New EasyJet Chair: Next's Chairman In Frame

By Mark Kleinman, City Editor

John Barton, the chairman of fashion retailer Next, has emerged as a leading candidate to chair easyJet, the FTSE-100 low-cost airline.

I understand that Mr Barton is on a shortlist of contenders vying to replace Sir Mike Rake, who is due to step down from the role this summer and who will assume the presidency of the CBI, the business lobby group.

The board of easyJet has yet to make a decision about Sir Mike's successor and insiders said on Monday that at least one other person was still in the frame alongside Mr Barton.

"His is one of the names in the mix but it isn't the only one," said one insider.

A decision about easyJet's new chairman, which could come as soon as this week, will be significant because of the fractious relationship that Sir Mike and his predecessors have had with Sir Stelios Haji-Ioannou, the airline's founder and largest shareholder.

Sir Stelios has called on easyJet's management to slow the pace of new aircraft deliveries and focus on improving shareholder returns.

Many independent shareholders have, though, backed Sir Mike and Carolyn McCall, easyJet's chief executive, following a surge in profits and its share price, which have propelled the company into London's blue-chip index.

The easyJet founder has fought a long-running battle against Sir Mike, accusing him of having too many corporate roles and being complicit in the lavish pay culture at Barclays, where he is deputy chairman.

He has threatened to further reduce his stake in the airline if the company places a large order to expand its fleet in the coming months.

Among the other candidates to replace Sir Mike is Charles Gurassa, who already sits on easyJet's board as its deputy chairman and senior independent director.

Mr Barton, who is 68, would probably be viewed by easyJet shareholders as a safe option to take on the role. He has chaired Next since 2006 and would be expected to hand over the reins at some point in the next couple of years.

He has also chaired companies including Brit Insurance, Cable & Wireless Worldwide and Jardine Lloyd Thompson.

An easyJet spokesman declined to comment.

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Boston Blasts Knock Stock Market Values

The apparent terrorist attack on the Boston Marathon has intensified the recent 'run for cover' on world stock markets.

There had already been a rush to dump gold before the blasts while oil took a fresh tumble amid an earlier world sell-off on fears of slowing economic recovery.

The Dow Jones closed 1.8% lower while Asian markets also lost value overnight as commodity stocks fell. European markets also opened lower.

In London, the FTSE 100 dropped 0.5% at the start of trading.

The effect of the attack on Boston, while seen to be a temporary shock, added to the gloom as fears grew that an end was in sight for Federal Reserve support for the US economic recovery.

Prices Correct At 9.20am

The sell-off in markets was triggered by the Chinese government's report on Monday that annualised growth in the world's second-largest economy slowed to 7.7% in the first quarter from 7.9% in the final quarter of last year.

Growth was expected to accelerate slightly to 8%.

Gold endured its sharpest drop in price over two days since 1983 on Monday, with the cost of a troy ounce falling to $1,350 before recovering slightly early on Tuesday.

Brent crude oil tumbled below $100 a barrel overnight as weaker Chinese growth was seen as hitting demand.

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Rogue Trader Admits $1bn Apple Fraud

A securities trader has pleaded guilty to fraud after he bought $1bn (£650m) of Apple stock without permission and brought down his company.

David Miller's rogue trade caused the demise of Rochdale Securities after he bought 1.625million shares on the day Apple reported third-quarter results in October 2012.

Prosecutors said Miller had hoped to profit from a rise in Apple's share price - but the gamble backfired.

It is claimed the 40-year-old made the trade on behalf of one of Rochdale's clients who had in fact only ordered 1,625 shares.

They allege Miller conspired with another person to reap the profit if the share price went up or claim "human error" if the price dropped.

When the share price fell, Miller claimed he had made a mistake in purchasing a thousand times too much stock.

Rochdale ended up holding 1.6million shares it did not want and taking a $5.4m (£3.5m) loss, pushing its assets below the legal limit for a brokerage.

The US Securities and Exchange Commission called the scheme "deliberate, brazen and ultimately ill-conceived".

"(It) caused catastrophic losses for his former employer and was unravelled promptly by the FBI," said attorney David Fein.

Miller faces 25 years in prison when he is sentenced on July 8, but could get just five to eight years under a plea deal.

His attorney said he regrets what he did and the harm it caused.

"Those who know David know that what happened here was out of character for a kind and generous family man who has lived an otherwise law abiding and good life," said Kenneth C. Murphy.

"When the time comes he will accept his punishment and he will spend the rest of his life trying to make up for the wrong he committed."

Rochdale Securities is not a defendant in either case and is not accused of any wrongdoing.

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Japanese Drinks Giant Plots Swoop For Ribena

By Mark Kleinman, City Editor

The Japanese beverages giant Suntory Holdings is in talks with banks about assembling a knockout bid to buy Lucozade and Ribena, two of Britain's most popular soft drinks.

I have learnt that Suntory has approached financiers in recent weeks about a prospective £1bn-plus offer for the two brands, which are owned by the FTSE-100 pharmaceuticals giant GlaxoSmithKline (GSK).

It is understood to have held discussions with banks including Morgan Stanley and Nomura, although it is unclear whether it has made a formal appointment yet.

Suntory is one of the world's largest soft drinks producers. While smaller than Coca-Cola and Pepsico, it owns a string of prominent brands such as Orangina and Schweppes, which it bought from Blackstone and Lion Capital, two private equity firms, in 2009 for £1.5bn.

GSK has signalled that it is open to selling Lucozade and Ribena but has yet to take a formal decision about doing so, and is expected to appoint an investment bank to advise it on a sale process in the next few weeks.

Sky News revealed last month that Blackstone would itself consider a bid for the two brands.

Other buyout firms, such as Bain Capital, CVC Capital Partners, KKR and Lion - recently in the news because of its joint ownership of Findus, the frozen food company at the centre of Europe's horsemeat scandal - would also be expected to examine offers.

GSK, which is due to report full-year results at the end of April, could yet opt to keep the two products or pursue a joint venture with a partner, analysts have speculated.

If Suntory was successful with an offer for Lucozade and Ribena, it would mark the latest in a glut of British-owned assets being taken over by Japanese buyers.

Deals in recent years have included the acquisition of Gallaher Tobacco by JTI, and last year's takeover by Aegis, the media buying group, by Dentsu, a Japanese rival.

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Samsung In Taiwan Probe Over HTC Reviews

Samsung is being investigated over claims it paid students to post malicious online comments about rival phone-maker HTC.

Authorities in Taiwan say the move follows complaints that people had been instructed to write articles recommending Samsung and criticising HTC, a Taiwanese company.

The probe could lead to penalties for false advertising and a potential fine of up to Tw$25 million (£550,000).

Precise details of the comments or where they were posted have not been confirmed.

Samsung Taiwan said the Fair Trade Commission had not yet informed it of the investigation.

However, a statement on its Facebook page said it regretted "any inconvenience and confusion from the internet event".

"Samsung Taiwan has halted all internet marketing such as posting articles on websites," it added.

Earlier this year, Samsung was also fined Tw$300,000 by the commission for a misleading advertisement about the camera functions on Samsung's Galaxy Y Duos phone.

South Korean firm Samsung controls around a third of the global smartphone market while HTC - which has seen profits slump over the last year - has 4.6%.

Fake reviews are thought to be on the rise as the web becomes increasingly social and businesses wise up to the influence they can have over consumers.

The New York Times last year reported on one company which made $28,000 (£18,000) per month writing "marketing reviews" for aspiring authors.

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Mining Mega-Merger 'Cleared By China'

Shares in FTSE 100 'mega-merger' miners Glencore and Xstrata have risen strongly on hopes their tie-up could soon be fully cleared.

Traders cited a media report that Xstrata's takeover by commodities trader Glencore had cleared the final regulatory hurdle in China for a 6% rise in Xstrata's value.

Glencore, which declined to comment, saw its stock rise 5.2%.

It was later confirmed that conditional clearance had been achieved from China's ministry of commerce.

Prices correct at 11.12am

It said on its website that Glencore would have to begin selling off assets in its Las Bambas copper mine in Peru within three months and provide copper, zinc and lead concentrates to Chinese clients every year during the period of 2013 and 2020 as conditions of the approval.

Glencore was expected to agree to the concessions.

The deadline for the deal to be completed has been extended a number of times, with the delays being consistently blamed on the pace of China's deliberations over its blessing.

Shareholders formally approved the tie-up last year but only after Glencore offered revised terms.

A controversial "golden handcuffs" retention plan for the miner's key managers, that would have paid out £140m, was rejected.

If the deal goes ahead, it would create the world's fourth-biggest natural resources firm.

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Inflation Steady Despite Car Insurance Rises

The headline measure of inflation remained steady in March as a reduction in the pace of fuel cost rises offset a sharp increase in car insurance prices.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) stayed at an annual rate of 2.8%.

Some economists had predicted an increase to 3%.

A 5.8% rise in car insurance premiums - partly a result of rising whiplash claims and an EU ban on setting premiums by gender - were found to have piled further pressure on household budgets, though slower rises in diesel and petrol prices helped cancel out the effect.

Petrol prices rose by 2.2p a litre against 3.3p a litre a year earlier, the ONS said, while diesel increased by 1.9p a litre compared with 2.6p last March.

Rising car insurance premiums were an inflationary pressure in March

Rises in the cost of books and digital cameras were also offset by lower inflation for sofas and armchairs.

Separate ONS figures also showed that factory gate inflation rose by an annual rate of just 2%, the smallest increase since July, on the back of falling oil prices.

Easing rises in producer prices challenge expectations that CPI will rise significantly in the coming months.

Many forecasts see CPI toping 3.5% by mid-summer - a result of higher water, gas and electricity bills - but it remains to be seen whether the lower oil prices of recent weeks can be sustained, to help bring down wider costs in the economy.

Supermarkets have been cutting fuel prices, with the latest drops in effect from Tuesday, however the weak pound has also led to higher prices for imported goods.

There has been little sign so far that sterling's weakness has significantly benefited demand from exporters amid the sluggish economic recovery across the world and confidence in the UK has remained lacklustre.

Rises in DVD prices contributed to stubborn inflation

However, a survey of chief financial officers (CFOs) at top UK firms by business services firm Deloitte found private sector confidence may be starting to return.

It showed that the cost and availability of credit, and attractiveness of bank lending, was at its best level for five years while there was a rise to 34% of CFOs who said now was a good time to take risk on to balance sheets.

Their perceptions of macroeconomic and financial uncertainty dropped to their lowest level for two and a half years, the study said.

Ian Stewart, chief economist at Deloitte, said: "Despite the gloomy coverage around the UK Budget and the crisis in Cyprus, CFOs believe that that the level of economic and financial risk facing their businesses has declined.

"Corporate appetite for risk is not far off the peaks seen in early 2011 when Europe looked set for a sustained recovery."

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Cable Climbdown After One Direction Blast

Business Secretary Vince Cable has been forced to backtrack after suggesting that the high pay of pop bands like One Direction is "downright insensitive and grossly immoral".

At an Institute of Directors event in central London, the Cabinet minister was questioned about the earnings of the boy band.

One Direction - made up of singers Zayn Malik, Niall Horan, Harry Styles, Louis Tomlinson and Liam Payne - made a total of £25m last year, according to the Sunday Times Rich List.

Mr Cable was asked if he agreed it was "mad" that the band had made £5m each over the past year.

He replied: "I agree ... about the extremities of pay and the fact much of it is downright insensitive and in some cases grossly immoral."

Vince Cable suggested the singers' earnings were "mad"

However, aides stressed that the Liberal Democrat had misheard the question and was referring to the pay of chief executives, rather than the teen pop group.

He told Sky News: "I don't want to attack One Direction; this is one particular group who are apparently very popular and very successful so I have nothing against them.

"But there is a general issue of chief execs in particular who are paid well beyond what can be justified in terms of the performance of their companies and that's something the Government is now trying to address."

Fans of the group immediately took to Twitter to criticise the politician.

One said: "I like Vince Cable a lot less after turning on One Direction." Another said: "And to THINK I voted for him."

Mr Cable was unveiling a 12p rise in the minimum wage when he made the remarks.

The rate for 18 to 20-year-olds will rise by 5p to £5.03, and by 4p to £3.72 for 16 and 17-year-olds, from October.

Ministers rejected a recommendation from the Low Pay Commission that the rate for apprentices should be frozen, and announced a 3p an hour increase to £2.68 an hour.

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Lloyd's Insurer Cathedral Begins £250m Sale

By Mark Kleinman, City Editor

One of the top-performing underwriters in the Lloyd's of London insurance market is being put up for sale.

Sky News has learnt that Cathedral Capital, which is majority-owned by Alchemy, the private equity group, is expected to command a price tag of more than £250m.

The decision to put the business up for sale comes seven years after Alchemy invested in the Lloyd's name and should see the investment house reap a return of at least two-and-a-half times its original outlay.

Cathedral, which employs just over 100 people, is rated in the top five of more than 90 Lloyd's syndicates by underwriting performance, with an average net loss ratio of just 60% since 2004.

Even at the upper end of a £250m-£300m price range which Cathedral is likely to fetch, a buyer will only be required to pay a fraction of the price of buying into comparably-performing businesses such as Amlin and Beazley.

Its management team, which has decades of experience in the market, is led by Peter Scales, chief executive, and John Lynch, chief financial officer, and John Hamblin, chief underwriting officer. The collective owners of roughly 40% of the business, they are understood to be willing to remain in their roles under a new owner.

Insiders suggested that Cathedral was likely to attract interest from trade buyers, private equity groups and pension funds, which have accelerated their deployment of capital in the insurance industry in recent times.

Cathedral will be one of the largest Lloyd's syndicates to have come up for sale for some time. A flurry of mergers and takeovers in the world's oldest reinsurance market during the last three years saw Brit Insurance taken over by Apollo Management and CVC Capital Partners, two big buyout firms.

Other attempted deals, including a takeover of Hardy Underwriting by FTSE-250 rival Beazley, fell by the wayside. Hardy was subsequently acquired by the US insurer CNA Financial.

The Lloyd's market has faced a challenging few months, with Superstorm Sandy in the US last year costing Beazley alone approximately $90m (£58.8m).

The sinking of the Costa Concordia provided another of 2012's key moments for some Lloyd's underwriters.

Kinmont Advisory and Willis Capital Markets & Advisory are handling the auction process on behalf of Cathedral's shareholders. Other firms which pitched for the sale mandate were informed today that they had been unsuccessful.

Cathedral was unavailable for comment.

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IMF Inflicts 'Double Blow' On George Osborne

By Ed Conway, Economics Editor, in Washington

The International Monetary Fund's chief economist has warned George Osborne that he is "playing with fire" with his fiscal policy.

In an interview with Sky News, Olivier Blanchard also said that the Chancellor should have changed his austerity strategy at the Budget last month.

The comments came as the IMF unveiled new forecasts which showed a dramatically weaker outlook for the British economy.

Asked about Britain's prospects, Mr Blanchard said: "I think conditions have deteriorated. There is no question that the fiscal plan - which was designed a few years back - was assuming that private demand would be stronger than it is.

"So the question is what do you do? Well the first line of defence is you let the so-called automatic stabilisers play.

The IMF's Olivier Blanchard has downgraded expectations for world growth

"That has been done, that's good. But then at some stage you actually have to sit down and say: do we continue?

"The danger of having no growth, or very little growth, for a long time is very high; you get a number of vicious cycles which come into play… the result is that [people] don't spend, output is low.

"And I think you're playing with fire when you get to very low growth rates so... if you can decrease the speed of fiscal consolidation maintaining  the credibility (so it's not a question of whether, it's a question of when), when growth is close to zero I think yes it's worth considering."

Asked whether Mr Osborne had wasted the opportunity of the Budget, Mr Blanchard said: "Well, 'waste' is too strong, but they surely could have done more, yes."

The comments are likely to infuriate the Treasury, which has insisted that its austerity plan is the only sensible course for the UK, and that Mr Blanchard is wrong.

The chief economist said his response to this was: "That I think that I am right and they are wrong."

The comments come after the IMF said that Britain's economy would grow by a mere 0.7% this year and by 1.5% in 2014.

That is a 0.3 percentage point cut for each year.

The combined cut for the two years is greater than for any other leading economy, including the US, Italy and Spain.

Although the 2013 forecast is marginally stronger than that of the Office for Budget Responsibility's 0.6%, the 2014 forecast is markedly weaker than the OBR's 1.8%.

It came as the IMF warned in its closely-watched World Economic Outlook report that the world economy was in danger of moving from being a "two-speed economy" to a "three-speed economy" as the US picks up pace and Europe is left behind.

The Fund also put pressure on the Bank of England to consider more radical action to kick-start the economy, pointing out that the impact of the Funding for Lending Scheme "has been limited, encouraging mortgage lending more than lending to small and medium-size businesses".

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