plans to hear your views
Rare and unusual ilems from The Worshiful Comany of
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folloving email address: !nca!p!anmcitynnndnn.gnv.uk
McDonalds to create 2,500 UK
jobs as it reveals rise in sales
MCDONALDS announced plans
yesterday to create 2,500 jobs at
its restaurants this year, taking
its UK workforce to 93,500.
The worlds biggest
restaurant group said the move
builds on the 3,500 jobs created
in 2012, of which 70 per cent
were taken by young people
under the age of 21.
Business secretary Vince
Cable, who met with employees
yesterday said: A highly-skilled
workforce is an important part
of any growing business. Thats
BY KASMIRA JEFFORD
why I am pleased to see how
McDonalds is providing
training and apprenticeships in
a range of skills.
McDonalds is also to be
applauded for helping adult
employees get qualifications
in maths and English.
The fast food giant also
revealed an unexpected
rise in December sales at
established US restaurants,
which helped lift its
fourth-quarter
profit by 1.4 per
cent to $1.4bn
(883.8m) above
analysts estimates.
The group said global same-
restaurant sales for 2012 rose
3.1 per cent, with US sales up
3.3 per cent and European
sales its largest market after
by revenue up 2.4 per cent.
Total sales rose 1.9 per
cent to $6.95bn.
Tui Travels shares closed at 278p,
below the price they were before the
merger talks were announced.
Shares in German-listed Tui AG fell
5.4 per cent to 7.51.
Tui Travel was advised by Lazard
during the talks.
Mark Kleinman is the City
editor of Sky News
@MarkKleinmanSky
A
R R O G A N T , i n d o l e n t ,
avaricious and these are
some of the politer adjectives
applied to investment
bankers and private equity firms
during their ongoing stand-off with
City fund managers.
The permafrost between them
has shown few signs of thawing
since two BlackRock executives
outlined in 2011 a litany of gripes
about the way bankers sell new
share issues.
Now add the voice of Legal &
General Investment Management
(LGIM), the most influential
investor in the City, to this chorus
of criticism.
In its submission to the UK
Listing Authoritys review of
listing standards, a copy of which
Ive seen, LGIM suggests a range of
proposals to reform the pivotal
relationship between fund
managers and bankers.
Among its most notable
demands is a call for banks to
publish their previous
performance record on company
listings and to name the
individuals responsible for those
transactions.
It also wants to see a limit on
the size of bank syndicates in
order to preserve a broad range of
independent research on
companies, and a deferral of
INSIDE
TRACK
MARK KLEINMAN
Icy times between fund managers and bankers
sponsors fees for up to six months
after a company lists with
payments linked to the average
post-flotation share price.
The fund manager also criticises
the widespread practice of
parachuting directors onto
company boards shortly ahead of
an initial public offering (IPO),
which it argues signals a
lukewarm commitment to
corporate governance.
LGIM is right. The emergence of
ever-larger syndicates has acted as
an impediment to the
accountability of banks.
Smaller pools of advisers would
redress that balance. Likewise
delaying fees would demonstrate
closer alignment between the
long-term interests of bankers and
investors.
The mutual distrust between the
private equity industry and fund
managers will take time to repair
itself. The Citys virtually-
moribund IPO market is testament
to the need for it to happen.
A SWITCHED-ON ROADSHOW
One company that could play a
role in that rapprochement is
owned not by private equity
barons but by Britains wealthiest
brothers.
Step forward, Global Switch, the
data centre operator founded by
billionaire siblings David and
Simon Reuben.
A flotation of Global Switch
has been on the cards for years. A
roadshow of institutional
investors, which City sources say
got underway earlier this month,
and the ongoing rally in equity
markets, lend the idea fresh
credence.
The Reubens are in no rush. The
motive for the roadshow, which
also took place last year, is to
familiarise prospective
shareholders with Global Switch
well in advance of a listing
process one of the other
demands expressed in the LGIM
submission.
Global Switchs earnings growth
profile means that it would sit
comfortably in the FTSE 100, with
a market value of at least 3.5bn.
If it floats in London, that is.
Global Switch is an emerging
markets technology play that
could list as easily on New Yorks
Nasdaq or in Singapore as in the
UK.
That gives the owners
geographical optionality (as
bankers might put it). It will
provide another test of the Citys
IPO credentials.
PREDATOR TURNED PREY
As a rule, chief executives prefer to
project themselves as corporate
predators rather than prey.
Nowhere is this narcissistic trait
more stubbornly exhibited than in
the Citys saturated small- and
mid-cap broking sector, where the
dearth of fee-generating activity is
exacting a stiff toll on the survival
prospects of many firms.
The dire environment has
prompted tentative merger
discussions between most of the
significant operators in this space,
including, I understand, Panmure
Gordon and WH Ireland shortly
before Christmas.
Another prominent name is
understood to be in talks about a
rescue deal that could materialise
in the next few weeks.
Expect more news imminently.
Tui Travels merger
talks with parent fail
Business secretary Vince
Cable applauded
McDonalds for
creating the
new jobs
ANGLO-Dutch consumer goods giant
Unilever said yesterday full-year sales
exceeded 50bn (42bn) for the first
time thanks to strong demand for its
soaps and hair products in emerging
markets.
The owner of PG Tips, Persil and Cif
Cleaning brands yesterday said pre-
tax profit rose seven per cent in 2012
to 6.68bn on sales up 10.5 per cent to
51.3bn.
Underlying sales in emerging mar-
kets such as India, China and Brazil
grew by 11.4 per cent and now make
up around 55 per cent of turnover.
The company said Magnum ice-
cream and Sunsilk shampoo both
became 1bn brands in its portfolio,
meaning that Unilever now has 14
brands in this category.
Unilever has been focusing on grow-
ing its personal care products, which
are more popular in regions like Latin
America and Asia. Sales of these prod-
Unilever profits
from emerging
market growth
BY KASMIRA JEFFORD
ucts rose 10 per cent in the period.
This helped offset sluggish growth at
its food division particularly spreads
such as Flora with underlying sales up
just 1.8 per cent in the quarter, due to its
exposure to more developed markets.
Chief executive Paul Pollman said:
Markets will remain challenging,
with intense competition and volatile
commodity costs. We remain focused
on achieving another year of prof-
itable volume growth ahead of our
markets.
Shares in PG Tips owner Unilever rose 3.1 per cent to hit a record high of 2,526p
Unilever PLC
23Jan 17Jan 18Jan 21 Jan 22Jan
2,440
2,420
2,460
2,480
2,500
2,520
2,540 p
2,526.00
23Jan
THURSDAY 24 JANUARY 2013
8
NEWS
cityam.com
BOTTOM
LINE
MARC SIDWELL
Swanns way has brought profit but not boosted sales
C
HRISTMAS should hardly have
been a season for merriment at
WHSmith, judging by the latest
trading update, with like-for-like
sales down five per cent for the 20
weeks to 20 January, and total sales
down four per cent. Yet the stationery,
books and impulse goods seller was
chipper, pointing to good profits
thanks to careful margin control
especially impressive in a season given
to heavy discounting.
Investors seemed to share the
cheer: shares fell, but remain well
above both their January lows and
the price they have commanded for
most of the last five years. Thats
thanks to the remarkable strategic
turnaround worked by Kate Swann,
the outgoing chief executive, which
helped WHSmith evolve from a loss-
making dinosaur burdened with
selling the sort of low margin CDs
and DVDs that laid HMV low into an
agile, margin-conscious business,
returning ever-increasing profits.
However, it might be time for a
little anxiety about how long this
new vision can remain airborne.
It isnt as if Swann can claim that
there is a problem in one particular
division. High street sales were down
five per cent like-for-like and five per
cent in total perhaps hardly
surprising, given the performances
other high street chains have been
reporting over the same period. But
travel stores in travel hubs like
train stations and airports, the focus
of the new WHSmith strategy was
down as well. Total sales for the
division were flat, despite the chains
continued expansion visible once
again this month with the
announcement that eight new stores
will be part of the new Doha airport
when it opens later this year. And
like-for-like sales in travel, stripping
out sales in new stores, were down
by four per cent.
The new WHSmith is much less
dependent on Christmas season sales
than it used to be, but these figures
are no one-off. WHSmith total like-
for-like sales were down four per cent
in 2010, five per cent in 2011 and five
per cent in 2012.
Investors havent minded that fall,
since group pre-tax profits rose at
the same time, and in healthy
increments: group pre-tax profit was
up nine per cent in 2010, four per
cent in 2011 and 10 per cent in 2012.
Yet there must come a point
where one effect starts to cancel out
the other. Despite the expansion in
travel and overseas outlets, overall
revenues have continued to decline:
down two per cent in 2010, three per
cent in 2011 and two per cent in
2012. Revenues have fallen only on
the high street side of the business,
but like-for-like sales have fallen
every year for travel as well: two per
cent in 2010, three per cent in 2011
and three per cent in 2012.
With profits continuing to march
upwards, it would be foolish to lose
faith in WHSmith just yet. No doubt
its interims on 11 April will continue
to reflect the remarkable success of
Swanns way. But the book and
magazine market faces a continuing
onslaught from the digital
revolution, the high street is on the
critical list and economic gloom is
keeping travel numbers soft.
Without growing revenues, or at
least arresting their decline, how
long can profits keep soaring?
With two recent disposals in US foods, we expect Unilever to continue its
favourable skew to faster growing categories in 2013. It is encouraging to see cash
ow improving...The outlook remains the same; further sales growth ahead
of the market and continued steady and sustainable margin expansion.
ANALYST VIEWS
Unilevers fourth quarter and full year 2012 numbers have beaten con-
sensus expectations on the key metrics of organic growth and core margins (core
earnings per share was in line). This caps a strong year for Unilever and
we see the trends as supportive of our buy case.
In all, Unilever looks to have moved from a recovery play to a core port-
folio holding. Exposure to the emerging markets remains enticing, cashow and
the resulting dividend payment still attractive, while its defensive attrib-
utes continue to appeal.
20
THURSDAY 24 JANUARY 2013
ANDREW LILICO
Conservative unity on Europe will
break open deep Labour fractures
culminating in 81 defying the whip to
vote in favour of an EU referendum.
And with a spirit of rebellion in place,
MPs started grumbling about other
issues House of Lords reform, the
deficit reduction strategy, and health
reforms. It was not talking about the
EU that created splits in the party.
By contrast, with the leadership now
committed to a renegotiation-and-refer-
endum strategy (and MPs cant fail to
note that Cameron has promised a ref-
erendum even if he leads another coali-
tion after 2015), Conservative MPs will
rally around, allowing focus and disci-
pline on other issues the economy,
education reform, welfare reform and
so on. Get-outers have long argued for
an in-out referendum. But Cameron is
now offering more than that. In his ref-
erendum, there will be no in option,
where in means the status quo. His
will be a renegotiation-versus-leave ref-
erendum. Almost no-one in the
Conservative Party will be unhappy
with that.
The big challenge will come if
Cameron wins in 2015. Then he has to
carry his promise through. It will be a
big ask to achieve a sufficiently signifi-
cant repatriation that Conservatives
can agree to accept. The chances are
that a large body perhaps half to two
thirds will consider a modest repatria-
tion a failure that should entail a no
vote in the referendum. If Cameron
agrees, all well and good. But if he feels
he has to back whatever deal he
achieves, most of his party may split
against him.
But thats a challenge for another day.
From now until 2015, much the bigger
challenge and much the bigger threat
of splits lies with Labour. Miliband has
said that Labour wants to repatriate
powers (bizarrely including state aid,
the repatriation of which would consti-
tute the end of the Single Market). But
yesterday he appeared to rule out a ref-
erendum. Most serious Labour com-
mentators have urged or predicted that
Labour must enter 2015 promising
some form of referendum just as in
1997 it promised a public vote on the
euro to park the issue and focus on
other things.
Labour is not an instinctively pro-EU
party. It does not attract activists
because of its EU policies. Supporters
are interested in the NHS, the unem-
ployed, the poor, or equality issues. Its
members will have little appetite for
standing against public opinion on the
issue, and most of the public has want-
ed a referendum for years.
Indeed, thats also true of Labour vot-
ers. Around 60 per cent of them want a
referendum, according to YouGov.
Labour voters are highly ambivalent
even about the benefits of EU member-
ship 41 per cent think leaving would
be bad for jobs; 41 per cent think it
would be good or make no difference.
As austerity and unemployment contin-
ue across the Eurozone, how long will a
pro-EU stance, originally adopted to cre-
ate political difference from Labours
deep EU splits of the 1970s and early
1980s, be sustainable?
Miliband must surely U-turn and
offer a referendum. But what of Nick
Clegg? Does anyone care? The Lib Dems
cant exit the coalition without self-
immolating, and if theres a hung
Parliament in 2015 they will go with
Labour anyway. Theyll match everyone
elses referendum pledges eventually.
From now until 2015, Labour will
have the problem. It must promise a ref-
erendum, but likely cannot promise
substantial renegotiation. So its referen-
dum would probably result in the UK
leaving the EU. As Cameron argued, the
true Europhile position from here is
the one in which we renegotiate. A slim
chance of success, but worth a try.
Andrew Lilico is chairman of Europe
Economics, and a columnist for
ConservativeHome.
It is easy to understand the
British publics anxiety over the
EU. Its reach into our daily lives
has increased. It has problems, not
least with the Eurozone. It comes
up with policies that are clearly
detrimental to the economy, such
as the recently announced
financial transaction tax. This is
basically a tax on consumers but
will thankfully only apply to the
countries who opt in.
But despite all this, there is a
reason why business groups,
including the British Bankers
Association, were queuing up
yesterday to stress the importance
of the UKs membership of the
Single Market. The tearing down
of trade barriers, and the creation
of a (more) level playing field
across a market bigger than the
US, has helped boost exports and
inward investment. The UK and
London has been a particular
winner from this.
The increasingly-integrated
single market in financial
services has enabled UK financial
service companies to win
business across the EU,
consolidating Londons position
as Europes financial centre. It
has created a far more integrated
market in capital, with surpluses
in saver countries, like Belgium,
helping fund investment in
countries such as the UK to the
benefit of both savers and
investors.
It has meant that global
companies can have their
European headquarters (and the
vast bulk of their operations) in
London, and simply passport in
their services across the EU via
what are essentially sales offices.
If Britain lost its access to the
Single Market, it would almost
certainly lose many of those
international banks.
It is not just important that the
UK is in the Single Market, but
also that it can influence the
rules that the market operates by.
Roughly 80 per cent of financial
services legislation comes from
the EU, and it is vital to UK
financial services companies that
their government is sitting
around the table helping write
the rules.
As we plunge into a prolonged
national debate about the pros
and cons of EU membership, we
must ensure that anger about the
downsides doesnt blind us to the
upsides.
Anthony Browne is chief executive of
the British Bankers Association.
ANTHONY BROWNE
European Union anxieties dont demolish the case for a level playing field
In association with
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21
THURSDAY 24 JANUARY 2013
EU negotiation
[Re: Camerons EU balancing act makes
treaty renegotiation unavoidable,
yesterday]
This article overwhelms with its lack of
ambition. It argues that EU partners will let
us reform the terms of our membership, but
only if we stick to those reforms they
already agree with. What of the
membership requirements they want to
keep or extend? Europe-wide justice
policies are pursued with enthusiasm.
Employment regulations are happily taken
up by social democratic European
governments. Europe wont allow Britain to
put these issues on the table because it
considers them integral to a level playing
field inside the Single Market.
MarkHarris
As the author says, the whole referendum
issue is fraught with uncertainty. First, Ed
Miliband says he wont hold a referendum.
But will he risk the clear public support for a
vote undermining his poll ratings? Secondly,
will David Cameron manage to achieve a
significant new deal? Its possible that he
wont and, if hes still Prime Minister after
2015, he may be unable to support either
side of the vote. Finally, will the public have
lost patience with the issue by the time a
referendum is held? The experience of
Britains last referendum over the
alternative vote suggests enthusiasm is
followed by lackluster turnout and fear of
change. Will the decision be accepted if too
few were involved in making it?
RichardBarker
T
HE announcement by
Michael Gove that the
government is planning to
reform A-Levels in England
will be broadly welcomed.
Many syllabuses and exams are
completely inadequate. They do
not provide the preparation for
university that the brightest
students deserve, and are justifiably
criticised by employers for lack of
rigour.
Its also right for the government to
look to top universities to shape new
qualifications. But there are reasons
for concern. Goves reforms are
inspired by a faith that government
can set a single framework that will
deliver for all. While qualifications
should be more stringent, reform
should also be realistic.
In September last year, policymak-
ers framed a consultation on GCSE
reform. The most important fea-
tures that all should sit a single
exam, that there should be a single
qualification for each subject, and
that awarding powers should be
bestowed on a franchise basis have
beencriticised for overthrowing the
very objective they set out to achieve.
In attempting to give better oppor-
tunities for all, creating uniform
exams is somewhat counterproduc-
tive. It ignores the fact that educa-
tional opportunity is largely specific
to individual aptitude. Students need
different opportunities, which
means diverse qualifications across a
wide range of subjects.
In the governments proposals for
reforming A-Levels, we see signs of
the same self-defeating centralist
approach. Were told that our top
universities are to have a shaping
influence over content and format,
and yet the government has already
decided against modular assessment.
Evidence shows that modular
exams have a motivational effect for
Will other EU countries block any attempt
by the UK to renegotiate its membership?
YES
David Cameron seems to have made it his mission to frustrate
other EU countries. This means his plea for renegotiation will be
(largely) rebuffed. What has Cameron done to upset the others?
First, he took the Conservatives out of the centre-right group in
the European Parliament. Then he threatened to veto the
Eurozones fiscal compact. He has crossed swords with the French
over tax rates and the European budget. You may agree with
these decisions, but they have worn Camerons political capital
away and isolated Britain. The others may give Britain some small
reforms, like the abolition of EU restrictions on working hours.
But they wouldnt see any advantage to full scale renegotiation
every state might then try to repatriate things they were unhappy
with, unravelling the situation entirely. Not to mention, it would
fail to satisfy the right of his own party.
John Springford is research fellow at the Centre for European Reform.
John Springford
NO
Chris Howarth
Angela Merkel, the EUs key player, has said she will talk
intensively with the UK to find fair compromises. She will also
find areas of consensus: a reformed budget, less regulation and a
more dynamic economy. Germany has good reasons to help. The
UK is a good partner, representing 15 per cent of the Single
Market, 14bn (11.8bn) of the EU budget, and is a destination for
19.4 per cent of EU exports. The UKs EU trade deficit also remains
important as the continent looks for growth. The UK is vital for
the EU politically; without it, the liberal bloc would lose its ability
to challenge the protectionist south. The UK is also one of only
two EU global powers. Lastly, nearly all the proposals for
Eurozone integration require treaty changes. If others propose to
change the way the EU operates, the UK has the ability and the
right to put forward its vision.
Chris Howarth is senior political analyst at Open Europe.
One-size-fits-all
isnt the route to
rigorous A-Levels
goal-oriented learners (often boys),
focusing minds from the outset.
They also ensure that those who do
not achieve pass-level competency
first time are forced go back and
learn it again.
And though the linear approach is
preferred by Russell Group universi-
ties (those taking the lead in advising
on the rigour of exam boards pro-
posals), manyother high-quality uni-
versities still structure their courses
along modular lines. How will this
one-size-fits-all approach to reform
serve students preparing for entry to
non-Russell Group universities, or to
overseas (notably US) institutions,
where modular learning is the
norm? And if the modular approach
is inferior, why has it served so well
(and for so long) in exams regulating
entry to the professions?
Clearly the intention is for the A-
Level to perform its traditional sort-
ing function more effectively. But
the government cant provide ade-
quate challenges to the most able,
while offering equal opportunity
through access to the same qualifica-
tions, to all students at the same
time. Gove would do better to leave
the A-Level alone, open up the mar-
ket so that students are offered a
wider range of qualifications, and
challenge Russell Group universities
to commission the boards directly or
better still to design qualifica-
tions for themselves.
James Croft is director of the Centre for
Market Reform of Education and a fellow
of the Institute of Economic Affairs.
JAMES CROFT
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NY 109
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From now, the EU question no longer hinges
on what Tory MPs think. Its about what the
people decide in an in-out vote. Historic.
@DouglasCarswell
Labour MEPs have created a headache for Ed
Miliband. Six months ago they blocked an
EU vote in the Shadow Cabinet.
@TimMontgomerie
Were back in the 1970s with a vengeance
reconsidering our relationship with Europe.
The rock music was so much better then.
@asentance
We voted to be part of a trade bloc and
landed in a federal Europe like going on a
date and discovering an arranged marriage.
@TonyParsonsUK
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Charterholders go on to work in a range of professions
CFA charter has won converts
beyond investment analysis
22
BUSINESSEDUCATION
THURSDAY 24 JANUARY 2013
agers, and must therefore master the
same level of detail.
But theres also pressure from
clients. Tim Rotherham of Hanover
Search Group says that the growing
sophistication of customers is influ-
encing the need for the broad swathe
of employees to be CFA accredited.
The maturing of the pensions market
has meant pension schemes are bring-
ing in investment specialists. Sales
teams are therefore having to upskill.
Outside client services, the CFA can
also help staff to better understand
their role. Tina Gould of research firm
Morningstar says that employees from
all areas of her business are encour-
aged to further their industry knowl-
edge. We have a number of colleagues
in data analysis, for example, who find
that the CFA programme adds a fur-
ther level of context to their work.
LIMITS OF THE CHARTER
This is not to say that the CFA is for
everyone the programme has its lim-
itations. Its curriculum is not as broad
as an MBA, for example. An MBA is
also arguably more practical, though
it does not cover the investment
industry with the same level of depth.
Further, although clients may be
comforted by an industry credential,
they are unlikely to know exactly
what it means. Its usefulness in client-
facing roles is still less significant
than the ability to build trust and rela-
tionships.
Completing the course also requires
a heavy commitment, typically three
to five years of study, and many never
finish. While the CFA programme can
certainly widen your horizons beyond
your specific role, its not to be under-
taken lightly.
T
HE Chartered Financial Analyst
(CFA) charter is widely
considered to be the professional
credential of choice for the
investment industry. Its course is
designed to provide the full breadth
of knowledge necessary to
understand all the major investment
products, alongside instruction in
financial reporting, corporate
governance and economics. All this is
underpinned by a grounding in
professional ethics.
A GROWING DEMAND
Given the diversity of its curriculum,
its unsurprising that CFA charter-
holders are found in a wide range of
positions. While the course is primari-
ly focused on training investment ana-
lysts and managers, developments in
the way financial products are market-
ed and sold have contributed to an
increase in demand from non-invest-
ment staff.
Richard Ker, head of investment
management at Odgers Berndtson,
says that this demand is primarily
concentrated in the more technically
demanding, client-facing positions.
And data from the CFA Institute shows
that 5 per cent of UK charterholders
now work in sales and marketing.
Although dwarfed by the 24 per cent
in portfolio management or the 19 per
cent in research analysis, the propor-
tion is growing.
One explanation is that new invest-
ment positions have recently appeared
notably the product executive. He or
she presents investment products to
the market on behalf of fund man-
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