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WEDNESDAY MAY 4 1994 


D3523A 



Children and Red 
Cross staff die in 
Rwanda massacre 

Twenty-one children and 13 Bed Cross volunteers 
were killed in an attack on an orphanage at Butare, 
southern Rwanda, the Inter natio nal Committee 
of the Red Cross said yesterday. The children 
had been moved from the capital Kigali because 
it was believed they would be safer at the orphan- 
age. United Nations officials and the Red Cress 
say more than 100,000 people have been massacred 
in Rwanda since the tribal killings began tour 
weeks ago. US steps up peace efforts. Page 7 

Russia fails to meet IMF conditions: Russia 
said it could not f ulfil international Monetary 
Fund conditions agreed when Moscow received 
a $I-5bn loan in March and that higher inflation 
was the only way to save the Russian economy. 
Page 2 

New York post for British editor 

Andrew Neil (left), 
editor of UK newspaper 
The Sunday Times, 
which Is owned by 
Rupert Murdoch, is 
being seconded to 
New York for seven 
months to launch a 
current affairs pro- 
gramme for Murdoch's 
US television network. 

If the show, which 
is designed to rival 
CBS's 60 Minutes, is a success, Mr Neil is likely 
to sign a two or three year multi-million dollar 
contract 

India postpones VSNL issue: The Indian 
government postponed a $lbn international equity 
issue by Videsh Sanchar Nigam, the statocon- 
trolled international telecommunications monopoly, 
after fund managers baulked at the high price. 

Page 19 

Hyundai head to retire: Chung Ju-yung. 
founder and honorary chairman of the Hyundai 
conglomerate, is to retire from the management 
of South Korea's largest business group. Page 18 

CD safes near level for cassettes: 

International unit sales of compact discs rose 
by IS.4 per cent last year to IJSbn. Sales of audio 
cassettes fell 2 per cent to L44bn, raising the 
prospect that the CD will replace the cassette 
as the world's principal music carrier. Page 5 

Ell tackles video camera imports: The 

European Union has imposed definitive anti- 
dumping duties of as much as 96.8 per cent on 
imports of studio video cameras made by five 
Japanese electronics companies. Page 5 

Store back in the black: Store, Europe's 
biggest pulp and paper group, made a strong 
return to profit in the first quarter after benefiting 
from increased demand, cost cutting and big 
capital gains. Page 19 

Pressure on margins hits Pepkon Heavy 
pressure on operating margins meant that Pepkor, 
South Africa's biggest retail group, Increased 
annual operating profit by only 3 per cent to R275m 
(555.5m). Page 22 

BHP faces New Guinea suit; Papua New 
Guinea villagers are to file a A$4bn (USSLSbn) 
suit against Australia’s Broken Hill Proprietary 
alleging environmental damage caused by the 
Ok Tedi rapper mine in western PNG, which 
BHP manages. Page 6 

GonzAJez digs In: Embattled Spanish prime 
minister Felipe Gonzalez refused to take the blame 
for corruption scandals involving former members 
of his administration. An aide said Mr Gonzalez 
had "absolutely no intention of resigning". Page 2 

Marzotto slips 74%: Italian clothing and 
textile group Marzotto reported a 74 per cent 
decline in net earnings to L10.2bn ($6m) because 
of n slump in demand on the world clothing market 
Page 20 

Bangladesh cyclone Mils 110: A cyclone 
that devastated south-east Bangladesh killed 
at least 110 people. More than 5.000 others were 
injured and at least 500.000 left homeless. 

HJ. Heinz, the international food group, has 
asked us to clarify remarks by Mr Tony O'Reilly, 
its chief executive, on the company's television 
advertising plans in the UK. The company con- 
firmed yesterday that it will stop advertising 
its main products on television in the UK and 
concentrate on direct marketing. It will however 
continue to advertise the Heinz name on British 
television, with spending likely to remain at its 
present level - an estimated £l2m i$ 17,5ml a 
year. 


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Anomalies slow S Africa poll count 


By Michael H o lm an , Path 
W a Mmalr and Mark Suzman 
bi Johannesburg 

South Africa's electoral 
machinery ground to a tempo- 
rary halt last night as officials 
fought to reconcile anomalies 
and irregularities in voting 
returns the day after President 
F. W. de Klerk conceded defeat to 
Mr Nelson Mandela's African 
National Congress. 

Counting was understood to 
have been completed in most 
areas, but the release of results 
was halted by the Independent 
Electoral Commission (IEC), the 
body charged with conducting 
elections and certifying the poll 

The delay forced the postpone- 


Delay forces postponement of national assembly session 


ment until Monday of the first 
session of the national assembly, 
which was to have been con- 
vened on Friday. 

Officials privately acknowl- 
edged that the exercise amounted 
to an attempt to determine an 
outcome that would be broadly 
acceptable to the three main 
political parties. This involves 
decisions on how disputed ballots 
are to be counted. Undo- the elec- 
toral act, political parties may 
agree among themselves on how 
to resolve ano malies and discrep- 
ancies in the vote, if necessary by 
nmwiHjiig party totals. 


Mr Mandela, due to be nomi- 
nated the next president, held 
talks during the day with Mr de 
Klerk on both the practicalities 
of the handover and widespread 
concerns about the integrity of 
the voting procedures and the 
count 

Officials on both sides pri- 
vately expressed concern that 
both the momentum of the tran- 
sition be maintained and the 
broad integrity of the result be 
accepted. Officials of the long- 
ruling National party, who dim- 
ing the day met Mr Justice 
Johann Eriegler, DSC Chairman _ 


privately expressed concern at 
the trend in title results. 

They spoke of “two psychologi- 
cal thresholds" which, If crossed. 
Could strain the t ransitio n and 
the authority of the yet to be 
appointed government of 
national unity. If, under-such dis- 
puted conditions, the ANC were 
to achieve more than 66 per cent 
of votes cast, allowing it to con- 
trol the process determining the 
final shape of the country's .con- 
stitution, and the National party 
support fell below 20 per cent, 
there would be serious reserva- 
tions about the outcome. 


‘ Latest national results, based 
on half the estimated votes cast, 
dhow the ANC holding -steady at 
62.5 per cent of the vote and the 
share of the National party fall- 
ing shghtly to ~22.I per cent 
Government officials added a 
third consideration: if Chief 
Mang osnthn Buthelea’s Inhatha 
Freedom party gets a substantial 
majority in Ids Natal heartland, 
the ANC may challenge the 
result. A senior ANC leader in 
the province last night gave 
notice of a . possible dispute by 
saying that the lead was “not a 
tree reflection of the IFFs popu- 


larity”, while Chief Buthelezi 
continued to reserve his position 
on the outcome of the poll until 
the results were known. 

Results in Natal left Inkatha 
with more than half the vote, but 
thes e were based on returns from 
the north of the province where 
the _IFP is strongest 

In the Western Cape province, 
won by the National party, Mr 
Hemus Uriel, who will become 
regional premier, said: “This is 
not a time to gloat, but a time to 
be grateful. We commit ourselves 
to a policy of reconciliation, and 
that begins today." 

Johannesburg to relax market 
access restrictions; Western Cape 
w 01 prosper, Page 7 


Nervous 
Jericho 
prepares 
to greet 
self-rule 

By Julian Ozarme bn Jericho 


Palestinian schoolchildren 
armed with brooms began col- 
lecting rubbish from the dusty 
streets of Jericho yesterday to 
celebrate today’s planned sign- 
ing of the Palestinian self-rule 
agreement. 

Under the agreement, Jericho, 
a sleepy, palm-fringed town 
which claims to be the oldest 
city m the world, win become 
the seat of the Palestinian 
administration and the home to 
Mr Yasslr Arafat, the symbol of 
Palestinian nationalism. 

At the Israeli police post m the 
heart of the city, once the target 
of Palestinian resistance, school- 
children collected stones from 
under coils of razor wire. Ner- 
vous Israeli soldiers armed with 
automatic rifles watched from 
observation towers. But instead 
of throwing the stones, the chil- 
dren carted them away to a 
nearby rubbish tip. 

At a schoolteacher's house, 
youths were busy preparing ban- 
ners which read: “Sooth Africa 
last week - Palestine today." 
Flags and bunting in the black, 
red, green and white Palestinian 
colours were to be draped 
throughout the oasis town which 
could become a Palestinian gate- 
way to the Arab world. 

Many of Jericho's 14,000 resi- 
dents believe they are about to 
witness a fundamental turning 
point In their lives after 27 years 



Israeli foreign minister Shimon Peres (top) and prune minister 
Yitzhak Rabin with his wife Leah arrive at Cairo airport rmv 


of Israeli occupation and. centu- 
ries of foreign domination. 
Within 21 days of today’s sign- 
ing, Israeli troops are scheduled 
to complete their withdrawal 
from the Gaza Strip and Jericho 
- the first Israeli surrender of 
Palestinian lands occupied in the 
1967 Arab-Israeli War. 


“When the agreement Is signed 
and the Palestinian police arrive 
it will be the beginning of oar 
liberation. The beginning of the 
liberation of Palestine," said Mr 

Continued on Page 18 
Last-minute row hits Gaza pact 
run-up. Page G 


Dutch ruling coalition faces 
losing majority in elections 


By Ronald van de Krol 
tn Amsterdam 

The Netherlands' two ruling 
parties, the centrist Christian 
Democrats tCDAJ and Labour, 
look set to lose their majority in 
parliament after yesterday's 
national elections, holding out 
the prospect of a three-party 
coalition for the first time since 
198L 

Two smaller parties which exit 
polls indicated had made strong 
gains would play a crucial role in 
any coalition negotiations that lie 
ahead. The rightwing Liberals 
are projected to have gained 
eight seats for a total of 30, while 
D6fi, a left-of-oentre party, is fore- 
cast to win 24 seats, double its 
number in 1989. 

These four main parties share 
a broad consensus on economic, 
monetary and foreign policy 
issues. Where they differ most is 
on the vexed question of social 
security and how to continue 
paying Tor it at a time of rising 
unemployment and the agang of 
the population. 

The two most likely coalitions 
are Labour, CDA and D66, or a 
right-left alliance of Labour. Lib- 
erals and D66, which would shut 


The Dutch government said last 
night that it will formally put 
forward Mr Ruud Lubbers, the 
prime minister, as a candidate to 
succeed Mr Jacqnes Defers as 
president of the European Com- 
mission, writes Ronald van de 
KroL 

The confirmation of Mr Lub- 
bers* bid For the post was made 
minutes after polling booths 
dosed in the Netherlands’ gen- 
eral election. 

Mr Lubbers said five years ago 
that he planned to leave national 
government after the 1994 elec- 
tion, but refused to be drawn on 
his European ambitions nntfl the 
election campaign ended. 

the CDA out of power for the first 
time since 1918. 

The CDA of prune minister 
Ruud Lubbers had been trailing 
Labour in the opinion polls but 
regained ground in the last few 
days before the election. It won 
two seats less than Labour, 
which won 38, according to exit 
polls and preliminary projections 
by Dutch television. 

Both parties Tell back sharply 
from the last general election in 
1989, when the CDA won 54 seats 


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CONTENTS 


and Labour 49 seats, giving them 
a governing majority in the 150- 
seat lower house of parliament. 

The loss of support for the 
CDA, the linchpin of every gov- 
ernment since the second world 
war, was caused mainly by the 
impending departure from 
national politics of Mr Lubbers, 
the Netherlands' longest-serving 
prime minister. His successor, Mr 
Elco Brinkman, did not have the 
same authority. 

Coalition talks could take 
weeks or months, and it is possi- 
ble that a new government will 
not be sworn in until the sum- 
mer. The close finish between 
CDA and Labour means that 
both parties will be in the run- 
ning to provide the next prime 
minister. Labour’s candidate for 
the job is the current finance 
minister, Mr Wtin Rob. 

Last night's results also 
showed a rapid evaporation of 
support for the far-right Centrum 
Democraten (CD). The CD won 
three seats compared with one 
seat in 1989, but some opinion 
polls before the election had pre- 
dicted as many as eight. 

Two new parties representing 
pensioners won a total of eight 


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SmithKline pays $2.3bn 
for US drug wholesaler 


By Tony Jackson 
and Daniel Given 

SmithKline Beecham launched a 
further European assault on the 
troubled US drugs industry yes- 
terday, offering &3bn for Diver- 
sified Pharmaceuticals Services. 

In a separate move, Eastman 
Kodak of the US Is to sell its 
pharmaceutical division, valued 
at well over $5bn, possibly to its 
French, partner Elf Sanofi. 

Together with Monday's $5.3bn 
sale of the US drug group Syntex 
to Roche of Switzerland, this 
brings tiie total of US healthcare 
assets chang in g hands this week 
to more than $i2bn. The moves 
are in response to acute pressure 
on the US healthcare industry, 
partly caused by the .Clinton 
administration's attempts to con- 
tain costs. , ' j : ’ " ' — .'^fT 

European ^ companies 7 " are 
increasingly seeking bargains in 
troubled sectors of the US econ- 
omy. Last week the UK tobacco 
giant BAT Industries paid flbn 
for American Tobacco, In an 
industry also under pressure 
bum the Clinton administration. 

SmithKline Beecham is paying 
$2.3bn in cash for Diversified 
Pharmaceutical Services, one of 
the four largest drug wholesalers 
in the US. The deal mirrors 
Merck's $R7bn acquisition of the 
leading drag wholesaler Medco 
last year, which sent shock 
waves through the US drug 
industry. like Medco, D i vers ifi ed 
Pharmaceutical Is a so-called 
pharmaceutical benefit manage- 


ment company, seeking to obtain 
bitik discounts from the drug 
companies cm behalf of a claimed 
1 1m patients. 

SmithKline Beecham’ s chief 
executive Mr Jan Leschly, who 
recently describe} the Merck deal 
as “a stroke hf genius”, said: “We 
must evolve from a pharmaceuti- 
cals iriawiTfi»et im»r. a»nUig p ills to 


Remedies for a global 

sickness Page 16 

Kodak to return, to core with 

: drug-sale Page 19 

Eastman Kodak prepares for 
a new image — —— ~-Page 21 


manag ing total pharmaceutical 
. rare. We could not do it without 
going through' this' important 
transaction." - 

He said the deal marked a tran- 
sition in the company’s strategy 
that renected thB Change in the 
business environment in the US. 
Rather than simply selling dis- 
ease treatments. SmithKline Bee- 
cham would use economic data 
gathered from the millions of 
patients and potential patients on 
Diversified’S books to “manage 
diseases”. 

SmithKline is the UK’s second 
biggest drug company after 
Glaxo. The deal will not increase 
its drug sales directly, but aims 
to use Diversified to promote its 
products to drug buyers in. prefer- 
ence to rival drugs. 

The deal comes a fortnight 


before the expiry of the US 
patent oh S mithKUn e’s ulcer 
treatment Tagamet, once the 
company's biggest product and 
the world's largest selling drug. 

United Healthcare, owners of 
Diversified Pharmaceutical said 
it had been approached by a 
number of companies since the 
Medco deal took place ten 
months ago. 

' Mr Hugh Cohum, S mithKline 
Beecham’s finance director, said 
the deal was likely to reduce 
earnings by less than 3 per cent 
this year and next. The price is 
equivalent to almost 60 times 
Diversified’s operating profits 
last year. However, Mr Co Hum 
said the purchase was justified 
by the rapid growth prospects. 

Although Eastman Kodak did 
not name a firm buyer for its 
healthcare business. Gif Sanofi 
has first refusal on parts of it 
through joint ventures with the 
Kodak subsidiary Sterling Winth- 
rop. bought for $5JLbn in 1988 in 
an auction against Roche. Elf 
Sanofi said yesterday the Kodak 
announcement was “an opportu- 
nity to go the final stage in merg- 
ing the two businesses'', adding 
that tt was considering the sale 
of assets to finance a possible 
purchase. . 

Kodak's share price rose $2% to 
$46% in early trading, as the mar- 
ket welcomed its moves to reduce 
its heavy debt burden. Elf Sano- 
ffs fell FFr43 ($737) to FFr975. 
S mithKlin e Beecham ’s share 
price rose 26p to 4l6p ($6.07). 


/& THE FINANCIAL TIMES LIMITED 1994 No 32,357 Week No 18 


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FINANCIAL TIMES WEDNESDAY may 4 1994 


NEWS: EUROPE 


PM ‘will not resign’ over corruption scandals 

Gonzalez digs in his heels 


By Tom Owns in Madrid 

Spain's embattled prime 
minister, Mr Felipe Gonzalez, 
is determined to beat off calls 
to take the blame for growing 
corruption scandals involving 
former leading members of his 
adminis tration. 

A senior aide said yesterday 
Mr Gonzdlez had “absolutely 
no Intention of resigning”. Mr 
Miguel Gil. the government's 
spokesman, said political sta- 
bility was assured because the 
Catalan nationalists had 
agreed to continue backing the 
government “Their support is 
not in danger,” he said. 

The 17 Catalan nationalist 


members of the Madrid parlia- 
ment have now become the 
power brokers of domestic poli- 
tics after their vote ensured Mr 
Gonzalez's nomination as 
prime minister following last 
June’s general elections, which 
left h is Socialist party short of 
an overall majority, 

The assurance of continued 
Catalan support was given on 
Monday by Mr Jordi Pujol, 
leader of Catalonia’s home rule 
government, the Generali tat, 
in a telephone conversation 
with Mr Gonzdlez. Mr Pujol 
reiterated his decision to aid 
the “goveraability of Spain” at 
a later meeting in Barcelona 
with Mr Karels Serra, the Cata- 


lan-born deputy prime minis- 
ter. A Conner mayor of Barce- 
lona, Mr Serra would be the 
politician most likely to suc- 
ceed Mr Gonzalez should the 
premier resign. 

The Catalan leader's stand 
may have gained Mr Gonzalez 
a breathing space in which he 
will seek to regain the political 
initiative in the face of con- 
tinuing pressure from the main 
opposition party, the conserva- 
tive Partido Popular. 

Conservative leader Mr Jose 
Marfa Aznar told the FT that 
Mr Gonzalez had “became an 
obstacle in Spanish politics, an 
obstacle we have to overcome”. 
Mr Aznar believes the govern- 


ment has been so discredited 
by the spate of scandals that 
Mr Gonzalez’s position is 
unsustainable. “It is not rea- 
sonable to ask now for new 
elections. ... but I can envisage 
the prime minister will (first! 
hand over power to somebody 
else." 

Unable to unseat Mr Gonz- 
alez in a parliamentary cen- 
sure motion, Mr Aznar is pin- 
ning his hopes on next month's 
European elections when he 
expects that a clear conserva- 
tive triumph "will accelerate 
developments”. He forecasts 
that general elections in Spain 
will take place between the 
autumn and next spring. 




-» - ♦£ ^ ' . . > . . 



Opposition leader Aznar: “Gonzalez an obstacle" 


Civil Guard on trail of its fugitive former chief 


By David White in Madrid 

The young man on duty outside the 
Civil Guard headquarters in Madrid 
fingered his automatic weapon and 
laughed nervously. No, the force 
would not be affected. But it was still 
“a blemish". People did not like it 

The “blemish" is the extraordinary 
story of Mr Luis Rold&x, six months 
ago the Guard’s chief, now a fugitive 
wanted for questioning and hunted 
by the paramilitary police be used to 
have under his orders. 

Mr Rold&n, 51, who managed to 
combine the post with extensive 
property purchases and a jet-setting 


lifestyle, was last year tipped as a 
candidate for interior minister. The 
man who got the job instead, Mr 
Antoni Asuncion, handed In Ids resig- 
nation at the weekend over Mr Rol- 
d&n's embarrassing disappearance, 
becoming the first senior victim of 
Spain's current scandals. Opposition 
politicians are now baying for more 
blood, including that of Mr Felipe 
Gonzalez, prime minister, who 
appointed Mr Rold&n. 

The headquarters building was 
where Mr Rolddn’s business partner, 
Mr Jorge Esparza, would (according 
to the latter’s evidence to a parlia- 
mentary committee) walk out with 


briefcases stuffed with money on his 
way to a bank. Mr Esparza said he did 
not know where the cash came from. 

A Civil Guard general told the com- 
mittee Mr Solddn would choose con- 
tractors for new barracks after can- 
ing them into his office. Mr Roldds 
ha s denied taking commissions. 

Controversy also surrounds the use 
of "reserved funds", alleged to have 
been used to provide pay bonuses. Mr 
Rold&n, who denies using these 
funds, has said the records have rou- 
tinely been destroyed. 

While in his post, Mr Rold&n 
bought houses and other properties, 
mostly through a company called 


Europe Capital He and Mr Esparza 
also travelled extensively. In one 
instance, confirmed by Mr Rolddn, an 
official chauffeur drove his car to 
Switzerland for the use of bis wife, 
who had travelled there by air. 

Hie Civil Guard has not made such 
headlines since Lieutenant Colonel 
Antonio Tqjero held up parliament at 
gunpoint in 1981. 

The latest publicity has spoilt the 
forthcoming 150tfa anniversary of the 
75,000-strong force, which polices the 
Spanish countryside and roads, pro- 
tects official buildings and which has 
borne the brunt of Basque terrorism. 
The force’s shiny black tricorn hats 


have gi ven way to green doth caps, 
softening the image of what the poet 
Lorca called "those patent-leather 
men with their patent-leather souls”. 

Mr RoJddn, a Socialist party mem- 
ber until Ins recent expulsion, was 
the first civilian to head file force. 
For an adminis tration already hit by 
allegations against a former Bank of 
Spain governor, the controversy has 
eclipsed all other affairs of govern- 
ment Interviewed in hiding by the 
daily El Hondo, Mr Boldin said there 
were similar irregularities elsewhere 
in the Interior Ministry «nd other 
departments, "if I go to prison, I 
could easily not go alone." 


Yeltsin aide wants pledges to the IMF relaxed 


By John Lloyd in Moscow 

President Boris Yeltsin's chief 
aide on the economy said yes- 
terday that Russia could not 
fulfil International Monetary 
Fund conditions agreed for a 
$l.5bn f£l.02bn) loan in March 
and that hi ghe r inflation was 
the only way to save the Rus- 
sian economy from collapse. 

Mr Alexander Livshits, who 
beads the group of economists 
on whom the Russian presi- 
dent relies for much of his 
advice, said In an interview 
that the reduction in inflation 
to between 7 and 8 per cent a 
month had been achieved too 
soon. “It Is one thing to have it 


as a target for December, but 
to have it in March-April is 
destroying our economy." 

The IMF agreed the systemic 
transformation facility on con- 
dition that the government 
increased revenues this year 
and kept expenditure at a tar- 
get of Rbsl83,000bn (£65.8bn). 

But Mr Livshits said the 
bulk of expenditure had been 
absorbed by the energy anda- 
gricultural sectors, “the two 
most powerful lobbies in this 
country by for,” and the rest 
was grossly inadequate for the 
needs of the economy. 

“The IMF must learn the 
reality of the situation and see 
what is happening,” he said. 


“You can of course continue 
with the policy of tight money, 
but it will mean that industry 
collapses. The policy must be 
loosened." 

Mr Livshits, a former eco- 
nomics professor, said the gov- 
ernment of Mr Victor Cherno- 
myrdin appeared to lack the 
political win to undertake eco- 
nomic reforms or industrial 
restructuring beyond tightly 
controlling credit and money 
supply. He agreed the political 
impetus should come from Mr 
Yeltsin, but said: “We have a 
separation of powers here and 
the president doesn’t want to 
issue orders - do this or do 
that in the economy." 


Steep foils in production of 
around 25 per cent in the first 
quarter of this year continued 
in April, he said. The fall in 
production last month was 29 
per cent compared to 28 per 
cent in March. “April is usu- 
ally not a bad month for pro- 
duction because there are no 
holidays, but May is bad [there 
are three days of public holi- 
days and many take more] and 
so we can expect terrible fig- 
ures for this month." 

Mr Livshits admitted the offi- 
cial statistics for the economy 
were unreliable because they 
omitted or under-counted the 
private sector. But they gave 
an indication.of what was hap- 


pening in the state sector 
where, he said, “factories are 
just at a standstill'*. 

Even in growing industries 
such as consumer electronics 
and white goods, production 
has plummeted rhig year, be 
said. Fart of the problem was 
the huge level of inter-enter- 
prise debts and the refusal of 
most concerns to supply parts 
or goods without pre-payment 

Mr Livshits called for a 
series of reforms to break up 
state enterprises and to end 
supply monopolies. He also 
proposed creation of a new 
commission, headed by a first 
deputy prime minister, to deal 
with strategic economic issues 


- paralleling the work of Mr 
Oleg Soskovets, at present the 
only first deputy premier, who 
heads a committee on opera- 
tional issues. "If we had had 
such a commission, we 
wouldn’t have had the budget 
we now have." 

The struggle over the budget 
has only just began. It has 
been passed “in principle” by 
parliament, which is still 
demanding fundamental 
rhangPK, including an increase 
in expenditure of the Wnd Mr 
Livshits is proposing. But he 
said the budget might yet be 
passed because the powerful 
agrarian lobby was satisfied 
with the support it gave. 


Bosnian Serbs : £T*iu 
test patience ! 

It • : ll ,1V 


By Laura Sflberin Belgrade 

nails for peace and accusations 
of corruption against Bosnian 
Serb leaders in the Serbian 
media are fheHing speculation 
that President Slobodan Milos- 
evic could turn against nation- 
alists insisting on a Greater 
Serbia at any price. 

Mr Milosevic's opposition to 
the politics of file Bosnian Serf) 
leadership been signalled 
by his wife, Mrs Mujana Mark- 
ovic. whose remarks have 
tended to foreshadow the next 
move by the Serbian president. 

“The representatives of those 
Serbs who are mostly outside 
of Serbia and think war is their 

only option. . . . have SO rig ht 

to feast that option on all 
Serbs," she wrote last week In 
file pip nhr Tnflgagfnfl Dii g a 

"I am afraid that the Serbian 

people are at the point 

when they must become paci- 
fists, if they want to survive,” 
she added, making the point 
that Serbs from Serbia should 
define tmtfon al poli tics. 

Television, tightly controlled 
by Mr Milosevic, last week 
repeatedly warned Bosnian 
Serb leaders that war should 
not be theSr only option. I 

Implicit criticisms of their 
belligerent stance were accom- 
panied by stinging accusations 
that Bosnian Serb leaders and 
their influential Belgrade men- 
tors woe involved in the huge 

financial gcaiy fal surrounding 
Dafiment hank, once vaunted 
at the biggest private hank in 
the Rahranc Mrs Dafina Milan. 
ovic. owner of the bankrupt 
institution, has made an 
“impromptu” revelation that 
even Mr Radovan Karadzic, 
Bosnian Serb chief, himself 
carried sacks of cash out of the 
bank, which owes Serbia’s citi- 
zens hundreds of millions of 
dollars. 

Such indictments of Mr 

KaraHrip an d the Bosnian Serb 

nationalists are being inter- 
preted as feelers for the 
famously close Mr Milosevic to 
rfwng n allegiances. 

But Mr Milosevic who rode 
to power on the mighty waves 
of Serbian nationalism may 
find it dangerous to separate 


bis future from theirs. 

In spite of three years of war 
in neighbouring Bosnia and 
Croatia, economic deprivation 
and political isolation, recent 
opinion polls reflect that most 
of Belgrade stiH supports the 
Bosnian Serb leadership. More 
than 51 per cent behere Serbs 
should keep the 70 per cent of 
Bosnia they currently control, 
according to one poll 

An overwhelming majority 

bank the ■ unification of Bel- 
grade with Serb-held lands in 
Bosnia and Croatia. However, 
the pragmatic Mr Milosevic 
may now be calling for some- 
thing else. 

His foreign, minister, Mr 
Vladislav Jovanovic, in a. week- 
end interview, sent a message 
to the US that the “only realis- 
tic solution for Bosma-Sercego- 
vina is the creation of a wider 
state which would include 
-Serbs and Croats”. 

This proposal to create a 
“new Yugoslavia” will set Mr 
Mfosevic on a collision coarse 
with Serb nationalists who 
insist on ethnic partition and 
the creation of Greater Serbia. 


THE FINANCIAL TIMES 
ftih&hod by The Ruanda) Tam* (Enron) 
QmfaU. Nfe ctaaggpto 3. 60318 ftukftn 
am Man Germany. Tdepbooc +-H9 0 156 
830. Fax ++49 W 9964481. Tckn 416193. 
Refloated in ftanUwt by J. Water Band, 
Wflhdm J. Brand. CoKn A. K canard a* 
GesdBiftsfohror and in London by Darn) 
OM. Bcfl and Aba C Mfflct Printer DVM 
DraeL-Vomieb und Marketing OwbH. 
Admiral- Roaendaid- Sirusc 3a, 63263 
Nea-benbug (owned by Bnrriyti 
International). ISSN: ISSN 0174-7363 
Sxapooabk Editor Richard Lambert, do The 
Financial Time! Limited, 
Number Per SwnbwaA Bridge. London SEI 
9HL, UK. ShartboMen of the Financial Thnei 
(Europe) OrabH arc The Financial Times 
(Europe) LULLondon aad P.T. (Germany 
AttaRhmg) Lid. London. Shareholder of tire 
abase mentioned two companies it. The 
Financial Times limited. Number One 
Southwark Bridge. London SEI 9HL The 
Company h moomunted nader the bws of 
En gland nod Wlllt. rhninnm D.Ol BdL 

FRANCE 

pubfehiDg Dnctuc D. Good 160 Roe dc 
RinCF-75044 Pads Cedes 01. Tdahooe (01) 
4297-0621, Faa (01) 4297-0629. Printer SLA. 
Non) Edu, I S/21 Roe de Cairo. F-S9I00 
Ronfcaik Cedar I. Editor Richard Lamfaat 
ESN: ISSN 114U733. Gmmmra Patimire 
No 6780KD. . 

DENMARK 

Fmanoai Times (Scandhwvia) Ltd, Vnane)- 
skafied 42A, DX-1J6I CknahneaK. Tele- 
phone 33 13 4441. Fu 33 93 53 357 


XJ-*- not so much a -XtiXy as a 

with '£) H/Dfi ^ f 


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David Levin 
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CAPITAL VcAP I T4 l) 


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Kingdom of Saudi Arabia 
’Ministry of Petroleum and Mineral Resources 
Directorate General of Mineral Resources 

INVITATION FOR PREQUALIFICATION 
AL JALAMID PHOSPHATE PROJECT 

The Government of the Kingdom of Saudi Arabia represented by the Directorate General of Mineral Resources (DGMR) of 
the Ministry of Petroleum and Mineral Resources invites appfcations from established companies with mining and 
processing experience to prequafify fa- the exploitation of A! Jaiarrid Phosphate rock deposit 120 km from the town of 
Turayf rn Northern Saucfi Arabia. 

A bankable feasibility study of Af Jafamtd phosphate project has been completed by Jacobs International, Inc. under the 
(fraction of the United States Geological Survey (US 6 S) on behalf of the DGMR Fofiowing extensive (estwork and 
technical teasibSHy studies, it has been established m at the deposits contain proven resaves of 213 mffion tonnes of ore 
averaging 21 % P 2 O 5 . 

A preliminary information package which includes the Executive Summary of the Feasibly Study, the Mining Code and 
Regulations and the Prequalification Document can be obtained from the DGMR Office in Jeddah upon payment of 
SR 5,000.00 or US$ 1 ,334.00 either In the form of a certified cheque a bank draft drawn in foe name of foe 'Directorate 
Genera* of Mineral Resources.” Saudi or foreign conpanies may apply iuSviduaffy a in conjunction with a group of 
companies. Firms or consortia selected will be requested to submit technical and economic proposals and a completed 
application form for a mining lease in accordance with the MWng Code and Regulations of the Kingdom of Saudi Arabia. 


THE PROJECT 

Mining will be by conventional open pit methods. 

Beneficiation is achieved by the flotation process for the production of 4.5 million tonnes per 
year ot phosphate concentrate. The Al Jalamid concentrate is a high quality product at 32.5% 
P 2 O 5 with MgO less than 0.4% and a CaO to P2^5 ra *'° of 1-57. 

The concentrate will be transported via a slurry pipeline to the fertilizer plants at Al Jubail for 
conversion into a high analysis fertilizer, diammonium phosphate (DAP) at the rate of 2.9 
million tonnes per year containing 18% nitrogen and 46% phosphate for sale in international 
markets. 

Total project investment is estimated at US$ 1,738 million composed of US$ 147 million for 
mining and beneficiation, USS 877 million tor the fertilizer facilities and US$ 714 million for 
associated infrastructure. 


Receipt of enquries from tirms manifesting interest ttfl be accepted unfit 20 Muharram 141 5H (corresponding to 29 June 
1994) at DGMR Headquarters at (he address fisted below. 

Deputy Minister for Mineral Resources 
Directorate General of Mineral Resources 
JP.O. Box 345, Jeddah 21191 
Kingdom of Saudi Arabia 
Fax: (966-2) 657-2265, Tlx: 601157 DGMR SJ 

This advertisement does not imply any obligation on the part of DGMR, nor can it be used as the basis for any 
legal right or claim against it 






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^P^ANdAJL TIMES WETWKKri Av. MAY 4 1994 


Ekostahl sale 
under threat 

■ a 2L5?* 1 ?' pen?«irs. engineering union, and Riva, the 

WW* are &&ed in mTetev- 

- SSSSTSS^i^' 9 ^ &***& *■ Privatisation of 

SSS™*' e ^ tem Germany's largest steel mill The dispute 
cai^ on the composition of Skostshl’s supervisory board 
STiS’S 8 "? 011 * ^ P 1 ^ contxact, scheduled far dsn- 
s’.™* TO postponed after the union and the 

company-faiteato reach n compronrise, 
ih^-stron^ supervisory board will be equally divided 
b^ween IG Metall and Riva, with the remaining member 
hoMing a neutral position. However, according to nn fo n offi- 
cials, Rivaopposes IG Metati’s nomination, of Mr w«ns Anel a 
. Sodal democrat and former federal finance ami d*n*nc* mfm* . 
.ter- .. . •_' ' ._ 

- ihspfcte has astonished officials principally because it ! 

- 7°™^ privatisation agency mote than two years 

u» and ajmyer, and protracted negotiations with the European | 
Commission, to had* a DMl.lbn (£440m) restructuring pro- 
granune which Riva will undertake. Judy Dempsey, Berlin 


NEWS: EUROPE 


Progress in EU-Russia accord 

-jhent over a trade and co-operation accord between the Euro- 
pean Onion and Russia coold be reached la time for si gning at 
- the Corfb Summit nUtt month- A C ommission qprihnamgri said 

"excellent progress” had been made by Sir Leon Britten, 
European commissioner responsible for external wmnnmin 
relations, and Mr Alexander Sbofcin, the Russian, deputy prime 
minister, who met earlier this week to discuss the two remain- 
log obstacles to- the accord - the rules g n w r ni ng the trade in 
uranium and .access fra European banks to the Russian bank- 
ing sector. However, he cautioned that, the accord still needed 
to be approved by member states. Prance, in particular, is 
keen to protect its uranium producers. Mr shnidn and Sir 
Leon agreed to work on an exchange of letters which could 
pave the way tor a annproaxtise. Emma Tucker, Brussels 

Italian prices edge upward 

Italian consumer prices grew 03 per cent in April giving an 
a nnu alised inflation rate off 41 percent. The monthly rate was 
marginally up an March. largely doe to a rise in cigarette | 
prices, But so ter tins year - thebiggest single rises have been 
in housing and health. The rise in housing costs in particular j 
has.ahhosf doubled the index average. The prospective rate fra I 
the year as a whole is now running at 4 per cent against ,42 
per cent far 1993. The outgoing government hoped to have a 
year-end inflation rate running at an annualised a 5 per cent 
Economists indicated _yesterday that the new government 
would inherit inflation rates ptffl relatively high by EH stan- 
dards and this made cautious management of Italy’s tfmfd 
reco v ery dss entl aL Robert Graham , florae 

US union cash for Poland 

1^1an(t“Partners, a aiew tffian (£4£n) venture capital tend, 
backed hy a US govern men t agency mm . created to boost the 
-private sector in Poland, will include five pension tends from 
TTS tr^de nriifins Although, the unkais have been generally 
hostile toward s overseas fe vestraeaff, US labour rallied around 
Poland’s Solidarity movement during its days underground, 
and the redatiariship ls stffl close, acccnfing to Mr Bob KalasKi, 

jftrgqfrnr nf oimwnpmwr^rma far -ffef n ^pA^^ ' mian = 

TterMmceptforPotetf Partners originated after a speech in 
3990. to USipw^TjyPr^l&nt IfiRh TBafea and the .fond has 
been stjrpRgjy gqpgqri mT by,tbe Overseas Private Investment 
Corporation. tioe TB^ ghvamnent - agenc y. O pic has already, 
bathed. 2a iven tnp s r te. Pcftmad iny bt ving tTS companies with 

$4fl0m m.teoanthlg-and ritflyrnern- 811 ™. yx ghrr in Wpanchig' 
inihe termer Eastern Mod For tefc/fimd ttwffl. provide up to 
$3San-3n:inyestmdDt gnaranteea. Thefond will be.mapaged by 
the Poland Partners Management Company, which is owned 
by California-based Avalon Ventures, Company A ssistance Ltd 
of Warsaw audXandon Butter & do of Washington. Nancy 

Dxmn^Wa s f m otah . ..«• 

Greek ex-Mne figlits seizure 


Greek: ex-topg tigats seizure | 

Former tcmg Constantine of Ckeeco.said yesterday he would j 
launch a legal battle against, the .Greek government's decision. ! 
to seize his property : and strip jus femfly of their passports. 1 , 
will certainty clammy property with all legal means provided 
by the [Greek] cemstitution and laws,” he said in an Interview 
with the Athens newspaper ApogevmanttoL Last month the 
Greek parliament. approved a MU giving the state control of 
Constantine's Mon Repos estate on the island of Crate, a 
summer prince in Tatoi north of Athens, and hundreds of 
acres in Polydendri in central Ck»a». Most other property 
owned hy the termer rcyals before they fled. Greece had been 
given to the stale to cover unpaidtaxes. Reuter, Athens - : - . 

Nagorno-Karabakh toll rises 

The fat ra natimal Conuriittee of the Bed Cross yesterday said 
.. . . TinHuaan ArmMiifliflnH Amrtwti an owr the 


teat iwent ixgauug 

diaouted endave.of NagumoJSarabakh had caused hundreds 
^casualties and 50.000 people to flee teeirbranes.^ICRC 
spokesman Pierre Gauthier raid most , of the dead janfl 
wounded were.soMifirs- The agency, was awaiting word from 
staff on the front hue on exact numb®* • ' ' 

The ICBC raid it had sent tents, foods and medKinfiS. to the 
area but was stretched by the sheer, numbers jof ^people who 
had fl e d their homes in Azerbaijan over the past three weeks. 
Befrretbe ' latest exodus thrae wwe:>bottt eotwoo fflsptawl 
Se in-Azabaijan as aresuK of theMx-yrar dvil war. tea 
statement, .the ICRC raid it was ‘^erkmdy a mceni^ about 
the serious tom of evenis in the narthem.and eratm finds., 
in the Nagorim-Kaiabakh conflict". Nagorno-Karabakh is pop- 
ulated mostly by ethnic Armenians. AP. Germ 

ECONOMIC WATCH ; 

French iiew car sales accelerate 


w ' '/■ " ' ^ in France accelerated last- 

month with; a m per cent 

Car sites increase' ye^--on-year to 

uoAonn njwwdme to urehnn- ' 


months were 13^ per cent 


ago. The French motor indns- 
j] - •? tjy bas ifevis^ upwards Ssr. 

' : ' I I - I forecast for west European 

’-■j;- sales this year to HTSm, an 

; ;'--T Increase of 3 per offlot ax* 

V ' pared -with jiff, previous ftoe- 

: V : cast ter a rise of only OS per 

• cait Peugeot Citroftn and 

Renault both gained ground 

****** 

It also declm^byO-^P® ifinistry. The mnustry 

JSSSiSk.**' *« tom5 

from aprtJH «se aa irhktion^sted^^ 

■ with W ^ 

cent said jesterd ay. 

menth. before* tte fBBBP**- _ , *, -vj«n currencies rose 


Left thrives in Hungary’s disenchanted soil 


T he left, fresh from elec- 
toral success in Lithua- 
nia, Poland, Russia and 
Ukraine, is poised for a come- 
back in Hungary’s parliamen- 
tary elections' next Sunday. 
Voters, disillusioned with four 
years of a conservative coali- 
tion led by the Hungarian 
Democratic Forum, are turning 
to the former communists of 
the Hun garian Socialist party. 

The Socialists, who scored 
just 11 per cent in the 1990 
national vote, have surged to 
well over 30 per cent in latest 
opinion surveys. “I did believe 
the pendulum would swing 
hack. I did not believe that it 
could swing back so ter,” says 
Mr Viktor Polgar, hpgri of the 
Socialists’ Budapest campaig n. 

The Socialist party is the 
successor to the communist 
regime that ruled Hungary, 
often brutally, for 40 years. Mr 
Gyula Horn, the 61-year-old 
Socialist leader, went to college 
in the Soviet Union and joined 
the “padded coats,” the volun- 
teers who helped pot down the 
1956 u prising against commu- 
nist rule. 

Government television has 
taken a literal approach to the 
search for skeletons in the 
Socialists’ cupboard. One TV 
documentary covered the 
search fin- prison cells, torture 
chambers and bones beneath 
Socialist party headquarters in 
Budapest. Another broadcast 
an account of Mr Ham Writing 
in the teeth of a “counter-revo- 
lutionary" prisoner. 


Ex-communists are set for a comeback in Sunday’s elections, writes Nicholas Denton 


Rise of Ute Hungarian socialists 


SSSL : 

.fotum -- ChrtsSm 


T adi ri i Uun "’ ‘ 
o( Young ... 
Ownocntfy 


HungMfan 





% of votes to tetast'poH. April 1994 

0 . ami ' 4o9t 

-Source:? .< "• . . 


. .» • V -i. 

• 1 . i ■ ■ r- 

... 80% ■ 10 m 


For a party that once believed in monolithic 
dictatorship of the proletariat, Hungary’s 
Socialists attract a surprising social mix, writes 
Nicholas Denton. State employees, pensioners 
and the unemployed, the losers in the transi- 
tion to a market economy* are their natural and 
most numerous supporters. But opinion polls 
show the Socialists command the most concen- 
trated support among “top leaders*. “If the new 
Hungarian bourgeoisie have a party at all, it is 
the Socialist party," rays Mr Peter Tolgyessy, a 
liberal politician. "The Socialist party has two 
wings: one is like the British Tories and one 
like Labour in the 1950s.” 

For Hungary’s business dlite did not spring 
into life instantaneously when the Soviet bloc 
collapsed in 1990. In Hungary economic liberal- 


isation began as far back as 1968 and the 
nomenklatura, leading communists, bad time to 
translate political power into economic weight 
The Socialists have a constituency that 
stretches from the new rich to the unemployed 
coalminer. Mr Laszlo Bekesi, the Socialists’ for- 
mer and perhaps future finance minister, 
matches any conservative or neo-liberal for fis- 
cal orthodoxy. Socialist campaign posters prom- 
ise to “get the expertise back Into government". 
The line has broad electoral appeal, says Mr 
Gaspar MBdos Tamas, a liberal commentator. 
“Voters see the Socialists as the aristocrats.” At 
the same time , however, Mr Gyula Horn, the 

Socialist leader, has led pensioners and state 
employees to believe he can halt the deteriora- 
tion of living standards. 


But the TV wwipatg n agains t 
the Socialists, so dose to the 
vote and so reliant on unsub- 
stantiated accusation, has 
lacked credibility. "The attacks 
actually help us,” Mr Andras 
Bard, Socialist spokesman, 
admits cheerfully. 

In any ease , many Hungar- 
ians are inrlined to forgive and 
forget “People change,” shrugs 
Eva, a Forum voter in 1990 and 
a Socialist supporter now. 

Horn the young communist 
became Horn the reformist for- 
eign minister of the last com- 
munist government, who let 
East German “tourists" out 
through Hungary to the west 
and so helped bring down the 
Berlin wall 

A despairing conservative 
official asks: “Do people forget 


so quickly?” Yes, the bad 
things, at any rate. Voters 
associate the left less with the 
horrors of the 1950s and more 
with the easy going “goulash 
communism" that Hun- 
gary the “Jolliest barracks in 
tho socialis t camp”. 

“People who lived in places 
with the toilet at the end of the 
courtyard were able to move 
into a decent tower block and 
live in civilised surroundings,” 
says Mr Is tv an Dobrogi, a 
worker at the light-bulb maker, 
Tungsram, pensioned off after 
General Electric of the US 
bought the company. 

“There was a bathroom. 
They could pay the elec- 
tricity bill and the rent, 
keep a gm^p plot an^ main- 
tain a Trabant. Only a few 


people can manage that now.” 

Living standards for most 
pensioners and state employ- 
ees have fallen over the last 
four years as gross domestic 
product has shrunk by 20 per 
emit Unemployment has now 
risen to 12J2 per cent of the 
labour force. Mr Janos 
Plyevszky, a car mechanic, 
complains: “Now there is no 
social safety net, at least then 
there was. There are terrible 
layoffs. They turn off the elec- 
tricity if people can't pay.” 

Electricity bills do not preoc- 
cupy the mobile phone wield- 
ing drivers in Mercedes cars 
who cruise through central 
Budapest past boutiques, west- 
ern brand-name stores, gleam- 
ing new hotels and banks. But 
the new rich are few and their 


conspicuous consumption, 
though impressive to foreign- 
ers, is galling to many less for- 
tunate locals. 

Only 18 per cent of Hungar- 
ians polled say they are better 
off than before, fewer than in 
any other east European coun- 
try except Russia. The conser- 
vative government takes a leaf 
out of tiie standard practice for 
beleaguered western govern- 
ments and argues that reces- 
sion has been as bad, if not 
worse, among all Hungary's 
eastern neighbours. 

To no avail. “Before the col- 
lapse of communism Hungar- 
ians compared themselves to 
Romania and they thought 
they were doing well,” says Mr 
Peter Tolgyessy, a prominent 
politician of the liberal Free 


Democrats. “Now they com- 
pare themselves with Austria.” 

The Socialists are the benefi- 
ciaries of the public’s disgrun- 
tiement “We get our support 
from the feet that most people 
have had it up to here,” says 
Mr Polgar. 

It Is not fair, respond Hunga- 
ry’s increasingly despondent 
conservatives. It was the com- 
munist regime that built up 
eastern Europe’s highest per 
capita debt and left their suc- 
cessors to repay it “For years 
and years we consumed more 
than we produced." says Mr 
Tamas Ratona, state secretary 
at the prime minis ter’s office. 
“Ordinary people are paying 
the price for the previous sys- 
tem.” And the conservatives, 
he might have added. 


need a couple of raincoats 

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[y^Cf • y • ■ r. ; .T , + , .y J. • • 5 


USindicators point 


« 


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to robust growth 

VB„„ nT ttM U COBOlOIMIliS of 




It Carries More Payl&SM 

Than Any Airplane In Its Ci#ss. tND uf Mua 

But let's start at the beginning, the biggest cabin and largest payload 
Beechcraft King Airs have been chosen but also the gnratest fuel Mr of 
more than wo to one over any other any airplane, jet orjetprop.mitscte 

single line of business airplanes, jet or Ona*picalbusiness missron (about 

- SfifikmUet competitors use 


By Michael Prowse 
h Washington 

The US index of leading 
indicators rose 0.7 per cent in 
March, more than expected 
and suggesting that economic 
arowthwill be robust during 
fhe next six months, the Comr 
merce Department reported 

ye Se?iWtBly, fbe National 
Association of 
Managers released a ImUish 

half-yearly forecast, predi cting 
7 per cent growth of corporate 
revenues in cash terms this 
year and a 10-9 per cent 

increase In capital spending. 
Pu rchas ing managers expect 
the price of goods they lW to 
rise only 15 per cent m 1994. 

Mr Ron Brown, commerce 
secretary, said the jump in the 
leading index, led by a sharp 
increase in the length of the 
average working week, indi- 
cated the economic recovery 
was not losing momentum. 


js^oftheUccanponenisof 

the leading ^ 

March, with positive conmbu- 
tioDS from W&ber commodity 

pri«M, an increase m fefl*ng 

permits and orders for durable 
mods; and a drop utweegy 
riaims for jobless benefits. ’Em 
overall index rose 0.4 percent 
in. January and was revised to 

show a zero change, rather 

than a 0.1 per cent decline, in 

February. ■ , , 

The Jump in the Judex 
showed “the eamumy 
UBS to hit on all cylinders, 
said Mr Martin R^Ba, chief 
economist erf the US Chamber 
of Commerce. 

Most forecasters believe pre- 
liminary reports of real .f* 5 ' 
nqmic growth at an armoah sed 
rate of 2.6 per cent in the first 
quarter, against 7 
Sie fourth quarter , understated 
the US economy's momentum. 

Purchasing managers were 
considerably more optimistto 
about the outlook for 1994 than 


SSL* 3 toldthe associations 

vesterday. In December^ 

increase in revenues of 4.7 per 
cent this year. 

Purchasing managers jam 

operating rates 
companies had risenfoani « q 
per cent last Derember^J^-? 
Sr cent the hjghfist rate since 

tae rate figures m **»■_*"% 
said, companies would 

tocreaS capita 1 spendm^to 

nearly ll per cent m casn 
terms this year. 

Their survey of 
tions was *5^5 

since it began m 1987; JJper 
cent of members said exports 

Sdrisearisyenr.TPjcem 

said exports wouW^hnA79 

per cent of menber companies 

export regularly 


illicit 
profits 


jetprop. Nice beginning. 

And this Super King Mr 
350 is the best ever built. 
Ever. 

It’s now 86 cm longer 
than its predecessor. Which 
makes the cabin the room- 
iest in its class. Its wingspan 
has been increased by 104 cm 
to improve climb and main- 
tain high altitude cruise 
speeds with no increase in 
engine size. 

But still, there's more 


y 

* 

£*/ ■ 

v -S 

&:■- t J 


<IV 


560 km), jet competitors use 
fipm 16 % to 423 more fuel. 
And the 350's jetprop effi- 
ciency continues to pay off 

out to the full range of the 

airplanes. 

In addition to this excit- 
ing story, there is one other 
note of interest Every new 
King Air comes with two 
years free maintenance. It 
covers all scheduled main- 
tenance and inspections - 
even wearables like tires 


waa him* — - — — 

Clinton toughens stance 
ag ains t Haitian junta 

® ... W35SI83?/:.-':-:* V:W."v- 


The Modd MO hast)* 

i^raiiintfaB0»JW 

But still, there's more. mUsdass. 

Its payload with full fuel is an aston- and brakes You pay only for fuel and oil 
ishing 1012 kg. That translates to ten For more information, call the 
passengers plus their baggage plus Beechcraft distributor nearest you - 
103 kg of cargo. No other airplane in its or call Beechcraft Marketing ,W 
class has this capability. toUSA !1 ^1 m 

Not only does the Model 360 offer 6T6-8808. Teta 203603 (BEECH). 

It’s Not Just An Aircraft. It’s ABeechcraft. 

Cteectaaft 

ABa\fll>®^ Com P any 


By Jurek Martin, us 

Editor, In Washington 

President Bill Clinton 
yesterday refused to rule out 
the use of force to oust the 
Haitian military junta from 
newer. “It’s time for them to 
po " he said, before leaving for 
Atlanta and an internationally 
televised news conference on 

the first step in renewed .Oh 
pressure on Haiti would be to 
have the United Nations Sca- 
nty Council agree to tighter 
economic sanctions, aimed 
more precisely at theassetsof 
junta members and of promi- 
nent civilian supporters. 

“We’ve tried other initiatives 

and they have not worked, Mr 

ninfrm conceded, “so we are 
now doing this sanctions 
regime as recommended by 
President [Jean-Bertrand] Aris- 
tide and others." 

Ms Dee Dee Myers, White 
House press secretary, saia 
that military intervention m 
the Caribbean country was a 
little far down the way” and 

would only be undertaken vrtth 
congressional approval tinder 

the War Powers Act 
Mr Clinton has come under 
growing pressure, particularly 
by the black caucus in Con- 
fess. to act as evidence of 
atrocities in Haiti PJoUferat^ 
Father Aristide, exiled by tee 
military coup of October 1991, 
has described US policy 
towards his country as tanta- 
mount to racism. 



Aristide has 
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The administration’s stance 
came under fire yesterday from 
ex-president George Bush, 
whose general policies towards 
thiirt Mr Clinton has followed, 
and from Mr Lawrence 
Pezznllo, US former spedal 
envoy who resigned, under 
pressure, last week. 

In an interview with a Hous- 
ton newspaper, in which he 
confessed to a change of opm- 
ion, Mr Bush said dm Mm 
for “a significant shin in us» 
policy. This should combine 
intensified diptomaticefforts 
with an end to US support Tot 
the return of the o eroti- 

cally elected Presidrat Anstide 

on the grounds that it was now 
clear he lacked sufficient sup- 
port in Haiti itself- However, 

Mr Bush added, it would be a 


tremendous mistake" ! en the 
US to intervene militarily 
because “no US lives are at 

risk in Haiti today". 

Mr Pezzullo, heavily critic- 
ised by supporters of Ft Ahsf 
tide, also warned - in a letter 
to Mr Warren Christopher, sec- 
retary of state - of “my grave 
concern that we are beading 
down a path towards unilateral 
military intervention - 
The White House yesterday 
declined comment on a report 
that it was thinking of sending 
US military officials to seek to 
-retrain" the Haitian army and 
to provide some protection for 
humanitarian food suppNf’J*} 
SaitLA similar, lhfotiy-jnned 

mission was alxjrted last ye^r 
off Port-au-Prince in the face of 
junta-organised protests. 


Paraguay suffers its first 
general strike in 35 years 

O Growing trade links wi 

. ^.rortcatmn nroeramme ulu r . 


By John Barham 
ki Buenos Aires 

Paraguay’s first general strike 
in 35 yearn has c laim ed one He 
and clashes with secunty 
forces have caused 20 mjuri^ 
police shot a peasant in the 
Interior of the country partici- 
pating in Monday’s general 
strike, in which protesters 
blocked roads throu ghou t the 
country and demonstrated m 
the capital Asuncion. 

They demanded 40 per emit 

wage rises, a halt to the coun- 


try’s privatisation programme 

and the suspension of eco- 
nomic integration wrib M* 
bouring countries. The army 
deployed tanks to keep 
roads open, hut transport 
workers paralysed the bus ser^ 
vice, forcing shops and offices 

in Asuncion to dose. 

The one-day strike followed 
months of growing tension m 
the interior, where pea^nte 
are demanding “ 

and government finmuti^s^ 

port to compensate for falling 
cotton prices. 


Growing trade links with 
Paraguay’s large neighbours, 
Brazil and Argentina, through 
the Mercosur emstoms union is 
also threatening smaller Para- 
guayan companies. 

This was the most serious 
challenge yet to President 
Juan Carlos Wasmosy, who 
was elected last year Mr Witf- 
mosy's Colorado party backed 
General Alfredo Stroessner 
during his 1954-89 military 
rule, but is now committed to 
democracy and market 
reforms. 


wage uses, a uau. w ^ — 

interest paymen t; 

Ecuador agrees bank debt deal 

_ .. ttonai roadshow under way “if choices 




By Canute James W"®* 40 " 
^ST^ratwo^ymeettog 

'•SvS&s 

^ aUwr the confiscation of 

a ^’jo^Lnis Rodriguez, 
flnmice minlster.ouUin^a 

of proposals but said 
mi^rt not be the ong to 
be adopted and inudemented 

reforms to Increase profoction 

or build up the supply sWe of 
the economy, but tiie 

to mop UP ore® 58 

Jlfoce a growing fiscal deficit 
StactMfte state increased 
Access tothe hard^™^ 
circulating Hie ida na- 
The government Is expert^ 
to™lS a w««r 
extending it to many more 
few thouMnd CHwns 

viba now pw- » 
impose taxes on Incomes 

“Sf «1» envte^ 

water and postal rate, sunsi- 
dies on a range of find 
medicines would be 

tog to higher prices. Printer 

dMhol. dgarettes and 

for private vehides would itwj- 

Free entry to 

tnral events would end^Tne 
govermnent would alsotovite 
Cubans to put their money on 

fixed deposit . m 

The government is coutem- 
plattng creation of a new cmr- 
rency This would be convrat- 
3T«rfta as valid at the 

special and relatively well- 

stocked Cuban sho ps wh ich 
accept only hard currency. 
Cubans would be encouraged 
to exchange foreign 
to the new peso, thus putting 
more of the bard currW In 
the country under official 

“gf government has been 
Increasingly concerned at the 
rapid devaluation of the exist- 
ing peso. The official rate 
keens it at sUghtiy more ^ than 
a US dollar, bid the street rate 
is dose to PslOOSl. The 
ernment says nearly 12on 
pesos are in circulation, four 
times the amount needed. 

Many of the fiscal meararra 

outlined would be aimed to 
reduce the monetary o ver- 
jumg . This would be difficult, 
riven the rate of monetary cre- 
ation implied by the govenh 
ment’s own flgnre* - “ 
Ps4.2bn budget deficit, test 
year and nearly 70 per cent of 
state enterprises losing 
money* 

Mr Castro said the new mea- 
sures would not be populm, 
but that a “disaster" woiud 
ensue if they were insufficient. 

He said that the success m 
new measures would depend 
on the crackdown on black 
marketeers, who have been 
doing thriving business, 
mostly in food, because of 
shortages in the shops. The 
government inten ds to seize 
their property and profits- , 
Cuba’s economy has shrunk 
by half since the collate « 
the Soviet Union, the Carib- 
bean island’s main trading 
partner. The problems were 
compounded by the failure of 
the Cuban sugarhareestiasi 
year and a significant reduc- 
tion in foreign earnings. 


w 


By Stephen FkfcrtoUindon 

and Raymond Cofftt to Qutto 

Ecuador and its leadfogbunk 
creditors have reached an 
agreement ^ principle on a 
rSdamental i^tructunngof 
its foreign bank debt The deal 
is aimed at erasing overdue 
interest ^bfowagi errors 
for the first tune since 1987. 
The accord, reached . 1 ^J£ 


LEGAL NOTICES 

AETNA CAPITAL MANAJGjMBnT 

IBWERNATTONALtnOTn) 

irt 

nx^A^A^APrtM. MANAGEMENT ThB aCCOTd, 

KraSSwNAL Monday by Bovorn^^j^^ 

Sl-SSriWW ato^andaco—" 

afll oca la flKoya *^*^*^^1 


Srtto JMli b 

fimfiaKHT <Srd«*«i Of ite QbW^ 

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ciediior of .he 

Rusund otficc: S5 !«*■ W«IL 

7 AD itatae »*ri**i WJ 

i.wwi a Samrtw. Sowhy « MM*y) QP 

t 4l A»j aoflwr of \bc 
« ox* iidndlag ^ i"*. *«• Wg 
hmi Camn Ooon note Skew* 1W of ^ wn 
Atfio, as ortn praWbUss «*» poy®* - onl 
wU 

FMU RUtatoVBlwifcWa 

Wall Loatoi ECTd 7AP 


fed by uoyds Bank, covers 
ifirtNSta CES-OSbu) c£cm- 
tal and up to $3bn of overdue 

^Smoundiig the 
Quito. President Sffito » Dnrtu 
Ballto emphasised that ihe 
country’s status as a detin- 
auent dfotor bad resulted in 
“Mormous difflcnUrnsra 
attracting tereign mv^tinmt 

generatingempfo^ent^nd 

obtaining the necraseuy 
oology to compete mtemation- 

^Under the Braife’-styl®^^: 
ment, holders of debt prnrapaj 
will be able to exchange it 
either for 30-year bonds carry- 


ing a floating interest rate md 
a 45 per rant discount to fac« 
valuefor for “par” brads wiffi 
Interest payments stepper UP 
from 3 per amt to 5 per cent m 

tiie nth y»r- . 

As is common in Brady 
agreements - named after for- 
mer US Treasury Secretary 
Nicholas Brady - the prina^l 
and one year of interest on the 
concessional bonds will be 

guaranteed by US Treasury 
bonds to be held in escrow as 

collateral , . , 

The government claimed 
that it also achieved a 20 per 
cent reduction onov&rdue 
interest of $3.1bn, although the 
calculation is based in part m 
contractual interest penaffifj 
which are generally not levied 
on such reschedulings. Most m 
the back interest will be repaid 
by the issue of 20-year brads 
with a 10-year grace period 
before principal repayments 
are due. 

Mr William Camposano, 
senior vice-president at lioyds 
in New York, said a full term 
sheet of the agreement should 
be in piece and an interna- 


tional roadshow under way “ff 
aTl goes well" by the end of 
June. The government hopes 
to complete the deal this year. 

The govermnent is expected 
to secure a standby loan agree- 
ment from the International 
Monetary Fund this month, 
and possibly also a reschedul- 
ing of its 1993 and 1994 maturi- 
ties to the Paris dub of credi- 
tor government. 

A maximum of $800m is 
available to provide initial pay- 
merits and purchase collateral 
for the agreement. Ecuador 
never fully consolidated its 
bank debt, and though It 
agreed partial reschedulings in 
1983. 1984 and 1985, it ceased 
fully servicing its debt in 
1987- 

In the secondary market, the 
price of Ecuadorean debt rose 
yesterday before easing back 
later. Bankers close to the 
agreement were keen to avoid 
the negative reaction from 
banks that followed the recent 
agreement in principle with 

Poland. , , 

They emphasised that there 
would be no reallocation of 



f 


choices once banks had made 
their initial choice and that an 
the collateral for the exchange 
bonds would be available 
immediately. This contrasts 

with the recently , compjnea 

Brazilian agreement Tney 
argued that there had been no 

big concessions on interest 

arrears. 

One said that in negotiating 
the agreement, the government 
had been aware ' that it wouja 
be “presenting the package™ 
a broader variety of creditors 
than would have been tie case 
a few years ago". . 

This is a reference to me 
large number of private narra- 
tors in such bank debt /Qi^® 
include the Dart family ot 
US, who refused to join tae 

recent Brazil package and wo 

are widely thought to how 
positions in Ecuadorean au» 
Polish debt . . 

The accord will not neeura* 
ifleation by Coogreffi, hut sane 
opposition politicians, w®* 
welcoming the agreem®*£ 
noted that the current modern- 
isation law forbids the use cs 
the debt in privatisations- 




■ "/feSasaga 



khjJt 


LJ* 


i&o 


FENAN CIAL TIMES WEDNESDAY MAY 4 1994 




HEWS: WORLD TRADE 


EU tackles imports of broadcasting cameras 

High duties against Japan 


By Guy de Jonquftres, 

Business Editor 

The European Union has 
unp osed definitive anti- 
dumping duties of as much as 
96.8 per cent on imports of 
broadcasting cameras made by 
five Japanese electronics com- 
panies. • 

The duties are among the 
idghest in any recent EU anti- 
dumping action' against J a na- 
aese imports. 

The duties were imposed 
after an Investigation by the 
European Commission of com- 
plaints by BTS, part of Philips 
of the Netherlands, and Thom- 
son Broadcast of . France, which 
are Europe’s only makers of 
studio video-cameras. * 

The investigation found 1 that 


Japanese exporters had 
increased their share of the EU 
studio camera market from 52 
per cent in 2389 to 70 per cent 
in 1992, while the share of 
European producers fell from 
48 per cent to 30 per cent 

The Commission said the 
market share gains were due 
to unfair pricing by the Japa- 
nese companies. It put at 21 
per cent to 60 per cent the 
“dumping margins" on the 
products - the gap between 
prices in the EU and Japan. It 
said none of the Japanese com- 
panies disputed thi« finding . 

However, Sony, one of the 
Japanese companies affected 
by the EU action, accused the 
Commission of failure to taka 
into consideration price differ- 
ences due to varying product 


specifications and service pro- 
visions. It said the duties 
would result in “significant" 
price increases. 

The damp in g duties on Sony 
cameras have been set at 62.6 
per emit; those on products by 
Fkegatni Tsushinki and Hitachi 
Denshl are SL9 per cent and 
52.7 per cent. 

Duties of 968 per cent bave 
been imposed on products by 
Matsushita and JVC, which the 
Commission said did not 
cooperate in its investigation 

Sony, the leader in the world 
broadcasting camera market, 
said many of its customers bad 
lobbied on its behalf during the 
EU investigation. 

The Commission said several 
users of broadcast cameras had 
said European products were 


inferior to those from Japan, 
but had not substantiated this 

Claim 

The Commission also 
rejected users’ objections that 
the duties would force them to 
switch to European cameras 
which were technically incom- 
patible with Japanese ones. 

Capital Group Studios, a 
London indpendent television 
production studio which lobb- 
ied against the duties, said yes- 
terday that the decision would 
put it at a competitive disad- 
vantage by raising the prices it 
had to pay for equipment. 

The company said the most 
sophisticated broadcast camera 
technology had long come from 
Japan, though BTS had 
recently launched a range of 
technically advanced products. 


Sales of 
CDs near 
cassette 
total 


By Michael Skapmker, Leisure 
Industries Correspondent 

International unit sales of 
compact discs rose by 19.4 per 
cent last year to i.39tm, rais- 
ing the prospect that the CD 
will soon replace the audio 
cassette as the world’s princi- 
pal music carrier. 

Unit sales of cassettes feB 2 
per cent to 1.44bn, according 
to figures from the Interna- 
tional Federation of the Pho- 
nographic Industry, which 
represents music companies 
worldwide. 

Although overall cassette 
sales remained higher than 


Recorded music sales 

World growtftby format ftWte ; 

160Q.7T-7- . ' ■■■ ' ■ — 


-1993'format spat 



. 1991 
-Souc&Fft 


1992 


1995 


angles last 


IPs 2*. 


those of compact discs, sales 
had begun to decline for the 
first time in 1993, the federa- 
tion said. Nevertheless, Cite 
now significantly outsell cas- 
sette tapes in all the biggest 
music markets, apart from 
Mexico, 

CD units sales rose by 21.5 
per cent in the year. The value 
of the total world market rose 
by 5.9 per cent, suggesting 


that most of the CD volume 
growth was reported in the 
budget and mid-price sectors. 

Unit sales of vinyl record 
albums fell 30 per cent to 80m. 
The federation said the vinyl 
album had almost disappeared 
from all the developed music 
markets. 

The total value of recorded 
music sales last year rose 5J& 
per emit to 63tL5bn (£2&2hn). 


■ft 


Washington sets 




progress on trade 


The US told" Japan’s new 
government yesterday that the 
two countries must make prog- 
ress on trade, before the July 
meeting of this Group of Seven 
leading industrial countries in 
Naples, and Japan promised to 
seek a solution. Renter reports 
from Cairo.. 

Mr Warren Christopher, US 
secretary of statd ddivered the 
message during a meeting in 
: Cairo with Mr Koji Kakizawa,’ 
Japan’s fonagh minister. * 

It” was the first high-level 
-contact Vbefcween the two allies, 
since a new govenunent was - 1 
Installed in' Tokyb. The twd 
were in Cairo -for today’s 
scheduled signing of the tefael- 
FLO agreement mt Palestinian 
self-role: : '• "■ -' ; J “ - ■ v 
Mr Christopher said the US 
was prepared/to be understand- 
ing during this transition 
phase as the . new government . 
established itself mid devei- ; 
oped its poOded! 

But at a ; news conference 
with Mr Bakizawa, he said: : 
“ft* qinte ni^xHtant that" we * 
make as' mu c h program as pes- - 


stole before the G7 meeting m 
Naples so we have a good 
report to give to the other lead- 
ers of the world at that 
time.” . 

Mr Kakizawa . said: “We 
agreed that the two countries 
have to make further efforts” 
following talks, between then- 
foreign minister Mr Tsutomu 
Rata, now Japan’s new prime 
minister, and Mr Mickey Kan- 
tor, US trade representative, in 
Mar r akesh at a recent meeting 
to conclude thB Gatt Uruguay 
Roiind.l 

Mr Christopher noted that 
3fr Kanter raised; with Japan 
in -Marrakesh 1 three questions 
-on- tbfr fr ame work agreement 
thatthe two sides are negotia- 
■ting- to {Boride-greater access 
to Japan’s markets for Ameri- 
can businessmen. 

HA Said Mir Kakizawa told 
him the knswers would be 
forthcoming. 

Japan has a trade surplus of 
mine than $S6bn with: the US, 
which. has been trying to force 
Tokyo in open up its mark- 


Turkish-US joint arms venture jams 

John Murray Brown on problems of a home-grown defence industry 


C ostly delays of Turkey’s 
largest defence industry 
collaboration project 
could be ironed out this week 
When US anH Turkish nffinifll* 
gath er at the US army’s ballis- 
tics testing centre at Aberdeen 
in Maryland for a week-long 
demonstration of Turkey's 
armoured personnel carrier 
produced by FMC of the US. 

This unusual move follows 
an intervention by General 
Dugan Cure?, the Turkish chi e f 
of general staff. Turkish con- 
cern about the quality of the 
FMC vehicle’s armour follows 
complaints by the Turkish 
land forces, which have 
refused to take delivery from 
the FMC plant outside Ankara 
where more than 400 vehicles 
await collection. ' 

The dispute meant FMC 
has not been paid since 
November. The company has 
informed the Turkish authori- 
ties it is setting off its debt 
payments against some $60m 
worth of debts owed by SSM, 
the government procurement 
agency, for vehicles which 
EMC has already produced. 
With these amounts denomi- 
nated in Turkish lira, company 
officials estimate that as a 



A version of FMCs armoured infantry fighting vehicle 


result of the recent lira devalu- 
ation the delay in payments 
has cost FMC an additional 
815m. With no response, FMC 
has stepped up the pressure 
and in February took its case 
to the international court of 
arbitration in Vienna. 

The twists and turns of this 
Slhn deal - the first co-produc- 
tion joint venture managed by 
the -civilian-run SSM - provide 
a telling snapshot of the prob- 
lems of a home gr o w n defence 
industry. The project has been 
the subject of the conflicting 


aims of cost and efficiency. 
FMC also seems to be caught 
up in the rivalry between the 
civilian-run procurement 
authority and the Turkish mili- 
tary over defence spending. 

Despite cuts elsewhere in 
Europe, Turkey's defence sec- 
tor has continued to attract a 
growing share of the budget 
But the issue has become par- 
ticularly acute at a time when 
the economy is under strain 
and the Kurdish insurrection 
in the country's south east has 
reached a new Intensity. The 


challenge to the military’s 
shopping list has intensified 
with the appointment of a new 
head for the SSM, Mr Yafom 
Burcak, a former Treasury offi- 
cial, who has put all spending 
on hold and is reviewing on-go- 
ing projects. 

The FMC contract when 
agreed in 1987 was to deliver 
1,698 vehicles by August 1997. 
The project was a joint venture 
with the local Nurol group 
-the target was to achieve a 
local m anufac turing content of 
about 70 per cent Some 200 
vehicles have been produced, 
some of which were deployed 
to support the Turkish troops 
in UN operations in Somalia. 
Others are in use In the Turk- 
ish security forces' 10-year-old 
counter-insurgency operations 
against Kurdish rebels. 

However, since the summer 
of 1992 not a single completed 
vehicle has left the Gdlba§i fac- 
tory. Defence experts say the 
cause of the problem was 
SSM’s decision in 1991 to 
change the contract terms. The 
original contract was a turn- 
key arrangement, under which 
FMC would deliver the com- 
pleted vehicle to the Turkish 
army. 


Now SSM has decided it will 
fti mish such equipment as the 
engine, the gun turret and the 
night-sighting equipment from 
rts own sub-contractors. 

Delays followed, some of 
which were not of SSM's mak- 
ing. For instance, the 25mm 
gun for the armoured fighting 
version was originally to be 
supplied by Oerlikon of Swit- 
zerland but the contract was 
discontinued after the Swiss 
parliament placed an arms 
embargo on Turkey because of 
its heavy handling of Kurdish 
unrest 

The latest row concerns 
armour quality and follows a 
test at the Turkish army’s own 
centre. FMC says the testing 
was unscientific. It claims the 
vehicle meets specifications of 
the contract and the armour 
quality is exactly the same as 
that on the vehicles supplied to 
the Belgian military. 

However, some defence 
experts say the army has 
deeper reservations, and is 
using the FMC issue to signal a 
more general discontent with 
the way SSM, a civilian author- 
ity, is now in charge of what 
has traditionally been part of 
the military's preserve. 


Poorer 
countries 
grab more 
investment 

By Francos WHBanis in Geneva 


Developing countries are 
gnatrhing a growing share of 
international investment and 
this trend is likely to continue, 
according to a report by the 
United Nations Conference on 
Trade and Development 

Flows of foreign direct 
Investment (FDD to developing 
nations reached record levels 
of nearly $50bn in 1992 and 
about $70bn in 1993, Unctad 
estimates. As a proportion of 
total FDI Sows, they rose from 
33 per cent in 1992 to 37 per 
cent last year as overseas 
investment in the industria- 
lised world continued to fall. 

The report, presented to this 
week’s meeting in Geneva of 
Unctad’s Commission on 
Transnational Corporations, 
notes that Asia continues to be 
the largest host developing 
region while flows to Latin 
America have Increased since 
the late 1980s. Most African 
nations, and least-developed 
countries, have seen FDI flows 
stagnate or decline. 

Unctad attributes the rapid 
expansion of FDI to the strong 
economic performance of many 
developing countries as well as 
to privatisation and more open 
equity markets. However, FDI 
growth had created relatively 
few new jobs in multinational 
corporations worldwide, fuel- 
ling criticisms that multina- 
tionals were reshuffling jobs 
away from rich countries. 

• Talks restart tins week in 
Geneva which aim to open 
individual country markets in 
three services sectors - mari- 
time transport, labour move- 
ment and basic telecommuni- 
cations. Trade officials agreed 
to continue the talks last 
December when the rest of the 
Uruguay Round was com- 
pleted. 

The negotiations on freer 
labour movement to supply 
services abroad, a priority area 
for developing countries, are 
due to be wrapped up next 
year, in parallel with talks on 
financial services. The negotia- 
tions on shipping and telecoms 
will extend until 1996. 


iJhkd ^ rr 


K- 







-r„, proud to for .I*—--** ™"P™Y- 

AK20 Nobe.-**^ 

to even’s >~M* •* 11 * 


here in Argentina. Argentinean law does not protect 
medical patents, so the market is flooded with hundreds 
of me-too products. Desptte -this tough competition, 
we have doubled our sales during the last two years. 


Organon’s unparalleled world-wide quality control, 
know-how and innovation persuade more and more 
Argentinean doctors to choose our side. Which proves 
again that it pays off to create the right chemistry. 1 ' 




CREATING THE RIGHT CHEMISTRY AKZO NOBEL 





FINANCIAL TIMES WEPNESPAV MAY 4 1994 


NEWS: INTERNATIONAL 


Last-minute World Bank plans $1.2bn Palestinian aid 
row hits Gaza 


pact run-up 


By Mark Nicholson In Cairo 

A last-minute row over details 
of an historic accord to with* 
draw Israeli troops from Gaza 
and Jericho yesterday soured 
final preparations for today’s 
scheduled signing of the agree- 
ment, locking both sides into a 
further and recriminatory 
round of negotiations. 

Israeli officials Insisted the 
signing would go ahead as 
planned, even if the outstand- 
ing disputes were not settled. 
“Time has its limits and tomor- 
row at 11 o'clock we shall 
sign." Mr Shimon Peres, 
Israel's foreign minister, said 
in Cairo. 

Mr Yitzhak Rabin, Israel's 
prime minister, and Mr Yassir 
Arafat, Palestine Liberation 
Organisation chairman, were 
due to meet last night in a 
final effort to resolve the differ- 
ences under the pressure of 
expectation and potential 
embarrassment created by the 
arrival of 2.500 dignitaries and 
a host of foreign ministers to 
witness today's planned event. 

The last-minute disagree- 
ment occurred when PLO offi- 
cials claimed Israel had 
"reneged" on more than 20 
detailed points or the agree- 
ment. 

Mr Arafat accused Israel of 
"manoeuvres to obstruct the 
signing", prompting Israeli offi- 
cials to blame the disagree- 
ments on "a last attempt" by 
the PLO “to get a bit more". 

The points of disagreement 
included whether the Palestin- 
ians could issue their own 
postage stamps and have their 
own phone codes for Gaza and 
Jericho, and a dispute over the 
length of validity of proposed 
Palestinian travel documents. 

Israel had balked at the 


The Bank of England will help 
Palestinians create a Palestin- 
ian Monetary Authority which 
will have all the functions of a 
central bank except the ability 
to issue a currency, a senior 
Palestinian economic negotia- 
tor said yesterday, Julian 
Ozanne writes. 

Mr Samir Houleila said in an 
interview that the greatest 
challenge facing the Palestin- 
ians in implementing the eco- 
nomic protocol signed with 
Israel last week was the ere- 


Inclusion of Mr Faisal Hus- 
selni, a Palestinian leader from 
Jerusalem, on the proposed list 
of 25 Palestinians to constitute 
the Palestinian authority 
which will administer limited 
self-rule until elections due in 
October. Israel says no Jerusa- 
lem-based Palestinians must 
serve on the body. 

PLO and Israeli negotiators 
had left Mr Rabin and Mr Ara- 
fat to resolve two final points 
of disagreement: whether a 
uniformed Palestinian guard 
would be allowed on the 
Allenby Bridge linking Israel 
and Jordan, and the delinea- 
tion of the area around Jericho 
to be ceded to Palestinian con- 
trol. The PLO had been seek- 
ing more than twice the 54 sq 
km offered by Israel. 

Mr Rabin's spokesman, Mr 
Ben Ari, said it was unclear 
whether the two leaders would 
announce any agreement on 
this and other outstanding 
issues before this morning. 

The 200-page document, enti- 
tled Agreement on the Gaza 
Strip and Jericho Area, would 
give the Palestinians their first 
limited degree of political and 
economic autonomy since the 
Israeli state was created in 
1948. committing Israel to with- 
draw troops from land claimed 
by the Palestinians and occu- 
pied by Israeli forces during 
the 1967 Arab-lsraeli war. 

The agreement is already 20 
weeks behind the schedule 
under which Israel should 
have completed Us military 
withdrawal by April 13. 

Once signed, the deal would 
prompt the imm ediate conclu- 
sion of Israeli military with- 
drawal from Gaza and Jericho. 
Under a draft text, Israel will 
complete the withdrawal 
within three weeks of signing. 


By George Graham 

fci Washington 

The World Bank has produced 
a $i.2bn (£820m) emergency 
assistance programme 
designed to yield improve- 
ments over three years in liv- 
ing standards in the occupied 
territories of the West Bank 
and the Gaza Strip. 

The programme is intended 
to serve as a sketch map to 
help coordinate aid flows from 
a wide range of donors, with 
the hope of avoiding some of 
the problems that could Sallow 


as money is pumped i nto a 
region with only rudimentary 
governmental and institutional 
structures. 

“It is in one sense a blessing 
not to have a long history of 
government bureaucracy. The 
negative side is you don't have 
any institutional structures," 
said Mr Ram Chopra, World 
Bank director In charge of the 
occupied territories pro- 
gramme. 

The programme proposes 
investing $234m for Gaza and 
$366m for the West Bank over 
the next three years in infra- 


structure projects such as 
water, sewers, transportation, 
electricity and education, as 
well as $300m to support pri- 
vate-sector development of 
housing, telecommunications 
and Industry. 

But it also includes an 
unusual $225m start-up expen- 
diture programme intended to 
provide temporary funding fin: 
a new Palestinian central 
administration, and to finance 
a social safety net through the 
public sector and non-govern- 
mental organisations (NGOs) 
already working in the area. 


“It is critical in this period to 
work with existi ng institutions 
and programmes, composed 
mainly of municipal structures 
authorised under the Israeli 
government, and the NGOs," 
Mr Chopra said. 

The World Bank has been 
working with the Palestinian 
Council fin* Economic Develop- 
ment and Reconstruction, set 
up by the Palestinian assembly 
last year to manage economic 
issues in a transition period. 

The emergency assistance 
programme represents a first 
tranche of aid commitments 


from donor countries to the 
occupied territories totalling 
$2.4bn over flour years. 

Mr Chopra said the Bank’s 
tas k force had examined pro- 
posals totalling about JiSbn, 
but had cut than to $L2h n to 
mrfiido only projects with the 
most immediate impact and 
which could be effectively 
implemented. 

“That does not mean roe 
ones we did not Include are not 
a priority, they may just not 
lave been ready," bfi added. 

Earlier Palestinian estimat es 
of the money needed went as 


high as SlObn. but Mr (ftopra 
said that included projects 
over a much longer period, as 
well as private-sector invest- 
ment, - 

Official statistics suggest an 
average annual income of 
around *1,275 per capita for 
Palestinians In the occupied 
territories, higher toan hi Jor- 
dan a n d more than donate 
Egypt’s income level 
But World Bank studies 
showed that services such as 
power, water and sewerage are 
often on a par with the least- 
developed countries. 



Arafat faces storm 
over self-rule jobs 


Right-wing Israeli women mode PLO and Hamas activists daring protests yesterday against the Jericho-Gaza. plan ap 


By Jufian Ozanne to Jerusalem 

Mr Yassir Arafat, chairman of the 
Palestine Liberation Organisation, is 
likely to face a stores of controversy 
among Palestinians in Use occupied 
territories over his appointments to 
the Pales tinian national authority 
almost immediately after he seals 
today’s Palestinian self-rule agree- 
ment. 

Details of Mir Arafat's provisional 
list for the 24-member authority, 
which will govern the Gaza Strip and 
West Bank enclave c£ Jericho before 
elections due later this year and 
which will act as a de Judo cabinet, 
reveal that he is determined to stack 
it with loyalists and members of the 
Palestinian diaspora. 

Palestinians who live in the occu- 
pied territories are critical of the 
agreement and deeply suspicious of 
their leaders who have lived in exile 
for several decades. The “insiders” 
want a real slice of power in the 
self-rule authority. 

Officials of Mr Arafat's Fatah fac- 
tion of the PLO have warned of a 
mutiny unless Mr Arafat includes 
many of the younger local leaders 
whet emerged during the Intifada- or 
uprising. 

However, according to senior FLO 


nffirigis in Cairo and Jerusalem the 
authority, to be headed by Mr A rafat, 
will be largely drawn from outside the 
territories and from within Mr Ara- 
fat's loyal political factions. 

The list includes Mr Hakam Baiawi, 
PLO ambassador to Tunis, who win 
be to charge of security; Mr Yassir 
Amr , a Jordan-based Fatah central 
committee member, to head the edu- 
cation department Mr Yassir Abed- 
Rabbo, a PLO executive committee 
member, to take charge of communi- 
cations; tbtisem al-Wazir (tJxnm 
Jihad), wife of the assassinated PLO’s 
former number two Khalil al-Wazfr 
(Abu Jihad), who will oversee wom- 
en's issues; and Mr Ahmed Qurie 
(Aba Aia’a), a Fatah central commit- 
tee member and Arafat loyalist, who 
will be finance “minister". 

The only two Palestinian “insiders” 
are Mr Faisal al-Hussetoi, PLO leader 
in the West Bank, in charge of liaison 
with Israel and Mr Zakaria al-Agra, 
the PLO boss of the Gaza Strip. 

PLO officials say the list, which has 
been partially leaked in Jerusalem 
and Cairo, could be made public 
today. Other officials say the PIG is 
determined to wait until the Palestin- 
ian police force takes control of the 
self-rule areas before risking a back- 
lash winch the list may provoke. 


Britain will help create monetary authority 


ation of credible, transparent 
and efficient financial and eco- 
nomic Institutions which 
would have authority outside 
the political and bureaucratic 
structures of the Palestine Lib- 
eration Organisation. 

The Palestinians will ask for 
considerable technical assis- 
tance from the UK and Switzer- 


land. Implementing the agree- 
ment would be bard because it 
only applied to the Gaza-Jeri- 
cho part of the occupied terri- 
tories, Mr Houleila said. He 
urged Israel to endorse policy 
decisions taken by the Pales- 
tinian authority and apply 
them to the rest of the West 
Bank. 


He defended the protocol, 
saying Palestinians would gain 
an immediate reduction in the 
cost of living from lower oil 
prices, VAT, customs duties 
and direct taxation,' which 
would fuel exports and invest- 
ment 

The economic protocol met 
Palestinian aspirations much 


better than the political and 
security agreement negotiated 
in Cairo. "Actually we have 
paid a high price in the politi- 
cal and security realm, bat we 
get the benefits in the eco- 
nomic sphere." 

The agreement terminates 
the Israeli-Jordanian agree- 
ment on banking In the occu- 


pied territories and allows Pal- 
estinians to make the US dollar 
legal tender, be said. 

A negative point for Palestin- 
ians was Israel's refusal to 
state specifically the number of 
Palestinians who would be able 
to work in Israel, Mr Houleila 
added. 

He and Mr Avraham Sho- 


chat, Israeli finance minister, 
agreed Israel was going to pay 
a short-term financial price for 
peace with the Palestinians, 
bat would gain from long-term 
normalisation of relations with 
Arab and Islamic states. 

Mr Shochatsaid Israel would 
lose several million shekels' 
revenue from customs duties 


and income tax on Palestinian 
migrant labourers (75 per cent 
of which will be transferred to 
the Palestinians) but would 
reap the rewards of peace. “For 
us the most important thing is 
not the existing situation but 
the opening of the door to the 
east and to And) markets." 

Mr Houleila warned the PLO 
would not call for an end to the 
Arab economic boycott of 
Israel before further talks on 
Jewish settlements. Interna- 
tional borders and refugees. 


BHP to face A$4bn 


Bond ‘unable to recall 


North Korea accused of 



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New Guinea suit 


By NlkJd Tait In Sydney 

A AS4bn (£1.97bn) damages suit against 
Broken Hill Proprietary, Australia’s 
largest company, is to be filed in Mel- 
bourne courts later this week by about 
6,000 Papua New Guinea villagers. The 
legal action seeks redress for environ- 
mental damage allegedly caused by the 
Ok Tedi copper mine in western PNG, 
which BHP manages. 

The class action is believed to repre- 
sent the largest compensation claim 
ever mounted in Australia, with the 
A$4bn figure comprising A$2bn in com- 
pensatory damages and A$2bn in exem- 
plary damages. Shares in BHP edged 
lower, by two cents to AS16.90, on the 
news. 

Details of the action were released by 
the Australian law firm acting for the 
villagers, ahead of the actual court fil- 
ing. The suit itself is likely to be 
entered on Thursday by Mr Rex Dagi, 
leader of the Western Province’s Mirl- 


pUti clan, in the Supreme Court 

Yesterday's statement from the law- 
yers said the suit would centre around 
the alleged pollution and flooding of the 
Ok Tedi River, due to dumping of waste 
material from the mine. The Western 
Province was concerned that the mine 
had "caused major damage to wildlife 
dependent on the river, to most fertile 
land beside the river, and possibly to 
the health of local people,” it said. 

“The local villagers are demanding a 
dam be built to contain the waste from 
the mine and that the river and the 
land affected by the dumping of waste 
be restored," it added. The lawyers said 
that the AS2bn exemplary damages fig- 
ure was based on the estimated current 
cost to build such a dam. 

Yesterday, BHP said that the Ok Tedi 
project "operates in compliance with 
PNG law and with the frill support of 
the PNG government", ft added that 
any legal action would be vigorously 
defended. 


Jersey companies’ 


violating 1953 armistice 


By Nikki Tait 

Mr Alan Bond, the failed Australian 
businessman, told a Sydney court yes- 
terday he was unable to remember any- 
thing about a series of Jersey-based 
companies which allegedly handled his 
personal funds and made investments 
bat were never mentioned in the for- 
mal statement of affairs drawn up 
when he went bankrupt in 1992. 

The bankruptcy trustee is trying to 
find where Mr Bond’s assets lie, to pay 
ids creditors. One of Australia’s most- 
prominent entrepreneurs in the 1960s, 
Mr Bond went tote bankruptcy with 
debts totalling hundreds of millions of 
dollars. 

At the long-delayed public examina- 
thm by his trustee in bankruptcy, he 
said he had no recollection of telling 
the Jersey office of Touche Ross to 
accept instructions from Mr John 
Bond, his son, Mr Harry Lodge, a 
Perth-based solicitor, or two other 


business associates, to acton his behalf 
over his personal affairs during the 
1970s and 1960a. 

Asked if he had authorised anyone to 
set op an offshore company for his per- 
sonal benefit, Mr Band said be could 
not recalL In fact, Mr Bond could not 
even remember Touche Ross. 

A day of relentless questioning by Mr 
Francis Douglas QC, acting for the 
trustee in bankruptcy, failed to have 
any impact on this amnesia. Neither 
did the presentation of a deposition 
given by one of the Touche Boss part- 
ners, a series of notes allegedly taken 
by Mr Lodge at a meeting with a 
Touche Boss partner in Jersey, or 
letters signed by Mr Bond telling 
Touche Ross to accept Instructions 
from some of these individuals. 

“What rm suggesting is that you had 
substantial sums of money, amounting 
to millions of dollars, administered for 
you through companies to the Channel 
Islands," said Mr Douglas. 


By John Burton in Seoul 

South Korea yesterday accused 
North Korea of violating the 
1953 armistice agreement that 
ended the Korean war by 
threatening to withdraw from 
the military armistice commis- 
sion. 

North Korea said it would 
try to dismantle the commis- 
sion unless the US agreed to 
conduct negotiations on a 
peace treaty to replace the 
truce pact 

Pyongyang has violated the 
armistice agreement "which 
provides that this document 
may be amended or supple- 
mented only by agreement 
between the parties involved," 
said the National Unification 
Board in Seoul 

Both the US and South 
Korea have said they will not 


consider the peace treaty pro- 
posal until the North Korean 
nuclear inspection issue is 
resolved. 

North Korea has refused to 
attend meetings of the armi- 
stice commission, which helps 
supervise the truce, since 
March 1991 when a South Kor- 
ean general was appointed 
chief delegate for the UN 
forces. It claims South Korea 
was uot a signatory to the 
armistice agreement, which 
was signed by North Korea and 
China on one side and the US- 
led UN forces on the other. 

South Korean analysts 
believe North Korea is trying 
to gain several advantages by 
raising the peace treaty pro- 
posal and Unking it with the 
nuclear issue. 

The most important goal Is 
to exchange nuclear inspec- 


tions for a peace treaty that 
would eventually lead to the 
withdrawal of US forces from 
South Korea and weaken rela- 
tions between Seoul and Wash- 
ington. 

The proposal is also part of 
the North's strategy to elimi- 
nate South Korea from the cur- 
rent nuclear negotiations. The 
North is seeking direct 
high-level talks with the US (m 
possible diplomatic recogni- 
tion, but Washington has 
refused to hold discussions 
until Pyongyang accepts full 
nuclear inspections of Its seven 
declared nuclear sites. 

Another motive behind the 
North’s action is to blor the 
international focus on the 
nuclear dispute. 

"It’s their way of moving the 
goalposts and obfuscating the 
issue," said a US Official. 


Identity crisis for Asian Development Bank 

Alexander Nicoll on a debate about the role of ‘soft’ public funds in a less than poor region 


Sri Lanka economy 
ahead by 6.9% 


W hat should a regional 
development bank 
do when its region 
has become - at least part- 
ly - developed? 

The question has occurred to 
the governments which sup- 
port the Asian Development 
Bank with taxpayers’ money. 
Many industrialised countries 
feel that since borrowers have 
growing resources and access 
to private capital, the ADB 
should focus on alleviating 
social problems - for example, 
reducing poverty and improv- 
ing the environment. 

Zealous championing of this 
issue, particularly by the US, 
has dominated the ritual dis- 
cussions over a capital 
increase for the ADB over the 
past two years and has upset 
some Asian countries even if 
they broadly agree with the US 
arguments. 

An even broader questioning 
of the modem rale of interna- 
tional development banks 
came from Sir William Ryrie, 
former head of the World 
Bank's private sector arm, the 
International Finance Corpora- 
tion, and now a director of Bar- 
ings, the merchant bank, dur- 
ing a seminar at the ADB's 


annual meeting in Nice. 

Massive private investment 
pouring into economies which 
were increasingly market-ori- 
ented had made official lend- 
ing, he said, "less necessary 
and sometimes undesirable". 
Official lending could retard 
development of private mar- 
kets by introducing capital 
which was not subject to the 
same risk discipline as private 
money. Development banks 
should lend to governments for 
sound projects only when the 
private sector would not meet 
the need. 

Though the debate about a 
capital increase is virtually 
over - negotiations have been 
completed and ADB governors 
must vote on a doubling by 


swirL 

The bank's new president, 
Mr Mitsuo Sato, faces a big 
challenge in implementing Che 
new strategy set by sharehold- 
ers while at the same time 
seeking to restore bruised dig- 
nities in an organisation 
which, in the Asian manner, 
has a strong tradition of oper- 
ating by consensus. 

Simply interpreting the new 
conditions which are being 
attached to the ADB’s lending 
will he difficult. About half of 
lending from ordinary capital 
resources (separate from soft 
loans) is to be devoted to 
social-sector lending. Instead of 
Just financing a road, the ADB 


should now ensure that the 
road is of particular benefit to 
poor communities, or for exam- 
ple that the borrowing govern- 
ment charges appropriate fees 
to trucks to limit environmen- 
tal damage. 

Most sensitive is a demand 
by donor countries that loans 
be linked to “good gover- 
nance" -a phrase with politi- 
cal overtones which alarm 
many borrowing countries, 
particularly those with memo- 
ries of past colonialism. 

Mr Gunther Schulz, an ADB 
vice-president, says: “We feel 
as a bank that we cm only use 
this term in an economic 
context, not a political con- 
text.” 

ADB officials concede, how- 


ever, that not all donor coun- 
tries agree with this interpreta- 
tion. “How can we judge 
human rights in a country?" 
asked one. “We are not 
Amnesty International. We do 
not have the tools." 

Mr PJL Lahiri, Indian execu- 
tive director of the bank, said 
India, while supporting the 
capital Increase, had reserva- 
tions about its linkage to pol- 
icy and operational guidelines. 

India and China also feel 
that if a high proportion of 
ordinary ADB lending is to be 
devoted to social sector con- 
cerns. then they - the borrow- 
ing countries with social prob- 
lems on the biggest scale 
- should have access to conces- 
sional loans from the Asian 
Development Fund which are 
naturally targeted at such 
problems. India and China are 
denied access to the ADF on 
the grounds that their sheer 
size would swamp the hind’s 
resources. 

The changes in policy take 
place just as the ADB is to any 
case tightening up its practices 
so that loans are better pre- 
pared and monitored. The bank 
has admitted that It suffered 
from an "approvals culture” to 


which the primary concern 
was to pump out loans rather 
than the quality of pro- 
jects - though it does not feel 
the performance record of pro- 
jects it has financed is any 
worse than that of other simi- 
lar lenders. 

ABB executives insist the 
bank still does have a valuable 
role to play. Mr Sato told the 
annual meeting yesterday the 
bank's regional presence acts 
an an incentive to others "to 
participate in a broad-based 
portfolio of investment for sus- 
tainable development”. 

Mr Schulz said the bank will 
be much more selective in 
future lending and that it 
should not compete with the 
private sector. He said the 
hank could act as a catalyst by 
taking small stakes to, for 
example, big infrastructural 
projects, and could also assist 
longer-term development by 
financing education and 
health. 

Donor countries will bo 
closely watching the ADB over 
the next two years as they dis- 
cuss the next replenishment of 
the ADF -negotiations which, 
given the present debate, 
promise to be difficult 


By M orv yn da Sttva tn 
Colombo and Stefan Wagstyt 
in New Oeffif 

Sri Lanka’s economy grew 6.9 
per cent last year, despite the 
turmoil caused by the assassi- 
nation of President Kanastoghe 
Ptemadasa and the continuing 
civil war in the north, an offi- 
cial report released this week 
says. 

The country saw the highest 
growth rate since 1978, the 
report published by the Central 
Bank of Sri Lanka shows. 
Growth was fuelled mainly by 
a recovery in agriculture and a 
24 per cent increase to invest- 
ment 

The report comes amid 
mounting concern about pros- 
pects for this year. The ruling 
United National party, prepar- 
ing for presidential elections to 
late 1994 and a general election 
early next year, suffered its 
first serious defeat in 17 years 
to provincial polls earlier this 
year. 

Reacting to criticism from 
within his party. President DJ3 
Wijetunga has launched a pop- 
ulist programme of tax cuts 
and hand-outs which could 


strain the government's 
resources. Meanwhile, the Sri 
Lanka Freedom party, the 
main opposition, has been 
gathering support at rallies, 
notably a May Day rally 
attended by 200,000 in Col- 
ombo. 

The Colombo Stock 
Exchange’s all-share index, 
which rose 62 per cent last 
year, has fallen rapidly this 
year, with further Sharp fells 
this week. The ail-share index 
lost 4&24 yesterday, felting to 
1,002.61 for a two-day loss of 8.7 
percent 

The report says the inflow of 
foreign capital soared 47 per 
cent to SDR490m (£466.SWX 
taking accumulated foreign 
assets to SDRL 5 &H to Decem- 
ber 1993, as foreign fond man- 
agers poured money into the 
Colombo Stock Exchange. 

Foreign direct Investment 
picked up, notably in Colombo 
property. Remittances fit® Sri 
Lankans working overseas’rope 
17 per cent to SDR4S4m- 
Expcrts were SDRa.lto'-and 
imports SDRZBbn. f - 

Inflation rose slightly to U-7 
Per cent, due partly fcrlilSb® 
defence costs to the north. 


Mr Edouard Bahadur, toe French prime 
minister, yesterday stepped up France's drive 
to enter Asian markets by vaunting what 
his country had to offer Asia in political, aid 
and commercial terms, David Buchan reports 
from Nice. 

Opening the annual meeting of the Asian 
Development Bank in Nice, the French premier 
expressed his hope for Europe generally to 
strengthen its ties with Asia, hut then homed 
in on French export specialties in 
telecommunications, transport and energy, 


citing Sooth Korea’s recent decision to buy 
the French-designed TGV train. 

Mr BaOadur urged ADB member countries 
to join, and play a foil role in, the new World 
Trade Organisation which France had pushed 
for to replace the Gatt organisation. 

Welcoming the effort that “most” Asian 
countries had made in the Uruguay Bound 
to liberalise their trade, he hoped all Asia 
would see the need to reciprocate trade 
concessions made by otters, as reciprocity 
was the only basis for "lasting agreements”. 


May 22 - discussion of the 
ADB’s function continues to 




i 










_FINANC1AX TIMES WEDNESDAY MAY 4 1994 


M. . 


on 

obs 




[1 of 
tice 


■2; * 


■onom: 

9 % 


NEWS: INTERNATIONAL 


Committee urges increased black participation in stockbroking community 

Johannesburg to relax market access restrictions 


% Mark Suzman ^Johannesburg 

gfe Jq faannesbarg Stock Exchange 
; ^®6rday announced its inbaitig p m 
.relax restrictions on foreign partkd- 
Wtfon and ownership of brokerages, 
mmw corporate membership, and 

lower barriers to entry for first-time 
investors, especially blacks. 

. TJe exchange is the , 11 th biggest 
mthfi world by market capitaHsa- 
ton with a- value of some UTObn. 
The proposals are part of the find- 
pga or a sab-committee that had 
been commissioned two years a go to 
“advise on how the JSE should be 

structured as South Africa enters a 

new era.", 

"The inquiry was prompted both by 
a.need to Increase the efficiency and 


accessibility of the exchange in a 
time of political flux and address 
pressure from institutions, such as 
me rchant banks, for the Tight to deal 
on the market 

The committee urges the encour- 
aging of wider share ownership 
among the black community, promo- 
ting small business and emerging 
black entrepreneurs, the expansion 
of possible channels for black 
savings in the market, and increased 
black participation in the stockbrok- 
ing community. 

The JSE proposes easing access to 
the exchange for small and medium- 
size black companies through a 
restructuring of the largely mori- 
bund local venture capital market as 
well as introducing a new Mass of 


members of the exchange to make 
market entry simpler. 

Operational questions addressed 
by the report centred on whether to 
permit corporate members, whether 
to allow negotiated commissions, 
and whether to switch from the cur- 
rent single trading capacity, where 
brokers act on behalf of buyers and 
sellers, to dual capacity trading, 
where brokers can act as principal 
as well as agent Although divided, 
the majority report of the committee 
decided that a London style, immedi- 
ate "Big Bang” was not desirable for 
Johannesburg and that “phased 
implementation” of deregulation 
would be preferable. 

It decided to retain fixed commis- 
sions at a slightly lower basic rate. 


but allow for negotiation on commis- 
sions on trades over R3m, On corpo- 
rate memberships, it suggests that 
initially up to 30 per cent of a brok- 
ing firm may be sold to non-stock- 
brokers, with the proportion possi- 
bly expanding at a later date. 

As the report also recommends 
lifting the restriction on South Afri- 
can citizens becoming brokers, this 
opens the door for foreign ownership 
of broking firms. Several local bro- 
kers are already sounding out pro- 
spective international partners. 

"There is a great deal of interest 
among the foreign community in 
increasing their involvement on the 
exchange," admits Mr Roy Ander- 
sen, JSE president, who described 
the proposals as an “elegant solu- 


tion” that would "level the playing 
field between brokers and bankers 
and allow the process of evolution 
without disruption.” 

On the more contentions debate 
over trading, a majority view 
decided to retain the current single 
capacity so as to prevent possible 
abuses and price manipulation. 
South Africa's banking sector is 
largely controlled by conglomerates 
which have significant industrial 
interests as weQ, thus opening up 
potential conflicts of interest 

However, the report acknowledged 
that, were South Africa’s restrictive 
exchange controls ever lifted as the 
committee favours, a shift to dual 
trading capacity in the broader 
global market would be inevitable. 


The report also blames the foreign 
currency controls for the problem of 
market illiquidity - annual turnover 
currently amounts to only around 7 
per cent of market capitalisation - 
but suggests that the abolition of the 
Marketable Securities Tax, currently 
levied at 1 per cent of transactions, 
could also help address the problem. 

The recommendations have to be 
passed on to the new parliament and 
then legislated before they take 
effect Among stockbrokers, the gen- 
eral reaction was favourable, with 
some seeing it as a pre-emptive 
strike against possible action by the 
new government “All in all it is 
good news and for better than hav- 
ing it imposed by an external force,” 
said one dealer. 


Mandela insists on fruits of liberation 

Patti Waldmeir and Mark Suzman ask whether the new South Africa can afford them 

M r Nelson. Mandela see the advancement of black vive". The programme sets display a touching faith in the that R3.83bn (£7l7m) will be ness community does not seen 

made one thing South Africans as the true goal ambitious goals - over the next powers of the new broom - and saved from defence spending. to be panicking over the plan 

fiDQUuAQtlV 1 ' ClCSr Of flf ffhp.raffnn cfnwr- fiw TOnT*Q ~ 1m hnm/m tiro tn a naivn holiaf m fha urillfn cr. It 7a qIoa nAffwa tkot lowmhr Iviimiioa fkn A kq, 


M r Nelson. Mandela 
made one ' thing 
abundantly clear 
when he claimed electoral vic- 
tory on Monday night that he 
will be moved by the spirit of 
reconciliation and compromise 
on all Issues bar one -his eco- 
nomic plan for uplifting Ma tc h 
South Africans, known as the 
Reconstruction and Develop- 
ment Programme (RDF): 

* The message of the man who 
will henceforth dominate 
South African politics was 
unambiguous: he will tolerate 
no apposition in implementing 
this programme; and anyone 
who disagrees with it need not 
bother entering the govern- 
ment of national unity.. 

His comments demonstrate 
the tact that Mr Mandela and 
his African National Congress 


Western 


see the advancement of black 
South Africans as the true goal 
of decades of liberation strug- 
gle. If political power cannot be 
used to ease black poverty, it is 
not worth having, they would 
argue. 

The foreword to the RDP 
puts the case even more cate- 
goticafly. “No political democ- 
racy can survive and nourish if 
‘ the mass of our people remain 
in poverty, without land, with- 
out- tangible prospects for a 
better Hfe.” . 

The ANC cannot -expect to 
remain In power unless it 
meets these basic needs. Mr 
Jay Naidop, who may be 
appointed to head a special 
ministry charged with imple- 
menting the programme, says 
its objectives most be met or 
“none of us is going to sur- 


vive”. The programme sets 
ambitious goals - over the next 
five years - im homes are to 
be built, 2.5m houses electri- 
fied. clean water, sanitation 
and health care provided for 
all But it also includes a com- 
mitment to fiscal discipline 
and the need to maintain 
macro-economic balance. 

“We must finance the RDP In 
ways that do not cause undue 
inflation or balance of pay- 
ments difficulties," it says, 
adding that “the vast bulk of 
the RDP wifi be financed by 
existing resources organised, 
rationalised and directed 
within R D P guidefines”. 

But the ANC’s plans for 
“increasing the efficiency of 
consumption expenditure and 
improving the revenue recov- 
ery capacities of government* 1 


prosper. 


Mr Hernus BSaW, wf*h r ’teill 




erhCs&e prtmhho, 
most money . m any postapfirt- . 
held economic boom will be.. 
attracted to. his administration; 
Reuter reports trom Cape; 
Town.- - s; : 

. Mr KrieL Jaw. and order mire 
ister in the the outgamg whita 
parliament, in an biter- ' 

view that mvestarewoulft be 
drawn to the Cape l^ hfoWBr 
ndtment to law and order and 
by the white-led HP’s commit- .' 
meat to a free market^--.- 
“People will invest where 
they feel their property and 
profits are safe,” said Mr KrieL - 
who is. likely to be the poly 
white provincial premier. ' 

Mr Kriel dismissed specula- 
tion that the Cape could 
become a white homeland or 
voBcstaat, hut he said investors 
would be drawn by the stabil- 
ity of NP_ rule - following 
. the repeal ’ of anti-apartheid 
sanctions that . deepened 1 the 
country's four-year recession. 

Economic analysts said, how- 
ever, that growth would be doe 
to the natural, advantages of 
the Cape, Mr David Bridgman, 
of Wesgro, a regional economic 
initiative, said the Cape was 
.already the country’s most, 
a tt rac ti ve venue for new manu- 




Heraps Kriel, victorious National party candidate to be premier 
oTWestemCape, fe congratulated by a-caOeague ap 


MMiuiui,-.- — , 

“There is a threat - ana 
it would be very bad news - 
that we could face a race with 


the National party going all 
out to maka the Western Cape 
work and the ANC going all 
out to prove it a disaster,” be 
saW. , 

“There is already a percep- 
tion of the C&pe as being high 
oh lifestyle add low on -vio- 
lence, which is attracting a lot 
of people.” 

Mr Rob Lee, Board of Execu- 
tors portfolio manager, said Mr 
Kriel would have only limited 
powers to put the Western: 
Cape mi a different economic 


News service withdrawn after item is dropped 

Malaysia in row with BBC 


By Kfaran Cooke 

foKuate Lumpur 

Malaysia, which in late 
February toposed i, toon 
giving government copiractsto 
British.' companies toUowtag 
u^flattering i^orts aho^th®- 
country and Prime 
Mahathir Mohamad m toe Brit- 
ish press, has now becme 
‘involved in an argnnjent with 
■ the BBC about its TV news 


Satellite transmissions are 
Illegal In Malaysia but since 
the beginning of March the 
BBC has been supplying Radio 
Televisyen Malaysia (RTM), 
the local state run broadcast- 
ing service, with a dally news 
programme. 

Last weekend the BBC with- 
drew the service, saying RTM 


hews bulletins be run in foil 
and not censored. At issue is 
an RTM dedston to drop a BBC 


* 

■%> 






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atfan iy«tan woridwftf* and 

bee In 1394 wSliwhip**. 


.TbcaaawwiB 


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. imUbwSWBOMM.BWW* 
S tmm» oa 8357,83 
5 fw-wiM®* 5 


display a touching faith in the 
powers of the new broom - and 
a naive belief in the willing- 
ness of government to cut 
defence spending. 

Mr Naidoo expects a 3 per 
cent annual rise in the produc- 
tivity of the civil service. But 
the ANCs agreement not to 
sack white civil servants in 
large numbers, coupled with 
its commitment to promote 
blacks through affirmative 
action, may, conversely, lead 
to a rise in the cost of the 
public service. 

And with nine new provin- 
cial administrations set up 
under the constitution and a 
host of new parastatal bodies 
created by the RDP itself, it is 
hard to share the ANCs opti- 
mism about productivity gains. 
So too is it difficult to believe 


that R3.83bn (£71 7 m) will be 
saved from defence spending. 

It is also worth noting that 
though the plan cites the need 
for fiscal discipline, a commit- 
ment to keep the budget deficit 
at 6 per cent of gross domestic 
product, included in early 
drafts, was removed from the 
final plan. 

(Vgtrng r the plan Is difficult: 
the ANC says it has budgeted 
R39bn for the five-year pro- 
gramme. The National party 
claims the true cost will be 
RTObn in the first year alone, 
rising to more than RBOObn for 
the fid! five years. Given that 
the financing of the RDP is at 
best vague, at worst unrealis- 
tic, only time will tell which 
will turn out to be (he true 
figure. 

Still, the South African busi- 


ness community does not seem 
to be panicking over the plan, 
largely because the ANC has 
shown such eagerness to con- 
sult widely on the programme 
and seek the commitment of 
business at every stage. 

As economist Mr Rudolf 
Gouws of Rand Merchant Bank 
pniwta out, the final draft has 
removed many of the “rough 
edges" of earlier drafts, malting 
it more difficult to criticise. 
And the original heavily “stat- 
ist" iwnphasla of the draft hftfl 
been substantially softened, 
with ANC officials keen to play 
up the party’s corpora list 
witewtinnn, rather than its anti- 
capitalist past. 

The real test will come if an 
ANC government must choose 
between either implementing 
the plan or raising taxes and 



SOUTH 

AFRICAN 

ELECTION 

RESULTS* 

Electorate; 

23m 



Votes 

% of 
total 

African 

National 
Congress (ANC) 

7.42m 

62AK 

National 

Party NP) 

2.62m 

22.1% 

Inkatha 

Freedom 

Party (IFF) 

Ohfim 

83% 

Freedom 

Front (FF) 

0.32m 

2.7% 

Democratic 

Party (DP) 

0.21m 

1.7% 

Pan Africanist 
Congress (PAC) 

0.15m 

1.3% 


* ftoMwal mum for no Natand Aaao mty 
baaed on IZOfm kj*k Counted out of tho 


printing money. 

For the moment, its inten- 
tions are virtuous; they will be 
sorely tested by a spell in 
power. 


US steps 
up peace 
efforts on 
Rwanda 


By George Graham 
In Washington 

The US has stepped up its 
involvement in efforts to end 
the fighting in Rwanda with 
the despatch of two senior dip- 
lomats to the region and a 
promise of $15m (£10.2m) of 
humanitarian aid. 

Mr John Shattuck, assistant 
secretary of state for human 
rights, and Mr David Rawson, 
former US ambassador in 
Kigali, were due to set out yes- 
terday for talks in neighbour- 
ing Uganda, Tanzania and 
Burundi. 

But US officials said they 
were working mostly through 
the United Nations, adding 
that US involvement might 
extend to providing money or 
logistical support for a UN 
force though not to despatch of 
US troops. 

State Department officials 
added that the US was pushing 
for the UN Security Council to 
impose an arms embargo an 
Rwanda and had approached 
other countries in the region in 
an effort to stop the flow of 
weapons into the country. 

Reuter adds from Nairobi: 
Rebels of the Rwanda Patriotic 
Front foiled to appear yester- 
day for peace talks in the 
northern Tanzanian town of 
Arusha. A delegation from a 
rump government which now 
controls barely a third of 
Rwanda had already arrived in 
Arusha. 

However, Mir Eman uel Nda- 
him, RPF militar y spokesman, 
said the RPF was prepared to 
talk to elements of the armed 
forces in an attempt to halt the 

killing s. 


Business Booster 






course from the policy adopted 
by the central government. 
However, “the N ati onal party 
will want to make the Cape its 
showcase, so they’ll put every- 
thing Jnto w ak i ng it look bet- 
ter than the rest of the coun- 
try" . 

He said. South Africa’s post- 
apartheid growth would be 
fUolled by tourism and manu- 
factured exports and the West- 
ern Cape was favourably 
placed to take advantage of 
both. 


news item which showed 
recent labour unrest involving 
thousands of people in the 
Tf|Hrtnegifln island of Sumatra. 

An official at Malaysia’s 
information ministry said the 
item had been dropped so as 
not to Jeopardise relations with 

« ■* ■ . j — j u. _ vmn 


of “blatantly disregarding 
Asian sensitivities”. 

In place of the BBC news 
programme viewers win now. 
watch American wrestling. 


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FINANCIAL TIMES WEDNESDAY MAY 4- 1994 


8 

NEWS: UK 


Major under pressure amid split over Europe 


By Philip Stephens, 

PofitfcaJ Editor 

Mir John Major yesterday rebuked 
Ur Michael Portillo, the Treasury 
chief secretary, as cabinet tendons 
over Europe and the party leader* 
ship left the government in visible 
disarray on the eve of tomorrow's 
local elections. 

Facing a fierce opposition attach 
in the House of Commons, the prime 
minister denied the cabinet was split 
over whether Britain should partici- 
pate in a single currency during the 


□ext stage of European integration. 

His response coincided with calls 
from a procession of senior ministers 
led by Mr Kenneth Clarke, the chan- 
cellor, for the party to end its fac- 
tional infighting. 

The ministers sought to dismiss a 
call from a senior backbencher, Mr 
David Evans, for large-scale cabinet 
sackings and the replacement of Sir 
Norman Fowler as party chairman. 

But the damage-limitation exercise 
did little to dispel the speculation 
among Tory MPs that heavy defeats 
tomorrow and in the European elec- 


tions on June 9 would seriously 
Imperil Mr Moor’s leadership. 

Amid alarm among party manag- 
ers about the threat of an electoral 
catastrophe, Mr Portillo said that he 
had not broken cabinet in voicing 
opposition to a single currency. 

He told a Westminster press con- 
ference that he fully backed the gov- 
ernment’s stance that it will decide 
whether sterling should be sub- 
sumed by a single curreucy only if 
and when the occasion arose. 
Remarks he made at the weekend 
had been misre ported. 


Turning to the leadership, Mr Por- 
tillo. the emerging candidate of the 
right in any contest, insisted he did 
not expect any challenge to Mr 
Major he was not encouraging 
friends to campaign on his behalf 
But party insiders did little to dis- 
guise Mr Major’s anger at the way 
Mr Portillo had reopened the Euro- 
pean debate in the last critical days 
of the local elections campaign. Offi- 
cials said the chief secretary bad 
issued his clarifying statement on 
the direct instruction of the prime 
minister’s office. 


Mr Mayor's personal irritation was 
visible also when he told MPs that 
Mr Portillo had “made clear this 
morning that he hilly supports our 
policy on a single currency, a policy 
agreed by the whole Cabinet" 

Mr Clarks also distanced himself 
from his deputy with the equivocal 
comment: “Obviously 1 just expect 
and assume that my Cabinet col- 
leagues will support a policy which 
Parliament will decide when the 
issue arises. Michael always has 
done, so far as 1 am aware.” 

But ministers on the Eurosceptic 


wing of the party backed the chief 
secretary. Mr Peter Ulley, the social 
services secretary and another prom- 
inent cabinet sceptic, was among 
those said to be angered at the sug- 
gestion that senior ministers were 
not allowed to voice their opinions. 

hi the Commons Mr John Smith, 
the Labour leader, ridiculed the 
prime minister tar failing to assert 
his authority. 

Mr Smith charged that “If you 
cannot control your own Cabinet, is 
it any wonder that we doubt that 
you can run the country”. 


Unions 

lead 

pensions 

protest 

Trade unionists representing a 
million members of the Local 
Government Superannuation 
Scheme currently employed, 
and a million local authority 
pensioners, yesterday lobbied 
parliament over government 
moves which they claim 
threaten the future of the 
scheme, Jim Kelly writes. 

Outside parliament they 
gathered beneath an IS ft 
inflatable model of Robert 
Maxwell with the banner "Min- 
isters - Don’t do a Maxwell on 
our pensions' before lobbying 
MPS of all parties to demand 
protection for their members' 
pension arrangements. 

Mr Bill Morris, general sec- 
retary of the TGWU transport 
onion, said: "The government 
aim is to force increasing num- 
bers out and then break up the 
Local Government Superannu- 
ation Scheme. First the per- 
sonal pensions disaster and 
now this attack on the LGSS 
threaten poverty in old age for 
a generation of pensioners in 
the 21st century. 1 ' 

Unison, the public services 
onion, the GMB general union, 
and the TGWU are concerned 
abont deregulation of local 
authority pensions and say it 
could lead to reduced benefits 
for members. Unison’s assis- 
tant general secretary, Mr 
Roger Poole, said: “This gov- 
ernment's punitive policies 
have turned the nation's pen- 
sioners into paupers.” 

Plchrac Tim* tfcmpfrwa 



The squabble becomes 
Tories’ single currency 


By Philip Stephens 

The latest ministerial 
in-Bghting abont a decision 
that a future British govern- 
ment may or may not have to 
take in the late 1990s provoked 
exasperation and dismay 
among the level-headed on the 
Tory benches yesterday. 

Bat it is a measure of the 
depths of the fundamental 
Tory divide on Europe that Mir 
Michael Portillo's off-the-cuff 
dismissal at the weekend of a 
single European currency 
could provoke such disarray. 

The chief secretary's antipa- 
thy to European Monetary 
Union is well known. His Euro- 
scepticism has propelled him 
within a few weeks into the 
position of the leading candi- 
date of the right in the event 
that Mr John Major is forced 
from office. 

But in articulating in public 


what he and his right-wing 
cabinet colleagues have long 
said in private - that a single 
currency would fe tally under- 
mine British sovereignty - Mr 
Portillo broke a care full y - 
constructed cabinet truce. 

The official government 
stance on whether or not the 
government would participate 
in a single currency was set 
out in a European elections 
campaign document last 
month. It was a fudge, deliber- 
ately designed to prevent the 
sort of row which has broken 
out in the last few days. 

The document states that 
because of the opt-out negoti- 
ated by Mr John Major at 
Maastricht. Britain retains the 
right to make its own decision 
on whether or not to take on 
the obligations leading to a sin- 
gle currency far Europe. 

It adds: “That will be the 
subject of a separate decision 


by our national parliament at 
Westminster, if and when that 
decision ever hag to be taken". 
And in the meantime Britain, 
will not rejoin the European 
exchange rate mechanism 
within the “foreseeable 
future". 

Put another way, the for- 
mula says there is no need now 
for the Tory party to tear itself 
apart over issues which will 
not confront it at least daring 
the next several years and, per- 
haps, not at alL 

Mr Portillo yesterday fell in 
again behind that neutral for- 
mula. But on the other ride of 
the European fence, Mr Ken- 
neth Clarke, the chancellor, 
made no secret of the feet that 
he could envisage supporting a 
single currency. 

Esoteric though it may seem 
to the voters, the split shows 
uo sign of going away before 
the European elections. 


Mercury faxes under fire 


By Alan Cane 

A fax bureau says that 
Mercury, the UK’s second- 
largest telecommunications 
carrier, overcharged it by up to 
£100,000 in 12 months by trans- 
mitting its Taxes too slowly. 
The bureau is preparing a for- 
mal complaint to Oftei, the 
industry watchdog. 

Com wave, the UK subsidiary 
of Swiss-based company Corn- 
wave Communications, said 
network providers do not have 
to comply with regulatory 


standards while manufactur- 
ers' equipment must pass strin- 
gent standards before it can be 
connected to the network. 

Oftei agreed this week that 
public telecommunications 
operators were not obliged to 
guarantee that fax calls would 
be successful or completed at 
any particular speed. 

Com ware said that faxes 
sent on Mercury lines took an 
average of 18 per cent more 
time than faxes on British 
Telecommunications lines. 
Com wave has switched to 


another network operator for 
its fax business. 

Its global fax broadcast ser- 
vice is used by customers such 
as McGraw Hill, the US pub- 
lisher, Swiss Bank and British 
Alcan to distribute time- 
critical information. 

The cause of the problem, 
which Mercury does not deny, 
was a mismatch between 
Com wave’s fax machines and a 
piece of Mercury equipment 
Mercury, while not admit- 
ting liability, has agreed to 
credit Com wave with £20,000. 


Lloyd’s 

presents 

reform 

package 

8y Richard Lapper 

Lloyd's of London yesterday 
paved the way for a further 
transformation of its capital 
base, providing far syndicates 
backed by one single corporate 
investor, effectively insurance 
companies, to operate at the 
market 

A package of reforms 
strengthens the rights of the 
individual Names, whose 
assets support the market, and 
suggests ways in which those 
Names who continue to trade 
may be able to sell the capital 
value or goodwill attached to 
theta- syndicate participations. 

“The proposals In this report 
piaintain a programme of radi- 
cal reform which we initiated 
a year ago,” said Mr David 
Rowland, chairman. Lloyd's 
introduced £800m In new cor- 
porate capital last year. 

Mr Peter Middleton, chief 
executive, said Lloyd’s would 
consult on its proposals for 
“transferring or realising 
value” for syndicate participa- 
tions and that the changes 
“will have a profound and pos- 
itive Impact” 

The market does not intend 
to change rules limiting the 
amount of capital corporate 
Investors can supply to syndi- 
cates. Single corporate Nantes 
can supply no more than 25 
per cent of a syndicate's capac- 
ity - the amount of premiums 
It can accept - while overall 
syndicates can obtain no more 
than 50 per cent of theta* capac- 
ity from corporate Names. 

However Sir Rowland said 
the council, the Lloyd's gov- 
erning body, could make 
exceptions and conceded that 
“It Is inevitable that at some 
point In the future we will 
revisit these regulations.” 

Lloyd's said - if introduced 
- single corporate members 
would be able to adopt annual 
accounting - in contrast to the 
three year system deployed by 
existing syndicates. 

Hr Robert Hiscox, deputy 
chairman and a keen sup- 
porter of the idea, said the 
new type of syndicate would 
allow managers “complete sta- 
bility of capital, and to retain 
earnings and plan Jong-term.” 


Tuilm, Ga/ ili 1 Kraiu-r impuris. inm->fiuri>. -iiiht- 

utnl <lf»rrilu<f<*» ini/itml «:««. sill iivit I rani-,*. 

T,« •!«• tlii-,. lUiy. ik* l-'ruin a r roll*, mi tin* fimr 

iiuijur mi), pliers m 

Kuriifn*: Kiissiu. Aigrrin. iVWwmj 

uml i In- i\,-ilu-rloiiil». wliirli pm viili* "0% 

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1 -rp Gaz 

de France, 
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|J»»- juli am 1 uni- 


i/f i in- wurlil - 


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ui«’r Milli a rh-nii. r,-oiltiiili,-:|l 


ami minim, mcrgi tnnreo. 





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AioaMl Ablhom. 54, nn la Beeffe 75008 Parte, fmm 


FINANCIAL TIMES WEDNESDAY MAY 4 1994 


* 


NEWS: UK 


Bank acknowledges delay to Crest system 

_ - ...... n<mir k nnt in ests. Also, the Bank said yesterdaj 


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By Nonna .Cohan, 
tevestments Correspondent. 

The Bank of England yesterday 
acknowledged for the first time that 
its timetable lor speeding share settle* 
xnfflit in the City will not be met It 
said the second phase of project to 
tatroduce paperless settlement will be 
delayed, they hope by no more than 
six months. - 

The Bank also indicated that the 
cost of the new system. Crest, may be 
higher than earlier believed. It 
announ c ed a “cap” oh Crest’s costs of 


wsm, compared with its initial cost 
estimate of £20m to £30nu Crest is 
intended to replace the London Stock 
Exchange’s failed Taurus system. 

However the Stock Exchange's 
.request to be a significant minority 
shareholder in. Crest was rebuffed, 
although the Bank grid that hut that 
the Exchange could still be chosen as 
the ^operator" of Crest • 

“It is so m e thing there are a lot of 
cogent arguments for," arid Mr E'en 
Kent, associate director of the Bank of 
England who Is spearheading the 
Crest project. 


The operation of Crest, set for 1998, 
required that the City greatly reduce 
the number of days between striking 
a bargain and either receiving the 
shares or pairing for them. From July 
18. share transactions win settle 10 
days after bargains are struck, but the 
Bap ic had planned to move to a five- 
day gap from next January. It will 
decide by year end when “Trade Date 
Phis Five* should be phased in. 

“1 expect it will be in the first half 
of 1995. If it Is any later I will be very 
disappointed,” said Mr Kent 
Yesterday, the Exchange said it 


“understands that the Bank is not in 
a position to offer participation in the 
ownership structure on the basis of a 
significant minority interest, as pro- 
posed.” But it will be a member of a 
consultative committee advising the 
Bank-appointed board and will con- 
sider whether a small shareholding is 
still appropriate. 

While large Exchange members 
have supported its application, fund 
managers and bankers have been con- 
cerned that a large stake would give 
it undue influenc e over Crest which it 
could use to advance its own inter- 


ests. Also, the Bank said yesterday 
that 50 City institutions have signed 
up to become Crest shareholders and 
it is extending the deadline for addi- 
tional shareholders by one month. 

While these shareholders will not 
have a direct vote in the ultimate 
design of Crest, the Bank of England 
will appoint a “shadow board” of rep- 
resentatives of some shareholder com- 
panies who will make key decisions. 
The Bank will not be legally obligated 
to follow the wishes of the shadow 
board but will be minded to abide by 
its re commenda tions. 


Money supply 
growth eases 
fears over tax 


By Peter Norman, 

Economics CcHtor 

Strong money supply growth 
last month and a sharp jump 
in banks' mortgage lending in 
March yesterday suggested 
that Britain's consumer-led 
recovery is shrugging off the. 
April tax increases. 

News that MO, the narrow 
measure of money supply, 
grew by a larger than expected 
seasonally adjusted 6.2 per cent - 
in the year to the end of April, 
strengthened market expecta- 
tions that Mr Kenneth Clarke, 
-the chancellor, and Mr Eddie 
George, the. Bank of England 
governor, would deckle against 
cutting bank- base rates from' 

5J25 per flprrirjrt . thrir mo nthly 

monetary meeting today. 

A decision' to change Tates, 
was already considered highly 
unlikely in view uf tomorrow's 
local -elections, receto indica- 
tors of steady first quarter eco- 
;uamm-growtii and risingyields 
for UK government bonds. . 

Yesterdays .figures for MQ, 
normally regarded as' Ta' good 
guide to retail sales, provided- 
the first statistical evidence 
that the tax increases have not 
■ deterred UK consumer s. ^T hET 
figures showed there is quite a= 
lot df momentum in consumer 1 
. demand*” said Mr Adrfon : Cpo-- 
per, UK economist at James 
Capel & Co, the stock. tankers.; 

According in the Bank' -of 
England, MQ, Which consists 


mainly of notes and coins in 
circulation, increased by a sea- 
sonally adjusted L9 per cent in 
April alone, the strongest 
monthly increase for 13 years. 
MO growth in the year to April 
was well above the &8 per cent 
increase expected by the City 
and 5J5.per cent growth in the 
year to March. 

Buoyant mortgage lending 
figures from Britain's eight 
biggest banks provided further 
evidence of UK consumers' 
resilience. * I 

Although the British Bank- . 
. era* Association said much of a 
sharp 46 per cent rise in gross 
mortgage tending to £L55bn in 
March from £L06bn inFebra- 
ary was . seasonal, Lord 
- Inchyra. the- . association's 
director general, said a sharp 
rise in mortgage approvals in 
March suggested that “impend- 
ing tax rises - have fold little 
effect cm buyers* confidence so 
far”.’ Approvals- in. March 
Increased by 38 per cent com- 
. pared with February to '£L68tm 
and were nearly double Janu- 
ary's seasonally depressed 

leveL : - . ' •• , 

■ '.Meanwhile, provisional fig- 
ures from the Confederation of 
r British Industry : provided 
mixed- signals on pay awards. 
-The "'OBI’*: Fay Databank 
showed that manufacturing 
; awards averaged2J7 per cent in 
the first quarter, slightly up an 
: the £5 per cent recorded in the 
three months to February. ■: 


Britain in brief 

UK business 
failures 
even out 

The number of UK business 
failures appears to have 
plateaued out at about half 
the level of 1992, according 
to a survey published 
yesterday by Touche Boss, the 
accountants. 

However, the number of 
receiverships and 
administ rations, which 
totalled about 2,500 in the last 
year, is running at well above 
pre-recession levels. In 1989, 
for it wfamiw, there were 1,500 


tunnel exhibition at the Science Museum in London yesterday 


No dear pattern has yet 
emerged in the monthly 
receivership figures this year. 
After two months when the 
number of receiverships 
increased, the number of 
business failures dropped by 
35 per cent in April to 171. 

The average monthly 
i nmm h er of failures in the first 
four months of 1994 was 211, 
little lower than the 220 
average recorded over the last 
12 months. 

Touche Boss said that the 
recovery from recession 
i^ntiwiid to be slow and 
cautious. 

Post chief 
lobbied MPs 


tunnel 6 30 times 


By Charles Batchelor, 

Transport Correspondent 

Travelling through the 
rhurmel ttramel should be at 

least 30 times safer than travel- 
ling by train above ground, 
according to a safety mannai 
prepared for the £lDbn project 
Eurotunnel, which will run 
trains through the tunnel, yes- 
terday unveiled a 1,000-page 
analysis of risks and the proce- 
dures to reduce them . 

The tunnel “safety case ” 

Ttwrif a gumma r y of documents 

which would fin two ward- 
robes^ Is due to be published 


within the next two weeks. It 
iHftntififta more than 50 possi- 
ble hazar ds including fires, 
derailments, obstructions on 
Hip line and earthquakes. 

After four months of test in g 
of the tunnel procedures, 
frnhhidtog round-the-clock oper- 
ation of a full train service, 
Eurotunnel hopes to obtain 

safety clearance to start freight 

services early next week. The 
official opening of the t unn el is 
on Friday May 6. 

Eurotunnel initially set itself 
a target that for passengers 
travelling without their cars 
the chance of being killed. 


should not exceed 4.7 per 100 
millinn journeys through the 
tunnel while for passengers 
with their cars the risk of 
d ea th should not exceed 5.6 per 
100m journeys. This was based 
on the safety performance of 
British Rail and the french 
railways SNCF. 

But the real risk to passen- 
gers without cars is 50 times 
lower than the criteria set and 
for passengers with cars 30 
times lower because of the 
safety measures adopted. 

These include special door 
locks; separate running tun- 
nels mid a service tunnel; auto- 


matic train protecting devices 
and a powerful ventilation sys- 
tem to remove smoke. 

• A decision on the site of 
additional stations on the 
£2.7bn Channel tunnel rail link 
is expected within the next 
four weeks, said Mr John 
a r mitt., chief executive of 
Union Railway, designer of the 
route, yesterday- 

The government will choose 
between of one or more of 
three sites: Stratford in east 
London, uafeham in Essex and 
Ebbsfleet in Kent, in addition 
to the station being built at 
Ashford in Kent. 


Mr Bill Cockbum, chief 
executive of the Post Office, 
revealed yesterday that he has 
Lobbied more than 150 MPs 
as part of his campaign to 
secure commercial freedom 
from the government 

He also publicly spelt out 
for the first time detailed 
business plans which could 
only be put into operation if 
the corporation was privatised 
or given commercial freedom 
within the public sector. 

TTk plans include leasing 
some or all of the 16 trains 
owned by the Post Office; 
distribution of newspapers and 
handling private mail and 
parcels, hi total the measures 
could save the corporation tens 
of millions of pounds. 


Under current rules it is 
prevented by the Treasury 
from using surplus cash to 
invest in such bu si n e ss 
ventures. 

Mr Michael Heseltine, trade 
and industry secretary, has 
said there is a strong economic 
case for privatising the Royal 
Mail to give it commercial 
freedom. But he has yet to 
publish his department’s 22 
month-old review of the 
business. 

Westminster to 
launch review 

Westminster Council in 
central London is launching 
an independent review of 

whether its proposed Unitary 

Development Plan could have 
been drawn up as part of a 
gerrymandering exercise 
related to its controversial 
sales of council houses. 

The launch of the enquiry 
into the development plan is 
nearest the Conservative 
controlled council has come 
to admitting that the alleged 
gerrymandering exercise - 
supposedly planned to boost 
Conservative votes in eight 
mar g inal wards - may have 
extended beyond the council 
house sales to other activities 
Including the planning 
process. 

Earlier this year, .the district 
auditor, Mr John Magill, made 
a preliminary ruling that the 
"designated sales” of council 
houses in the late 1980's were 
unlawful and recommended 
♦h«t ten councillors and 
officers, including the then 
leader, Dame Shirley Porter, 
should be surcharged £2l.5m. 

Mr John Major, the prime 
minister, yesterday said the 
Westminster Conserv ative s, 
who have a slim majority, 
deserve to be re-elected. 


CORRECTION 

Cory 

Environmental 

Our use of a photograph of the 
Cory Environmental Pollution 
Services site at Mucking, 
F foavr to illustrate last Satur- 
day’s report on. the introduc- 
tion of new rules for the waste 
disposal industry does not 
imply that Cory is deficient, 
and it continues to operate 
tinder its existing licence as it 
meets the new rules. We apolo- 
gise for any embarrassment 
caused by use of the picture. 

' r'-'jy \ ■ y 


r 







FINANCIAL TIMES WEDNESDAY MAY 4 1994 


BUSINESS AND THE ENVIRONMENT 


T he wind Is blowing so 
hard that it is ail Brian 
Mahony can do to keep 
bis plans and maps straight 
We are deep in the English 
Lakeland fells looking across 
the Dnddon Valley at the 
wooded slopes of Hardknott 
The forest is one of the most 
sensitive of the many managed 
by Forest Enterprise, tbe 
operating' ana of the Forestry 
Commission. It covers the east 
flank of Barter Fell, a peak 
close to the central Scafell 
group which forms the 
backdrop to some of (be most 
dramatic scenery in the Lake 
District National Park. 

Mahony is Forest 
Enterprise’s district manager, 
and his papers contain plans 
to reshape the forest to take 
account of the growing 
environmental pressures 
which now have to be 
balanced against the 
traditional goal of timber 
production, ft was not always 
this way. 

Tbe Forestry Commission 
acquired this huge estate at 
the head of the Dnddon Valley 
In 1936. But before it coaid 
smother the area with trees, 
it was prevailed upon by the 
Council for the Protection of 
Rural England to sell off a big 
part of it, keeping only 
Hardknott for planting. 

The result is that much of 
tbe top of the valley remains 
unspoilt But Hardknott bears 
the marks of tbe 
production-driven planting 

practices of 30 years ago. Tbe 
1,400-acre forest is mostly fir, 
laid oat in orderly ranks with 
little regard for the contours 
of the surrounding landscape. 

However, half a century 
later. Hardknott Is now being 
harvested, and this gives 
Mahony an opportunity to 
remodel the forest He has two 
master plans. 

The first is the Telting plan. 
Rather than raze whole areas 
in angular shapes, the aim 
is to phase the felling in order 
to soften tbe outlines and 
introduce variety. 


A new look 
for an old 
forest 

David Lascelles discovers a 
woodland being remodelled 


The second is the restocking 
plan. Landscape designers 
have prepared a scheme to 
plant a greater variety of trees 
in groups which blend in with 
the line of the fell. 

Mahony ’s plans are a 
patchwork of coloured blobs 
representing different 
varieties. Spruce will continue 
to dominate the upper slopes 
because it is best suited to the 
cold, wet conditions there. Tbe 
middle slopes will have more 
larch and Scots pine with 
broad-leaved trees for the 
lower slopes. 

Forest Enterprise now has 
forest design plans for each 
of its woodlands, all based 
around “multiple purpose 
forestry*' which combines 
commercial forestry with the 
environment, conservation 
and recreational uses. 

Although tbe organisation 
would like Hardknott to be 
exemplary of its approach to 
forestry in a national park, 
it is not typical. “What we’re 
doing bere Is at tbe upper end 
of the spectrum because it’s 
a very special site,” says Geoff 
Hatfield, director of the north 
and east England region. 

The difficulty Is that while 
Forest Enterprise has become 
more environmentally aware, 
it is also coming under 
increasing pressure to operate 
commercially and transform 
its annual operating loss into 
a profit. This pressure would 
grow if die government 


considers privatising the 
Forestry Commission, which 
Is one of the options currently 
before ministers. 

The redesign of Hardknott 
forest will reduce its yield in 
the long tern because fewer 
trees will be planted, and a 
greater proportion trill be 
slow-growing hardwoods. 
Harvesting is also expensive 
there becanse felling is to be 
phased over 30 years, and the 
logs hauled down the Dnddon 
Valley's tiny lanes in specially 
designed lorries which can 
only manage 100 tonnes a 
week. And if the true 
Lakeland appearance of the 
forest is to be preserved, dry 
stone walls will have to be 
rebuilt and maintained, at 
heavy cost. 

“Would a private-sector 
company take so mach 
trouble?'* wonders Hatfield, 
rather implying that they 
would not. He also stresses 
the wide public access which 
the Forestry Commission 
grants to its woodlands, 
something which private 
owners might restrict 

Bat at the same time, be 
says that Forest Enterprise 
“does not pull its punches" 
in its quest for commercial 
viability. Costs have been 
sharply redneed, and much 
of the work is now contracted 
out to private firms. 

Efficiency is one reason why 
Forest Enterprise wiD 
continue its unpopular 


practice of planting trees in 
tidy rows at Hardknott 
because it wakes access easier 
and encour ag e s trees to grow 

to the required size and shape. 

Harvesting is done using 
highly efficient machines 
which can feu, strip and saw 
several dozen trees per hour, 

A few miles east of 
Hardknott lies Grizedale, the 
largest Lakeland forest, where 
Forest Enterprise has already 
gone some way to try to 
balance timber production 
with its environmental and 
leisure objectives. Tourists 
are encouraged to use the 
forest there is a visitor centre, 
and cyclists and walkers can 
use the trades and trails. 

AQ told, Forest Enterprise has 
11400 ba of land in the Lake 
District, and produces 75,000 
tonnes of timber a year, which 

makes it one of the biggest 
landowners and commercial 
operators in the national park. 
Hus pots a premium on good 
relations with the park 
authority. 

Alan Fisbwick, the park's 
awririant chief planning 
officer, says that Forest 
Enterprise's new approach 
based on forest design plans 
is a welcome development 
“We are involved at an early 
stage, which has enabled 
common objectives to be 
agreed," he says. 

Tony Juniper, forestry 
specialist at Friends of the 
Earth, agrees there has been 
“a dramatic change" in the 
Commission’s approach. “They 
juggle their various objectives 
much better Qian they did 10 
years ago," he says. 

But there is also concern 
in the Lake District park 
about tbe growing commercial 
pressures on the Forestry 
Commission, and tbe 
possibility of privatisation. 
These pressures, Fishwick 
says, “are bound to have an 
influence on what can be 
achieved, and we do have 
concerns about the scale and 
impact of dear felling, for 
example". 


A pplying the term 
“value-added" to 
waste may seem odd, 
bat it goes to the 
heart of a European plastics 
Industry initiative to use ordi- 
nary waste packaging for 
energy. 

The high energy value of 
plastics and paper usually dis- 
carded with the rest of the 
household rubbish can be 
exploited by using them as a 
fuel in a conventional power 
plant rather than a municipal 
! solid waste incinerator (MSW). 
The project's backers claim 
the process saves fossil fuel 
resources and reduces landfill 
requirements at a price that Is 
both environmentally and eco- 
nomically acceptable. 

Tests at plants In Sweden 
and Finland have shown 
the process is technically via- 
ble. Now the challenge will be 
persuading local authorities 
and power plants throughout 
Europe to adopt it 
If they do, as much as 30m 
tonnes or the 50m names of 
combustible packaging which 
Europe consumes every year 
could be used for power gener- 
ation. That is more than four 
times the current level, and 
would represent a saving of 
14m tonnes of oil worth £Ibn. 

The initiative is being pro- 
moted by tbe Association of 
Plastics Manufacturers in 
Europe (APME). with support 
from a number of plastics and 
packaging manufacturers and 
tbe Finnis h government 
Combustible used packaging, 
when converted into a fuel, has 
a higher energy value than 
peat wood or brown coal - 
plastic is, after all. made from 
ott. 

The basic product, refuse- 
derived fuel (RDF), Is munici- 
pal solid waste from which 
food, glass and metals have 
been removed. It has a net cal- 
orific value of 15 megqjoules 
per kilogram, compared with 
the 10 MJ/kg rating of ordinary 
m unicipal solid waste. Packag- 
ing-derived fuel (PDF) is a 
refined, drier, version of RDF, 


Is this an oasis in North Africa? Torrential 
i^citerfiNs in South America or the Great Wall 
of China? If this is your Fata Morgana take 
Swissair for real. Swissair, flying to more than 
11 0 dies^i n a t i 6 n s worldwide, takes you there 


Jime^i^rything. swissair 












j. .. K . ; . 









At fte Kauttua plant taste here shown that waste can be used as an attemathre foal wflhout Increasing 

Running on 


Christopher Brown-Humes on a plan to exploit 
the high energy value of waste packaging 


with a 20 MJ/kg calorific value. 

The idea is to use tbe pack- 
aging as a co-fuel, rather than 
on its own, because quantities 
of RDF and PDF are relatively 
limited and plants would prob- 
ably need to spend more an 
changing the combustion 
chamber and modifying flue- 
gas cleaning equipment if the 
proportion of RDF/PDF feed 
were to rise above 30 per cent 

“In most areas there will 
never be enough PDF to feed a 
plant. But there will be a 
power plant that is able to take 
all the PDF waste in an area as 
some 5 per cent to 20 per cent 
of its feed," says Martin Fran- 
kenhaeoser, a project manager 
In plastics and the environ- 
ment at Borealis Polymers. He 
says the technique brings 
energy from waste within the 
scope of small local authorities 
which usually do not have 
access to an MSW incinerator. 

At the Kauttua combined 
heat and power plant in Fin- 
land. RDF/PDF has been used 
as a substitute for coal in trials 
over the past year. The tests 
have demonstrated that pack- 
aging can be used as a substi- 
tute fuel without higher over- 
all emission levels and without 
damag in g equipment. 

Reduced coal use has cut sul- 
phur dioxide pollution; how- 
ever, the higher plastics con- 
tent has increased hydrogen 
chloride emissions. Chlorine Is 
present in substances such as 
PVC, and its corrosive power is 
the main reason that the com- 
bustion equipment is being so 
closely inspected for signs of 
damage. 

Supporters of RDF and PDF 
combustion say it fits in well 
with the broader recycling 
trend. 

According to Fred Mader, 


deputy director general of 
APME. combustion and. recycl- 
ing are different sedations to 
the problem of plastics waste, 
rather than alternatives. 

“Recycling can maximise the 
Envir onmental benefit of recov- 
ering plastics bottles and con- 
tainers. But there is no benefit 
from collecting, sorting and 
cleaning lightweight plastics 
films ," says Mader. 

One reason for believing the 
initiative has a future is the 
increasing political resistance 
to the burning of unsorted 
waste in municipal solid waste 
incinerators. Older MSW 

Would power 
plants be prepared 
to pay for waste 
packaging? 

plants have been condemned 
on both economic and environ- 
mental grounds. 

This bad led plastics indus- 
try experts to suggest that, in 
future, building plants capable 
of using RDF and PDF as a 
majority fuel may be more 
attractive than constructing 
additional MSW incineration 
capacity. But this applies only 
to densely populated areas 
where volume of supply could 
be assured. 

An important issue will be 
cost Kauttua has not had to 
make significant outlays 
because it has a suitable “flui- 
dised bed" boiler technology 
and because it already has a 
suitable feeding system, han- 
dling waste paper from a 
nearby mifl- 

Other power plants are likely 
to have to install a receiving 
area and feeding line for the 


material, at the very least But 
they could also have to make 
much, more substantial invest- 
ments, particularly if they do 
not have “fluidised bed” boil- 
ers. 

Assessing the scale of such 
investments is just (me of the 
tasks for the APME to confer 
when it studies the potential 
for packaging combustion in 
power plants in five countries 
- the UK, France. Germany. 
Italy and Sweden - in the com- 
ing Tnonthig. 

- It win also have to take into 
account the fact that many 
European countries do not 
have well-developed networks 
for separating types of waste. 
E stablishing one would imme- 
diately create an extra cost 
burden. 

There is also the vexed issue 
of who pays. Will power plants 
accept the plastics industry’s 
contention that packaging fuel 
has a positive value, because it 
is cheaper than coal, and 
because savings on raw materi- 
als would more than cover 
additional installation, opera- 
tion and maintenance costs. In 
other words, would power 
plants be prepared to pay for 
waste packaging? 

It Is a question that wQl 
almost certainly have to be 
taken up in the broader con- 
text of recycling and bmdfrn 
costs. 

Made r- stresses that there Is a 
long way to go, not least 
because the public tends to 
link incineration with pollu- 
tion. Tins will inevitably com- 
plicate the task of securing 
changes to current legislation, 
be says. But he still believes 
that up to 15 per cent of 
Europe’s plastics waste could 
be used for energy recovery by 
2000 . 





Card Services 
Prtreavie Business Park 
Dunfermline 


"The quality of 
our people and 
a premier Fife 
location enable 
us to provide 
the service 
demanded by 
our customers . " 


Bank of Scotland chose a greenfield site 
in Fife as the location for its Card 
Services Centre which now employs 60D 
people. 

Card Services provides processing 
tadfines for a variety of financial 
institutions. 

The Centre takes advantage of excellent ■ 
communication links with the rest of 
Central Scotland and the (JK. 

For more information on the benefits 
of locating or expanding your 
company in Fife and Scotland 
including an excellent grants and 
property package, call 071 839 2117. 


Locate in Scotland 


Invest in Fife 


* r *. • 
rib/-.: a 














t^Q 


FINANCIAL times WEDNESDAY MAY 4 1994 


•teh 




Wk- 


fMfm 

mm 


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AGAIN. After Cambodia the world said, ‘Never 
again’, yet today in Rwanda there is genocide. 

Oxfam does not use the word genocide lightly, 
but there is no other way to describe the mass 
slaughter happening right now. Men, women, and 
children are being systematically hunted down, 
tortured, and killed. The rivers are choked with 

bodies. 

We have not witnessed such horrors since the 
Killing Fields. And again, like Cambodia, the 
people who can do something to stop the 

bloodshed are not doing enough. 

At the height of the killing the UN cut its 
peacekeeping force to 270 men. When the 
Belgian UN troops were withdrawn they tore up 


their blue berets in disgust. 


We share their outrage. 


Half a million people, mainly Tutsis, face 
imminent death. Over 200,000 are already 
feared dead. Thousands more are dying every 
day while the Security Council dithers. 

What is happening in Rwanda is a crime. The 
apathy of the world is criminal. 

We believe Britain must use its seat on the 
Security Council to call for effective UN 
intervention in Rwanda, now. How many more 
people must die before something is done? 

Will we have to say ‘Never again’ again? 


fXFAM 

Working for a Fairer World 


For more information write 


to Qxfem, 274 Banbury Road, Oxford. 0X2 7QZ. Registered Charity No. 202918 









12 



FINANCIAL TIMES WEDNESDAY MAY 4 1994 


MANAGEMENT 


On the road to 

procrastination 

Adrian Fumham offers tips on how to perfect 
your decision-avoidance technique 


H aving to make important 
decisions causes 
considerable stress. 
Psychologists in the 1960s made 
monkeys develop stomach ulcers 
and other signs of corporate stress 
simply by forcing them to make 
decisions. In the now notorious 
“executive monkey” studies, 
otherwise carefree animals had 
to cboose between options with 
significant physical consequences 
such as electric shock. The 
consistent monitoring and 
worrying led them to become ilL 
And so it is with the modern 
manager. Told constantly about 
the importance of change, 
development, customer 
satisfaction etc, many middle and 
senior managers long for a period 
of stability or as the prayer-book 
has it “eternal changelessness". 

The stress of decision-making 
quite naturally leads to the 
development of numerous 
effective decision-avoidance 
techniques. Without doubt, the 
most popular is to appoint a 
committee to help the delaying 
tactics. A good decision-avoidance 
committee is a group of people 
who individually prefer to do 
nothing and who collectively can 
meet and decide that nothing can 
be done. Furthermore, the 
possibility of avoiding a decision 
increases in proportion to the 
square oi the number of members 
of the committee. 

Committee behaviour positively 
facilitates decision-avoidance. 
Thus, as Parkinson observed, the 
time spent on any item on the 
agenda is inversely proportional 
to tbe sum of money involved. 
Committees handle trivial matters 
promptly, the important issues 
are delayed and rarely solved. 

But from the delay perspective 
there is always one sure result; 
if a committee meets over a long 
enough period of time, the 
meetings become more important 
than the problem they were 
intended to solve. 

People are unused to thinking 
in groups - they talk, argue, 
adjudicate, compromise, joke - 
but they do not think. In 
consequence, a really new creative 
idea tends to destabilise groups 
and upset consensus. The 


committee is thus a group which 
is impelled to agree and is 
instinctively hostile to that which 
is divisive or new. 

Faffing the decisfon-by- 
commlttee avoidance tactic, 

individuals can resort to their 

own preferred approach. These 
avoidance techniques can be used 
by tbe same individuals in 
different situations with equal 
effectiveness, depending on Che 
type and consequences of the 
decision and personality of tbe 
decision-taker. Probably the six 
most favoured methods of 
avoiding a decision are: 

• The temper-tantrum method. 
Here the decision-a voider 
regresses to the behaviour pattern 





of a spoilt two-year-old. Call the 
decision-requester names, stamp 
the foot, appear outraged or 
insulted or even apoplectic. If 
possible weep with indignation. 
Often the surprised and 
embarrassed requester will 
immedia tely step down. 

• The bush-hush method. Call 
the requester to one side, and in 
a conspiratorial stage whisper, 
point ont that he/she is lushing 
in where angels fear to tread. 
Suggest that they clearly don't 
understand the latest company 
figures, the real wishes of the 
CEO, the contents of the secret 
corporate plan etc, and that 
requesting such a decision will 
make them look naive, even 
idiotic. Threatened with this sort 
of career-limiting move, most 
decision-requesters will back off. 

• The clarification method. This 


is the "more details please” 
approach. The person requesting 
a decision Is asked to provide 
more specifically the reason for, 
and the nature and consequences 
iff, the posable options available. 
This analysis-paralysis method 
is aimed at exhausting tbe 
derision-requester as a fisherman 
exhausts a great marlin at the 
end of a line. Tim request for 
clarification is potentially endless 
and had nothing to do with 
actually gaining information. 

Most requesters eventually give 
up and thus no decision is made. 

• The double-talk method. This 
method is favoured by those with 
a command of consultant 
psychobabble or consultant-speak. 
The use of management jargon 
can easily confuse those not folly 
conversant in fids ambiguous 
language. Tty: “But that’s against 
the delayering, reengineering 
ethos of this company” or “How 
does that square with 
empowerment quality-cirdes?”. 
The aim is to confuse the 
requester. 

0 The denial method. Delay is 
the deadliest form of denial but 
also the most primitive. By 
denying that a decision has to 
be made and that a situation 
requires change can be very 
effective. Said with the square-jaw 
of “they shall not pass”, the denial 
technique, if consistent, has been 
known to be highly effective. 

• The “that’s your problem 
shorty” method. This method is 
to hand the problem straight back 
to the requester. The idea is to 
make them fee 1 weak, selfish, even 
demanding, but this requires skill 
in developing the appropriate 
degree of hauteur. Banding the 
problem back to the requester 
needs to make them feel they 
should either be adopting to the 
current situation or matting the 
decision for themselves. 

Some might ride with Victor 
Siam, who noted that 
“procrastination is opportunity's 
natural assassin”. Bat 
decirian-avoiders are more likely 
to believe Tfaurber’s “He who 
hesitates is often saved” Don’t 
procrastinate - learn a 
decision-avoidance technique 
today. - 


T he problems facing IBM’s 
personal computer busi- 
ness have been highlighted 
this week with news of 
another imminent shake-up in top 
management Yet the operating 
challenge for IBM is better Ulus-, 
(rated by recent changes at its giant 
manufacturing complex at Green- 
ock in Scotland. 

The aim of this reorganisation - 
to focus more on the needs of the 
customer - merely brings the com- 
pany into tine with its competitors. 
But the seals of tbe transformation 
has been formidable, for the Green- 
ock, site is Big Bine's biggest manu- 
facturing rite in the world tor per- 
sonal computes. 

Whether tbe changes will be suf- 
ficient to restore this IBM business 
to healthy profitability remains to 
be seen - tbe personal computer 
market, after all, is notorious for Us 
volatility, for tiny ma rg i ns and for 
tbe tendency of competitors to rise 
from almost nowhere and gam mar- 
ket share. 

What cannot be denied is that in 
the past 18 months the seemingly 
unwieldy IBM facility at Greenock 
has greatly reduced its unit manu- 
facturing costs, while increasing the 
volume of output by SO per cant 
The improvement followed tbe 
restructuring in September 1932 of 
IBM’s S9bn (£6bn) PC business, with 

the setting up of a semi-autonomous 

company called IBM PC. It also 
involved a more radical approach 
than the sort of job cutting which 
marked IBM’s productivity gains in 
the 1980s. 

Despite this, IBM's Leading share 
of the European PC market, which 
had touched 15 per cent in 1 990, had 
been eroded to about 12 per cent by 
1992 as rival manufacturers under- 
cut IBM on price for broadly .similar 
products, and responded more 
speedily to orders. 

IBM PC was set up in response to 
these pressures. Greenock, which is 
almost entirely run by Scots, took 
over the distribution of PCs in 
Europe, the Middle East and Africa, 
and 14 distribution operations in 
different countries were wound up. 
Previously the country subsidiaries, 
such as IBM France, had given 
Greenock a forecast of their needs 
and then stockpiled computers 
when they arrived from the plant 
“We used to ship to plan," says 
Bob Beaty, director of manufactur- 
ing and operations at Greenock, 
“ regardless of actual demand or 
what the individual customer 
wanted. We then realised that we 
hpri to ship to order." 

Companies such as Dell in the US 
and Vobis in Germany had already 
begun manufacturing to order. But 
IBM faced tbe particular challenge 
of achieving change in a very large- 
scale manufactu ring operation and 
over such a far-flung distribution 
network. 

Greenock began the process with 






reborn in a glen 

James Buxton explains how IBM's Greenock plant 
increased output while lowering manufacturing costs 


its Val appoint range of low-priced 
computers, tiffin moved an during 
1993 to the PS/1, PS/2 and ThinkPad 
notebook ranges. Beaty says the 
plant can now ship a product within 
10 days of receiving an order. 

The orders come in ficus dealers, 
country subsidiaries or even indi- 
viduals. “The printer churns them 
out 24 hours a day," he says. “We 
might get an order for 400 Value- 
points all of the sam<* configuration, 
but they could all be in different 
permutations. The customer might 
want his applications software pre- 
loaded in the factory.” 

T he plant, he says, can now 
respond to those demands. 
The complexity of the busi- 
ness is not the manufacturing, it is 
the logistics. This is more of a logis- 
tics mnnhinp than a manufacturing 
plant." 

A smooth components flow is 
essential to the successful running 
of tbe Greenock plant though many 
high-value items are common to 
many product lines, reducing the 
diversity of the stocks needed. 
Beaty attribute the cost savings to 
two factors: a higher degree of verti- 
cal integration in the plant than 
many of its rivals; and the fact that 


it draws many of its inpats from 
suppliers who are either a few 
dozen away or at least in the 
UK. 

About half the mother boards, 
which power the computer are 
loaded with their tiny components 
inside the Greenock plant. The rest 
come from six outride suppliers, 
four of them in other parts of cen- 
tral Scotland. 

Some 50 per cent of all monitors 
are made in the plant, with the rest 
coming from two local suppliers. 
Keyboards are made cm site. Some 
assembly arid testing of computers 
is carried out by contract manufac- 
turers nearby. 

While many European computer 
mates import about half their com- 
ponents from the Far East, Green- 
ock depends for 40 to 50 per cent of 
its inputs on businesses based in 
the UK. It brings in just 15 per emit 
from the Far East, with the rest 
coming from Europe and a small 
amount from the US. 

“We can compete against the 
Far East with UK costs,” says John 
McClelland, Beaty's superior who 
has overall responsibility for 
supplying not only Greenock's mar- 
ket area but also Australia and 
Japan. “Having a local supplier 


base is a pretty valuable resource.” 

Beaty acknowledges that the 
chang e to manufac turing to onto 
has been “extremely difficult, but 
we fed. much more in touch with 
what's happening at the customer 
end That is vitally important” 

Greenock executives say that 
since the plant switched to manu- 
facturing to order it has cut its. 
inventory by 25 per cent in absolute 
terms, while output has risen by 
between 15 and 20 per cent a year. 
The cost of what IBM calls “fulfil- 
ment” - the processing of orders 
and the delivery of the product to 
the customer - has been reduced by 
two-thirds. 

MbGteDand will not give financial 
details of Greenock’s performance, 
t ho u g h jerry York, chief financial 
officer of IBM. acknowledged 
recently that its margins on PCs 
were lower. than those of competi- 
tors. 

McClelland says that thanks 
partly to reductions in production 
costs the company has been regain- 
ing market share in Europe in the 
past year and a half; and quote ah 
estimate by industry analysts Data- 
quest that its share of the world- 
wide PC market rose to 13.6 per 
cent in 1983. 


CONTRACTS & TENDERS 


TECHNICAL ASSISTANCE AND CRITICAL IMPORTS LOAN 


/HdUEI^Hungarian Airlines/^ 


NOTICE PUBLISHED BY THE SECRETARY OF STATE UNDER SUBSECTION 10(7) OF THE 
TELECOMMUNICATIONS ACT 1984 

A licence to ran telecommunication systems under section 7 ol the Telecommunications Act 1984 
has been granted to Telecom Securicor Cellular Radio Limited. 

!. The Secretary of State hereby gives notice: 

(a) that he has duly reconsidered the proposals In respect of which be published a 
notice on 30 December 1993 under subsections 8(5) and 10(6) of toe 
Telecommunications Act 1984 ('the Act") regarding his Intention to grant a licence under 
the Act to Telecom Securicor Cellular Radio Limited (The Licensee') lo run 
telecommunication systems throughout the United Kingdom; 

(b) that he has granted such a licence (“the Licence") to the Licensee, being a licence 
which includes conditions such that section 8 of the Act applies to them, thereby making 
the Licensee eligible to have the Telecommunications Code contained in Schedule 2 to tbe 
Act applied to It under section 10 of the Act; 

fc) that he has applied the Telecommunications Code (“the Code") to the Licensee 
throughout the United Kingdom. The application of the Code to the Licensee is sub|ect to 
certain exceptions and conditions. The effect of these exceptions and conditions is that 
the Licensee has duties: 

i. to comply with various safety and environmental conditions. In particular 
(with certain exceptions) to install lines underground or only on such above- 
ground apparatus as is already installed (or any purpose; 

II. to comply with conditions designed to ensure efficiency and economy on the 
part ol the Licensee, in connection with the execution of works on land 
concerning the installation, maintenance, repair or alteraUoo of Its apparatus; 
iii. to consult certain public bodies before exercising particular powers under the 
Code, including the local planning and highway authorities and, where 
appropriate. English Nature, Scottish Natural Heritage, the Countryside Council 
for Wales, the National Trust and the National Trust for Scotland, as well as 
relevant electricity suppliers; 

Iv. to keep and make available records of the location ol underground apparatus 
and copies of exceptions and conditions in the Licence to. the powers under the 
Code: and 

v. to ensure that sufficient funds are available to meet certain liabilities arising 
from the execution of street works. 

2. The Secretary ol State has applied the Code to the Licensee: 

(a) because the Licensee will need the statutory powers In the Code to install and 
maintain the telecommunication systems which are to be installed and run under the 
Licence; 

(b) subject to the exceptions and conditions referred to above because they are 
considered requisite or expedient for the purpose ol securing that the physical 
environment is protected, that there Is no greater damage to land than necessary, that 
the systems are installed as safely and economically as possible, and that the Licensee 
can meet land relevant persons can enforce) liabilities arising bom the execution of works. 

3. The Secretary ol State has granted the Licence because he considers that It will help to satisfy 
demands In the United Kingdom for the provision of services of the type authorised, will promote 
the interests ol consumers In respect of the quality and variety of such services, and will 
maintain and promote effective competition between those engaged in the provision of 
telecommunication services. 

■1. The Licence has been granted for a period of 25 years in the first instance and is subject to 
revocation by the Secretary ol State on 30 days notice in the circumstances specified Jn the Licence. 
5. Copies of the Licence may be obtained bom the Office of Telecommunications (Library), 

50 Ludgate Hill, London EC4M 7JJ, price S 16.00 each, postage and packing free. 

L Beech (Miss) Department of Trade and Industry 
4 May 1994 


GENERAL PROCUREMENT NOTICE 

Loan number 3363 - BO 

The Government of Romania has received a loan from the 
Technical Assistance and Critical Imports Funds of the 
International Bank for Reconstruction and Development (The 
World Bank). The funds would be used to finance the 
procurement of various imported goods in accordance with the 
Work) Bank's Procurement Guidelines. 

At present It is intended to procure with the proceeds of this 
loan the METERING SYSTEM for OIL TERMINAL S.A. 
CONSTANTA - ROMANIA, consisting oft 

P.D METERS - 16* ANSI ISOflF 411pcs 

STRAINES WITH AIR ELIMINATOR - 1ITANS1 150 RF 5 pcs 
DOUBLE BLOCKS BLEED VALVE -18‘ANSIISORF 12pcs 
4-WAY VALVE-20* ANSI 150RF 1 pc 

BUTTERFLY VALVE-1 8*ANS» 150RF 5 pcs 

DENSIMETER 1 to 

P ROVER 2000 irflfli 1 to 

FLOW COMPUTERS 5 pCS 

Inducting spare pahs tor tro years operation, techrtcat specifications, 
operation manuals, technical assistance for commissioning and 
starting-up and traintog lor end-ueeria apueftirft 

Rons interested in participating In International competitive 
bedding for supplying those goods and services are invited to 
register their intoiWt no later than May 15th, 1994, by writing to 
ihe Purchasing Agent 

Petrotexporttmport SA. 

1-3 Maghero Blvd, Bucharest, Roman® 

Phone: (40-1) 8 13 30 45 
Fax (40-1) 6 15 65 50 
Telex 11 519petexr 
Cable: Petrol axportirnport SA. 


LEGAL 

NOTICES 

BLACK HAG ASSOCUUB LIMITED 


Tod? [tojaw >s 

nWMtt 

VMIAflSfOWAWNQMCON 

JoatjkliaujaM(auMii 

(DKcefutti vdtm fJKari W 
Ift Or RwA 8C1V MU 



The Financial Times is happy 
to announce the start of 
Malev's daily non-stop service 
to New York , 

John F. Kennedy Airport, 
which begins on 
2 nd May 1994 . 

Your Malev flight attendant 
will be pleased to provide you 
with a complimentary copy of 
the F.T. on your next 
Malev flight 


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EUROPEAN SMALLER COMPANIES FUND 
SICAV 

8, Avenue Marfe-TMftoe 
L-2132 Luxembourg 

R.C. Luxembourg No B 20093 

DIVIDEND NOTICE 

By r sotmou of tbe Annual General Meeting held on April 26 1994, a dividend of 
ECU (LQ47 per share class ’A* ud per share class "B‘ is declared payable on or 
age* Mav 6, 1994 to registered Ehaicbdtfos on record on April 28. 1994, and to 
Itoldcc of bearer stares upau presentation qf coupon No »). Tbe shares are quoted 
ex-dividend as from April 28, 1994. 

Paying agent : 

Gtdii Commercial de Fiance (Luxembourg) S A 
8. Avenue Mirle-ThWse 
L-2132 Luxe i ubo u i E 

By order irf tbe Bwd of Directors 


Japan 

NIPPON MEAT PACKERS, INC. CDRs 

Referring to its advertisement of 1 April 1993 the undersigned 
announces that Bonusdividcnd no. 20 of CDRs Nippon Meat 
Packers will be payable in cash with USS 140.49 per CDR repr, 
MJ-Ste add ttftfeJjSS .1 404.90 per CDRieor. l.OQQshs. at Kas- 
Associate N.V., Amsterdam and Kredier Bank S.A., 
Luxembourgeoisc in Luxembourg. 

Further tbe undersigned announces that at Kas-Associatie N. V. and 
Krediet Bank S-A, Luxemboiugeoise in Luxembourg dJv.cp-no- 21 
(accompanied by as "Affidavit") of the CDRs Nippon Meat 
Packers Inc., will be payable with USS 9,48 per CDR, repr. 100 shs 
and with USS 94,80 per CDR, repr. 1.000 shs. fdiv. per rec-dale 
31.03.93; gross Yen 15,5 per Sh.) after deduction of 15% Japanese 
tax = Yen 232,5 = USS 1,67 per CDR, repr. 100 shs and Yen 
2325,- - USS 16-70 per CDR, repr. 1.000 shs. 

Amsterdam, May X 1994 

AMSTERDAM DEPOSITARY COMPANY N.V. 



(¥fy\L>4 










.'.Si A 1 :- '• -rr 




FINANCIAL IZVESTIA 
BUSINESS TO 300,000 INFLUENTIAL 
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Financial Izvestia is an 8-page weekly business newspaper 
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FINANCIAL TIMES 

LONDON ■ MM3 ■ f*ANKFU*T ■ NEW TOW TO* VO 






14 


w 


FINANCIAL TIMESCJONmBNGES 


European Telecommunications 

Responding to Change 

London 20 & 21 June 1994 

This conference will examine the challenges and 
opportunities facing the telecommunications industry 
in Europe at a time of rapid technological change. For 
example: 

• Competition & privatisation 

• The future shape of regulation 

• Multimedia & telecommunications culture 

• Network investment - how much and when? 

Speakers include: 

Mr Per Westerberg 

Ministry of Industry & Commerce 
Sweden 

Mr Wim Dik 

Royal PTT Nederland NV 

Mr Eugene P Connell 

Nynex CableComms Limited 

Arranged in association with the 
FT Newsletter 'Telecoms Markets" 



Multimedia 

Vision and Reality 

London 12 & 13 July 1994 

QUALITY GIFT AVAILABLE FOR PAID BOOKINGS 

received by June 7, 1994 
This conference, by casting a sceptical eye on the 
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new developments. Issues include: 

• The regulatory and technological framework 

• The demand for multimedia services 

• Strategic alliance - a critical assessment 

Speakers include: 

Mr Alfred C Sikes 

Hearst New Media & Technology 

Mr Scott C Marden 

Philips Media 

Prof. Nicholas Negroponte 

Massachusetts Institute of Technology 

Arranged in association with the 
FT Newsletter "New Media Markets" 


This is an ideal opportunity to attend two conferences of critical importance 
in assessing the future development of the entire communications industry. 
A discount of 10% is available for those attending both events. 


EUROPEAN TELECOMMUNICATIONS 
MULTIMEDIA - VISION & REALITY 

O Please tick if you would like details on "European ToJeconunuaicationa.' 
□ Please tick if you would like details on "Multi media - Vision & Reality.* 
O Please tick if yon would like details on the Ft Newsletters. 

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‘HA 


PEOPLE 

Computer People choose Roger 
Graham as new chairman 


FINANCIAL times WEDNESDAY MAY 4 1994 


Computer People knows a 
thing or two about recruitment 
despite its somewhat lacklus- 
tre performance of late. The 
London-based computer con- 
sultancy, which is now back in 
the black after making a sww»n 
loss in 1992, is undoubtedly 
patting Itself on the back for 
having snapped up Roger Gra- 
ham as non-executive chair- 
man. 

Graham, right, on the brink 
of 55, is one of the leading 
lights of the UK computer busi- 
ness. A former president of the 
Computing Services Assocm- 
Han and chairman and chief 
executive of the BIS Group 
before Its acquisition by Bir- 
mingham-based ACT last year, 
he has been in the computer 
business since 1962. ' 

He has not let the grass grow 
under his feet since leaving 
BIS. Last week he was 
appointed non-executive chair- 
man both of Mantix Systems, 
which specialises in . advanced 
business management and of 
Braid Systems which develops 
messaging software. Both are 
small. Interesting companies 
with novel products. 

An engineer by background, 
Graham was educated at Cam- 


bridge University where be 
crossed paths with several 
other individuals who became 
luminaries in the UK comput- 
ing services business. He says, 
however, that hisr- chief inter- 
ests as a student were rehears- 
ing politics, an interest he stifl! 



h>. EES where he stayed for 24 
years.- 

Graham’s entrepreneurial 
spirit remains bright he talks 
enthusiastically of the opportu- 
nities in networked desk-top 
computers. The prerequisites 
for a new, venhw. would be, 
however, “the right opportu- 
nity and the right people’*. 

■ Vldeoiogic, a subsidiary of 
Avesco, has appointed two 
non-executive directors. Geoff 
Shingles, 55, was formerly 
-chief executive of Digital' 
Equipment since 1985 and. its 
chairman since 1981, having 
.been with the company in a 


indulges, and Hying small aero- 
planes. 

He first joined International 
Business Machines as a 
systems engineer, made his 
n awift in sales and then moved 


pel Simpson, 60, spent 25 yams 
at' Management Consultants 
PA Consulting group. 

■ Tom Brockbank, 56, has 
been appointed non-executive 
chairman of Computerised 
Financial Solutions, the TJ5M- 
Jisted company which provides 
computer support an&adminifr 
trative services. He was with 
Hill Samuel - where, he was 
joint: bead of the smaller com- 
panies advisory team - for 20 
years, before taking early 
retirement in 1993. 


Shipping group recruits new helmsman 


David Cobb, 58, a naval 
architect, Is to take the helm of 
James Fisher, the Cumbrian- 
based shipping group, which 
lost £5.6m pre-tax in its last 
financial year. 

He is expected to take over 
as full tim e chairman after the 
company’s annual meeting thfa 
month. 

Fisher has been seeking a 
new chairman for several 
months following the depar- 
ture of John Hornby, who Is 
understood to have been forced 
oat by shareholders unhappy 
with the company's perfor- 
mance. 

Charitable trusts own nearly 
half the company's equity and 
their income has been sharply 
reduced following the compa- 
ny’s failure to pay a dividend. 

Cobb has been managing 
director of Cochranes of Selby, 
rhflfrman of Rowbotham Tank- 
ships and was chief operating 
officer of Ingram International 
in the mid-1980s. He will move 
his home to Barrow. 

■ Crestacare, the UK’s third 
biggest private operator of 


nursing homes, has made some 
board changes, promoting 
James Ramsay, 35, to be group 
finance director; he joined the 
company in 1986, becoming 
group financial controller in 
1989. He succeeds Geoff Crowe, 
who remains company secre- 
tary. 

The group now manages 37 
nursing homes with 2^64 beds 
located in the north of 
Bn gfanri L northern Ireland and 
the Isle of Man. 

The group has picked up 
recently, converting a 1992 loss 
of £L58m to pre-tax profits of 
£341,000 in 1993, despite a num- 
ber of managerial upheavals 
and withdrawing from prop- 
erty activities. Andrew Taee, 
chief executive, recently pre- 
dicted the company “will 
bloom” in 1991 The group is 
looking at all areas of 
long-term health care. 

Colin Brown has resigned 
from his non-executive direc- 
torship of the company. 

■ Mark EUsmore has been 
appointed to the new foil-time 
post of executive director - 


Asia Pacific at IT Group .. the 
specialist engineering concern. 

The appointment comes two 
m onths after H announced it 
had readied agreement with 
the Sembawahg Group, a lead- 
ing Singapore-based industrial 
conglomerate, to develop busi- 
ness opportunities in the Asia 
Pacific region. .j - 

TI said Bllsmore, aged 44, 
would pursue this Initiative 
and ensure appropriate group 
resources are allocated to other 
strategic opportunities in the 
region. 

The company believes the 
Asia Pacific offers strong- 
growth opportunities for all 
three of Its core buinesses, 
John Crane, Bundy and Dowty. 

EDsmore joined T l Group in 
1998 and became finance direc- 
tor of John Crane International 
in 1992.. 

He win report to James Roe, 
director of strategic develop- 
ment, who said Elismore’s 
background in finance and 
marketing and his interna- 
tional experience made him 
particularly well-suited to his 
new role. 


No Roche at 

Morgan 

Stanley 

One . of London’s more 
charismatic market strate- 
gist^ David Roche, 47, is leav- 
ing Morgan Stanley Interna- 
tional; where has has 
established a reputation for 
forthright and accurate analy- 
sis and research covering 
areas as diverse as the ERM: 
and the internal problems of 
the former Sovtet Union. . 

With Morgan Stanley s fore 
1987, Roche Is now setting up 
his own research bureau. 

Called foMtepemteut Strategy 
and based in Bond . Street mv 
the heart of London’s west 
end, the new rompany win. 
produce briefings and generate 
investment ideas for fund 
managers, in exchange- "for / 
consulting foes. 

Roche says the break away 
firms Morgan Stanley is hap- 
pening on the very best of 
terms. As evidence of that' his" 
erstwhile employer is to he 
one of Independent Strategy's 
Brat and biggest clients. 

Moreover, the move should 
suit both Roche and Morgan 
Stanley: “It’s absurd .to t hink 
in this day and age that all 
research should be conducted 
in-house. 1 am moving from 
being Morgan Stanley’s 
In-house general practitioner 
to being its external special- 
ist,” he says. 

Roche argues that his stratr 
egy as an Independent will be 
somewhat different, in that it 
will allow Mm and his col- 
leagues to give a. much tighter . 
focus to their research and 
analysis: ' 

At Morgan Stanley Roche 
played a key role In reorgan- 
ising the bank's method of 
research .and analysis, forming 
industry teams from the previ- - 
ous - geographically-based 
style. 

Among bis more famous pre- 
dictions was that tite Berlin ‘ 
Wall would foil, but be has 
akn rnadd a name for himself 
by being particularly outspo- 
ken on east Europe and the 
European Union’s exchange 
rate mechanism . 

Before Joining Morgan Stan- 
ley Roche worked for J P Mor- 
gan as a portfolio manager 
looking at international asset 
allocation. 

His only worry in the new 
role is physical - he will be 
cycling much less than, his cur- 
rent impressive daily round 
trip from west London to 
Canary Wharf. 



,* v 



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FINANCIAL TIMES WEDNESDAY MAY 4 1994 

Dance/aement Crisp 

The Moscow 


ARTS 


Ballet 


Y A T e Sir rit,ie ^« aMf ^ 

\l\l J d »J an ^ttewfflrstcirtoi5m 

1/ 1/ Russian ballet since the BoL 
W W shevik Revolution. Then, for 
nearly a decade, ballet had to fight to 
Mfvre and justify itself in a new society. 
That it did so, manacled by the doctrine of 
socialist realism, and flourished, says 

more for the grand aspirations of the Bns- 
raaa spirit than than for nwian™ Now, 
without the sanctions - or the support - 
of the fonner regime, Russian baUetmu st 
seA to retain its dignity, must adjust to 
new market forces, most go into the mar- 
ketplace, and must, ul timat el y , regener- 
ate for a new era. 

So the great companies toor, playing 
thnr traditional repertory in ever logger 
and less convincing arenas, haemorrhag- 
ic dancers and teachers, Irving off an 
aesthetic that has faded with the comnris- 
sars. So smaller and opportunistic ensem- 
bles are formed,- trading on the West's 
belief that the /words "Rnsdan'*’ and “Bal- 
let” are guarantee enough of quality. That 
they are not has latterly been all too 
clear: I have found little to admire in 
performances by such outfits as Moscow 
.(Sty Ballet, with its. rickety classical stag- 
ings in tremulous performance. 

It is pleasing, then, to welcome Moscow 
- Festival Ballet, returned for a third visit 
to smaQerregkmal theatres. The company 
has S O dancers. Its repertory o ff er s gems 
from the classics - at best, the second acts 
..of Stain lake and Giselle - but its direo- 
tor, Sergey : Radchenko, whom we remem- 
ber with the Bolshoi, has re crui ted inter- 
esting soloists, and. his dancers are i 
well-trained. (None of those innocent bod- 
tes who took as If they should have been 
in bed - or. ballet class - hours ago). The 
added cachet is. -the presence, as in previ- 
ous visits, of Lubov Bunakova, a guest 
ballerina, a real Imlleriua, from the Kirov. 

- There results an evening, as I saw at 
the Beck Theatre in Hayes on Monday 
night, which nattier cheats the public nor 
the idea of Rnssiahballet.Staginglsbasic 

- the Bayes lighting was, one might say, 
uncooperative - but the second act of 
Giselle which opened the evening was 
absolutely credible, absolutely what it ; 
purported: to be, a comment ! would be 
retnetmit-to make about otherstagings, 
both here and abroad. After the initial 
shade of Marion's entrance - he goes 
mad alone on stage before our veiy eyes .- 
the text and tbe performances were seri- 
ous, in the case of Bunakova, ire ware 
given an interpretation of complete 
authority. A sense of tradftfcm {that mys- 
terioosqnalatytbatmakes.tiiedance seem 
inevitable), doqufflrt ljraasnu shOTred ns 
CdseOe.w It o^U fobe shown - by a , : 
ballerina mistress .etcher art. it . was in 
many ways an ‘S>Jdrfa^cm^’ , p«^r- r 
mance — fids is . where. traidifkai speaks 
m ost ctearty ahoUtf bdw cach Incident, 
each dancephrase; mat be shaped - and 

2 thonght lt con The. " 

Albrecht, Alexey Kiwauyov, iras pronus- 
ing, but stiff finding his way lido the role. 
The Myrtha, Saule Ra khma dova, and her 
wilis, were good. The Bed: stage is sha^:; 
low, but the production (even wife taped 
accompaniment) made one forget tins’. As, 
in those longtime days wheal used to go 
to the Mercury Theatre and see tenet- 
crammed on to a s±K=mdresqnare stage, I " 
believed. There is no greater tribute, i ; 

The second part of the evening (I saw 
one of two programmes which vary in 
their components) was given over to 
divertissement numbers. 27 ie Pas de 
Quatre looked coy - TagHonA is a nervous 
hostess - and a pas d'actiou from Esmer- 
alda was a dark moment of the sonLbnt 
in Marina Alexandrova there was an. 
Aurora of distinction, having a lovely^ 
seriousness for the last great duet, white 
as fireworks we bad the Sotovyov-Sedoy 
Gopak, and the Spring Waters d uet^wh ose 
costumes (pale green chiffon outfits for 
hbn and her) suggest mad cross-dressing, 
but whose athleticism is of Olympic stan- 
“dard- One reproach: there was no mdtea-. 
tkm of the night’s casting from a-list of 
alternative names in the p rogramme. The 
: public is owed this courtesy. . .. 

Moscow Festival Balled tours until May. 
3L 









MU *•’ V/-'*' . 


Candidates for b an i sh ment to enter darkness? David Bellamy, Cilia Black and Steve Rider: self-indulgent, naff and. gung-ho respectively 

Television 


Unsullied by wit, taste or quality 


S ow, we are told, cur homes will be 
bombarded by hundreds of televi- 
sion channels, incl uding , possibly, 
some from other planets. I look 
forward to tuning into Planet Janet. But 
long before then, to help us chart a course 
through the videogrunge of hundreds of 
earthly channels, we will enter the era of 
ME-TV. . 

We will buy a black box that will chan- 
nel-surf for us, selecting, recording, and, I 
hope, editing a nightly menu of pro- 
grammes, or bite of programmes, that will 
cater to our specific tastes and needs. 

, ; I wish . I had MB-TV now. By the longest 
of chalks, British television is the best in 
the world - so good, indeed, that 1 cannot 
keep up with it If I had ME-TV 7ww. it 
would do the job for me by analysing my 
viewing habits and noting my instruc- 
tions. Despite the quality of British televi- 
sion, much would be zapped, censored and 
expu nge d. Here are. l.0_things that would 
be oMtterated foam MTN-TV: 

1, Naffness,: rubbish trad condescension. 
This would erase, at a stroke, the whole of 
1TV, which, is now realising its- destiny as 
a petfood -and- tampon channel unsullied 
by wit, taste or quality. It. is a channel for 
proles, to imprison them in naffifom. What 
a load of tosh it is, personified, far me, by 
such nightmarish visions as Matthew 
KeDy, Michael Barrymore, Bruce Forsyth 


and Cilia Black - especially Black, whose 
squalidness and commonness, calculated 
so precisely, is as malign as anti-matter. 
She should be shot into space, to expire in 
near-vacuum. 

Funnily enough, I llltff rammarfliaU 
Federico Fellini once praised British com- 
mercials as mini-wonders, so once a week 
MTN-TV will screen a 30-minute carousel 
of the latest ads. 

2. Violence. There will be plenty of (con- 
sensual) sex on MTN-TV, but no violence 
whatsoever. I hate it desperately, espe- 
cially in news shows, where producers’ 
fondness for hospital footage of war- 
wounded children and other carnage is a 
form of pornography. 

3. Channel 4 Naas. It is apparently well- 

regarded, yet it makes dreariness an art 
form; preetoasness, too. It is not so much a 
news show as a 'phone-in-cum-seminar 
with snippets of news. I watched it last 
Friday. Presenter Jon Snow was stffl in 
South Africa, though there was so news to 
speak cL His first item, on the South Afri- 
can election, lasted 15 and con- 

tamed no news whatsoever. To team what 
is going on, MTN-TV will rely on the BBC. 
t Medical programmes. I am decaying 
away nicely. The last thing I would want 
to watch is half-an-hour on the prostate. 
As genetics research makes more and 
more progress, it will be possible for us to 


learn about the likely nature of our 
deaths. Not me. In the hrave new world of 
MTN-TV, ignorance will foster happiness. 

5. Party political broadcasts. These will 
not be censored out completely. There was 
one recently for the Green Party that was 
rather good - intelligent, modest in Its 
claims and free of the gallimaufry of lies 
that constitutes the party-political offer- 
ings of the three big grey parties. 

6. Steve Rider, presenter of Grandstand 

Michael Thompson- 
Noel erases purveyors 
of small screen tosh 


(BBCl). I watch quite a lot of sport, text 
the presenters have been lobotomised. 
These days, given the cost of buying the 
rights, sports presenters have jettisoned 
almost all objectivity. Ratings are every- 
thing. Everyone is gung-ho, especially 
Steve Rider. His eyes are horribly close 
together. That apart, I was staggered at 
the stupor of sulkiness into which he 
slumped at the Winter Olympics when it 
became apparent that Britain’s Torvill and 
Dean - that pair of frozen pilchards - 
were not going to win the ice-dancing gold 


medal T&A were lucky to win the bronze. 
What Rider was doing there I could not 

hnagtrm 

7. Soaps and situation comedies. I used to 
like Coronation Street (TTV), but can no 
longer fold the time for it On the other 
hand, MTN-TV will screen plenty of 
drama, fflrns and current affairs. There is 
not much dr ama about at present, nnieKB 
you count The lifeboat (BBCl), in which 
Lynda La Plante, of Prime Suspect fame, is 
said to have had a hand. It is set. says the 
Beeb, “off the rugged Welsh coast" At 
first I wondered if they had shot it in 
Welsh, as another filmic sop to all those 
Welsh whingers with no thing better to do 
than blow up holiday cottages. They 
hadn't though even in English 1 found its 
hairy-chestedness silly. 

If there is not much drama about at 
present, there is a surfeit of first-rate docu- 
mentaries. QJLR: Plastic Fantastic (BBCl) 
was a marvellous account of the alleged 
discovery, by Maurice Ward, an eccentric 
ex-hairdresser, of a miracle plastic, a 
so-called “smart" material called Starlight 
which can withstand amazing heat levels 
and may save mankind from invasion by 
Planet Janet Starlight HQ is a bungalow 
in Hartlepool Some scientists, including 
Nasa’s, seem impressed with Ward's 
claims. By some calculations, the inven- 
tion is worth billions. But Ward is proving 


reluctant to share or sell his formula. 

Another excellent currant affairs pro- 
gramme was The Disorderly House of 
Windsor ( Channel 4). winch put the boot 
in so effectively that I wondered if Queen 
Elizabeth U and her hapless family were 
not about to book one-way tickets through 
the Channel Tunnel to start life afresh in a 
small town in Germany. 

8. David Bellamy. There will be a lot of 
wildlife programmes on MTN-TV. In tima 
our children's grandchildren will view the 
late 20th-century wildlife video library in 
horrified amazement that we presided over 
the extinction of so many species. But I 
can no longer watch David Bellamy's self- 
indulgent antics. His heart is in the right 
place but his mannerisms - especially the 
leaping about on all fours - made King- 
doms in Conflict : The Owl and the Timber- 
man (Channel 4), about the endangered 
northern spotted owl in Washington state, 
unwatchable. 

9. Weather forecasts. 

10. Angela Rippon. She is the antithesis 
of Cilia Black in every respect, and thus 
just as harmful 

Media experts and bankers to whom I 
spoke yesterday were delirious with 
excitement at the range of viewing likes 
and dislik e s likely to be encountered on 
MTN-TV, and urged me to make it coni’ 
merdally available. I said that 1 might 


O n the South Bank, a retrospec- 
tive festival of Luciano Berio’s 
music is wall underway. “Ren- 
derings" - the label reflects 
Berio's penchant for doing things over 
agsin. both other composers’ things and 
bis own - goes on until May 14 (a semi- 
staged BBC performance of his opera La 
vera storied. It Is strange to think of this 
inquiring, playful, sensuous spirit as sud- 
denly belonging to a Grand Old Man. 
.Actually .his 70th anniversary is not this 
year, but next; so we may be in for the 
protracted kind of musical birthday party 
/that has enjoyed a recent vogue. 

On Friday Berio conducted the HaDG 
Orchestra in a programme that might 
have been designed to hi ghli g ht his elu- 
sive twinkle, and his restless revisiting of 
old sites. First we had Twice iqxm..., a 
new partiapationpa^ce designed for chil- 
dren from a half-dozen primary schools, 
with, ten Hall6 players to guide them 
through noisy high-jinks. Not so much a 
'score, more a set of crowd-control direc- 
tions, but there were unmistakable Berio 


Berio roundly celebrated 

David Murray welcomes ‘Renderings’ on the South Bank 


moments: some suspended chords, lumi- 
nously spaced just so, and his comic relish 
for superimposing disparate ideas without 
letting them blend. 

We also heard his officially-titled Ren- 
dering (1990), a respectful mock-up of late 
Schubert sketches (D.936A) for a sym- 
phony in D, with dreamy, celesta-iced 
interludes out of other late Schubert and 
Berio’s own knight's-move fancies. Not 
quite enough of the one or of the other, I 
thought Schubert’s fragments too little 
fleshed out for a vital reconstruction, 
Berio's elaborations too shy and bitty to 
turn the whole thing into an honest post- 
modern exercise. But interesting, of course, 
and attractive; Berio is never less than 
interesting or attractive. 

Among the famous post-Schoenberg 


modernists of the 1950s and 1960s - Bou- 
lez, Stockhausen. Barraqufe, Nemo, Mad- 
erna - Berio already had more of a pre- 
“modera" oeuvre to Ms name than most 
Only in the early 1960s, when he married a 
ground-breaking young artist the Ameri- 
can mezzo Cathy Berberlan (their creative 
partnership survived Ms subsequent mar- 
riages) and began studying with Dallapic- 
cola, did the new possibilities of atanality 
and serialism seize his imagination. So did 
the extra-musical allure of “semiotics'’, 
language as radically restudied by Eco, 
Sanguined ami CaMno, 

Though British critics have preferred 
not to examine that side of Berio too 
closely, it is no less central to his mature 
work than “pure 1 * musical serialism. Even 
in Ms early, consdexrfiously formal experi- 


ments. Berio scores sounded more trans- 
parent and lyrical, more direct and often 
more mischievously inconsequent - more 
Italian - than anything by Ms Euro-revo- 
lutionary comrades. His fascination with 
procedures has always been leavened by 
Ms concern for the human voice, and what 
- in countless different ways - it can say. 

Friday’s main work was his “new" qua- 
si-cantata Epiphanies , for mezzo and 
orchestra. This is Berio’s latest, joined-up 
and presumably definitive version of what 
used to be Ms looser Epifanie sequence 
(1969), but was originally a set of brief 
studies (1959-62: Quademi, “notebooks") 
for the overweeningly large orchestra that 
a lucky young composer could command 
in those palmy days. Berio soon wanted to 
Interpolate vocal movements amongst 


them. Sung, spoken or muttered, the 
“epiphanies" are drawn from revered 
Euroauthors (Proust and Joyce. Machado 
and Brecht); here, young Charlotte Helle- 
kant was superbly to command of Ber- 
berian’s wide-ranging multilingual role. 

Readjusted by Berio's master hand, the 
dramatic half-hour sequence of Epiphanies 
- more exactly, its rhetorical succession of 
highs and lows, limpid breadths and gno- 
mic compression - works a treat It grips, 
surprises and convinces. 

In detail however, it seems more iff an 
autobiographical music-album than a inte- 
gral whole. The earliest Quademi bits are 
impacted neo- Webern shards; they share 
few of their manners with Berio's later 
solo-voice gf fri«rinn«5 , when the challenges 
of Ms unadorned Sequenze forced him to 
seek plain, ground-level ways of develop- 
ing his music for ordinary ears. The fruits 
of that experience can be heard In the 
remaining concerts, and in particular the 
complete, astonishing Sequenze will be 
delivered by suitable virtuosi this Thurs- 
day. 


deal 



■BORDEAUX 

FESTIVAL . 

■ Despite sweepteg cuthu’®! 

earfier this year. Bordeaux is gfcwig 
-ahead with its annual May 

■ which opens on Fri and 

May 20 at various halls, ctoJrches 
and chfiteaux. Alain 


tfaaux Aqunauw — 

graawhe.foaowed 

iond Symphony °n Fri and 
dhoven’s NWhj on SaLTrio 
tay plays Beetftovenstri^ 6103 
Sun Trinity College Char on 
n presents a programme ranging 
n Lassus to Britten ana 
ssjbMfL Beginning on Mon, - 
_ i ii—-: mmnnflV nresents 


CWartet 

» COLOGNE 
OpemhausT te ™^ P r ^ uetion 
, ttomadh is Macbeth wg^ 

“ Alaxandnj Ag»W land Bag* 
-Conndl (May 6, 13, 15. »• ^ «■ 


Repertory abo.indudes a 
TanzForum production of Peer Gynt 
choreographed by Jochen Ulrich, 
and Ariadne auf Naxos with cast 
. headed by Alexandra Marc, Barbara 

- KBduff and Peter Svensson 
(0221-221 8400) 

Phflharmonfe A six-week festival 
entitled MusikTriertnale 94 opens 
next Tues, embracing tradition^ 
symphony concerts, new music 
programmes and children's events. 
Quest orchestras include the Berlin 
Philharmonic and Chicago 
Symphony (0221^2801) 

■ COMPIEGNE 

- The riwriy restored ThdStre Imperial, 
60km from Paris, is hosting four 
peritormances over the next two 
weekends of Ambroise Thomas’ 
long-forgotten opera Le Songd 
d’une Nuit cTEte. Michel . 
Swierczewski conducts a staging 
by Pierre Jourdan, with costumes 
from Royal Shakespeare Company 
(freephone 0503 134?) 

■ LEIPZIG/ 

Gewandhaus Fit- Saufius Sondeckis 
conducts Lithuanian Chamber 
Orchestra jn works tjy Haydn, ■ 
Mozart and Rossini, with violin 
sofixst Gfl Shaham. Sun: Simon 
Rattle conducts CBSO in 
symphonies by Tippett and Bruckner 
(0341-713 2 280) 

■ COPENHAGEN 

Royal Theatre The Anal three weete 
of the season bring performances 
of Der Rosenkavalier, 
and a new production of two 
ballets by John Neumeier pel 3314 


1002 fax 3312 3692) 

TivoG The 1994 music programme 
is under way, with symphony 
concerts or recitals most nights. 

This week’s events include a 
performance on Sat of Cherubini's 
Mlssa Solemnis by Danish Radio 
Orchestra and Chorus under ERo 
Boncompagrd (3315 1012) 

■ FRANKFURT 

Alter Oper Tonight Ghena Dimitrova 
aid Paata Burcfaiarize sing Italian 
arias and duets. Tomorrow, Fri: 
ETiahu Inbal conducts Frankfurt 
Radio Synphony Orchestra 'm works 
by Webern, Schoenberg and 
Schumann. Fri (Mozart SaaQ: Felicity 
Lott song recital Sab SauBus - 
Sondeckis conducts Lithuanian 
Chamber Orchestra in Mozart and 
Rossini, with vtofin soloist Gil 
Shaham, Sat, Mori (Mozart Saal): 
Richard Goode plays Beethoven 
piano sonatas. Sun: Jukka-Pekka 
Saraste conducts Deutsche 
Kammerpwahannonie In SandstrOm, 
Schoenberg and Brawns. May 
11-14: Metropolitan Opera Orchestra 
and Chorus under James Levine 
(069-134 0400) - 
Jahrfumderthafle Hoechst Tonight, 
tomorrow: CuUberg baflst'm 
choreographies by Mats Be Frh 
extracts from Andrew Lloyd Webber 
musicals. Sat Georges Prfetre 
conducts Bamberg Symphony 
Orchestra in works by Bizet and 
Prokofiev, Mon: Rafael Fruhbeck 
. de Burgos conducts Berlin Radio 
Orchestra in FaUa, Turina and 
Strav i nsky, with piano soloist AHda. 
de Lanvcha. Tuefir Stonon Rattle 
conducts (Sty of Birmingham 
Symphony Orchestra (D69-360 1240) 
Oper Sab Frankfurt Baflet In 


choreographies by William Forsythe 
and Amanda Milter. Sun: Giido 
Johannes Rumstadt conducts first 
night of Nuria Esperfs production 
of Bektra, with cast headed by Janis 
Martkr (repeated May 12, 15, 18, 

29). Next Wed: ComeHus' comic 
opera Der Barbter von Bagdad 
(069-236061) 


Arthur MSeris play The Ride Down 
Mount Morgan, daily except Mon 
HU May 21 (069-2423 1620) 

■ GOTHENBURG 

Konserthuset Tonight, tomorrow, 
Sat afternoon: Neeme JarvI 
conducts Gothenburg Symphony 
Orchestra and Chorus in Verdi's 
Requiem. Fri; Murray Perahia piano 
recital (031-167000) 

■ HELSINKI 

Finnish National Opera The main 
event this week Is the world 
premiere on Fri of Jorma Uotinen's 
new ballet Sonata in Glass, with 
music by Sibelius (repeated May 
10, 13. 21, 28, 31). Repertory also 
indudes Carmen, L’elisir d'amore 
and La traviata (0-4030 2211) 

II HAMBURG 

Sta&tsoperThe main event this 
week Is the premiere on Sun of a 
new production of Khovanshchina, 
conducted by Gerd Albrecht, staged 
by Many Kupfer and designed by 
Hans Schavemoch, with cast 
headed by Olga Borodina and Matti 
SaJmJnan (repealed May 12, 15, 

20, 23, 26, 29). Repertory Includes 
Le nozza di Figaro and two Mahler 
ballets by .John Neumeier. Christa 


Ludwig gives a farewell recital on 
Fri (040-351721) 

MusOrhaDe Visiting orchestras 
during the coming week are the 
Leipzig Gewandhaus with Kurt 
Masur on Fri aid City of 
Birmingham Symphony with Simon 
Rattle next Wed. Dave Brubeck 
gives a concert tonight, followed 
tomorrow by Virtuosi Saxoniaa 
North German Radio Symphony 
Orchestra plays a Brahms and 
Rakhmaninov programme on Sun 
morning, Mon and Tues 
(040-354414) 

■ LYON 

Op4ra Kent Nagano conducts 
orchestral works by Shostakovich, 
Ravel and Dvorak next Tues. Felicity 
Lott gives a song recital on May 
18, and La traviat& opens on May 
19 for nine performances (tel 7200 
4545 fax 7200 4546) 


■ MUNICH 

MUNICH BIENNALE 

Munich's festival of new 
music-theatre runs till May 22. This 
week’s premiere is Freeze by Dutch 
composer Robot Zuidam (b1964), 
based on the tale of Patty Hearst 
(tomorrow, Fri, Sat at Muftathatie). 
Next week brings Der btaue Stan 
by Paul Engel (M949). Benedict 
Mason’s new foatbaU opera Playing 
Away receives Its first performance 
on May 19 (089-48098 614) 

OTHER EVENTS 

Gasteig Tonight, tomorrow, Fri, 

Sat Hiroshi Wakasugi conducts 
Munich Philharmonic Orchestra and 
Chorus In works by Stravinsky, John 
Adams aid Betty OTrvero. Next Mon: 
Alexander Lazarev conducts 


Bavarian Radio Symphony Orchestra 
and Chorus in a Wolfgang Rffim 
world premiere. Next Tues: Justus 
Frantz Is pianist and conductor in 
a Beethoven programme with 
Sinfonta Varsovfa (069-4609 8614} 
Staatsoper Fri: Cos! fan tutte. Sat 
La forza del destine. Sim, next Wed: 
Salome with Gwyneth Jones. Tues: 
Don Pasquafe. May 14-23: ballet 
festival with guests including Sylvie 
Guflem and National Ballet of 
Canada (Q89-221316) 

Deutsches Theater Ballet Teatro 
Espanoi presents choreographies 
by Rafael Aguilar, daily except Mon 
till May 15 (089-5523 4360) 

■ OSLO 

Konserthus Tomorrow. Emmanuel 
Krivine conducts Oslo Philharmonic 
Orchestra in works by Richard 
Strauss and Franck (2283 3200) 
Folketeatret Tomorrow, Sat Heinz 
Fricke conducts Mike Ashman’s 
Norwegian National Opera 
production of Das Rheingold. May 
14, 19: Die Watkfire (2242 7724} 

■ STOCKHOLM 

Berwakfiialen Tonight Leif 
Segeretam conducts Swedish Radio 
Symphony Orchestra in works by 
Sandstrfim, Chopin and Ravel, with 
piano soloist Angela D5me (08-784 
1800) - 

Boyd Opera Tomorrow, Fri: 

Swedish Ballet School presents 
Konstantin Damranov*s production 
of Coppefia Next Mon, Tues, Wed, 
Thurs: video of the Barenboim/ 
Kupfer Ring at Bayreuth (08-248240) 
Konserthuset Mon: Murray Perahia 
piano recital ( 08 - 102110 ) 


ARTS GUIDE 

Monday: Berfin, New York and 
Pats. 

Tuesday: Austria, Belgium, 
Netherlands, Switzerland, Chi- 
cago. Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 
(Central European Time) 

MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 0745, 
1315, 1546, 1815, 2345 

WEDNESDAY 

NBC/Super Channel: ft 
R eports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sfcy News: FT Reports 0430, 
1730; 









Edward Mortimer 



More than two 
centuries ago 
Lord Justice 
Mansfield 
established the 
doctrine that 
any human 
being who set 
foot on English 
sod automatically enjoyed the 
rights of a free man under 
English law. First and fore- 
most among those rights is the 
one enshrined in the Habeas 
Corpus Act, passed in the reign 
of Charles n. which forbids the 
detention or imprisonment of 
anyone unless due cause is 
established in court 

But Lord Mansfield's doc- 
trine took a severe knock when 
parliament passed the Immi- 
gration Act in 1971. That law 
gives immigration officers the 
right to detain anyone arriving 
in the UK for as long as it 
takes to decide whether that 
person has a right to enter the 
country and, if not, whether he 
should be given leave to do so. 

Under this provision, people 
can be detained indefinitely. 
There is one person now in HM 
Holding Centre Haslar (a 
prison near Portsmouth) who 
has been in detention for a 
year and four mouths - and 
even that is not the record. 

After visiting Camps field 
Detention Centre near Oxford 
earlier this year I received 
many telephone calls from peo- 
ple held there who have 
requested political asylum. 
One of them. Appolinaire Egny 
- a computer technician who 
defected from the ruling party 
in the Ivory Coast, and fed the 
country after his brother was 
arrested last autumn - wrote 
me a letter of such eloquence 
that I felt I must try to help 
him. On the advice of the Refu- 
gee Legal Centre I sent a fax to 
the chief immigration officer at 
Heathrow airport, where Mr 
Egny's file is kept, asking that 
he be spared further detention 
and offering to have him as a 
house guest pending a final 
decision on his case. 

In reply 1 got a courteous 
phone call. The officer regret- 
ted be could not grant tempo- 
rary admission to Mr Egny at 
this stage, “for reasons I am 
not at liberty to disclose”. I 
asked if Mr Egny's lawyer was 
aware of those reasons. “No. 
It’s not our policy to give rea- 
sons. Our powers are discre- 
tionary." 

The officers of Charles I or 
Charles Q could not have put it 
better. As for Lord Mansfield, 
he must be turning in his 
grave. 


Free to 
be held 
captive 

Britain’s tough 
immigration 
laws are unfair 
and cany an 
economic price 

If Mr Egny had been arrested 
for a crime, the police would 
have had to convince a magis- 
trate that there were good rea- 
sons to remand Mm in custody; 
otherwise he would be entitled 
to baiL But the Bail Act does 
not apply to people held under 
immigration law. 

To such complaints there is 
a standard reply; “If you don’t 
like it you are free to go”; that 
is, to be deported to your coun- 
try of origin. But that begs the 
question which is being exam- 
ined, namely whether the 
applicant can safely return 

The UK ‘has failed 
to reap the 
economic benefits 
from selective 
skilled migration’ 

home. "Alas.” wrote Mr Egny 
in his letter to me. “today, if I 
could return home I would, 
with fanfares and hymns of 
joy.” But to do so “would be 
bold to the point of madness”. 

The same catch 22, or a simi- 
lar one, has overturned Lord 
Mansfield's judgment even 
more directly. There are people 
in Britain today who are to all 
intents and purposes slaves. 
They are domestic servants 
whose passports are in their 
employer’s possession. In same 
cases they do not even have 
passports of their own. but 
enter the country on their 
employer’s passport, as if they 
were his or her child. They 
work up to 19 hours a day for 
very low wages, and sometimes 
are not allowed out of the 
house or fiat for weeks on end. 
In most cases they dare not 
complain, for they know that if 
their employer dismisses them 
they have no right to be in the 
country, and therefore no 


chance of finding any other 
legal employment 

Mr Dudley Fishbum, a Tory 
MP, went to the Home Office 
last week to try to win some 
protection for these people. But 
any protection they are offered 
will be meaningless unless it 
includes the right to stay in 
the country and seek work. 
Their situation is only an 
extreme form of the jeopardy 
in which millions of illegal 
Immigrants live throughout 
the industrialised world- Such 
immigrants frequently work in 
health and safety conditions 
far below the legal standard, 
but dare not complain for fear 
of being deported. 

Thus tough immigration 
laws create a kind of apartheid 
between the legal residents of 
a country, who enjoy various 
h uman , dvil SOtial ri ghts , 
and the illegal residents who 
do not Such laws also inter- 
fere with economic freedom. 
According to Allan Findlay, 
director of the Applied Popula- 
tion Research Unit at Glasgow 
University, “the UK govern- 
ment’s negative attitude to 
immigration has sold the coun- 
try short. It has failed to reap 
the economic benefits from 
selective skilled migration, 
foregone the investment and 
jobs which entrepreneurs 
could provide, and prevented 
companies from benefiting 
fully from inter-company 
transfers.” 

That is one of the conclu- 
sions of a recent study by the 
Institute for Public Policy 
Research*, which exposes the 
protectionist reflexes behind 
current British immigration 
policy. In trade policy the UK 
government is rightly sceptical 
of the notions that economic 
activity is a zero-sum game, 
that there is a finite pool of 
jobs to be shared out. and that 
rewards for foreigners neces- 
sarily mean losses for UK citi- 
zens. Yet those are precisely 
the assumptions that dominate 
immigration policy, and which 
are so unquestioned that Home 
Office officials approached by 
the IPPR could not even see 
“what purpose new research 
would serve”. Ministers “had 
already decided what immigra- 
tion policy should be,” and 
“they doubted that ministers 
would reconsider their 
approach”. 

Perhaps new ministers are 
needed, as well as new 
research. 

*Strangers & Citizens. A posi- 
tive approach to migrants and 
refugees. Edited by Sarah Spen- 
cer. (Rivers Oram Press, £14.95) 


T he pressures on the 
world's pharmaceuti- 
cals industry have 
exploded into corpo- 
rate action. 

On Monday, Switzerland's 
Roche announced it would pay 
$5£bn for US drugs company 
Syntex. Yesterday, the 
Angio-US company SmithKline 
Beecham said it was buying 
Diversified Pharmaceutical 
Services, a CJS company, for 
$Z3bn. Within hours, US con- 
glomerate Eastman Kodak said 
it wanted to sell its three 
healthcare divisions, Grinding 
Sterling Wiathrop, which have 
combined annual sales of 
$3.7bn. 

On the surface each deal 
looks different. Smith Kline 
Beecham is buying a passport 
to the dispensers and prescrib- 
es of drags. Roche wfll absorb 
a research-based company tike 
itself. And Kodak is escaping 
from the industry entirely. 

But they represent three dis- 
tinct solutions to one problem: 
that drugs companies’ profits 
in the industrialised w arid are 
under pressure from govern- 
ments, employers and insur- 
ance companies determined to 
drive down costs. 

These pressures have been 
particularly acute in the US. 
The Clinton, adminis tration has 
proposed sweeping healthcare 
reforms in an effort to cut the 
cost of treating sick Americans 
- including the possibility of 
capping drug prices, a move 
which would alter the econom- 
ics of drug development, which 
depend on high returns from 
heavy investment 
Though the reforms have not 
yet been fully debated, the 
price of drugs is already being 
squeezed. Those who ulti- 
mately pay for the drugs - 
insurance companies who meet 
claims and employers who pay 
premiums - are employing 
intermediate companies, called 
healthcare management organ- 
isations or pharmacy benefit 
managers, to negotiate dis- 
counts with drugs manufactur- 
ers. 

Mr Jan Leschly, chief execu- 
tive of S mithKHne Beecham' s 
since last week, yesterday out- 
lined four further causes for 
consolidation in the sector 
• Attempts by governments 
in Europe and Japan to control 
pharmaceuticals prices, which 
have depressed prices gener- 
ally - even for drugs not spe- 
cifically targeted. 

• The trend towards generic 
substitution in which drugs 
buyers abandon a branded 
product in favour of a cheaper, 
unbranded alternative. This 
has been a particular problem 
for Syntex: the company's prof- 
its in recent years were based 


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Daniel Green looks at the long-awaited start of 
restructuring in the international drugs industry 

Remedies for a 
global sickness 


Syntax’s costs as it merges the 
operations of the two compa- 
nies, and it gains access to 
drugs still in development. 

Roche is cagey about how 
many of Syntex’ s 10,000 
employees will lose their jobs. 
It insists that the acquisition is 
only the latest stage in a sev- 
en-year strategy for DS growth. 
This began in earnest m 1390 
whan it bought California bio- 
technology company Genen- 
tech for g Uhn . 

While Genetech was the 


largely on the success of an 
anti-inflammatory drug, Napro- 
syn. At its peak two years ago, 
Naprosyn's annual sales 
peaked at &bn, but in Decem- 
ber last year, Naprosyn’s 
patent protection expired, and 
its sales fell by more than SO 
per ceiit in four months. 

• Therapeutic substitution, in 
which a cheaper drug, often 
non-branded, is used on 
grounds or price. This could 
happen later this mon th when 
SB's ulcer treatment, Tagamet, 
loses patent protection and 
doctors could choose it over 
Glaxo’ s more expensive Zan- 
tac. 

• Escalating development 
costs. The increasing popular- 
ity of generic and therapeutic 
3Uhg t jfttrinn waans that marry 

companies are focusing on try- 
ing to create unique products. 
As research into well-under- 
stood areas is dropped in 
favour of pioneer work, more 
scientists have to be employed 
and subsequent clinical trials 
are more expensive and 
time-consuming. 

Most healthcare executives 
agree with this analysis of the 
pressures on their industry. 
But while they agree on the 
causes, the executives of 
Roche, .S mith Kl ine Beecham 
and Kodak disagree on strat- 
egy. 

Smithifline Beecham’s pur- 
chase, Diversified Pharmaceu- 
ticals Services, is a pharmaceu- 
ticals benefit manager (PBM). 
Such Institutions were bom in 
the 1980s in the US with the 
aim of providing services to 
insurance companies and 
employers in their dealings 
with hospitals and drugs com- 
panies. Typically they process 
claims, offer ranges of drugs 
secured at discount prices and 
substitute generic alternatives 
for more expensive branded 
treatments. 

S mithKUne 's deal is an echo 
of last summer's $6bn purchase 
by Merck, the biggest US drugs 
company, of drugs distributor 
Medco, whose business is simi- 
lar to Diversified’s. SndthKlme 
began talking to Diversified’s 
parent company. United 
Healthcare, in August 1993, 
just weeks after the Merck- 


dobat 

The toftlodrugs companfe* Sates $m)- v T. i [ 

!' ThrocapOoa - , y\ : 

- Wank ^ Company y l : 7 dugs. f ... 

./zV -..?. Gkym' . V •*' . -8010 .1 iS»,'cV ..-7! 

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ikm&fe&r: U \ V Vii*i 

Pharmaceutical sales (5} 557bn.. .t.84tor* 
Employees ' SBJSBn- -tio&b y 

ScUDT Irfretrt BroBws 



Medco announcement. Because 
of their direct contacts with 
purchasers and doctors. Medco 
and Diversified can promote 
their owners’ drugs to doctors 
at the expense of rival offer- 
ings. 

Mr Leschly stresses that 

Drugs companies 
are under pressure 
from governments 
determined to 
drive down costs 

SmithKline’s acquisition repre- 
sents more than this, however. 
He says that the future of the 
healthcare industry lies not 
simply in trea tin g diseases but 
in “managing them” for a set 
fee per person over a set 
period. With its acquisition of 
D i versi fi ed. SmithKLme would 
become involved in all stages 
of looking after health, he 

Twain taing . 


The reasons for Roche's take- 
over of Syntex are more tradi- 
tional, with no overarching 
vision of a transformed world 
of healthcare. Mr Paul Frei- 
nran . Syntax chairman, says 
his company’s pipeline of 
drags in development has sim- 
ply become too expensive for it 
to develop alone. The main 
drug in development is Myco- 
phenoiaie Mofetil used to pre- 
vent rejection in organ trans- 
plant patients, which cost 
“about $50m a year, before 
overheads and support”. 

“At $400m, [last year’s RAD 
budget] we could probably not 
absorb all of the products in 
our pipeline if we kept the 
spending at that level. We had 
decided in our strategic plan 
that we needed alliances - 
from joint ventures to baying 
small companies, to spiling to a 
bigger company,” says Mr Freb 
man 

Roche sees its acquisition of 
Syntex in an even more 
old-fa&hioned light it can cut 


biotechnology, Roche sees Syn- 
tex as a route to the US over- 
the-counter dregs market . 

OTC is gaining in impor- 
tance as a means of making 
the patient pay directly fra: a 
treatment rather than through 
(■pTrpfi, as in Europe, or insur- 
ance premiums, as in the US. 
Roche is strong in OTC 
through its vitamins business 
and Arnold be able to boost the 
ml pg of Naprosyn in the wake 
of the approval last month by 
the US food and Dreg Admin- 
istration of an OTC version. 

F or Kodak, It appears 
that neither alliances 
nor acquisitions are 
the right solutions to 
the problem of falling drugs 
prices. Its way of addressing 
the turmofl tn the healthcare 
industry is to bid it farewell 
The company wants to con- 
centrate on its core businesses 
and its move yesterday is an 
acknowledgement that the 
$5J.bu the acquisition of Ster- 
ling Dreg in 1988 was an error. 
Elf Sanofi, Sterling's European 
partner, has already begun a 
strategic review with a view to 
buying all or part of Sterling. 
Asset sales of its own 'are 
possible, “given the size of a 
possible transaction,' it 
said. 

There is no shortage of 
potential deals in the health- 
care industry while the pres- 
sures on profits remain. Com- 
panies. in a similar position to 
Syntex include Upjohn, the US 
company, which has seen 
patent run out on its biggest- 
selting products in recent 
months for example on Ifantnr. 
an anti-depressive. Other 
potential buyers have the cash- 
pile that Roche apd S mithKlrne 
have been spending. Top of the 
list is Glaxo, the biggest Euro- 
pean drugs company, which 
has yet to find a home for cash 
reserves of more than $2bn. 
Chief executive Mr Richard 
Sykes said recently that he 
ipt ap A ; to do a deal in the US 
by spring next year. 

This week’s shake-out may 
be seen in retrospect as just 
the beginning of a long-awaited 
industry restructuring. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not hand written. Please set fax for finest resolution 


Investment thrives 
on instability 


From Ur Mark Godridge. 

Sir, Barry Riley’s concerns at 
the instability in markets cre- 
ated by US mutual funds flows 
(“American money brings new 
risks to markets”, April 27) 
ignores real life and common 
sense. 

He reports that the financial 
economist Mr Henry Kaufman 
has “worries” about this insta- 
bility - I would suggest that 
Mr Ka ufman is pointing at the 
dragon in the cave but ignor- 
ing the gold it is sitting on. In 
the words of the billionaire 
investor Warren Buffet in his 
latest annual report: “True 
investors welcome volatility," 
The risks of instability create 
opportunities for those pre- 
pared to take advantage of 
them - the forced buying or 
selling by mutual funds coping 
with customer money flows is 
confronted in the marketplace 
by those with the nous to 
anticipate and capitalise on it 

I find Mr Kaufman's sugges- 
tion of a 60-90 day withdrawal 


notice period from mutual 
funds laughable. First, he 
wrongly assumes that mutual 
fund managers have no ability 
to anticipate redemptions and 
take appropriate action. Sec- 
ond, the market would move to 
discount the ending of a partic- 
ularly choppy period by 
looking at fund flows - and 
could create the sort of volatil- 
ity Mr Kaufman is seeking to 
diminish Third, his concerns 
presuppose a “correct" level of 
volatility to which the notice 
period would encourage rever- 
sion. I would love to see his 
suggestions as to what this 
level should be. 

Perhaps Mr Riley'6 next 
article Should be to gsamina 
bow much money investors 
could have made recently by 
actively taking advantage of 
market conditions, rather than 
sitting around fretting about 
them like Mr Kaufman. 

Mark Godridge, 

1220 Park Anemic, Apt 9A, 

New York. NY 10128. US 


More a kind of insurance policy 


From Mr David Taylor. 

Sir, I suspect that the “naive 
faith” on the part of some 
senior Whitehall decision-tak- 
ers (“Value for money”, April 
26) has far less to do with per- 
ceived need for outside, objec- 
tive endorsement for signifi- 
cant projects than with a 
desire to have someone to 
blame and to get access to an 


indemnity insurance policy in 
the event of a failure. 

More is the pity, for, as you 
say, management consultancy 
properly and positively 
employed can prove excellent 
value fra- money. 

David Taylor, 
chartered accountant, 

31 Sion BiO, 

Bath BA1 2UW 


MEPs must tackle issue of 
unnecessary legislation 


From Mr Christopher Jackson 
MEP. 

Sir, Your editorial “Europe’s 
parliament” (April 3) makes 
many valuable points - nota- 
bly that the parliament is “a 
case study in unwieldiness”. 
However, the key problem to 
which you refer - our traipsing 
between Brussels and Stras- 
bourg - is forced cm ns by the 
governments of the member 
states, including Britain. They 
have insisted that this costly 
and absurd state of affairs 
shall continue. Do not forget 
Luxembourg, too, the place 
MEPs never visit, but where 
parliament's main library is 
forced to remain; nor French 
blackmail over the elections to 
the European parliament, forc- 
ing a disgraceful signature by 
the parliament’s president of a 


lease for a new, unnecessary 
hemtcycle in Strasbourg at 
great benefit to the French. 

There is much to sort out 
There are two crucial issues: 
increasing the effectiveness of 
our communications with 
industry in the early stages of 
consideration of the laws we 
make; and reducing (and 
repealing) unnecessary and 
costly legislation of which we 
have had too much in the past 
five years of the Labour-domi- 
nated European parliament 

Interest in th is parliament is 
justified by its legislative 
power to affect lives, jobs and 
Europe's wealth. That is why 
the European elections on 
June 9 matter. 

Christopher Jackson, 

Palais de FEvrope, 

Strasbourg, France 


Treasury’s undignified retreat 


From Mr Brian GilL 

Sir, The UK government’s 
cultural bankruptcy and moral 
impoverishment is surely com- 
plete with the announcement 
that tiie Treasury is to sell up 
and beat an undignified retreat 
from the corridors of power 
(“Treasury mandarins’ cost 
controls strike home”, April 29. 
“Des res for buyer with £60m”, 
April 30). 

The contrast with the For- 
eign. Office could not be more 
complete. The FO stiffened its 
lips, tightened its belt, and pro- 
duced what must be one of the 
most magnificent and uplifting 


restorations of government 
buildings at home or overseas, 
demonstrating yet again its 
knowledge of the way the 
wider world really works. 

By an means let the Trea- 
sury mandarins send them- 
selves and their servants off to 
the Lubyankas of Croydon or 
Docklands - many would 
claim they deserved no less; 
but hand the buildings over to 
some more worthy department 
that understands their worth. 
Brian Gill 
261 Grove Street, 

Deptford Wharf. 

London SB8 3PZ 


Challenge to human resource management theory lacks evidence 


From Ms Sue Fame and 
Mr David Metcalf. 

Sir, Mark McKergow 
(Letters. April 11) expresses 
concern about the fact that our 
measure of employee-manage- 
ment relations is subjective. 
This is so: how can it hot be? 
But the suggestion that h uman 
resource managers would be 
more likely to report worse 
industrial relations than tradi- 
tional managers is mere specu- 
lation. After all their whole 
raison d’etre is to improve such 
relations. The fact that manag- 
ers responsible for personnel 
report honestly is supported by 
the high correlation between 
their responses and those of 
worker representatives, winch 
are almost identical across the 


2.000 plus workplaces. This 
Implies that our measure accu- 
rately represents the dimate of 
relations hi these work places. 

No one denies that the bot- 
tom line in human resource 
management (HRM) is profit- 
ability and financial perfor- 
mance; Duncan Brown 
(Letters. April 11) seems to 
suggest we do. But surely HRM 
is also supposed to produce 
good industrial relations? To 
the best of our knowledge ours 
is the first UK study that 
attempts to relate HRM prac- 
tices to either industrial rela- 
tions or economic outcomes. 
We shall be interested to see 
the evidence alluded to by Mr 
Brown that "HRM practitio- 
ners have been making major 


strides In fighting the British 
disease” (whatever that is). We 
know of no other research 
which relates HRM practices to 
economic outcomes. 

Our own work suggests a 
dichotomy. HRM appears to be 
associated with better eco- 
nomic outcomes in the work- 
place - higher productivity 
and better performance on the 
jobs front - but worse Indus- 
trial relations outcomes - 
higher number of resignations, 
higher absenteeism and less 
good relations between man- 
agement and employees. 
Instead of making cheap points 
against empirical research Mr 
Brown should give us his evi- 
dence on this important topic 

Tom Barry (Letters. April 11) 


Is reluctant to admit that per- 
sonnel hierarchies exist in 
workplaces. They do - you 
only have to look at National 
Health Service trusts. But even 
In “flatter” organisations some- 
one has to take decisions. 
Therefore it is important to 
consider what makes for good 
or bad relations. Our own work 
casts doubt on the self-serving 
idea that HRM techniques are 
the vision of the future, for bet- 
ter management/employee 
relations. 

Sue Femie. 

David Metcalf, 

Centre for Economic 
Performance, 

London School of Economics, 
Houghton Street. 

London WC2A2AE 


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financial times 

£toe Souihwarlc Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922180 Fax: 071-407 5700 

Wednesday Mav 4 1994 


South Africa 
forward 



South ..Africa's transition from 
minority rale to democracy is 
smnfiaiinsr to celebrate. Not even 
the painfully inefficient election 
Qfflpt.can.gpofl .an.eyfflit of such 
moment and one whose signifi- 
cance extends well beyond the 
region. A: stable, democratic and 
economically successful South 
Africa mj ghfr yet offer hope for a 

continent : debilitated by debt, 
disaster and disease. It could even 
become a model for other coun- 
tries where ethnic and racial ten- 
sions present seemingly insupera- 
blfi barriers to. economic progress. 

Fulfflmentof these hopes will be 
as difficult as the transition itself; 
hut South Africa has made an 
encouraging start. President F.w. 
de Kl erk has left office with a 
grace that has enhanced his repu- 
tation and augurs well for his 
expected role as second vice presi- 
dent General Constant VUjoen, 

1 he former armed services chief, 
steered the. conservative right 
away from confrontation and <"*0 
the election. He -deserves credit for 
defusing what could have, been a 
destabilising clash. 

Above all, the president-elect, 
Mr Nelson Mandela, leader -of the 
victorious African National Con- 
gress, is preparing for office with 
the pragmatism and compassion 
that is his hallmark. With the 
grim legacy of apartheid all 
around him, he was right to strike 
a note of urgency in his victory 
speech on Monday night,- promis- 
ing that he and his team will roll 
up their sleeves, and get ikmth _ 
Africa back to work, t. 

Cabinet places . 

H<e was alto, wise to offer places 
in -his ^cabinet to parties- which:-, 
failed to reach the. 5 per cent that, 
would give Swan automatic repre- 
sentation 4ma government of 
nation^. mdtyr toe Ifoeral Demo- 
cratic party; the radical Pan Afri- . 
canist Congress and Gen VBjoen's-v 
Freedom Front,- which seete reas- 
surance that Afrikaner "cuibire - 
wiH survim ft wopld bo wise to 
extend -au similar invitation, to 
Chief Map&^ugm Jftutha&lexL- 
although-bis : toka#sa. Freedoms 
party- may have attracted suffi- 
cient votes to secure it A catenet. ’ 
seat Odef Buihded’s difficulties 
with the ANC and its leader are 
well-known. Yet can be. 

lost by attempting- to bring this- 
prickly personality into the fold. : . 
In selecting his cabinet Mr 


Mandela must also look beyond 
bis domestic constituency, a care- 
ful balance is needed to reassure 
international investors, who look 
for stability. They will, wish to see 
continuity of the sound wywwwrtn 
policies that have characterised 
the transition. The retention of Mr 
Derek Keys, the present finance 


minister, in one of the eco- 
nomic portfolios, would constitute 
a clear signal that this is under- 
stood. Mr Chris Sfaia, the gover- 
nor of the Reserve R a nk , fiho nld 
be asked to stay . in Ids job. ft may 
be difficult for Mr Mandei fl but 
room should be found for both 
me n , not as token whites but as 
key players in South Africa's new 
economic team. 

Investment code 

Mr Mandela must also be on Ms 
guard against those who argue for 
an investment code. Rev Leon Sul- 
livan, the US-based campaigner, 
achieved some success in urging 
foreign companies who decided to 
maintain fiieir operations in the 
old South Africa to end discrimi- 
nation on the shop from:, introduce 
training- programmes and accept 
sodal responsibffifies in the black 
community. He and.others now 
advocate similar terms for 
would-be -foreign investors. These 
objectives are well-meant, but to 
make them a condition displays a 
misunderstanding of the tough 
competition for investment. No 

lobby UtgB8 the tome ctmflMnna 


_ for other developing nations. 

Sonto investors are showing 
strong interest in postapartheid 
South. Africa, whether as a market 
in its own right, or as a base for 
operations in the rest of Africa. 

- Yet . the new government is in no 
position to lay down terms that 
might drive- investment capital , to. 
mtror attractive Asian homes. 
Indeed, Mr Mandela should bear 
Aiiazt lessons closely in mind as 
ho looks to the future. That 
implies a marketdriven exchange 
rate, a competitive badness envi- 
ronment, a dose partnership 
between government and the pei- 
ypte^sectox; trade, liberalisation, . 
enc ou ra g ement of undthtetionals 
with, their w or ldwi de marketing 
‘teahtira, technology and manage- 
ment Aj ih .and an effietep t civil 
service. He will best serve the new 
South Africa if he applies these 

- principles. He might also than gal- 
vanise the rest of Africa, for 
whom be Is already an inspiration. 


Back to the 
pork barrel 


When is a manufacturing subsidy 
not a subsidy? The answer is : 
when, it is a “focused research and. 
development incentives - pro- 
gramme". This is the Clinton', 
administration’s euphemism for 
Its decision to underwrite the 
development of a commercial, 
industry to make flat panel dis- 
plays, such as those used to porta- 
ble computers or aircraft cockpit 
displays. And it raises troubling 
questions about a developing 
trend in US industrial policy. 

Two themes are emerging. Gov- 
eminent research money is being 
redirected away from specific mili- 
tary projects towards more gen- 
eral commercial ventures. Old 
fashioned industrial intervention 
is being glossed up and justified 
under, the heading of technology 
policy. But the ft miliar shape of 
the pork barrel is already discerni- 
ble. 

The defence department 
acknowledges that its require- 
ments for flat panel displays will 
never amount to much more than 
about 5 percent of .the rapidly 
growing US market. It also con- 
that established foreign sup-, 
pliers - all from Japan - are 
already in a position to provide 
affordable products. But it is wor- 
ried about assured and early 
access to leading edge technology 
in what will be toe esseni^ niter- 
fees for toe battleground of the 
fliture 

Research grants 

So it is prepared to o^ sufc- 
stantial research grants to -those 
private sector companies which 
are willing to canmlt tl^elv^ 
to build production factotum- « 
envisages providing support ior 
four world scale, manufacturing 

* -ate over the next fire years, 

fa will have the capacity to 
some 15 per cent of the world 
l b. a.it rnmal fKnn1a.VS. Tbfi 


initiative will cost the tJ5tex- 
payer around Jllfan to $l2Qm a 
year over that period-; . 

This development is worrying 
for several reasons. Fhst. itsug- 
gests that HAD subsidies - wmch 
toe Clinton fought to pre 5 ®™- 
during the Uruguay 
being abused in 
diaijestfoinanufa^uriDS industry- 

Next, there tea long fastarym 
toe US and elsewhere of goveroe 
ment fends befogj^tedm^ 
the heading of strategic teebnot 


ogy peftcy. The attempt to build a 
commer cia l synthetic fuels todus- 
try and the supersonic transport 
project are only two of the more 
egregious examples. AH the evi- 
dmoe la - that the net impact on 
productivity of US government 
B&D spending is lower them the 
return on privately funded spendr 
tog; and may even be negative. 

It is highly uncertain whether 
the latest initiative will be any 
more' successful, given that the 
Japanese are already several years 
ahead in terms of technology. 

Innovators ./ . 

. Moreover, these, initiatives 
invariably, favour older, estab- 
lished companies at the expense of 
Innovators. A case in point is 

agmstArih, the government-backed 
consortium for semiconductor 
manufacturing technology. It is 
true that the US chip industry has 
recovered well in recent years, but 
this has been based as much on 
innovative designs as cm the man- 
ufacturing technology, which 
Sematech was • designed- to 
enhance. 

.Finally, the arguments being 
used to justify the flat pend, dis- 
play project could . easily be 
to cover a lust of other 
Industries where toe Japa nese 
have a Kg commercial load - from 
- ceramics to machining. The 
defence department has an enor- 
mous shopping list: where is the 
line to be drawn? 

All this is not to say that the US 
adminis tration is powerless to 
help. It could mount an assault on 
the . Pentagon’s extraordinarily 
.cumbersome and bureaucratic 
procurement procedures, in order 
to speed up the transfer of 
advanced technology and reduce 
flevetopmsrt costs, ft could sun- 
plifr the patent system, and revise 
antitrust procedures in. order to 
make it easier, for companies to 
como together to joint ventures to 
develop new technoIogies. lt could 
consider putting temporary tax 
incentives for private sector 
research on to a penuanent foo®- 

^ poliCT of ddfing out.money to 
companies to help them get hack 
into an industry which they have 
.abandoned is not likely to suc- 
ceed. What is worse is that it mQ 
encourage other governments, 
notably in toe European Umon, 
down toe same slippery path. 


I n what may be their last 
chance to strike a deal on 
reforming the controversial 
Superftmd law on toxic waste 
dumps, government, industry 
and environmental groups met at 
toe White House yesterday. If an 
mt is not reached, the 
ition may foil off tote 
year’s congressional calendar. 

The ramton administration’s pro- 
posals seek to distribute the costs of 
dealing with toxic waste sites fairly 
among the polluters, to cut toe 
money spent on lawyers and to 
increase the amount spent on actu- 
ally. cleaning up. 

But the contaminated land issue 
is so controversial that any me of 
many interested parties - chemicals 
companies, insurers, local govern- 
ments, environmentalists - could 
torpedo a bill Congressional leaders 
are thus unwilling to press ahead 
untS they have achieved consensus. 
The effects of Superfund’s faults, 
however, have been Celt in insur- 
ance markets worldwide; adding, 
for instance, to the travails of 
Lloyd’s of London. 

Tlie Superftmd programme has 
been dogged by problems of cost 
since it was set up in 1980 and 
revised in 1986, despite resulting in 
toe clean-up of at least 320 toxic 
sites on a national priority list of 
1,300. “Despite the creation of a 
multi-billion -dollar public works 
programme and an awesome new 
overarching approach to hazardous 
waste liability, the Superfund solu- 
tion has become an implementation 
nightmare." according to to Profes- 
sor Daniel Mazmanian, a professor 
of political science at California's 
Claremont Graduate School, and Mr 
David Morell, head of Epics Interna- 
tional. a regulatory consultancy, in 
their book Beyond Superfailure. 

Two issues remain fraught: first, 
what exactly should be done about 
the chemical and mineral wastes 
that have for decades been freely 
dumped without concern for their 
health and environmental conse- 
quences? Second, who should pay? 

Existing Superftmd law is vague 
on the first question. Neither in 
1980 nor in 1986 was Congress able 
to establish hOW clean a nleawflri 

site should be. National standards 
for acceptable levels of contamina- 
tion have proved difflenit to define 
without unnecessarily tying the 
hands of the government's Environ- 
mental Protection Agency adminis- 
trators, in charge of drawing up a 
dean-up plan at each rite. Cleanli- 
ness Is dtrffapri in the law not by 
substance but by process: were the 
right parties consulted and the 
right procedures followed in draw- 
ing up tire plan? 

On the second question of who 
should pay, by contrast, Superfund 
law Is excessively clear. liability 
for the costs of a Superfund 
clean-up is legally defined as strict. 


Superfailure may 
yet be a success 

George Graham says an agreement to reform the US 
Superfund toxic waste clean-up scheme is in the balance 



retroactive, joint and several: any- 
one who contributed in any way to 
contamination - the operator of a 
dump, the landowner, the compa- 
nies that sent waste there, even the 
road hauliers - can be held liable 
for the entire cost 

In 1979, estimates showed a 
national clean- op, taking many 
decades, would cost between 
$2&2tm and $44.1bn - and the latest 
assessment from the Congressional 
Budget Office puts toe bill to the 
public and private sectors at $230bn 
in inflation-adjusted dollars. But the 
original Superfund contained only 
$L6bn. so the government’s EPA 
has every incentive to apply joint 
and several liability ferociously, in 
order to find someone other than 
the fund to pay. 

Industry, however, has every 
incentive to fight batik, sue other 
polluters for a share of the costs, 
and to argue with its insurers over 
every penny. For instance, IC1 


Americas, the US offshoot of the 
British. group and o n e of 

the “deep pocket" polluters initially 
targeted tor the EPA to pay for the 
clean-up of Delaware’s Tybouts Cor- 
ner landfill, sent a 30-page question- 
naire to every manufacturer within 
100 miles of Tybouts in Us search 
for other polluters. Litigation 
dragged on from 1980 until 1989 
before an agreement was reached 
on sharing oat the costs of the 
clean-up. 

Thus the result of both the vague- 
ness and the clarity has been end- 
less litigation. Developers, mean- 
while, shy away from once-used 
land for fear of some future liabil- 
ity. “Many claim that prospective 
owners who want to develop prop- 
erty have an economic incentive to 
use undeveloped, or greenfield, sites 
to avoid potential Superfund liabil- 
ity, thereby contributing to subur- 
ban sprawl and exacerbating 
chronic unemployment often found 


in inner-city industrial areas,” 
according to Us Carol Browner, 
head of the EPA. 

Many flaws in the Superfund leg- 
islation are rooted in its creation. 
The first law was passed in Decem- 
ber 1980, as Congress rushed to 
complete legislation before Presi- 
dent-elect Ronald Reagan, pledged 
to roll back the regulatory burden 
on industry, took office. 

Mr Reagan’s EPA proved unwill- 
ing to puisne polluters vigorously 
and unable, in a period of tight bud- 
gets for everything but defence, to 
spend much of its own money on 
cleanups. So in 1986 Congress took 
fresh aim with the Superfund 
Amendments and Reauthorisation 
Act (Sara). 

Although Sara took some modest 
steps to reduce the application of 
strict, joint and several liability by 
providing limited incentives for 
everyone to settle early on a fair 
distribution of costs, it did not get 


much closer to determining how 
clean is clean. 

The proposals outlined in Febru- 
ary by Ms Browner aim to clarify 
the issue. They would establish in 
law national goals, as yet not 
spelled out, for health protection, 
and follow these up with regula- 
tions to set national levels of per- 
missible contamination for the most 
common chemicals. They would 
also provide flexibility by finking 
the standard for a particular site to 
its fixture use. "If the community 
decides that a contaminated site is 
going to be used for an Industrial 
plant, we might not need to clean it 
up to the same level as we would 
for a school," Ms Browner said. 

T he administration bill 
would not reverse strict, 
joint and several liabil- 
ity. but it would specifi- 
cally exempt those 
responsible for very small amounts 
of waste; it would seek to reduce 
litigation through a voluntary pro- 
cess under which an in d e pendent 
expert would decide on a fair alloca- 
tion of costs to polluters who agreed 
to take part 

The Clinton administration had 
originally proposed a new fund 
financed by a levy on insurers 
starting at $500m a year to help 
settle insurance claims on waste 
dumped before 1986, when Sara was 
passed. Insurance and chemical 
companies, however, have agreed a 
somewhat different arrangement 
that has wan government approval, 
if not yet formal endorsement It 
differs from the administration pro- 
posal in the degree of acceptance a 
clean-up plan must have before the 
fund could start to pay out. 

With no dispute that Superftmd 
badly needs reform, the process has 
so far been different in spirit from 
previous attempts to legislate on 
toxic waste clean-ups. The debate is 
not overshadowed by congressional 
distrust of the administration, and 
the administration has sought out 
everyone involved in an attempt to 
build consensus - though it has not 
yet achieved unanimity. 

Ms Browneris proposals draw 
heavily on similar reports produced 
by an EPA working- party with rep- 
resentatives from the public and 
private sectors. An independent 
National Commission on Superfund. 
bringing together industrialists, 
insurers, environmentalists, state 
and local governments and commu- 
nity groups, worked towards very 
similar conclusions. 

That may be the lesson of Super- 
fund's superfailures: the secret of 
dealing with toxic wastes lies less 
in detailed contamination remedies 
or precise cost allocation formulae 
than in the process by which a 
nation reaches agreement on the 
balance between economic and 
environmental values. 


Bronwen Maddox on UK government attempts to formulate a policy on contaminated land 

Haunted by the past 


A 


host of golden daffodils 
hardly seems a source of 
serio us pollution. But the 
.UK’s National Rivers 
Authority, the river quality watch- 
dog, reported last mouth that 
highly toxic insecticides had seeped 
from a Cornish daffodil farm into 
local streams. 

That was just one example of the 
threat posed by contaminated land 
revealed in the NBA’s survey, 
which also reported that in the Sev- 
em-Trent region of central England 
alone, 186 sites were toought to be 
polluting water. Just over half of 
those cases were of industrial con- 
tamination, and the rest of leaking 
rubbish dumps. 

Many similar instances have 

been cited hi the responses - due in 

yesterday - to the government’s 
consultation paper on contami- 
nated land, Paying for ourpasL The 
paper, published in March after the 
govern m ent scrapped proposals for 
a register of contaminated land, 
calls for comments on the size of 
the problem and on who should 
foot the bin. Ministers say they are 
determined that the chosen solu- 
tion should avoid the problems 
which have bedevilled Superfund. 

So -far the full scale of the prob- 
lem has not been known, as there 


have been no systematic surveys, 
just compilations of incidents such 
as the NBA report. Friends of the 
Earth, the pressure group, has 
suggested that there could be 
100,000 problem sites in England, 
concentrated in Hie former Indus- 
trial heartland of the Midlands. 
The Confederation of British indus- 
try has also estimated that 200,000 
hectares could be contaminated by 
industrial use, and that cleaning it 
up could eost£20bn- 

Not all that pollution may need 
tariffing urgently. Mr Andrew Lees, 
campaigns director of Friends of 
the Earth, says: “If the pollution is 
fixed In the soil and is not moving, 
then it is possible that it poses no 
problem. But if it is contain tearing 
water supplies, for example, then 
dearly it does." 

However, even if some contami- 
nated sites do not need treatment, 
the government is anxious to 
devise a dean-up policy because it 
fears that uncertainty about poten- 
tial liabilities will hinder develop- 
ment of forma: Industrial regions. 
Many of these areas suffer from 
high unemployment, and the gov- 


ernment is keen to encourage 
investment It is also concerned to 
ease pressure for construction on 
greenfield sites in the south. 

Lawyers and bankers confirm the 
government’s fears that uncer- 
tainty about liabilities is making 
buying and selling property diffi- 
cult in some regions. Ms Clare 
Deanesly of Gouldens, the solici- 
tors, says that a House of Lords 
ruling te December - the much- 
publicised Cambridge Water case - 
“only answered some of lawyers’ 
worries". 

In that case, the Lords ruled that 
Eastern Counties Leather, a leather 
treatment company, could not be 
held responsible for pollution 
caused years ago which had con- 
taminated boreholes, because the 
company could not reasonably have 
foreseen the damage, te doing so, 
the Lords rejected the application 
of strict liability along Superftmd 
tines - that is, polluters are liable 
regardless of whether they foresaw 
the damage or took steps to allevi- 
ate it 

However the case left open the 
question of whether adequate roles 


to determine who should pay could 
evolve through toe courts by the 
application of common law, or 
whether they need to be defined by 
new legislation. 

The government’s paper docks 
that question. Its only dear recom- 
mendation on the question of win 
should pay is that banks should, in 
some circumstances, be held liable 
for cleaning up pollution caused by 
companies to which they have 
made loans. 

This proposal has attracted fierce 
criticism: the Royal Institution erf 
Chartered Surveyors has told the 
government that “putting unrea- 
sonable liability" on the financial 
sector could “encourage [it] to 
withdraw from environmentally 
vulnerable markets". In other 
words, banks would lend money 
only for the development of dean 
land. 

The paper, however, points the 
way forward on some other prob- 
lems, according to lawyers, devel- 
opers, banks and insurers. They 
have particularly welcomed the 
proposal that land need not be 
cleaned up to a pristine state, only 


to the level necessary for its 
intended use. The proposal - which 
has been attacked by environmen- 
talists such as Friends of the Earth 
- is an attempt to avoid some of 
tine huge dean-up bills which have 
arisen under Superfund. 

But that does not compensate, 
according to the paper's critics, for 
toe paper’s failure to address the 
central question of who should foot 
the bill for past pollution. “The 
courts passed the buck to parlia- 
ment on the Cambridge Water case, 
and Paying for our past passed It 
back again,” says Ms Deanesly. 

Because that central question 
remains un tackled, many respon- 
dents have called for the govern- 
ment to pay for cleaning up con- 
tamination, possibly by setting up 
a fund through levies on industry. 

Ms Deanesly says: “My personal 
view is that we have all benefited 
from the industrial revolution - it 
produced economic benefits. To the 
extent that it has produced disad- 
vantages, those should be funded 
from the public purse." 

In spite of the problems the US 
has had te operating such a fund, 
the government is likely to find 
that many of the respondents to its 
consultation paper have echoed 
those views. 


Observer 


Caracas to 
take the job? 


■ Antonio Casas Gonzfilaz could 
hartfly wlsh for more testing 
circumstances in which to prove 
bis mettle. The new president of 
the central bank of Venezuela flies 
is from London amid a full-blown 
bolivar crisis, to step into the shoes 
of the immensely rejected Ruth 
deKrtvoy. 

The fetter's resignation, after 
a row over the central monetary 
authority 's farispendence, unsettled 
tntpmntjrmfll investrgs - who are 
far from mollified about what they 
foarfeapaliMaH«mteetolifir 
place, - • 

A sociable type who was 
weB-tikcd during his four-year 


aQ company, PDVSA, Casas is also 
dose to PresMent Rafael Caldera. 


had expected him to return to 
Caracas with a shot at the top job 
at PDVSA, or perhaps the oil 
portfolio in the new cabinet, bat 


Casas is of course an experienced 
and weti-iravellad man. In addition 
to his stint as head of the 
gpPB ffmwHf ti ftrono mlp. planning 

pfBra during Caldera's first 
administration in early 1970s, he 
also sat on the board of the central 
bank for three years between 1572 
and 1975. 

He bad held diplomatic posts 


te Washington and worked at the 
Inter-American Development Bank 
before moving to PDVSA, where 
he rose to the position of chief 
financial officer. 

But while the Venezuelan 
economy is in far too much trouble 
for anyone to worry about the 
academic niceties <rf central bank 
independence, Casas will have to 
prove he is more than a Caldera 


international confidence returns. 

Savouring success 

■ Is there no keeping that Peter 
tie Sayary down? Hot on the beds 
of the collapse of hfaPlaceton 
p ro pofy-toHofl company, he now 
has plans for a ElOOm network of 
“autoparks’’ - sites where people 
can test-drive and buy cars - which, 
he claims, win be great places for 
a family day out 

So where is he going to get the 
money from, seeing that Standard 
Chartered has suffered a loss of 
up to £S0m on the Placetou 
collapse? Well, plenty of other 
banks have been on the phone in 
the past couple of days, would you 
believe, perfectly ready to talk 
business, “l have banks who are 
very fond of me," be points out. 

Indeed, plans for "four or five” 

autoparks around Britain are 
already well advanced. De Savary 
says six big car companies - 
anonymous so far - are keen to 
support the idea. The first sites 
amid be operational in 1996, with 



Tm right behind anyone who’s 
right behind John Major 1 

London's Docklands and 
Southampton being among the 
contenders. Each would be about 
50 acres and indude Disney-styie 
amusements for children plus 
restaurants and bars operating 
18 hours a day. 

Sounds absolutely heavenly, just 
what the bankers ordered. Wait 
a minute; has he checked out 
Eurodteney recently .. ? 


Master builder 

■ Lloyds Bank’s £l-8bn ted for 
Cheltenham & Gloucester may have 
caught analysts on the hop, but 
can it really have come as such 


a surprise to staff at the Bunding 
Societies Association? 

Back in De cember, its 
directorgeneral Adrian Coles 
prescdently chose Brian Pitman 
to deliver his “distinctive view of 
current and ftitore developments 
in the banking world” to the BSA’s 
conference later this month. 

Sadly, Coles's crystal ball 
contains a minor flaw. Lloyds 
Bank’s boss will be speaking 
shortly before toe legality of the 
deal is tested in the High Court 
Had the conference been schedule d 
far just a little later in May, Pitman 
might have been able to say rather 
more. 


Nom de plume 

■ Citroen’s UK subsidiary is 
having a spot of bother with the 
parent company^ brainwaves on 
the Vehicle naming fr ont With 
scant regard for prime minis ter 
Edouard Bafiaduris campaign to 
defend the purity of the French 
language, CItrogn is calling its 
latest two-and-a-half tonne van 
toe Citroen Jumper. Company 
executives mutter obliquely about 
■Jolly Jumperf being the name of 
the horse belonging to ‘Lucky 
Luke’, some cartoon figure. 

But the company’s UK 
m a paggiripnt is leSS than tahan 
with caflinga vehicle after a woolly 
garment that may be ajmfortable 
but tends to be familiar, old, 
tired ... So it has plumped for Relay 
instead. 


That still leaves the new 
multi-purpose vehicle - a 
competitor for Renault’s Espace 
- that the big bosses are 
christening the CStrogn Evasion. 
The French connotations may be 
of escape and adventure, but Pierre 
Boisjoly, managing director of 
Citroen UK, reckons toe Brits will 
think of tax evasion. 

Anyone care to help him oat? 


Chopped sueys 

■ Naturally, the syndicate officials 
who slaved day and night on what 
was to be India’s biggest ever equity 
offering were more than a little 
nonplussed when VSNL, the Indian 
international telecoms company, 
decided to postpone its $lbn 
international equity offering at 
the eleventh hour. How to 
commemorate their failure to 
pocket some whacking fees? A 
slap-up meal seemed the perfect 
idea. 

Understandably, toe idea of 
dining out at one of London’s 
superb Indian restaurants made 
them feel a little queasy. So they 
all went out to Memories of China. 


Slick 

M More Senile Prats. That would 
be toe upshot of a union between 
oil companies Enterprise and 
Lasmo, according to a reader who 
enjoys shuffling letters of the 
alphabet around. 


» 



IS 



World 
Leader 
in rolling 
bearings 


FINANCIAL TIMES 

Wednesday May 4 1994 


as Shepherd 

3*5 Design & Build 

Frederick House. Fuford Road- 
TatephonH 0904 632401 . Fax: 0904 610356 . 


Departure aimed at mending ties with government 



Founder of Hyundai to 
retire from management 


By John Burton In Seoul 

Mr Chung Ju-yung. the founder 
and honorary chairman of the 
Hyundai conglomerate, said yes- 
terday that he would retire from 
the management of South 
Korea's largest business group. 

His departure is meant to ease 
tension between Hyundai and the 
government, which has discrimi- 
nated against the group since Mr 
Chung unsuccessfully stood 
against President Kim Young- 
sam in the 1992 election. 

Since the presidential election. 
Hyundai has not received low- 
interest industrial loans from the 
state-run Korea Development 
Bank and has been restricted in 
raising capital abroad. Three of 
its main subsidiaries have also 
been denied listings on the Seoul 
bourse. 

The retirement of 78-year old • 
Mr Chung would end a business 
career that began with the foun- 


ding of Hyundai in 1947 as a 
small motor service company. 
During the next three decades, he 
developed Hyundai into a symbol 
of Korean industrial might with 
48 subsidiaries and total assets of 
Won31,700tm ($39.2bn). 

Share prices for Hyundai com- 
panies rose in the expectation 
that the government would 
resume financing to the group. 

Some government officials 
have urged that the restrictions 
against Hyundai be removed for 
the sake of the national economy 
because the group is the coun- 
try's largest producer of cars and 
ships and is die owner of the 
biggest construction company. 

But aides to Mr Kim expressed 
scepticism that Mr Chung would 
actually withdraw from Hyun- 
dai's management and retire to 
live on his remote far min g estate. 
They noted that he will remain 
as honorary chairman and con- 
tinue to provide advice to his 


brother. Mr Chung Se-yung, the 
group chairman. 

Mr Chung described the honor- 
ary chairmanshi p as a “ceremo- 
nial'' position, but his status as 
group founder almost certainly 
guarantees that he could con- 
tinue to guide the conglomerate 
from behind the scenes. 

Some analysts believe that Mr 
Chung’s retirement announce- 
ment is part of an attempt to 
persuade the government to over- 
turn his conviction for illegal 
campaign funding during the 
1992 election. 

Mr Chung received a three-year 
suspended jail sentence last 
autumn for embezzling corporate 
funds to support his fculed presi- 
dential bid. He is now awaiting 
an appeal against the decision. 

He severed ties with his politi- 
cal group, the United People's 
party, last year and vowed to 
stay out of politics to appease the 
government 


Jericho 
prepares 
for self-rule 

Continued from Page l 


Isaac Shawa. a shopkeeper on 
the town's small grass square. “I 
believe from that day it will be 
the beginning of our indepen- 
dence. We will be able to start to 
count from zero.” 

But although there are hopes 
in Jericho, there are also deep 
fears and worries abont the 
future. Many Jcrichoans remem- 
ber last December 13 when they 
prepared to celebrate the begin- 
ning of Israeli withdrawal and 
nothing happened. The Israeli 
army exacerbated suspicion yes- 
terday when it closed tbe town 
to visitors. 

One basinessman said he 
feared Israel would seal off Jeri- 
cho from the rest of the West 
Bank and from neighbouring 
Jordan. leaving “ns sitting here 
in jail”. 

More worrying is the response 
of young extremists of the 
Hamas Islamic Resistance move- 
ment. “When Arafat comes here 
we will pot a bullet between his 
eyes," said Khalil, a garlic seller. 

Ominons signs for future Arab- 
Jewish relations were also on 
show on the outskirts of Jericho, 
where Jewish settlers in the Jor- 
dan valley protesting against the 
agreement blocked a road with 
burning tyres and clashed with 
police. Some settlers said they 
would not obey any orders from 
incoming Palestinian police. 

The army stopped Jewish set- 
tlers travelling through Jericho 
and sent them around the town 
on a military by-pass road. For 
Arab and Jew at the military 
checkpoint yesterday it seemed 
that the agreement was herald- 
ing a divorce rather than coexis- 
tence. 


Kohl joins efforts 
to push through 
EU enlargement 


By David Gardner in Strasbourg 

Chancellor Helmut Kohl of 
Germany yesterday joined a last- 
minute push to ensure the Euro- 
pean Parliament today ratines 
the enlargement treaty to bring 
Austria. Sweden. Finland and 
Norway into the European 
Union. 

Ratification requires approval 
by at least 260 of the 518 MEPs. 
and party managers were yester- 
day making frenetic efforts to 
ensure enough Yes votes. Accord- 
ing to a parliament official, spe- 
cial travel arrangements were 
being made to make sure that 
several MEPs not yet in Stras- 
bourg will arrive in time for the 
vote. 

In letters to leaders of the main 
political groups in the Strasbourg 
assembly. Mr Kohl promised to 
ensure that tbe parliament would 
get the increased role it is 
demanding in a working party 
whose work will form the basis of 
the 1996 constitutional review of 
power-sharing in the EU and the 
Maastricht treaty. Mr Ruud Lub- 
bers. the Dutch prime minister, 
and Mr Jean-Luc Dehaene. the 
Belgian premier, have made simi- 
lar pledges to back parliament’s 
demands. 

Germany takes over the EU 
presidency at the end of next 
month, when the working party 
should be set up to prepare the 
1996 inter-governmental confer- 
ence. Mr Kohl reminded Euro-MP 
leaders that he bad long argued 
for a strengthening of the Euro- 
pean Parliament as the basis for 
a more democratic and federal 
Union. 


The parliament has been mak- 
ing its mandatory ratification of 
the Ell's biggest expansion condi- 
tional on an enhancement of its 
own role. In March. Strasbourg 
made clear it would not ratify if 
the UK got its way in the voting 
rights row. making it easier for a 
minority of member states in tbe 
larger Union to block decisions. 

Germany took the lead in 
ensuring the UK received only 
cosmetic concessions, but even 
these have provoked many MEPs 
into fighting for postponement of 
enlargement until the institu- 
tional balance in tbe EU is sorted 
out. 

At least 100 MEPs are today 
expected to press for a postpone- 
ment. though this motion will 
almost certainly be defeated. But 
the question is whether enough 
of the dissidents will then vote 
Yes on entry for the four new- 
comers. 

Mr Kohl’s intervention will bol- 
ster arguments that tbe failure of 
the enlargement vote would cre- 
ate a crisis that would hinder 
reform. But the British Conserva- 
tive government faces further 
discomfort from its Euro-phobe 
faction if it backs Mr Kohl's 
pledge to support a body which is 
markedly Socialist and federalist. 

Polls suggest that after next 
month's Euro-elections, the Stras- 
bourg parliament will be even 
more dominated by socialists 
than it is now. Officials in Stras- 
bourg point out, moreover, that 
additional seats for Germany to 
reflect unification mean that fed- 
eralist Germans will occupy 
many of the key positions in the 
new assembly. 


IBM to 


set up data 
network 
across 
China 


By Louise Keftoe 
in San Francisco 

International Business Machines 
has been chosen by China's min- 
istry of electronics industry to 
lead a vast project to link about 
500 dties to a national “informa- 
tion highway” data network. 

Under the terms of a memoran- 
dum of understanding signed by 
Mr Lou Gerstner. IBM chairman 
and chief executive, and Mr Zou 
Jiahua, a Chinese vice-premier, 
IBM will head the “Golden 
Bridge" project, one of three ini- 
tiatives designed to modernise 
China’s data communications 
and computing infrastructure. 

Tbe project will involve design- 
ing ami building regional net- 
works in cities across China, 
along with a “backbone” network 
linking the regional systems. The 
effort will be led by a new joint 
venture, based in Beijing, 
between IBM China and Ji Tong 
Communications, a company 
affiliated to the Chinese minis try 
of electronics industry. 

“This is China’s version of the 
information highway." said Mr 
Ned Lautenbach, head of IBM’s 
international operations. “The 
Chinese government has set very 
ambitious goals and we are 
thrilled to have been selected to 
work with them." 

IBM has also been chosen as 
the primary consultant on two 
other “golden projects": Golden 
Card will establish facilities for 
the credit and debit cards 
throughout China, and Golden 
Customs will create computer- 
ised record-keeping and tracking 
systems for China ’s exports and 
imports. 

“IBM is a famous computer 
company and has a long history 
of working with us," said Mr Zou. 
“Its technology and experience 
have contributed greatly to tbe 
development of tbe information 
technology industry in China.” 

As part of its expansion in 
China. IBM plans to establish a 
software development centre in 
Shanghai to develop programs 
for use in China and for export. 
Three networking technology 
centres will be opened in Beijing. 
Shanghai and Guangzhou provid- 
ing consulting services to Chi- 
nese customers, linking comput- 
ers to networks. 

IBM’s presence in China dates 
back to 1935. The company left 
China when the communist 
regime took over and came back 
in 1982 as an offshore business. 
In September 1992 IBM China 
became a wholly owned foreign 
enterprise, authorised to trade in 
local currency and to hire Chi- 
nese employees. 

“In the last 18 months or so we 
have been aggressively growing 
our resources, our commitment 
and our business in China." said 
Mr Lautenbach. These moves 
reflect the Clinton administra- 
tion's liberalisation of export con- 
trols on high-technology goods 
sold to China. 




Europe today 

A complex low pressure area west of Scotland 
will bring showers and rain to the British Isles. 
A cold front associated with the low will move 
east over the continent bringing rain and 
scattered thunder showers to eastern France. 
Germany and Switzerland. Poland and the 
Balkans will remain dry and mostly sunny. 
South-westerly winds will draw cool and 
unstable air towards the Benelux and north- 
west France resulting in mainly cloudy skies 
and a few showers. Temperatures will be 
much lower than yesterday. The Mediterranean 
will have a lot of sun and comfortable 
temperatures. High pressure over the Baltic 
Sea wtfJ keep Scandinavia sunny and mainly 
dry. 

Five-day forecast 

High pressure over Scandinavia will expand 
over western Europe during Friday and the 
weekend bringing sunshine and a gradual 
warming trend to Scandinavia, the Benelux. 
France and, later, the British Isles. A 
disturbance over the Atlantic will produce 
thunder showers in Spain and Portugal over 
the weekend. A series of depressions will 
cause cool and unsettled conditions to 
develop In eastern and south-eastern Europe. 

TODAY’S TEMPERATURES 




Maximum 

Befng 

fair 

21 

Caracas 

cloudy 

26 


Celsius 

Belfast 

ram 

13 

Cardiff 

cloudy 

12 

Abu Dhabi 

3un 

39 

Belgrade 

sun 

21 

Casablanca 

sun 

23 

Accra 

shower 

30 

Benin 

shower 

22 

Chicago 

cloudy 

20 

Algiers 

son 

27 

Bermuda 

shower 

25 

Cologne 

cloudy 

18 

Amsterdam 

shower 

16 

Bogota 

cloudy 

17 

O’ Salaam 

Shower 

30 

Athens 

fair 

22 

Bombay 

far 

33 

Dakar 

fair 

26 

Atfanla 

rain 

23 

Brussels 

shower 

17 

Dates 

fair 

28 

0. Airea 

fair 

IS 

Budapest 

sun 

19 

Delhi 

aun 

39 

B.fiam 

cloudy 

13 

CJwgen 

fair 

16 

Dubai 

sun 

39 

Bangkok 

far 

37 

Coin 

sun 

29 

Dublin 

rain 

14 

Barcelona 

fa ir 

22 

Capa Town 

sun 

21 

Dubrovnik 

sun 

22 



Our service. starts long before takeoff. 

Lufthansa 

German Airlines 


Edinburgh 

ram 

12 

Madrid 

am 

27 

Rangoon 

cloudy 

34 

Faro 

sun 

24 

Majorca 

sun 

25 

Reykjavik 

shower 

9 

Frankfurt 

cloudy 

17 

Malta 

sun 

23 

Rio 

fair 

26 

Geneva 

ran 

14 

Manchester 

rain 

13 

Rome 

sun 

21 

Gibraltar 

sun 

26 

ManBa 

cloudy 

34 

S. Frsco 

cloudy 

17 

Glasgow 

rain 

12 

Melbourne 

cloudy 

IE 

Seoul 

rain 

19 

Hambirg 

rain 

18 

Mexico CSfy 

ter 

24 

Singapore 

thund 

31 

Helsinki 

sun 

13 

Miami 

fab- 

32 

Stockholm 

sun 

15 

Haig Kong 

fair 

28 

Mflan 

sun 

25 

Strasbourg 

shower 

15 

HonoMu 

for 

29 

Montreal 

fab 

18 

Sydney 

cloudy 

24 

tsunba 

Ur 

16 

Moscow 

rabi 

9 

Tangier 

aun 

22 

Jersey 

shower 

14 

Munich 

ihuid 

18 

Tel Avtv 

lair 

24 

Karachi 

fair 

36 

Nairobi 

shower 

25 

Tokyo 

rain 

22 

Kuwait 

tar 

38 

Naples 

sun 

22 

Toronto 

cloudy 

16 

L Angeles 

cloudy 

21 

Nassau 

for 

31 

Vancouver 

for 

16 

Las Palmas 

901 

23 

New York 

Mr 

15 

Venice 

Mr 

23 

Lima 

loir 

23 

Nice 

thund 

20 

Vienna 

fair 

21 

Lisbon 

sim 

22 

Kflcostt 

shower 

23 

Warsaw 

fair 

17 

London 

cloudy 

14 

Oslo 

fab 

17 

Washington 

rain 

14 

Luxiwurg 

shower 

14 

Parts 

cloudy 

18 

WeBnglon 

cloudy 

15 

Lyon 

rain 

14 

Penh 

Mr 

26 

Wmipeg 

fair 

14 

Madeira 

sun 

20 

Prague 

thund 

22 

Zurich 

shower 

16 


THE LEX COLUMN 


SmithKline’s prescription 


When Merck bought Medco for $6bn in 
July last year most other pharmaceu- 
ticals companies were unconvinced of 
the commercial logic and flabber- 
gasted by the price. It is a measure of 
how Ear the market has -come in the 
last 10 months that SmlthKline Bee- 
chain’s decision to follow into vertical 
integration se ems to have immediately 
convinced on both counts. True, SB 
seems to be paying a shade less than 
Merck for its US pharmacy benefit 
mana ger A handy tax break means 
that earnings will barely suffer this 
year and should benefit thereafter. 
Even so, paying a multiple of around 
50 times test year’s gpmfo gs demands 
a com p e lling case . 

At its crudest level, buying Diversi- 
fied Pharmaceutical Services allows 
SB to recoup some of the margin now 
being lost to its new breed of custom- 
ers. DPS’s earnings depend on its abil- 
ity to negotiate aggressive deals with 
drugs companies. There is also the 
promise of rapidly rising profits as 
benefit managers cover more of the US 
population. It re mains to be seen 
whether DPS’s customers will be 
happy about its loss of independence. 
The relationship with SB will have to 
be played carefully. Still, the early evi- 
dence from Medco is that large health- 
care buyers are reluctant to take their 
business elsewhere. 

The wider benefits, including access 
to DPS’s clinical data, will only 
become apparent over time. The rela- 
tive performance of SB’s drugs will be 
the critical test. As Roche’s acquisi- 
tion of rival drug company Syntex 
makes clear, there is more than one 
way to tackle the margin squeeze now 
under way. With two of the big three 
US benefit managers in the hands of 
drugs companies, though, others in 
the sector will find that opportunities 
for vertical Integration are few and far 
between. 

UK economy 

The strong growth in MO money sup- 
ply last month is about the best indi- 
cation yet that economic recovery has 
survived the immediate impact of the 
chancellor’s tax increases. But the 
jury must still be out on whether that 
positive response will continue, espe- 
cially now that consumers have 
banked their April pay cheques. Anec- 
dotal evidence suggests confidence is 
weak. Yet spending may well turn out 
not to be too badly affected. Employ- 
ment and wages are growing, and 
higher turnover in the housing mar- 
ket underlined by yesterday's mort- 


FT-SE Index? 3100,0 {-25-3J 


SffiithKEne Beechasi 

Share price wtoaweto the ' 

FT-SE-AA»-Share index 



gage lending figures, should boost 
demand for consumer durables. 

Obviously the authorities cannot 
wish the recovery to falter, but such a 
high rate of narrow money growth 
must also leave them uneasy- Year-on- 
year growth of 52 per cent is way 
above the monitoring ceiling of 4 per 
cent, and the excuse that individuals 
are inclined to hold cash because 
interest rates are so low is wearing 
thin. Arguably, the original target 
range for MO was too tight, but the 
authorities cannot let the aggregate 
expand at tins kind of level for more 
than a month or two without risking 
serious loss of credibility. 

Then talk would turn, not to 
whether there is room for one more 
rate cut, but rather to the question of 
how soon rates would have to rise 
again. It is perhaps unfortunate that 
news of such vigorous money growth 
coincided with fresh nervousness over 
sterling. Its trade-weighted index 
dropped 03 per cent yesterday, partly 
in the backwash of a weak dollar and 
partly in response to political worries. 
There was no inflationary threat when 
sterling left the ERM because the 
economy was so weak. Depredation is 
more risky now that the output gap Is 
closing and unit labour costs have bot- 
tomed out 

Lloyd’s 

All credit to Lloyd's of London for 
trying to transform itself from an 
expensive club into a rational market. 
The proposed introduction of preemp- 
tion rights for Names, s imilar to those 
enjoyed by shareholders in the equity 
market, is a small step in this direc- 
tion. Risk-based capital requirements 


for underwriting syndicates should 
also bring returns more closely into 
line with risks. Lloyd’s might then 
stand a better chance of developing a 
mix of business capable of generating 
consistent profits. ‘ 

Lloyd’s will look an odd-ball among 
financial markets until capital is allo- 
cated to syndicates cm the basis of 
price, rather than favours and queue- 
ing as at present That giant leap will 
probably involve Names exchanging 
syndicate participations for shares in 
specialist Lloyd's companies which 
can be traded. Exactly how that might 
happen, and what form the new com- 
panies might take, was left open by 
yesterday’s report. 

In manag ing any such transition, 
though, the interests of Names will 
have to be carefully protected- Haying 
relied on private individuals to ride 
out the recent underwriting storm, 
Lloyd’s must give them a fair chance 
to recoup their losses under the struc- 
ture which is now emerging. 

Crest 

It is obviously embarrassing that 
the London stock market is unlikely 
to meet the original deadline of next 
January for introducing five-day 
rolling settlement. Five-day settlement 
has become the International stan- 
dard. while some rival markets are 
moving towards a three-day system. 
Delay makes London look unprofes- 
sional. reinforcing the Impression cre- 
ated by last year’s Taurus fiasco. 

Nevertheless, delay is better than 
disaster. The move to five-day settle- 
ment is due to occur under the old 
paper-based system. Fast paper settle 
meat may be feasible but there is 
clearly a risk that back offices and 
registrars could be swamped by paper 
m o un tains it certainly makes sense to 
see how 10-day settlement due to start 
in July, beds down before progressing. 
There may even be a case for postpon- 
ing fast settlement until Crest, the 
electronic system that fills the role 
that Taurus should have filled, is up 
and running. 

Meanwhile, the stock exchange has 
been snubbed in its ambition to bold a 
30 per cent stake of Crest Its share 
will be no higher than that held by at 
least 17 other financial Institutions, if 
indeed it decides to take part at all. 
The exchange may yet receive tbe con- 
solation prize of operating Crest under 
contract - a possibility held out yes- 
terday by the Bank of England. But, to 
win the contract it will have to com- 
pete. Success cannot be guaranteed. 


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BRIEF 


_. . — ~ --FUWU UHIMIIU, nu-^ngnrM 

GieakB, the chief executive, forecast a profit for 


.■.un muam a, uxuj iwu mucpeuueni nmmr-Tgi 

entities which wfll be distributed in a complicated 
tr a nsac tion to existing shareholders. Papa 21 

Sap warns over problem assets 

. Standard & Poor’s, fee international credit rating 
agency, has said asset-quality problems at Japanese 
banks, which face increasing lad-loan levels, 
will take several years to resolve, ftiap 22 


Brown & Jackson in rescue talk* 

Pepkor, the South African retailer, is stiffhnicfing 
talks with Brown ft Jackson* the troubled discount 
retailer which last jnontti announced a £0m rescue 
deal with the Wefafidds, the irifllfoaaire couple 
who created the What Everyone 'Wants chain. 

Page 25 

Enterpr ise bM worries shareholders . 

Sha r eholders in rivalexplorers Enterprise OH 


terms and structure of the hostile £L5hn offer. 
Shareholders* main concerns appear to be the ' 
valuation placed on ijwmn (which excludes a 
cash alternative) the unusoal equity structure 
and the timing of the bbL Page 25 "" 

Keefe aim for off-fleld success 

When the UK's Manchester United takes to the 
Add far its laBt home game of the season an May 
8, all minds will be concentrated on football, fts 
core business. But for the directors watching 
that afternoon’s clash with Covenfry TSty, the . 
clubisanmlti-Iayered business- non-footballing 
activities have helped lift first-half profits by 
. 65 per cent to £7JSm CfTLlru) Page 26 

jBanrfero around Chinese nlna* 

China’s mtorog sector has lagged well behind 
others, notably oil and gas, m efforts to attract 
foreign fargnhrwnffni ttartt&vrs* Tnirring executives 
say China is mateng deflntte progress in deartng 
away, barriers to {ordgnhtve^bnavtPage 28 

UK buBdlngsociety merger expected 

The UKbuildingwjddiesas^TooksEettofaca 
a further shake-up asNorthera Rock, the UK’s 
elevento largest building sodety, Is today expected 
to announce plans to mage with another society. 


Companies In this Issue 


Abbey National • • 29 

Aeon . * 25 

Aktivbanken ' 20 

Ansetc 2 2 

A3hJey (Laura) - 25 

BHP A 

BP 29 

BTR 2? 

Bank Bumlputra - 22 

British Gas 29 

Brown & Jackson 25 

CEPSA 25 

CHP Leisure 27 

Compass 27 

DSM ® 

OarthBton Crystal 27 

Diversified Phann IB 

DnB 20 

Eastman Kodak 21, 19 

Etewtek 26 

Enterprise 29 

Enterprise OB 25 

FaJconbridge 21 

Fiaons 29 

Freeport-McMoRan « 

GB Glass 27 

GBE mti 26 

Gartmora European 27 

Glaxo 29 

GovettCrtemal 25 

HSBC 2? 

Heron Inti 25 

Hyundai 6 


Market Statistics 

fAmoal reports service 30-81 

Saidmark Swt bonds 24 

Bond futures and options a* 

Bond prices and yieUs g 

ComnuxSOae prices ® 

DMdenh amowced. UK » 

BE currency rates » 

Brtbond prices » 

S2S5 

ft Bold Unas mm# 

FTASMA M bond wc » 

FMgvJcaafJesftriws a 


(CtAintrafa 
Jove brv Tat 
Kuhna&Nagai - 
Laaroo:;'- ■ 

Letts (CtariM|/:. .. . 
Law 8. Bonar . 
Manchester Uri«ad.. 
Marzotto 
Minay Acorn • 

New Guernsey Secs 
OMV 

pej*w ;• - ■ - 
PowaU Duftryn • 
Premium Underwriting 
RWE 

Reuter Hofcftigs 
Revmaninds ... 

Sanoff 

Samoa 

Shoti 

Shlresect 

SSentixght . 

SmHhKUne Beecham 


Sydbank 

Tbfcnex 

Thomas Cook 

Tbpdanmerk 

UAC 

UnBevar 

V8NL 

Wacom 

WeBcome 


ForakP exchange 38 

£818 prices 24 

URa equfty options Bock Pago 
London stare aentar awi 

ixrdrn trad qdfcms 3G 

Uana^d finds sendee 32-38 

Money mates 38 

Now Ml bond Issues M 

Recant teUBs, UK . a 

Sfnrt-lnin W tabs - 36 

US interest rates 24 

Wortd Stock Motets 37 


Chief price changes yesterday^ 


PAWSfWr) 


795 + M 


2H ® 


FINANCIAL TIMES 


COMPANIES & MARKETS 


Overseas Moving 
byMichaelGe rson 

” I 081-446 BOO 




©THE FINANCIAL TIMES LIMITED 1994 


Wednesday May 4 1994 



RWE expects to 

increase dividend 

EWE, the industrial congomerate bunt around 
^n^slargtet electricity generator, will likely 
**!•> spteofhS 


US group withdraws from healthcare as UK pharmaceutical company buys distributor 

Kodak returns to core with drug sale 


- tatprXsSV hSr'Sridend 

au the basis of more favourable tax allowances. 

«*•* pharmaceuticals business 

Sanaa, the French pharmaceuticals group, has 
expressed interest in acquiring a substantial 
past of Eastman Kodak’s pharmaceuticals busi- 
nesses, -either on Its own or with partners, following 
the OS group’s announcement that it would sell 
its healthcare activities. Page 21 

fTeeport-McMoRan, the New Orleans-based natural 
resources company, win split its two principal 

hUsrinpSAPfi rnmwr anil onU nl.k.. — J j 1 


By Patrick Hanrerson Mr Pis! 

h New York December 

Whitmore 

Eastman Kodak, the struggling US satlstactic 
photographic products group, plans to sen The tbr 
its pharmaceutical and consumer health- to sell - 
care divisions to concentrate an its core products ■ 
imaging business. sonal cart 

The restructuring plan is aimed at light- ness, LftF 
ening the group's $7bn debt and bolstering nos tics d 
its balance sheet as well raising funds to S3.7bn of i 
develop the core photographic imaging year, 
business. It is the latest attempt by Mr Mr Pis 
George Fisher, c hairm an, to restore the whether t 
group's flagging fortunes. off in a p 

An expensive 
bargain for 
SmithKline 


Mr Fisher took the helm at Kodak last 
December after his predecessor, Mr Kay 
Whitmore, resigned amid shareholder dis- 
satisfaction with the group’s performance. 

The three divisions which Kodak plans 
to sell - the drugs and consumer health 
products unit Sterling Winthrop, the per- 
sonal care and household products busi- 
ness, LftF Products, and the Clinical Diag- 
nostics division - accounted for about 
S3.7bn of the group’s $l&4hn revenues last 
year. 

Mr Fisher would not comment on 
whether the units would be sold or spun 
off in a public offering. However, he said 


the group’s partner in a worldwide drug 
sales venture, the French company Elf 
Sanafi, would be given the right of first 
refusal to buy parts of Sterling, which 
Kodak bought in 1968 far $5.1bn. Yesterday 
Bayer, the German pharmaceuticals 
group, said it was interested in purchasing 
Sterling. 

Kodak said it was retaining its Health 
Sciences division because the unit will 
play a pivotal role in its imaging strategy. 
Wall Street, which has been highly critical 
of Kodak’s performance, welcomed the 
restructuring. The group’s shares climbed 
to $46%. 


Standard & Poor’s, the credit rating 
agency, said it would consider upgrading 
Kodak’s debt rating in light of the divest- 
ment plan, which it believed could ulti- 
mately lead to the elimination iff much of 
the group's debt 

The plan continues Kodak’s strategy of 
focusing on its core imaging business. 
Four months ago Kodak spun off its chem- 
icals division, Eastman Chemical, and last 
month it flnnmyrwyri the formation of a 
new unit to spearhead its involvement in 
the winrkpt far electronic imag in g 
New image, Page 21; Global sickness. 
Page 16 


By David Wighton 


M r Jan Leschly, chief 
executive officer of 
SmithKline Beecham, 
recently described Merck's pur- 
chase of drug distributor Mefl co 
last year as “strategically ... a 
stroke of gemus”. But he ques- 
tioned the $6.7bn price tag: 

So it should have come as little 
-surprise tint feBBfe wants 
to buy Medeo’s smaller rival 
Diversified Pharmaceuticals - or 
that Mr Leschly argues at only 
$L3hu (£L5bn) it is a much better 
deal Not that it looks a bargain 
by normal standards. Diversified 
made an operating profit of just 
$39 LSm last year. 

To be fair. Diversified fa grow- 
ing rapidly with profits rising by 
over 60 per cent last year on 
more than trebled sales of 
$142.1 m. 

But Mr Jean-Pierre Garnier, 

- chairman of SB Pfa» rm«wTH«i}g < 
says its importance for the group 
cannot be measured in tradi- 
tional terms. He simply wains 
that pharmaceuticals companies 


without similar deals “will proba- 
bly not survive in the increas- 
ingly competitive environment'’. 

Mr Leschly sees the move as a 
vital part of his efforts to move 
the group from being a “manu- 
facturer selling pills” to a sup- 
plier of “total pharmaceutical 
care” This transformation is 
deemed necessary because 
healthcare in the US Is moving 
from one controlled by doctors to 
one controlled by tire payer - a 
rfiangB which hag hpgp associ- 
ated with toe creation of two new 
groups of businesses, health man- 
agement organisations (HMDs) 
and phar maceutical benefit man- 
agement companies. 

Both act as intermediaries buy- 
ing care and drugs on hphaif of 
their customers, which in the 
case of pharmaceutical benefit 
manftgpmPTvt companies are usu- 
ally HMOs. Mr Leschly says 
SmithKline’s deal is unique in 
that it involves not only the pur- 
chase of a pharmaceutical benefit 
management company. Diversi- 
fied, but also dose links with its 
parent United Healthcare, which 



Ttmwr H u mpWBB 

Jean-Pierre Gander (left) SB chairman, with Jan Leschly and Hugh CoDum, chief finanrial officer (right) 


owns health TTMTiagpmgnt organi- 
sations with 1.6m members. 

“That triangle fa essential for the 

strategic importance of the deal.” 

SmithKline and United have 
agreed to a minimum six-year 
alliance, through which Smith- 
Kline will have exclusive rights 
to data from those 1.6m mem- 
bers. This data will help Smitb- 
Kiine to greater understanding of 
the cost/benefits of drug use. 
United will continue to use 


Diversified for its owned man- 
aged care operations. 

Mr Leschly says the acquisition 
will “enhance" the “presence” of 
SmithKline's products in the 
managed care sector, yet stresses 
it wiQ not attempt to force fts 
products through Diversified. “If 
we forced them to do certain 
thing s it would not he competi- 
tive and that would not be in our 
interests. We want them to con- 
tinue their fruitful relationship 


with other manufacturers.” 

He argues SmithKline will 
bring benefits to Diversified, 
indinting access to its salesforce 
and specialist rimirai knowledge. 
As for the price, Mr Leschly says 
SmithKline is paying $210 for 
parh of the llm people for wham 
Diversified directly manages 
pharmaceutical benefits. On the 
same basis he says Merck paid 
more than $325 a bead for Medco. 
Lex, Page 18 


India postpones VSNL $lbn equity issue 


By Stefan Mtegstyl in New DeBii 
and San Webb In London 

The Indian government 
yesterday postponed a planned 
$lbn International equity issue 
by Videsh Sanchar Nigam 
(VSNL), the state-controlled 
international telecommunica- 
tions monopoly. 

Fund managers balked at the 
high price set by the government 
in consultation with the company 
and the global co-ordinators, 
Salomon Brothers of the US and 


Britain’s Klein wort Benson. 

The postponement fa India’s 
biggest setback in the interna- 
tional capital markets since 
Indian issuers first raised funds 
tn late 1992, after the govern- 
ment’s hboaifaation programme 
permitted increased foreign trade 
and investment. The decision 
could harm the prospects for 
future Indian issues and will do 
fittie i to help confidence in invest- 
ing in emerging markets, which 
have mostly fallen this year after 
rapid gains in 1993. 


Barry Riley 


“This is really bad news for 
India," said Mr Tony Singh, a 
stockbroker at Cresvale, a Lon- 
don-based investment company. 
“There were so many other 
Euroissues from India which 
were hoping to ride on the back 
of VSNL’s success." 

When VSNL, which fa 85 per 
cent government-owned, first 
considered the international 
equity offering late last year, it 
considered raising $50Qm, which 
would stil 1 have been the biggest- 
ever Indian international offer- 


ing. But the growing appetite of 
foreign fond managers for Indian 
stocks persuaded the company 
and the government to increase 
the issue size to Slbn. With the 
VSNL price rising on the BSE 
from Rs650 in early November to 
a peak of Rsl,700 in January and 
February, the issuers fixed a min- 
imum issue price of Rsl,400. 

But by the time the price was 
approved at a cabinet meeting in 
early April, international mar- 
kets had soured and were in a 
difficult state when the company 


started its roadshow in Hong 
Kong in mid-April. Fund manag- 
ers there, and later in London 
and New York said with shares 
trading in Bombay around 
Rsl.300, Rs 1,400 was too high. 

There were talks over the 
weekend on proposals to cut the 
price to between Rsl.100 and 
Rs 1.200, to raise about $700m. 
The VSNL board was not against 
cutting the price, but a change 
required cabinet approval. 
Background, Page 22; World 
stock markets. Back Page 


Capital 
gains put 
Stora back 
in black 


| By Christopher Brown-Humes 

In Stockholm 

Stora, Europe’s biggest pulp and 
paper group, made a strong 
return to profit in the first quar- 
ter after benefiting from 
increased demand, cost-cutting 
and big capital gains. 

The group swung to a 
SKrl.07bn ($135m) profit after 
financial items from a SKr78m 
loss a year earlier. Excluding 
one-off items, profit amounted to 
< SKr430m compared with a 
SKrsam deficit in 1992. 

Mr Lars-Ake Helgesson, Stora 
president, said the market was 
recovering after three years of 
over-capacity and falling prices. 
He was encouraged by evidence 
of faster-ihan-expected economic 
recovery in Europe, the compa- 
ny’s twain market. 

Group volume was 2.7 per cent 
higher than a year ago at L68m 
tonnes, but prices were generally 
lower than in 1993. “Increases in 
pulp prices have brought price 
rises in most paper and board 
product areas, but with only a 
limited affect on earnings to 
date,” said Mr Helgesson. 

Disposals meant group sales 
fell to SKrll.46bn from 
SKrl2.5Sbn. For comparable 
units, sa les were SKr425m higher 
reflecting the volume growth and 
currency movements. 

Operating profit improved 
strongly to SKrl.39bn from 
SKi358m. A restructuring pro- 
gramme which has lowered costs 
by SKr<L5bn during the industry 
recession was one reason for the 
upturn, but tbe main impact 
came from SKr641m in capital 
gains. There was a SKr800m gain 
from the SKr3-46bn sale of the 
group's Tarkett flooring unit, but 
this was partly offset by a 
SKr20Gm provision for the possi- 
ble writedown of a Canadian 
pulp plant 

The company said all units 
improved their operating perfor- 
mance. Stora Feldmuhle lifted 
profits to SKrl27m from SKrt7m, 
while Stora Billerud saw profits 
rise to SKr275m from SKridlm. 

The only product area to record 
a worse performance was techni- 
cal office papers where losses 
deepened to SKrl7m from SKr9m. 
Profits from printing papers 
i climbed to SKrl79m from 
| SKrllfim and from board and 
I packaging paper to SKr3Q3m 
from SKr228m. Pulp made a mod- 
est SKrlGm profit, turning 
around a SKi38m loss. 

Financial expenses fell to 
SKr322m from SKr436m. The 
improvement reflected lower 
interest rates and reduced debt 


Long hot summer to test 
the nerve of dollar bulls 




t Dollar dis- 
appointment fa on 
the edge of turn- 
ing into a rtfthawfe 
as the US Federal 
Reserve fa forced 
to resort to prop- 
ping Up thfi aflmg 
currency as it 
sinks against the yen. At risk are 
many erf the global investors who 
have been almost unanimously 
h uffish about the dollar for more 
than a year, to 1993 the dollar 
went down against toe yen but at 
least it went up against the 
T VMaik. This year it has been 
soft against most other curren- 
cies. 

What has nobbled the dead 
cert? After an, with the DS ecanr 
omy expanding strongly while 
most of its G7 trading partners 
remained in recession, the argu- 
ment has been that a transforma- 
tion in interest rate differentials 
would push up dollar exchange 
rates. In practice the EaQ in conti- 
nental European interest rates 
has hem rather Slow, but 
whereas at the end of 1992 
D-Mark three-mouth rates were 
more than 500 baas points higher 
than the dollar equivalent, today 
toe «tiflhrpntigl fa only just over 
100 points. Pretty soon the gap 
could reverse. 


irrational? There do, of course, 
have to be reasons but they vary 
from time to time. Besides 
short-term interest rate differen- 
tials, currency exchange rates 
may be driven by long-term 
investment Sows and by political 
uncertainty. There Is also the 
basic -economic factor of trade 
tmfialBTirfis . which this year may 
have become important ag a in. 

There are some big negatives 
here. The BS current account def- 


icit may be heading for $X40bn in 
1994, pushed up by domestic 
demand, and generating 
unwanted dollars overseas. More- 
over, far from supporting their 
local neighbourhood Treasury, 
US pension funds and mutual 
fund investors have discovered 
the virtues of global investment, 
and poured almost $l30ba into 
foreign securities in 1998. 

Offsetting that was gLIQbn of 
net purchases erf US securities by 
foreigners, but the point fa that 
whereas in the 1980s the big 
investments by foreigners (often, 

at that gtftg p. , Japanese firtanHal 

institutions) were vastly greater 
than the US outflows, now there 

Anybody buying 
rising yields is 
also baying 
immediate 
capital losses 

is a rough balance. 

The underlying US current 
account deficit is therefore hav- 
ing to be financed by attracting 
hot money which is more sensi- 
tive to the prospects for 
short-term capital game through 
exchang e rate volatility than it fa 
to small-scale interest rate differ- 
entials. 

A low rate of domestic saving 
in the US is.fonasg the country 
to draw on savings overseas, 
especially when the economic 
upturn is leading to a rise in cor- 
porate investment The mirror 
image is depressed in Japan, run- 
ning a current account surplus of 
about $130tm, but apparently no 
longer willing to buy dollar secu- 


rities as it was in the 1980s. 

The Americans portray prob- 
lems with Japan in terms of 
interference with freedom of 
trade, but different propensities 
to save are at the heart of the 
problem. The immediate diffi- 
culty is that Japanese fife compa- 
nies are no longer willing to take 
risks with the dollar /yen rate 
Which has COSt thnm SO rr mnh in 
falling from over 200 10 years ago 
to scarcely above 100 today. 

Seen this way, the challenge 
for Americans is to attract 
savings domestically and interna- 
tionally. Last year the hanks and 
the hedge funds were still 
healthy sources of support far US 
Treasuries but that game fa now 
over. The simple solution fa a 
sharp rise in long-term dollar 
interest rates, which has hap- 
pened, with the 150 basis point 
rise in the benchmark long band 
yield since last October’s trough. 
Apart from attracting foreign, 
money these higher returns will 
also, eventually, choke off the 
portfolio outflows. 

But anybody buying into rising 
yields Is also buying into immedi- 
ate capital losses. So there fa the 
potential for a hiatus as potential 
buyers erf dollar securities wait 
for the bond market to settle 
down. While long-term portfolio 
investors hold oH, the dollar is 
likely to wilt; and Japanese insti- 
tutions certainly have reason to 
bide their time until toe yen is 
not just overpriced but ridicu- 
lously priceiL 

At least we learned last week 
there are limits to the rea d iness 
of Americans to encourage deval- 
uation of their currency. But we 
could be in. for an unstable and 
unpredictable summer as the 
nerves of the dollar balls are 
tested. 


THE LINK BETWEEN THE PAST 
AND THE FUTURE 


Omega Seamastcr. Selfwinding 

k chronometer in 18 L gold and sred, 
wa rer-resistan r ro 1 20 m/400 ft. 
Swiss made since 1848. 








Sr “T?V — V, 


O 

OMEGA 

■The sign of excellence 











20 


| 111 IT TfT WPnNESDAY 41994 


INTERNATIONAL COMPANIES AND FINANCE 


DSM net profit lifted to 
FI 83m by jump in sales 


By Ronald van de Krol 
in Amsterdam 

A jump in sales allowed DSM, 
the Dutch chemicals group, to 
report a near 14-fold increase 
in net profit in the first quarter 
compared with the same, 
severely depressed period of 
1993. 

Net profit rose to FI 83m 
($43m) from FI 8m a year ear- 
lier. on turnover up 5 per cent 
at F123bn. Sales by volume 
were up a strong 9 per cent, 
reflecting greater demand for 
plastics and caprolactum, a 
raw material used to make 
nylon. 

DSM said part of the sales 
rise may have been due to non- 
recurring factors, such as extra 
stockpiling by industrial cus- 
tomers and by a drop in 
exports from competitors in 
central and eastern Europe. 


Another factor behind the 
profit rise was a further 
decrease in fixed costs. The 
woiifbrce stood at 19,774 peo- 
ple at the end of the first quar- 
ter, an 11 per cent decline from 
the same period of 1993. 

The economy In Europe, 
DSM’s main market, showed 
signs of a hesitant recovery in 
the first quarter, with some 
growth reported by European 
car makers, an important cus- 
tomer group for the company. 

The company said it expec- 
ted business in the current 
quarter to be similar to the 
first three months of the year. 
But DSM cautioned that 
results would be influenced by 
maintenance shutdowns In the 
second quarter. It declined to 
make a forecast for foil-year 
results. 

Mr Rirnnn de Bree, flhq lrmaq, 
said the results, which were 


above analysts' predictions, 
were encouraging but noted 
the recovery was frail, and sell- 
ing prices were still low. 

DS&Ts shares rallied strongly 
on the first-quarter results, 
closing up FI 4.70, or 3^ per 
cent, at FI 145.00. 

• Ballast Ned am, the con- 
struction group, said the num- 
ber of shares in this month’s 
flotation would be 3.7m, with 
an option to issue up to a fur- 
ther 450,000 zf the issue is over- 
subscribed, Reuter reports 
from Amsterdam. 

The company confirmed that 
the share issue represented 37 
per cent of its cumulative pref- 
erence stock. Ballast expects 
1994 net profit of about FI 90m. 
It made profits of FI 845m in 
1993. The preference shares are 
to be listed on the Amsterdam 
bourse from the middle of this 
month. 


Kiihne & Nagel in public offer 


By Ian Rodger in Zurich 

Kuhne & Nagel, the 
international freight forward- 
ing group, is going public with 
a placing this week of 181,000 
bearer shares - 18 per cent of 
the enlarged capital - in Zur- 
ich and Frankfurt at STY775 a 
share. 

The group, in which Mr 
Klaus-Michael Kuhne will 
retain a majority stake, also 
posted a 15.5 per cent rise in 
consolidated net income last 
year to SFr44.6m ($30-9m) on 
sales up 1.1 per cent to 
SFrtJJbn. 

Mr Bruno SaimnanTi , finance 


director, forecast that net 
income would rise a further 12 
per cent this year, suggesting 
the placing price was 15.5 
times expected 1994 earnings. 

Mr KQhne, 57, decided on the 
placing as part of the arrange- 
ments to ensure an orderly 
succession. He has no heirs. 

Viag Bayemwerk Beheer of 
Holland acquired 33 per cent of 
the capital in 1992 when Lon- 
rho of the UK, which had held 
a 50 per cent stake since 1981, 
withdrew. 

Viag has first refusal on Mr 
KQhne's shares, and its policy 
is for tbe public to hold large 
minority stakes In its subsid- 


iaries. The placing consists of 
91,000 gristing bearer shares, 
being sold by Deutsche 
Handelsbank. and 90,000 new 
shares. 

Following the placing, Air 
Ktihne will hold 51.6 per cent 
of tbe capital and 56.7 per cent 
of the votes. Viag will have 

30.3 per cent of the capital and 

33.4 per cent of the votes. 

Mr Salzmann said the 
group's medium-term targets 
were for annual cash flow of 
SFr90m to SFr95m and a 10 per 
cent annual rise in net income. 
It planned a 40 per cent to 50 
per cent distribution of profit 
in dividends. 


Sydbank to acquire Aktivbanken 


By Hilary Barnes 
ft Copenhagen 

Sydbank is to acquire 
Aktivbanken and become Den- 
mark's sixth-largest bank with 
assets of about DKr5Gbn 
(S7.5bn). 

The takeover has solved a 
problem for Topdazunark, the 
insurance group, which bought 
Aktivbanken in 1989 for 
DKrl.4bn. Since then 
Aktivbanken has run up losses 
totalling DKr58lm. 


Topdanmark's involvement 
with Aktivbanken were factors 
in the resignation last month 
of Mr Henning Birch, Topdan- 
mark's chief executive, and Mr 
Oluf von Lowzow, supervisory 
board chairman. 

After the deal, Topdanmark 
will own 22.6 per cent of the 
shares in Sydbank and Top's 
life assurance and accident pol- 
icies will be sold through Syd- 
bank’s branches. 

Sydbank will pay krone for 
krone for Aktivbanken *s net 


assets with an issue of shar es 
with a market value of about 
DKr4lQm. Sydbank will make 
an underwritten issue of 
shares with a minimum price 
of DKr210 per share. 

Following the share Issues, 
Sydbank' s capital adequacy 
ratio would be about 12 per 
cent, Topdanmark said. 

Mr Carsten Andersen, Syd- 
bank chief executive, said cost 
savings, equal to at least 12 per 
cent of the combined costs of 
the two banks would be made. 


DnB moves 
back into 
the black in 
first quarter 

By Karen Fossil hi Oslo 

Den norske Bank, Norway’s 
largest bank, moved back; into 
the black with a net profit 
with NKrSBGm ($79 Jim) for tbe 
1994 first quarter, from a loss 
of NKrlSSm a year ago. 

The tunround was helped 
by reduced losses on loans and 
guarantees and came in spite 
of lower non-interest income. 

Mr Finn Hvlstendahl, group 
managing director, said the 
improved performance contin- 
ued a trend which began last 
year. Net interest income rose 
slightly to NKrl-27bn from 
NKrl^abu, helped by “com- 
fortable” margins in the face 
of strong c om petition. 

However, gross interest 
income was reduced by 
NKrl.44bn to NKr2.97bn as 
interest expenses were cot by 
NKrl.48bn to NKn.7bn. Non- 
interest income fell by 
NKr296m to NKr662m with 
currency and securities gains 
falling to NKr65m from 
NKrlZOm. 

DnB that unreal- 

ised gains on shares amounted 
to NEr392m at end March and 
that an increase in interest 
rates had led to a loss on 
bonds, partly offset by an 
increase in valne of other 
financial instruments used to 
hedge interest rate risk. 

Group operating profit, 
before losses on loans and 
guarantees, fell to NKr780m 
from NKrl.OGbn. Losses on 
loans and guarantees were cut 
to NKrlSOm from NKr 1.171m. 

DnB said there had been 
some strong recoveries, partic- 
ularly where the improvement 
in the Norwegian economy had 
a positive Impact on custom- 
ers* ability to meet payments 
and on the value of the bank’s 
collateral. 

The volume of non-perform- 
ing loans was NKr8.9bn, a 
reduction of NKrl*3bn since 
the mid of 1993. DnB said tbe 
volume of new non-performing 
loans registered in (he period 
was moderate while several 
previous non-performers had 
been reinstated as performing 
assets. 

“The quality of the bank's 
loan portfolio was enhanced 
during the first quarter,” said 
Mr HvistendahL 


RWE expects to increase 



By Quanta Peel bi Bonn 

RWE, the industrial conglo- 
merate built around Ger- 
many's largest electricity gen- 
erator; expects to pay a higher 
dividend this year, in spite of 
heavier losses in its waste dis- 
posal division. 

Mr Frledhdm Gleske, chief 
executive, forecast a profit for 
the year ending June, compa- 
rable to last year's DM881m 
(3512m) - but promised a 
higher dividend on the basis of 
more favourable tax allow- 
ances. 

Both the oil and chemicals 
division, and RWE Energia, the 
electricity generator, will make 
bigger contributions to the out' 
come, with the buoyant con- 
struction division maintaining 
its position. 

Two US investments - the 
Consol mining group, hit by a 
seven -month strike, and 
NuKEM, its waste disposal 


operation - are the mam loss- 
makers in the group so Ear this 
year, Mr Giesfce sail 

On the other band, improved' 
results In east Germany, with 
rising petrol sales for RWE- 
DEA and expanding construc- 
tion activity, helped two impor- 
tant arms of the company to 
better results. 

The mining and raw materi- 
als division, centred an Rhein- - 
braun, Germany's biggest pro- 
ducer of brown coal for power 
generation, saw a drop bJ turn- 
over of 13.6 per cent, without 
taking acquisitions into 
account . 

Mr Gleske said the losses at . 
Consol reached $42m as a 
result of the miners'. strike,, 
leaving RWE to carry its 
T RisBm share of amount. 
However, he promised much 
more favourable prospects for 
the US interest in 1394, with 
Consol stren gthening its posi- 
tion in the low-sulphur coal 



Friedbelm Gleske: forecast a 
profit comparable to last year 

market with the purchase of 
Island Creek- 

Waste disposal, an area into 
which RWE has expanded rap- 
idly in recent years, saw oper- 
ating losses of 396m ' at 


tfnKEM, where a big restruct- 
uring programme has bear cav 
ried out ' : 

Mr Gleske said the entire 
amount had been provided^ 
in tbe company accounts up to 
December 3L 

Overall group turnover 
increased by £4 per cant upto 
the end of March, although the 
growth excluding acquisitions 

was only 0.9 per cent 

Electricity consumption sta- 
bilised at a growth rate of 03 
per cent, after 18 months of 
decline in line with the Ger- 
man recession. However, RWE 
Energje was the main ben efi- 
ciar y from improved depreda- 
tion allowances Introduced by 
the German government 'to 
increase corporate competitive- 
ness. ■ 

In particular, RWE has been . 
able to write off a large portion 
of the cost of its big environ- 
mental programme to reduce 
emissions from power stat ions . 


Marzotto falls 74% to L10.2bn 


By Andrew HOT in MHan 

A slump in demand on the 
world clothing market has hit 
1993 profits at Marzotto, one of 
Italy’s largest clothing and tex- 
tile groups. 

The company, which con- 
trols Hugo Boss, Germany's 
biggest menswear designer, 
yesterday reported a 74 per 
cent decline in net earnings to 
L102bn ($6m), against L39.8bn 
in 1992. Net earnings in 1991 
were lAO.lbn. 

Sales were little changed at 
Ll,953bn, against LU955bn, of 
which three-quarters came 
from the European Union. 

The parent company 
announced a net profit of 


14.41m, compared with the 1992 
loss of L44.7bn, which was 
struck only after some L70bn 
of extraordinary provisions. 
S alrK of the parent company 
fen 8J per cent to LA56bn, and 
operating profits were cut to 
125£bn from L552bn. 

Marzotto ’s caution was 
reflected in its decision to rec- 
ommend a cut in dividends, to 
T.im per ordinary share from 
1280. 

However, the group said 
orders were up in the first 
quarto: of 1994, both in Italy 
and in overseas markets. The 
end- March order book was 
worth L774bn, nearly 20 per 
cent Hi ghw fhVm at the samp 
time last year. 


Sales at the same date had 
reached L591bn, down 2 per 
cent on the first quarter of 
1992. 

The company explained that 
it was in Italy - particularly in 
the market for classic men’s 
clo thing - that Marzotto felt 
the pinch last year. 

The group said the downturn 
had offset growth in net profits 
from its textile manufacturing 
s ubsidiari es, and its holdings 
in Hugo Boss, and linificio, a 
th rg ftri msmiifan tairer. 

Marzotto owns nearly 64 per 
cent of the voting stock of 
Hugo Boss, which last month 
announced 1993 profits 73 per 
cent higher at DM76. 5m 
(344.5m). 


OMV posts record Sch4.4bn loss 


By Patrick Blum In Vienna 

OMV, the Austrian oil, gas and 
chemicals group, yesterday 
reported record losses for 1993 
but a move back to profit in 
(he first quarter of tins year. 

It said losses for last year 
totalled Sch4.43bn ($363m), 
against Sch604.6m in 1992, on 
turnover of Sch8L93bn, down 
about Z per cent. Losses on 
ordinary activity were 
Sch924m, compared with 
Sch264-5m in 1992. But an 


extraordinary loss of 
SchS.48ta, to cover restructur- 
ing, inflated the deficit. There 
will be no dividend for 1993. 

Positive developments in the 
gas and trading branches, and 
in refining in the second ban 
of the year, could not compen- 
sate for losses in the chemicals 
and "plastics branches, Mr Rich- 
ard Scbenz, chairman, said. 

Tbe group bas gone through 
a restructuring with plant clo- 
sures and cost-cutting. More 
than goo jobs were cut leaving 


the group workforce at 11,743 
at the end of 1993. 

Gas and trading generated 
operating profits of Schl.44bn 
and Schieom. respectively, with 
aU other activities showing a 
loss. The biggest deficit was in 
the plastics division with an 
operating loss of Schl.ahn 

The group made a SchlSOm 
pre-tax profit for the first quar- 
ter of this year, reflecting 
mainly the positive effect of 
restructuring over the past two 
years, Mr Schenz said. 


Bavarian bank 
plans DMlbn 
rights issue 

By David Walter bi Frankfurt 

Bayertsche Hypo theken-und 
Wec hs el-Bank, one of Ger- 
many’s two big Bavaria-based 
banks, Is planning a ome-for-10 
rights issue. The terms will be 
fixed around June 20 and the 
issue of 2.3m new shares is 
likely to raise about DMlbn 
($588m). 

The bank, which recently 
reported a 33 per cent rise in 
pre-tax profits for last year, 
said it needed the money in the 
context of strong business 
-growth last year and in the 
early months of the current 
year. 

In the first two months of 
the year, Hypo-Bank's group 
operating profits rose by 17 per 
cent, reflecting the bank’s 
strong position in the buoyant 
mortgage lending market 

The issue is the fourth from 
a leading German bank in the 
past six months. The most 
recent was Dresdner Bank's 
innovative DM1 ^bn equity pla- 
cing with international inves- 
tors. details- of which were 
annrainr-pri last month. Of Ger- 
many’s biggest five banks, only 
Deutsche Bank, the largest, 
has said it will not tap the 
equity market for the time 
being: 



REPUBLIC NEW YORK CORPORATION 
SAFRA REPUBLIC HOLDINGS S A. 


Consolidated Statements of Condition 
and Summaries of Results 

These statements and summaries represent the consolidated accounts of Republic New York Corporation and its 
wholly owned subsidiaries and of Safra Republic Holdings S.A. and its wholly owned subsidiaries. Republic 
New York Corporation owns 46-8% of Safra Republic Holdings S A., which is accounted for by the equity method. 


Assets 

Cash and due from banks 

Interest bearing deposits with banks 

Precious metals 

Investment securities 

Trading account securities 

Federal funds sold and securities purchased 

under resale agreements 

Loans, net of unearned income 

Allowance for possible loan losses — 

Loans (net) 

Ocher assets 


Total assets 

Liabilities 

Total deposits 

Trading account liabilities 

Short term borrowings 

Other liabilities 

Long term debt 

Subordinated long-term debt and perpetual capital notes 

Shareholders’ Equity 

Cumulative preferred stock 

Common stock and surplus, net of treasury shares 

Rerained earnings- 

Net unrealized loss on securities available for sale, 
net of taxes — - .. 

Total shareholders’ equity 

Total liabilities and shareholders 1 equity 

Book value per share 

Client portfolio assets in custody 

Net income, for the three months ended......... 

Net income per common share 1 
V Average common : ’ 


fc'v IIIU1IU14 

ommon share (primary) 

l shares outstanding (primary) .... 


REPUBLIC NEW YORK 
CORPORATION 

March 31, 


SAFRA REPUBLIC 
HOLDINGS S JL 

March 31, 


1994 

1993 

1994 

1993 S 

(in thousands of US$ except per share data) I 

$ 602,263 

$ 446,934 

$ 51341 

$ 60,864 

5,505,088 

7,271,423 

3364369 

3301379 

1,521,937 

419,242 

- 

— 

14^585,763 

13,063,123 

6385,640 

5,557,635 

2,954,056 

844, 131 

93368 

43,617 

2,159,596 

1,769,200 

_ 

_ 

10,051,994 

7,925,159 

1351398 

1,173316 

(313,416) 

(251,870) 

(110,901) 

(56,790) 

9,738^78 

7,673,289 

1,140,497 

1,116,726 

4.795.335 

3,282,057 

329,003 

280.081 

$41,862,616 

$ 34,769399 

$ 11,864,218 

$ 10360302 

$22,139,301 

$20,713,976 

$ 7,667312 

$ 6,819,860 

2,484,177 

114,558 

- 

— 

5,879,697 

4.228341 

2,015,178 

1,705,094 

4,010,969 

3,091399 

240,197 

231,215 

2,628,242 

2,175,662 

750,000 

447,600 

2,205,674 

2,130,988 

— 

— 

556,425 

556,425 



714,802 

711,288 

904302 

901,870 

1,265,093 

1,046,162 

343,608 

254363 

(21,764) 

- 

(56379) 

- 

2314356 

2313,875 

1,191.631 

1.156,733 

$41,862,616 

S 34.769399 

$ 11,864.218 

$10360302 

$ 37 J2 

$ 33.67 

$ 67.17 

$ 5,779302 

$ 6337 

$ 3,697,565 

$ 79,779 

$ 68.745 

$ 43347 

$ 27305 

$ U8 

$ 1.18 

$ 2A4 

$ 1.54 

5Z357 

52,196 

17,738 

17,703 J 


Risk-Based Capital Ratios 

As of March 31, 1994, Republic New York Corporation's risk-based core capital ratio was 16.15% (estimated) and 
total qualifying capital ratio was 27.80% (estimated) The ratios include the assets, risk-weighted in accordance with 
the requirements of the Federal Reserve Board specifically applied to Republic New York Corporation on a folly 
consolidated basis and capital of Safra Republic Holdings S-A, Total consolidated assets are approximately US$ 52 
^billion and total consolidated capital, including minority interest and subordinated debt, exceeded US$ 53 billion. 


Republic New York Corporation 
Filth Avenue at 40 th Screec 
New York, New York 10019 

Geneva, Gibraltar, Guernsey, London, Lumna, mxcmBOutg, Milan, Monte uano, ruu, fnnrY\ a Beverly HJ 
Los Angeles, Mexico Qty, Miami, Montreal, Nassau, New York, Buenos Aires, Caracas, Montevideo, 
Rio de Janeiro, Santiago, Beirut, Beijing, Hong Kong, Jakarta. Singapore, Sydney, Taipei, Ti 


Safra Republic Hofafings SLA. 
32, boulevard Royal 
2449 Luxembourg 

Banking Location* 

Milan, Monte Carfo, Paris, Zurich, Beverly HUb, Cayman Islands, 

Puna del Este. 
"okyo 


T^fS-FutureView 


ARBITRAGE 


One or the potentially non profitable yet least known areas of Trading 
in WortdWMe Financial Market*. Contact Michael Learie Partnership Ltd 
Fiaandol Services Dept* (Member of SFA) Teh 071 4937054 or Rax 071 4994239 


YOU WON’T BELIEVE YOUR 



EARS 


Just a quick gfcurce at die Ericsson EH 237 will ceil you diet 
here h a mobile phone with 3 lot going for it 

Small, compact and obviously well designed, as you can. 
see. And, on doser inspection you’ll discover its many ocher 
attributes. 

It has an Jlumimred keypad and a 199 name/ number 
memory with instant access to emergency and diicamy 
enquiry services. Plus there’s a choke of security and call 
barring options, cal] rimers and total call counts, automatic 
mail and Inst ns- number redial. 

So your eyes obviously don’t deceive you. But you might 
dunk your ears do. Linen, can a mobile phone really sound 
that good? Ip a wokL yes. 

J^urly it’s due to something you'll already hare noticed. 


W VP 

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€* f§ t* 

■rp 'W' $$ 

£» «& 


Thar stubby little aerial which you don't need 10 pull up 
when you make or receive a calL 

Technically its 3 bebcaJ antenna offering parabolic 
performance. But you wont want to know that. From your 
point of view it simply means that it works just as well 
pomred in any direction. TTie signal nays constant rcga/dlcsi. 

The attention wt paid to tbe sound quality on the 
EH237 even extended to developing the earphone in 
association with a hi-fi manufacturer.. 

The result you can heir for yourself at your nearest 
mobile phone dealer. Believe us, wc doubt you'll find another 
mobile as easy on the cars. 

MOBILE PHONES BY ERICSSON 0 


For more decals. contact: Erf own Limited, 5 Guildford Burinen Rule. Guildford Surrey CV2 5 SC. Telephone <483 -fti53S3. Fac 0483 4t,S46r, 

Rar Ericsson Accessories, telephone 0623 73W I. 



The tool Co. th* uiIdui investor 

Market-Eye 

London stock exchahos 


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_pNANdAL TIMES WEPNESPAY MAY 4 1994 


V lacom looks at 
selling Madison 
Square Garden 


By Richard Waters 
in New York 

Viacom , the US entertainment 
group, is considering selling its 
Bladisbn Square Garden 
operations in a deal that ana- 
lysts value at more than $ibn. 
- The company played down 
suggestions' that ft was being 
forced Into a sale by the heavy 
debt load associated with its 
$10hn takeover of Paramount 
Communications, the former 
owner of the Garden. 

The operations include the 
New York venue itself, two 
professional sports franchises 
which piay there and a sports 
cable television chaw^ pi 

Viacom said it had had 
“expressions of interest from a 
nu mber of parties" interested 
in buying "the operations, but 
did not say how for these dis- 
cussions had progressed. 

Mr Sumner Redstone, Via- 
com chairman, said: “While we 
have the option of retaining 
this extraordinary asset and 
building on its many strengths, 
-it would -be imprudent to. 
ignore the many inquiries from 
possible buyers." - 


He added that Viacom 
planned to explore a sale of 
MSG “as part of an orderly pro- 
cess for determining how best 
to maximise shareholder value 
in the company**. 

His statement follows 
intense recent speculation that 
Viacom is likely to be forced 
into selling a number of sub- 
stantial assets. 

To help sendee the debt 
resulting from the Pa ramount 
takeover, the company has 
been counting on the comple- 
tion of its planned merger with 
Blockbuster Entertainment, 
the US video rental group. 
Blockbuster itself has little 
debt and strong cash- 
flow. 

However, that transaction 
has looked in doubt as Via- 
com’s B-sharas, the currency 
fear the deal, have tumbled in 
value in recent months. 

The shares rose $% yesterday 
to $23 'A. In January, when | 
Blockbuster first agreed to buy 
a $L25hn stake in Viacom, they 
were trading at $55. 

Last week, Viacom said it 
would sell some parts of Para- 
mount's publishing 


Freeport-McMoRan 
to separate units 


By Ijnate florae to Chicago 

Freeport-McMoRan, the New 
Orleans-based natural 
resources company, will split 
its two principal businesses, 
copper and gold mining and 
agricultural minerals, info-two 
independent financial entjti en 
which will be distributed In a 
complicated transaction to 

/wringin g - gharwhnlriwr g . 

; Shares of the two new com- 
panies are expected to be mare 
valuable than when they were 
combined as Freeport snbsict 
iaries. The two businesses axe 
quite distinct,: and their for- 
tunes often move in opposite 
directions. 

. Mr Clarence Morrison, anar; 
iystwifoPrudfflitialSflraTrktBS. 
said the Sj^ WouM offar iaves* 
tors * -dearer- play in either 
copper mining or frotQSsera 

Mr Jaimes Moffett, Freeport- 
McMoRan chairman, said the 
proposed restructuring would 
benefit the companies and 
their securities holders by 
improving access to the credit 
markets, reducing debt sendee 
costs and eliminating possible 
liability crossovers between 
the two companies. 

Freeport's earnings have 
been ' recovering,- rpartly. 
because copper and gold out- 
put in Indonesian operations 
rose in the first quarter; and 
because the company has insu- 
lated itself from copper price 
volatility using derivatives- 
based price protection. 


.-On ; the -agricultural side, 
Freeport is in a joint venture 
with ZMC-Agrioo that is expec- 
ted to produce cost savings of 
$95m by the end of Its second 
foil year. During the first quar- 
ter Freeport had net earnings 
o£$123m,- or 9 cents a share. 
Freeport-McMoRac Copper and 
Gold had operating earnings of 
$58m, and Freeport Resources 
Partners, the agricultural dfvi- 

- sum, had operating earnings of 
fgi.i-m. 

The restructuring, which one 
Wall Street analyst called a i 

- “fair transaction**, will have, 
the effect of converting much 

■ of the- company's debt into 
: equity without any share dfln- 
. turn. Freeport will distribute to 
Wf wjwBnf all Of 

its , interestig Fraeport-McMo- 
Ran Copper and Gold in a. 
transaction it hopes will be 
tax-free. The deal is co ntin ge nt 
"an a EavourahLe ruling by tax 
authorities, debt restruc turin g 
and shareholder approval. 1 

After theTdistribution, Free- 
port-McMoRan’s business win 
• consist solely of its 51 per cent 
interest -in Freeport-McMoRan. 

. Resources Partners, a company 
which specialises in fertilisers 
a nrt agricultural minerals. 

V 1 As part of the deal, Freeport 
said tt would begin to (Hstrib- 

- ute FreejxrtMcMoRan Copper 
end Gold shares to sharehold- 
ers ia lieu of first-quarter divi- 
dends at a rate of one Copper 
and Gold share for each 80 
Freeport-McMoRan shares. 


Falconbridge plans 
C$1. 3bn share issue 


By Robert Gfobane In Montreal 

Falconbridge, the west’s 


BCVUUUTJW— « , . ■ 

plans to go public again with 
aCIl-Sbn (US$940m> share 
offer. 

Pricing will be set arc and 
mid-June. The offer i s bein g 
made in Canada and by private 

placement internationally, said 

Mr Lars Eric _ Johannson, 
senior vicepresidenfc Proceeds 
will help to pay ofi Falcon- 
bridge’s C$U8m debt . 

Canada’s Noranda and Trei- 
leborg of Sweden each 
acquired 50 per cent of Falcon 
bridge five years ago . for 

C$&Zbn. „ . , 

After the offer. Noranda s 
equity holding will be ahout45 
per cent But Trellfiborg will 


not participate and ite interest 
will drop to 30 per cent The 
-'-ptiblic will hold about 25 par 

' Falconbridge’ s . - main 
operations are the nickel mines 
at Sudbury, Ontario, where 
new deep reserves have been 
found, the Kidd Creek copper- 
tninA fn northern O ntBri o^ 
a nickel refinery in Norway 
and nickel mines in the Domin- 
ican Republic. It also owns 
one-third uf the C$1 boa C o Hah u - 
asi project in Chile. 

Many analysts believe base 
Tngtalfl prices are due for recov- 
ery with improving world eco- 
nomic growth. 

The underwriting group is 
led by Wood Gundy, Bums 
Fry, Gordon Capital and RBC 
Dominion Securities. 


Telmex falls 14% in quarter 


m Mexico City 

Telfefonos. de 
country’s monopoty 
utility, 

l.85bn pesos ($566m) m the 


Finance N.V. 

V&. siso^oo.000 

iSSdoeZOM 


S3a*Jsssfsatf 


first quarter, a drop of 14 per 
cent on the same period last 
year. 

Telmex’s profits were pushed 
A>wn by an esiihahge rate loss 
of 7 i$m pesos on fiinagn cur* 
rency debt resulting tom the 
depreciation of the peso 
against the dollar and weak- 
ness of the dollar against the 
yen. 

Excluding the exchange rate 
loss, the underlying results 
showed robust growth-' Operat- 
ing profits readied 2.94bn 
pesos, a IS. per ceirt advance, 
while revenues climbed to 
&6Sta pesos, an increase of the 
mime amount. ■ . 

The rise in sales was helped 


by unexpecKW 
of hfteniMioad.tdeiiiMiis traf- 
fic, whteh rose 223 per cart in 
the quarter, far hi gh e r than 
last year’s'increase- 
Long distance traffic was iq» 


grew by 12 JJ per cent 


. 21 

INTERNATIONAL COMPANIES AMP FINANCE 

Eastman Kodak prepares for a new image 

The chairman has persuaded the company to embrace change wholeheartedly, writes Patrick Harverson 

T he announcement by Mr Mr Fisher would choose to seU rola - bas persuaded Kodak to imaging business, and its The restructuring will also day, the divestments will aHo 1 

George Fisher, chair- off Kodak's non-core embrace change whole- Health Sciences division, a allow Kodak to concentrate on Kodak to "attack a broad* 

man of Eastman Kodak, operations so that it could con- heartetfly. unit which, with its X-ray film developing its imaging busi- array of imaging opportunity 


T he announcement by Mr 
George Fisher, chair- 
man of Eastman Kodak, 
that the group would sell its 
healthcare and household 
products businesses delighted 
Wall Street for a simple reason: 
many analysts and investors 
doubted that the new Kodak 
chief bad the guts to do It 
Ever since Mr Fisher took 
aver the helm at the struggling 
photographic products group 
last December following the 
resignation of his predecessor, 
Mr Kay Whitmore, Wall Street 
has waited for the new chair- 
man to outline his strategy for 
turning around Kodak, which 
has been heavily criticised for 
its lacklustre financial perfor- 
mance. 

Most analysts were hoping 


Mr Fisher would choose to seU 
off Kodak's non-core 
operations so that it could con- 
centrate on its photographic 
products and i pig g in g busi- 
ness. But few were sure that he 
would be able to engineer such 
a dramatic shift at a company 
renowned for its stodgy corpo- 
rate culture and resistance to 
change. 

After all, Kodak had made 
five attempts in the past 10 
years to restructure Its busi- 
nesses and generate better 
ea rn in gs , apd all had foiled. 
Why, critics asked, would it be 
an y different this time? 

Yet, judging by the planned 
restructuring, Mr Fisher - who 
made a name for himself as a 
brilliant technologist and man- 
ager while chairman of Moto- 


rola - has persuaded Kodak to 
embrace change whole- 
heartetfly. 

Under the divestment plan 
unveiled yesterday, the group 
will sell its pharmaceutical and 
consumer health products unit 
Sterling Winthrop, its personal 
care and household products 
business L&F Products, and its 
Clinical Diagnostics division. 
Between them, the three busi- 
nesses generated almost a 
quarter of Kodak's 1933 reve- 
nues of $I6.4bn. 

When the divestment is com- 
plete - and Mr Fisher would 
not be drawn on whether the 
operations would be sold to 
another company or spun off 
in a public share issue — Kod^k 
will be reduced to two main 
components. These are its 


imaging business, and its 
Health Sciences division, a 
unit which, with its X-ray film 
and electramcsJbased medical, 
cardiology, and dental diagnos- 
tic businesses, is regarded as a 
vital part of Kodak's imaging 
strategy. 

The first impact of the 
divestments will be to Improve 
dramatically the group's finan- 
cial condition. Kodak is labour- 
ing under $7bn in debt, and the 
proceeds from the sale of the 
healthcare operations could 
eliminate the bulk of the 
group's debt at a single stroke. 

Kodak paid $5.1bn for Ster- 
ling in 1988, but that purchase 
was completed when US drug 
stocks were at their peak, so it 
is unlikely the unit will sdl for 
quite as much today. 


The restructuring will also 
allow Kodak to concentrate on 
developing its ima g in g busi- 
ness. 

Most of Kodak's photo- 
graphic earnings are derived 
from its traditional film prod- 
ucts, which uses a chemical 
process - the sensitivity to light 
from silver halide salts. Yet 
this business is threatened by 
the rapidly growing market for 
di gttai, electronic imaging. 


M r Fisher has taken 
steps to protect and 
develop Kodak's core 
business, Including the recent 
formation of a new unit to lead 
the group's involvement in 
electronic imaging. Further, 
similar measures are likely 
soon; as Mr fisher said yester- 


day, the divestments will allow 
Kodak to "attack a broader 
array of imaging opportunities 
around the world.” 

First, however, Kodak must 
dispose of its non-core busi- 
nesses. The group should have 
little trouble finding a buyer 
for Sterling Winthrop, given 
the wave of merger activity in 
the pharmaceutical industry. 

In fact, within hours or 
Kodak announcing its restruct- 
uring, the German drugs group 
Bayer expressed an interest in 
acquiring Sterling. 

Mr Fisher, however, said yes- 
terday the French company Elf 
Sanofi, a partner with Kodak 
in a worldwide drug sales ven- 
ture, would get the first right 
of refusal to buy part or all of 
Sterling. 


Sanofi shows interest in purchasing pharmaceuticals businesses 


By John Rkkfing in Paris 

Elf Sanofi, the French 
pharmaceuticals group, is interested 
in acquiring a substantial part of 
Eastman Kodak's pharmaceuticals 
businesses, either on its own or with 
partners, following the US group's 
aimoimcement that it would seU its 
healthcare activities. 

The French group, a subsidiary of 
Elf Aquitaine, the recently privatised 
oil groigi. already hag a for-reaching 


allian ce with Sterling Winthrop. the 
pharmaceuticals arm of Kodak, which 
dates from 1991 and which is based on 
the Elf Sannfi-WInlhrop joint venture. 

“Kodak's decision is a big opportu- 
nity for us to strengthen our pharma- 
ceuticals activities in a rapidly chang- 
ing market,” said Mr Jean-Franpris 
Debecq, Elf Sanofi cfaalnuan. 

Elf sanofi said It was ggamintng the 
possible acquisition of the businesses 
in which it was already Involved with 
Sterling, namely the US group's pre- 


scription pharmaceuticals operations 
and its European over-the-counter 
drugs businesses. It said it was not 
interested in Sterling’s US OTC 
operations, its household products or 
its diagnostic divisions. 

Mr Debecq said the acquisition 
could be done alone or with partners. 
“There are a number of possible part- 
ners," he sai d. aHitfnff fhat Elf Sanofi 
mas in a strong position with respect 
to the sale of Kodak’s pharmaceuti- 
cals businesses because of its agree- 


ments with Sterling. 

Mr Dehecq said it was too early to 
estimate the size of the possible deals, 
but said Elf Sanofi would not need a 
capital increase. Instead, the company 
raised the prospect of a sale of assets 
to help finance the operations. 

"Given the size of the possible 
transaction, we have begun a strate- 
gic review of business units in each of 
our three main activities,” the com- 
pany said, referring to its healthcare, 
beauty and bio-industry activities. 


Industry observers said Elf Sanofi 
was a natural buyer for the bulk of 
Kodak’s pharmaceutical businesses 
because Of their Misting fltliannft 
Elf Sanofi and Sterling Winthrop 
have integrated their prescription 
drugs and OTC products on a country- 
by-country basis. The French group 
mntTQ ip the European activities of the 
joint venture, with Sterling Winthrop 
controlling operations in the UR 
The stock market pushed Elf Sanofi 
shares down FFr43 to FFr975. 



Bank of Greece 

DM XOOO^XJO^OO 
7*%' Bearer Bonds oM993/1S98 


Speclaleflorte 



The Council of Europe Resettlement Fund 

n m — -» - ** «— j* 

TO" "Stop* niniBsas lawniFiwwpn ■» 

DM 100 , 000,000 

Optfon-Strangte-Notas of 1394/1996 


r — — 

C3 DeiPfa-Bcmk 

r~ 

X 

MEERSTE 

Sg«"igSg Daua3» Hasten TCgBrpn-r^M'nni* MS 

octsmicNscha SparCaase - Bank Afctfengosallsctiaft 


First Austrian Bank 

DM 500,000,000 

DM 150,000,000 

650 % Profitfrhwfng Certificates of 1994/2009 

h 

5 VofeBaarar Bomb of 1904/2001 

a 




National Bank of Hungary 


DM 1,000.000,000 
8% B irr Bonds of 1994/2004 


IMACIONAL 


Banco Nadonal SJV. 

DM 100,000,000 

8£% Bearer Bonds of 1994/1997 



EUROPEAN INVESTMENT BANK 

DM 500,000,000 
G% Bearer Bonds of 1993/1997 
with Deferred Rats Setting 


I KB Deutsche Indostriebank H 7 


DM 500.000,000 

Floating Rate Notes of 1994/1999 


tOmnaiionaS 
.mwMww Finance Inc* 


DM 1,500,000,000 
6>/*% Bearer Bonds of 1993/2003 





Republic of Portugal 

DM 1,500,000,000 
77*% Bearer Bonds of 1993/2003 


International Bank 

for Reconstruction and Development 
DM 200.000.000 

Floating Rate Notes with Cap of 1993/2003 
and 20,000 Floor Certificates 


IL-BANK 

’ 

UNIBANCO 

LancMnOfaM* BHWMKHWtag 

Unturned - Unilo da Banco* BraaiMras S. A 

DM 800,000,000 


6.75% Profit-Sharing Certificates 

DM200,000,000 

Of 1994/2009 

87«% Bearer Bonds of 1994/1997 


KAUFtlOF 

Kaufhof Finance B.V. 

DM 100,000,000 
Bearer Bonds of 1994/2004 
with alternating coupons (fixed/variable/fixed) 


COMMERZBANK SSt 

German know-how in global finance 


n »"urk| iia r tai* a ; P-BQ261 Frankfort, Germany. Tel: (69) 1362 - 37 73, Fax: (69) 1362 - 30 97 - . 

International Presence- Alma-Ata Amsterdam. Antweip, Atlanta, Bangkok, Barcelona, Beijing, Bombay, Brussels, Budapest Buenos Aires, Cairo, Caracas, Chicago, 
Copenhagen,' Dublin, Geneva, Gibraltar, Grand Cayman. Hong tong, Istanbul. Jakarta. Johannesburg. Kiev London, Los i Angeles, Uxembouig, Madrid. Manama (Bahrain), 
Mexico Otv Milan Minsk. Moscow New York, Osaka, Paris, Prague, Rio de Janeiro, SSo PSulo, Seoul, Shanghai, Singapore, St Petersburg, Sydney, Tehran, Tokyo, 
- - ■ ' Commerzbank is a member of SFA 


Toronto, Warsaw, Zurich. 






S&P warns over 
Japanese banks’ 
asset problems 


■ nMC ».^«SDAV M AV4 l 9», 

INTERNATIONAL COMPANIES AND CAPITAL MARKETS : — 

s i A ff ican | Delayed issue damages emerging markets 

Stefan Wagstyl and Sara Webb examine the postponement of a $lbn Euroequity 


By Emiko Terazono 
in Tokyo 

Asset-quality problems at 
Japanese banks, which face 
menwising bad-loan levels, will 
take several years to resolve, 
according to Standard & 
Poor’s, the International credit 
rating agency. 

While the pace of increases 
in problem loans has slowed, 
the agency estimates that prob- 
lem loans at 23 leading Japa- 
nese banks totalled Y3Q,QQ0tm 
to Y35,Q00bii ($275bn to $321bn) 
for the business year ended 
last March - a substantial 
deterioration from the 
Yl3,700bn in bad loans dis- 
closed by 21 leading banks last 
September. 

The official figure given by 
the banks only includes loans 
to now-bankrupt borrowers, or 
those who have not paid inter- 
est for more than six months, 
while S&P broadly considers 
loans with the likelihood of 
becoming loss-making. 

The credit agency recently 
downgraded its debt ratings on 
many of the leading Japanese 
h anks due to the mounting 
pressure the banking system 
faces. 

“Japanese banks’ biggest 
challenge now is how to extri- 


cate themselves from problem 
assets as quickly as possible 
without reporting red figures," 
S&P says. 

But without the prospect of a 
significant rebound in core 
t im in g s in the near term and 
with the equity market remain- 
ing sluggish, the clean-up pro- 
cess is expected to reduce 
financial flexibility as banks 
try to rebuild their balance 
sheets and cope with financial 
reform. 

However, due to the increas- 
ing transparency of the banks' 
asset problems and the slowing 
of the increase in new problem 
loans, the agency predicts that 
future downgrades of banks’ 
ratings are less likely. 

• The Co-operative Credit 
Purchasing Company, the bed- 
l oan purchasing organisation, 
said it bought Y65.1bn worth of 
bad loans from banks at a price 
of Y122 Jbn during AprIL 

The company, set up by a 
consortium of banks, said it 
purchased a total ¥4,585.1011 
worth of bad loans backed by 
real estate collateral for 
Y2.253.9bn since it started 
operations in March last year. 
But only Y37.68bn has been 
recovered through sales of the 
real estate due to the slump in 
the property market 


Bank Bumiputra backs 
private power plan 


By Kleran Cooke 
to Kuala Lumpur 

Bank Bumiputra, the 
Malaysian state-owned bank 
which has been dogged by con- 
troversy and bad debts, is folly 
underwriting a M$587m 
(US$2 12.7m) loan to a consor- 
tium of local companies 
involved in Malaysia's indepen- 
dent power programme. 

The consortium, Powerteck. 
has the license to build, own 
and operate a 440 MW gas fired 
power station in Malacca, on 
the west coast of peninsular 
Malaysia. 


This is the third loan flank 
Bumiputra has made in recent 
months to companies involved 
in Malaysia’s plan to privatise 
part of the electricity industry. 

The bank says the loans - all 
in ringgit, the Malaysian dollar 
- show the maturity of the 
local capital market 

However, some financiers 
have expressed concern that 
Malaysian financial institu- 
tions, anri Rank Bumiputra in 
particular, are too exposed in 
one sector. They have also 
asked why foreign banks have 
chosen not to become involved 
in the private power sector. 


S African 
retailer 
lifted by 
tax changes 

By Marie Suzman 
In Johannesburg 

Heavy pressu re on operating 
margins meant that Pepkor, 
South Africa's biggest retail 
group, was only able to 
Increase operating profit by 8 
per cent for the year ending 
February, to &75m ($80. 6m) 
from 

However, lower tax and 
finance charges meant that 
after-tax profit increased 16 
per cent to R184.7m from 
B16L35U. 

Turnover rose to H8.24bn 
from B7.76bn. largely due to 
increased market share 
achieved by core operation Pep 
stores, which target the 
mainly black, mass wiarfr j*- 

Shoprito, the subsidiary that 
controls supermarket chain 
Checkers, also performed well, 
withstanding the effects of a 
five-week strike and a flat 
trading market to boost after- 
tax profits 27 per cent to 
H4&56m from R35.79HL. 

Announcing the results, 
management declared 1994 as 
the “most difficult [yearl to 
date In the history of the 
group" but said the improving 
political and economic cli- 
mate, particularly among the 
black consumers ffm* consti- 
tute much of Pepkor’s market, 
should help future perfor- 
mance. 

The company Is also 
involved in negotiations which 
may lead to a bid for troubled 
UK retailer What Everyone 
Wants. Results of the bid will 
be known on Monday at 
WKW's annual meeting. 

• Edgars, the clothing, foot- 
wear and textiles group in the' 
South African Breweries sta- 
ble, increased after-tax profit 
11 per cent to Rl7L2m from 
Ri75J3m last year. i 

Sales increased 16 per cent j 
to R3.<B8bn from R3.l8bn, 
boosted by the acquisition of 
Shoecorp. 

The results, which were 
boosted by a slight reduction 
in taxation and net financing 
costs, reflected an improve- 
ment in market share despite 
the continued depressed over- 
all trading environment 


T he postponement yesterday of 
the $lba Euroequity issue by 
Vldesh Sandbar Nigam (VSNL), 
the state-owned Indian international 
telecommunications monopoly, is a 
blow for the company, the country and 
for emerging markets. 

But it Is a blow from which VSNL, 
India and the markets can all recover. 
Financial ventures in developing coun- 
tries are by nature risky. Hie fact that 
rtna attempt to raise funds has failed 
will probably not cast a permanent 
shadow over future offerings, though it 
may well make life difficult for Indian 
Issuers over the next few months. 

VSNL's decision to defer the issue 
after frantic talks with the government 
in Delhi and with the global coordina- 
tors, Salomon Brothers of the US and 
Kleinwort Benson of the UK, has left all 
involved feeding embarrassed. 

There will be recriminations, particu- 
larly in India, where economic globali- 
sation and the disposal of state-owned 
assets are sensitive political questions. 

The issue Med mainly because of 
bad t imin g, compounded by 
over-ambitious pricing and, in the flnai 
stages, inflexibility in decision-making 
which made it impossible for the Issu- 


ers to cut the price to save the offer. 

From the shut VSNL was no ordi- 
nary offering. The Indian government, 
which owns 85 par cent, saw it as a 
flagship of its otherwise undistin- 
guished portfolio of stateowned enter- 


But by the time the issue was ready 
for market In early April, the investor 
mood had changed. An increase in US 
interest rates had soured the markets, 
especially the volatile emerging mar- 
kets. Potential investors told tte con* 


When VSNL indicated late last -year 
its interest in an. international equity 
offering, investment bankets drooled at 
the prospect, not least because India 

Wes in fimhinit in intamaHmal mar . 

kets. Salomon and Kleinwort secured 
the mandate far the issue against tough 
competition. Quite apart from the pres- 
tige of handling India's biggest-ever 
Issue, there were the fees. The going 
rate for enmpiCT international nfferfngy 
such as European privatisations is 3 per 
emit of the amount raised. If VSNL bad 
raised glbn, it would have paid about 
630m - of which .Salomon and Klein- 
wort would have received at least halt 
Shares prices in Bombay soared 
between November and February, tak- 
ing VSNL from about fis650 to a peak of 
more than Rsl,700 in January and Feb- 
ruary. This tempted VSNL and the gov- 
ernment to double the size of the lam 
from $50Qtn to $lbn and to aim for a 
price of Rsl,400 to RsI,SX). 


t frmq 1993 earnings, were too expen- 

siva. fo hasty talks last weekend, Salo- 
mon and Kleinwort tried to save the 
Issue by securing permission to 
approach fund managers informally 
with a lower price. It emerged that the 
shares could be sold at Rsl.100 to 
Rsl/MQ, raising some $70Qm and that 
invest or dgn»mH would be sufficient for 
the deal to go relatively smoothly- 

I t seems that the VSNL board, gath- 
ered in London, wanted to proceed- 
So did Mr N Vittah chairman of the 

government's Telecommunications 
Commission and an advocate of eco- 
nomic liberalisation, who was also in 
London. But in Delhi, in meetings late 
cm Monday, others counselled caution, 
notably Mr Sukh Ram, the telecommu- 
nications i« j f li t te r who is opposed to 
over-hasty deregulation, and who 
insisted that price was an issue for the 
Cabinet The prime minister's office 


arneed. So at 4am London tiraeywterv 
teethe lead managers were asked to 

P rK II d^iM 5r ta s no immedfeta 
impact on VSNL since ttr. myestoent 
Sara flmdhte and do not depends 

the issue for finance. 

-jhe tt government, jwmii needs 


cal deficit, will be under pressure to 
And funds elsewhere, ft wffi d* to 
criticism tot having mfohand^Lthe 
deal However, it will avoid aocosatta 
of having sold the famJy.' Jewels 


Indian companies, which raised about 
S2.5bn in 1993-94 in EuroissuM.are 
planning to raise a totter -©bn m 
1994-95. Brokers and fund m an ager s 
Svided last right how the VSNL 
failure would affect their prospects. 
Some thought fixture issues mlgnt abo 
be postponed, but others thought the 
Mure of VSNL would leave morefimds 
available far other offers. Mr Jeff Chow- 
dhry, director at Barclays de Zoete 
Wedd Investment Management, said; 
“Inevitably this will put further Issues 
on hold but that may not be suc ha ba d 
as it will create time for digesting 
Indian, paper." 


NEWS DIGEST 

Ansett flies 
abroad from 
September 

By NttddTaft 

ki Sydney 

Ansett; the Australian airlin e 
which is owned jointly by Mr 
Rupert Murdoch’s News Corpo- 
ration and TNT, the transpor- 
tation group, yesterday 
unveiled its long-awaited plans 
to become an international 
carrier. 

It will focus on routes to 
Japan and Hong Kong but 
defer plans for Malaysia, Singa- 
pore and South Korea. 

The new services will start 
in September, using Boeing 747 
aircraft leased from Singapore 
Airlines - part of a “wide-rang- 
ing strategic alliance” between 
the two carriers. Initially, 
there win be five flights a week 
to the new Kansai airport at 
Osaka, and three services a 
week to Hong Kong. 

Mr Ken Cowely, Ansett 's 


chairman, said be expected the 
new operation to generate posi- 
tive cashflow in the second 
year of operation. He said 
start-up losses In the first year 
should not exceed A$50m 
(US$38m) while revenues 
should total around AjisOm. 

North Broken Hill 
unit plans US boy 

North Broken EBB Peko’s War- 

man Tnternatitmgl mrit, which 

makes slurry pumps, is negoti- 
ating to buy the assets of Bar- 
rett, Haentjens, a US slurry 
pump company better known 
as Hazleton Pimps. 

Warman has annual sales of 
more than A$200m, and said 
that the acquisition would 
bring in further turnover of 
around US$26m. 

Central Norseman 
in new venture 

Central Norseman Gold Corpo- 
ration, 50.5 per cent owned by 
Australia’s Western Mining 
Corporation, is to go ahead 
with the development of a gold 
mining operation at Norseman 


in Western Australia. 

The Harlequin underground 
mine is the first new mining 
venture for Central Norseman 
for three years. The mine will 
be located about 9km north of 
Norseman, and L5km west of 
Central Norseman’s North 
Royal mine. 

No details of the develop- 
ment cost were released, 
although It Is understood to be 
in excess of A$10m. 

Savage Resources 
undersubscribed 

Savage Resources, the Austra- 
lian pnmpnny acquiring the US 
zinc mining assets of Belgium’s 
Union Mini&re for US$200m, 
said its rights issue, designed 
to help fimd the deal, was less 
75 per cent subscribed. 

Some 135 Am shares, repre- 
senting A$169.7m, were com- 
mitted to by shareholders, 
leaving 47.7m shares, or 
A$5&9m-worth, to be taken up 
by the underwriters, Ord Min- 
nett and Prudential-Bacfre 

The issue price had been set 
at A$1.25 two months ago, 
when the stock market was at 
significantly higher levels. 


Nigerian divestment 
agreed by Unilever 


By Raul Adams in Lagos 

Unilever, the UK-Dutch 
consumer goods group, has 
agreed plans to divest from its 
Nigerian affiliate, UAC, In 
which tt has a 40 per cent stake 
valued at around $46 bl 

UAC has evolved from a 
trading operation into 
Nigeria’s largest manufactur- 
ing, packaging and distribution 
conglomerate, with the 60 per 
cent Nigerian-owned shares 
held by both private and insti- 
tutional investors. 

Unilever will reinvest the 
cash from the divestment in its 
core sectors. Including food 
and personal products. UAC 
will remain the flagship com- 
pany of Nigeria but without 
foreign ownership and manage- 
ment for the first time in its 
74-year history. 

The Nigerian authorities 
approved a complex restructur- 
ing of UAC and the transfer of 
Unilever's assets to a new hold- 
ing company, Unilever Nigeria, 


ensuring that no capital leaves 
Nigeria. 

Unilever will retain its 40 per 
cent share in UAC's tractors 
mui equipment division (the 
Caterpillar dealership), which 
will become a separate joint 
venture, and acquire all the 
shares in AJJ. Seward, the con- 
sumer goods arm. The two 
holdings account for half the 
value ofstake in UAC. 

Unilever will sell its shares 
in the other divisions of UAC 
and reinvest the capital In 
new ventures In Nigeria, all 
under the newly-formed Uni- 
lever Nigeria. 

Unilever’s remaining UAC 
shares (worth about J2lm at 
the current share price) will be 
offered for sale to the public at 
the same time as UAC issues 
new shares. 

Company sources say that 
subject to clearance by an 
extraordinary general meeting 
in May and by the courts in 
June, the share offer will fol- 
low as soon possible. 


0 ESSELTE 


Weekly Petroleum Argus 


Strong earnings gains 
strengthen CS Holding’s 
leadership in the global 
financial services sector 


CONSOLIDATED 
FINANCIAL HIGHLIGHTS 
FOR 1993 




1993 

1992 

CHANGE 

CASH FLOW 

SFR M 

5,257 

2,983 

76% 

NET PROFIT 

SFR M 

1,993 

1,178 

69% 

SHAREHOLDERS 1 EQUITY* 

SFR M 

15,807 

10,751 

47% 

RETURN 'ON EQUITY* 

SFR M 

14.3% 

11.9% 



'before deduction of minority interests 

CS Holding is one of the leading financial services groups in the world. 
Operating from some 500 offices worldwide and employing more than 
50,000 people, CS Holding is active in ail five continents and in all the 
world’s principal financial centres. For a copy of our 1993/94 Annual 
Report,. please telephone (41 1) 212 02 90 or fax (41 1) 212 06 69. 


CS HOLDING NOSCHELERSTRASSE I 8021 ZURICH SWITZERLAND 


ANNUAL GENERAL MEETING 

Shareholders of Esselte AB are hereby invited to attend the 
AbihmI General Meeting of the Company to be held on 
Thursday, L9th May, 1994, at 5.00 pra at the offices of 
the Company, Sondbybergsvigen t. Solas, Sweden 

Right to p a rticipate and notification 
ShaxehoWera who wisfc to participate in Ihe Meeting 
must be recorded in (be share register maintained by Vhrdepappcnccairaten 
VP C AB (Swedish Securities Register Center) no! later than Monday, 9th 
May, 1994, and 

must notify the Company of their ituenuon to attend the Meeting not Inter than 
4.00 pm Monday, loth May, 1994, by writing to Esselte AB, Box 1371, 
S-171 27 Solrta or by telephone Im + 468 272 760. 

Shareholders must sum their n am e, address, personal or registration number 
(where applicable) and telephone number. 

Sharehold er s, whose shares are registered in the name of a trust department of a 
bank or a private broker, must, in order to be eligible to partitapme in the 
j Meeting, temporarily register their dares in their own name with VFC Such 
I registration must be executed on or before Monday, 9th May, 1994, and should 
therefore be applied for via such bank or broker in due time before the said date. 

Agenda 

In addition to the mattes prescribed by tire Swedish Companies Act and the 
Ankles of Association the following matters will be addressed at the Annual 
General Meeting; 

L The Board of Directors 1 proposal that the Company shall be a public limbed 
company and that { I of the Articles of As so ciation shall be amended to read as 
follows: *Tbo name of the company is Esaelto Aktiebolag (pub)”. The 
resolutions shall be subject to the adoption by the Riksdag of (be Swedish 
government's proposal relating to public companies without any substantial 
amendments ami shall be effective » bom the operative date of such tegistatkm. 
The Boerdof Directors further proposes that the Board, or whomever the Board 
appoints, shall be authorised to make such minor adjustments of (be new 
wonting of tbc Anicfca erf Associat io n as may be necessary in ccppoctioo with 
tbd( registration with the Swedish Patent and Registration Office. 

2. The Board of Directors’ proposal regarding the sate of all Ihe issued store 
capital of the Company's French subsidiary Rover SJV, a minor portion of 
which capital is to be sold to officers of the subsidiary. 

3. The Bond of Directors' proposal regarding (he sole of twelve dormant 
subsidiaries to Sctiboua AB in consideration for a purchase sum 
corresponding ro the aggregate amount of their equity. 

Board of Directors 

Shareholders, representing more than 45% of the number of votes for nil shares 
In the Company, have informed the Company (hat they will propose to the 
Annual General Meeting the Rejection of the present members of the Board. 

Dividend 

Tto Board of Directors has proposed a dividend of SEK 2.75 for each store. The 
record dare for payment of the dividend will be Wednesday, 25lh May, 1994, (f the 
sharehaltfcra at (be Amiri General Meeting approvu the proposal, it is erpeami 
that d» divider*! payment vdU be mailed by VPC on Wednesday. 1st June, 1994. 

Solna, April 1994 

Board of Directors 


Mortgage Securities 
<No.1) Pic 
£19,100,000 
Class A 

Mortgage Backed Floating 
Hale Notes due 2023 

In accordance with the 
provisions ot the notes, notice 
Is hereby given that for the 
interest period 29th April, 1994 
to 29th July, 1934 the notes 
wm carry an interest rate erf 
555% per annum. 
Interest payable on the 
relevant Interest payment date 
28th July, 1894 will amount to 
£1,383.70 per £100,000 note. 

Agent Bank: 

Bank of Scotland 


Petroleum Argus 



ECU Tennknaet P(jC 
29 Chatham Ptoea 


UndonSWfXMfl. 
Tth +Tf 248 OOtt 
Free +71 2356899 


REUTERS lOOO 

24 hours a day - only $100 a month! 

UVE FINANCIAL DATA DCRECTTO YOUR PC 
** ~u*u^_ bjfpWrCOSB ,^+454337 a773 " 


For more Wormetlon 


Mortgage Securities 
(No.l)Plc 
£20,000,000 
Class B 

Mortgage Backed Floating 
Rate Notes due 2023 

In accordance with the 
provisions of the notes, notice 
Is hereby given that for the 

interest period 29th Aprti, 1994 
to 29th July, 1994 the notes 
will cany an interest rate of 
5. 75% per annum. 
Interest payable on the 
relevant interest payment date 
29th July, 1S94 will amount to 
£1,433^6 per £100000 note. 
Agent Bank; 

Rank of Scotland 


TO ADVERTISE YOUR 

NOTICES 

Please contact 

Tkia McGorman 
on 071 873 4842 
Pax: 071 873 3064 


LKB BadenWurttemberg 
Finance N.V, 

US41 ,000,000^)00 
Guaranteed Boating rate 
notes due 1998 

Notice Is hereby given that the 
notes mUl bear interest at 
4.5625% per aruum from 
4 May 1994 to 4 November 
1994. Interest payabteon 
4 November 1991 mill amount 
to US$2332 per US3 1, 000 note 
and USS233J9 per US$10,000 
note and USS2.33I.94 per 
USSIOO.OOO note. 

1 Agent: Morgan Guaranty 
I Trust Company 

JPMorgan 


Q C3ZA\520(PCyS 

US$200,000,000 j 

Floating rate depository 
receipts 1998 Issued by { 
The Law Debenture That 
I Corporation ptc evidencing 
entitlement to payment of 
principal and interest an 
deposits with 

Carlploossa dl Rlsparimo 
Delie Provlnde Lombarde 
S.pA London Brandt 

Notice is hereby given that the 
receipts wiB bear interest at 
4.6875% per aruum from 
4 May 1994 to 4 August 1994. 
Interest payable on 4 August 
1994 will amount to USSII9, 79 
per USS 10,000 and 
USSt, 197.92 per US$100,000 
receipts. 

Agent Morgan Guaranty ' 
Trust Company 

JPMoigan 


Mortgage Securities 
(No3) PLC 

963,000,000 Class At 
£39,000,000 Class A2 
£15,000,000 Class A3 
£8,000,000 Class B 
Mortgage backed notes due 
2035 

For the interest period 29 April 
1994 to 29 July 1994 die notes 
bear interest as fottoas: 
Class At. 5.6250% per annum 
Class A2. 521000% per annum 


Qass& 62500% per annum ' 
Interest payable 29 Jtdy 1994 
wUtbeasfottom: 

At. 9573. 72 per 540.910.00 note 
A2 51.446.03 per UOOj'OOO non 
A3 51,470.96 per HOODOO note 
« US5&22perSm0Q0no* 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 







FINANCIAL TIMES WEDNESDAY MAY 4 1994 


Attention 

Kemper 

Shareholders 


The Kemper Annual Meeting is next week. 


In making your decision, you should consider the following; 



OF. $55 per stare proposal prides shareholders with a dgni**n« premium 

1994 

strxk k* without die GE Capital proposal? 


interest. 



^CapMal should be given an^uouMidlateoppornin^toie-duwlfeinp^s I ^ es i ate P ort ** > * io 


The^ lSt «« per ^ 

We will follow your wishes. If we win, our IfnQ ^ wewiUwith draw our proposal. 


WE URGE YOU TO SIGN, DATE, AND MAIL 


THE BLUE PROXY CARD TODAY. 



GE Capital 


IMPORTANT 




wy°yr.$£&w 

the 




if you 


have Questions 


or 


.toll free at 1 -800-859-8511- 




■ 


■n^riAL TIMET «~™FSPAY MAV f ^ 


INTERNATIONAL CAPITAL MARKETS 


US Treasury prices recede in thin trading Index shows widespread 


By Frank McGurty In New York 
and Sara Webb in London 


US Treasury bonds receded in 
thin trading yesterday as deal- 
ers adjusted their positions 
ahead of Friday’s important 
data on labour market condi- 
tions last month. 

By mid-session the bench- 
mark 30-year government bond 
was down y< at 86%, with the 
yield rising to 7.3S1 per cent 
At the short end of the yield 
curve, the two-year note was % 
easier at 99g, to yield 5.837 per 
cent. 

Earlier, prices had drifted 
lower as the market followed 
through on the previous ses- 
sion's selling and on weakness 
in bonds overseas. 

The negative tone was wors- 
ened when traders miscon- 
strued comments made by Mr 
Wayne Angell, a former Fed- 
eral Reserve governor recently 
name d as chief economist at 


Bear Stearns, the New York 
securities house. 

Mr AngeQ said that if the 
Federal reserve intended to lift 
interest rates again before Its 
May 27 policy-making session, 
it would probably have done so 
yesterday. 

It was later made clear that 
Mr Angell thought the likeli- 
hood of a move yesterday was 
remote. 

But speculation over an 
immediate tightening had only 
a brief impact on prices. The 
long end of the maturity range 
soon climbed off its session 
lows, resulting a flattening of 
the yield curve. 

A fresh decline in the dollar 
against the yen and D-Mark 
had little impact on the mar- 
keL Neither did the day’s eco- 
nomic news. 

The Commerce Department 
said that the leading indica- 
tors, designed to predict future 
economic strength, rose by 0.7 


per cent in March, against a 
consensus forecast of a 0.8 per 
cent rise. 

Instead, most retail accounts 
were sitting on the sidelines, 
while dealers were unwinding 
speculative positions set up 
earlier in anticipation of April 


GOVERNMENT 

BONDS 


employment data due at the 
end of the week. The result 
was a modest slump across the 
board. 


■ European government bond 
markets closed lower, with the 
UK and Spain experiencing the 
sharpest declines yesterday. 

UK government bonds were 
depressed by the combination, 
of unfavourable MO data, politi- 
cal jitters ahead of the local 
elections and lack of investor 
interest, dealers said. 


The narrow money-supply 
measure MO was reported 
growing at an annual hate of 
62 per cent In April, above the 
expected figure of W per cent 
Dealers said that the figure 
implied that consumer spend- 
ing remains robust, and there- 
fore reduced the prospect of a 
near-term cut in the base rate. 

Meanwhile, dealers com- 
plained at the poor investor 
Interest in the gilts market. 
"Investors just remain side- 
lined in these conditions," said 
one gilts salesman. 

The Liffe gilt futures con- 
tract opened at 105.30, touching 
a high of 106.31 early in the 
day and settling at 10L28 - but 
shortly after settling, the con- 
tract dropped down to a low of 
104.18 in tiie late afternoon. 


country's long-running politi- 
cal scandals. The Meff futures 
contract dropped sharply from 
its opening level of 97.10 and 
foil to a low of 96J35, settling at 
9S.50. 


declines for year to date 


By Conner Mddebnann 


■ Spanish government bond 

S rices were hit early in the 
ay, mainly on continning 
twists and developments in the 


■ German bunds ended lower 
after a fairly volatile session, 
with tittle immediate news to 
focus on apart from the pros- 
pect of another interest rate 
cut at today’s repo, traders 
said. 

After fairly generoos cuts at 
the last two weekly repo 
operations, the repo rate 
stands at 5.47 per cent, and 
dealers said they expect to see 
a further Lowering of the rate 
by between three and seven 
basis points today. 

The Liffe bund futures con- 
tract opened at 95.20 - which 
was also the high of the day - 
foil back, then recovered and 
finally dropped down again to 
a low of 94.88 by late afternoon. 


Most government bond 
markets suffered declines in 
the first four winnflm Of 1994, 
ranging from a 0.15 per cent 
drop in Italy to a 7M per cant 
riwiirw in tiie UK gilt market 
J. P. Morgan’s bond index 
shows. 

Modi of the negative perfor- 
mance was triggered by the 
sell-off in the US Treasuries 
market, where strong eco- 
nomic growth, mounting infla- 
tion concerns and Fed tighten- 
ing combined to drive yields 
higher and increase volatility. 

This spilled over into 
Europe, where signs of stron- 
ger^ th&n-expec ted economic 
revival added to market jitters, 
J.P. Morgan states. 

Japan was the only govern- 


ment bond market to post P 0 -^ 
tive returns in April, rising ®y 
0.17 per cent in local currency 

tenns on the back of a stronger 

ran, low inflation and signs of 
continued weak economic 

activity. , 

European government bonds 
posted farther losses last 
month, in spite of continued 
ea rfn g by the Bundesbank and 
accompanying rate cuts by 
other central ba nk s. 

Total returns in Europe feu 
by (L8I per cent, with Sweden, 
the worst performer, shedding 
as much as 1.56 per cent 
The UK market also per- 
formed poorly in April, foiling 
by L21 per cent in response to 
infla tion concerns and increas- 
ing uncertainty ahead 

of forthcoming local ami Euro- 
pean parliamentary elections. 


Shedding only 0.03 Ter can^ 


tag market, support** by 
hopes for a stable new guvem-- 
ment following ti^.vtetay of _ 
the right-wing Alliance: in ;fher 
Marth ejections. K - , . 

Spain, Europe’s othenhlgk. 
vielder, was the second-best 

performer, declining by_ : (Ul 

per cent - • - 1 

Unhedged US dollar invest 
tors benefited from the 
strength of most major curren- 
cies against the dollar last 
montlL to US dollar terms, the 


yen's appreciation contributed 
to a total return of t*l pet 
cent on Japanese government 
bonds in US dollar terms. Sink 
forty, tiie lira's strength helped 
Italian bonds show a L16 per 
cent return. 


Volatile conditions keep activity to a minimum 


By Conner Mkfdsfmann 


Eurobond issuance dried to a 
trickle yesterday, with Japa- 
nese markets slowed by Golden 
Week holiday, and tomorrow's 
UK Local elections and Friday's 
US jobs data looming. 

Volatile conditions in some 
of the underlying government 
bond markets are keeping 
activity to a minimum. 


INTERNATIONAL 

BONDS 


"A lack of investor interest 
doesn't usually stop underwrit- 
ers from issuing bonds, but 
given the current volatility, 
they're less Inclined to hold 
unplaced paper on their 
books," said one syndicate offi- 
cial. 

The Canadian Wheat Board 
braved the Canadian dollar 
sector ahead of Ontario's bud- 


get announcement tomorrow. 
The tripIe-A rated government 
agency issued C$125m of 714 
per cent three-year bonds 
priced to yield five basis points 
over the interpolated govern- 
ment bond yield curve. 

That spread widened to 
around TA basis points by the 
close, said lead manager 
Hambros Bank. 

Targeted mainly at retail 
investors, the issue was said to 
be slow to place. However, one 
dealer said the spread was 
likely to tighten, as it did with 
the recent three-year issue for 
Canada’s Export Development 
Corporation, which now yields 
substantially less than govern- 
ment bonds after being issued 
flat to them. 

The day’s other deal was a 
self-led L200bn issue of 9% per 
cent 10 -year bonds with a four- 
year call option for Credito 
Itallano. At less full fees, the 
paper yields 10.03 per cent to 


NEW INTERNATIONAL BOND ISSUES 


Buoyant Paris stock market 
puts brokers back in black 


Borrower 

CANADIAN DOLLAR 
Canadan Wheat Boarri(a) 

ITALIAN URE 
Credito ttateno, HKfh) 

LUXEMBOURG FRANCS 
CNCWNKBK IML RntnceM 
CNCP/NKBK Ins. Finance#) 


Amount 

m. 

Coiqson 

% 

Men 

Mtttoffy 

Feet 

% 

Spread 

bp 

Booh runner 

126 

7.50 

96L20R 

Dec. 1997 

050R 

+0 (7KK-97) Kembroe Bonk 

ZOObn 

9.75 

10030 

Juo2004 

200 

. 

CradHo llaliano 

Ibn 

7.00 

102 J 0 

Jun. 1999 

1.75 


Cridtt Europten-BBL 

Itm 

750 

102.25 

Jun2002 

2.00 

- 

Ci 6 cfit Emupton-BBL 


By Mice ftawsthom 
In Paris 


Final unrn and nan-eatable unless staled. Hie yMd spread (over relevant government bond) or Launch Is euppSacf by the load 
manager. Ft Arad re-offer price; tees are shown at the re-offer level 4 Short 1 st coupon, b) caBabta on 2/8/98 and annuaBy thereafter 
at par. c) Tranche A d) Tranche B. 


France’s stockbrokers moved 
back into the black last year 
due to the buoyant state of the 
Paris stock market, which 
helped them to return to profit 
after three years of heavy 


maturity (SO basis points over 
the corresponding government 
bond) and 10.29 per cent to its 
four-year call date (130 basis 
points over). 

According to Mr Niccolo 
Nuti, head of capital markets 
at Credito Italiano. the issue 
saw strong demand from Ital- 
ian investors attracted by the 
high coupon and the familiar 
name. 

• Although South Africa 


stands a good chance of achiev- 
ing a successful economic per- 
formance, its debt is unlikely 
to achieve an investment grade 
credit rating in the foreseeable 
future, the European rating 
agency IBCA said. 

Examining prospects follow- 
ing last week’s first multi- 
racial elections, IBCA warned 
that overseas capital flows to 
South Africa are still smaller 
than capital flight by current 


residents; that investment has 
been low and needs to rise 
sharply, and that the balance 
of payments has been a tradi- 
tional weakness of ; the 
economy. 

Consequently, the scope for a 
rise in living conditions is lim- 
ited and there is little scope for 
income redistribution if the 
skills of the middle class white 
population are to be retained, 
IBCA said. 


The latest figures from the 
French Stockbrokers’ Associa- 
tion show that the 57 French 
stockbrokers made collective 
net profits of FFrLWbn (9179m) 
in 1993. The surplus compares 
with an aggregate deficit of 
FFrl-96bn for the three preced- 
ing years. 

The chief catalyst for the 
return to profits, according to 
tha ass o ciati on, was thA "explo- 
sion in volume trading" during 
the year combined with a “sig- 
nificant reduction in restruct- 


uring costs” for the stockbro- 
kers themselves. 

Last year marked a turning 
point for France’s stockbro- 
kers, which suffered severely 
during the sluggish climate of 
the early 1990s. 

The industry then faced the 
parallel problems of low vol- 
ume - reflecting weak demand 
for French equities following 
the bullish conditions of the 
mid-1980s - and fierce competi- 
tion fuelled by the arrival of 
foreign houses In the Paris 
market 

These problems were aggra- 
vated by the strategy adopted 
by same of France’s big banks 
of using their stockbroking 
subsidiaries as loss-leaders to 
protect their positions else- 
where in the financial sector, 
thereby destabilising the mar- 
ket and making fife more diffi- 


cult for the Incoming foreign 
houses. 

However, the Paris stock 
market rallied last year as for- 
eign funds poured into Franca 
At the same time the supply of 
equity increased, due to. a 
stream of issues from private 
sector companies and the Bat 
ladur government’s privatisa- 
tion programme. 

The programme began last 
year with the sale of the state’s 
stake In Banque Nationals de 
Paris, and is continuing with 
the current Union des Assur- 
ances de Paris issue. 

As a result, the industry has 
benefited from increased 
dgiwnnri and an improvement 
in the Paris stock market’s 
long-standing liquidity prob- 
lem, which has enabled the 
stockbrokers to return to 
profit 


WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Rod Day's Weak Month 

Coupon Data Price change Yield ago ago 


■ NOTIONAL ITALIAN GOVT. BONO (RTF) FUTURES 
(IJFFE)- Lira 200 m lOOths of 100 % 


FT-ACTtf ARIES FIXED INTEREST INDICES 

Brice Indices Tue Day's Frt Accrued 

UK (Ilia May 3 change % Apr 29 interest 


— Low cotton yMd — 
May 3 Apr 28 Yr. ago 


Austria 
Belgium 
Canada * 
Denmark 
France 


9.500 08/03 

7.250 (MAM 


6.500 06/04 

7.000 12AM 


Germany 

Italy 

Japan 


Netherlands 
Spain 
UK ORs 


US Treasrey ■ 


BTAN !L 000 05798 

OAT 5.500 04/04 

6.000 03/03 

8500 01/04 

No 119 4300 06/39 

No 157 4500 06/03 

5.750 01AM 

10500 10/03 

6.000 08/39 

6.750 11/D 4 

3.000 1QAMJ 

* 5.875 02/04 

6250 06/23 

Govt) 6400 04/04 


ECU (French Govt) 6.000 04/04 

London ctateg, "Now Yak mW-day 
1 Orooe fnctodinB wtthhoidtag lax at IU per 
Puces: US. UK hi 33m». amors In dadmai 

US INTEREST RATES 


108.8300 

832800 

87.6500 

86.1000 

106.1250 

89-9700 

96.7900 

965000 

106.4450 

104.1070 

93.7400 

106.0000 

92-31 

90- 28 
107-00 

91- 10 
86-20 

90.7200 


-0280 8.45 8.18 758 

*0.060 7.50 769 723 

-1.650 8.34 S.12 7-95 

-0.450 726 738 6.93 

-0.380 022 628 5.76 

-1.030 093 096 856 

+0.810 6.46 063 853 

-0200 8, 08t 085 3.11 

+0.360 333 3.40 343 

+0280 3.89 3.98 421 

-0160 064 8.61 048 

-1.150 9.49 938 9.19 

-20732 7.65 7.61 ?20 

-48/33 006 733 7.63 

-57732 8.17 7.96 7.79 

-18/32 7.12 693 6.77 

-27/32 737 722 739 

-0.720 735 738 695 

YUkte Local onriaa HandatL 
by m un eU aw) 

Source: AIMS MerrvttMrf 


Open Sett pries Change High Law EsL val Open irtt 

112.05 11190 -041 11235 11135 34641 77185 

11120 11130 -0.41 11130 11120 12 2028 


■ ITALIAN GOVT. SOND (BTF) FUTURES OPTIONS (UFFQ UraMOm lOOths of 100% 


1 Up to 5 years (23) 

2 5-15 years (23) 

3 Over IS years (9) 

4 hredeemabtos ( 6 ) 

5 AP stocks (67) 


-0.13 123.12 144 

^0.49 14545 1.83 

-091 165. IQ 231 

-134 18738 099 

-4X48 14240 1.77 


434 5 yrs 
434 15yts 
3. 76 20 yrs 
012 hred.7 
433 


— Medium coupon yield tffgfe coupon yMd — 

May 3 Apr 29 Yr. ago May 3 Apr 28 Vfc ego 

737 730 740 736 7.88 7 31 

008 799 844 037 828 8.71 

008 730 834 026 &14 828 


Strfito 

Price 

Jun 

■ CALLS - 

Sep 

Jun 

- PUTS 

Sap 

111 ® 

129 

2 ® 

1X89 

2.70 

11200 

1.02 

227 

1.12 

257 

112 ® 

051 

255 

141 

355 


-toflatfon S% — 

'3 Apr 29 Yr. : 


8 Up lo 5 years (9 

7 Over 6 years ( 11 ) 

8 AH stocks (13) 


4X08 18434 

-029 17834 

-027 17829 


233 Up to 5 yrs 
1.89 Over 5 yrs 
1.77 


May 3 Apr 29 
331 347 


fetation 10 % 

May 3 Apr 29 Yr. ago 

235 ‘ 231 '138 
834 3v32 341 


Ere. vtjL UUL Cets 1841 Puts KM. Rrartou* do/* open lot. Cato 6*742 Pus 80999 


Debentures and Loam 


8 yore y M d -—15 year yMd— — 

May 3 Apr 28 Yr. ago May 3 Apr 28 Yr. ay 


-25 year yMd — — ■ 
>3 Apr 29 Yr. ago 


9 Debs & Loans (75) 132.50 -029 13230 2.13 4.17 838 838 932 9.17. 8.08 933 9.11 907 039 

Avenge grow nrdampilan yMMa roe drawl above. Coupon Bomb: Low: CWfc-TH%; M adunr 8X-i0M(c Halt lilt and over, f re ytaU. yM Year to data. .... 


Span 

■ NOTIONAL SPANISH BOND FUTURES (MEFF) 


Foil tab — 
FnUumbrtki 


Om oniBi . 

— 6% Uremia. 

— 5 Itau area 

3(1 SSt Ml 

km_ - (to year _ 


TnnuyBBa and Bond YMds 

352 Two year 

350 Ttroyw 

■ 4.14 Rw yew 

451 UKsssr 

— 5.15 30-rear 


Open Sett prim Change Ffl^i Low Eat vol Open int 
97.10 9630 4X80 97.10 9036 52.765 117.139 

96.90 - - - 823 


FT FIXED INTEREST INDICES GILT EDGED ACTIVITY INDICES. 

May 3 Apr 29 Apr 28 Apr 27 Apr 26 Yr ago High* LoW Apr 29 Apr 28 , Apr 27 -Apr, 28 Apr g 

Govt Secs. (UK) 95.18 85.68 9000 9334 96.08 95.04 107.04 95.18 Gflt Edged bargains 88.0 115.1 1108 1093 ' 883 

Fixed briefest 114.45 11432 11541 115.74 11S42 11130 133.87 114.45 5-dagr overage 103.1 1103 1143 1153 • 1253 

'for 1994. Oavermaat Soorttaslagh dhcecenplaitaiE 127.40 0171/33), tor 49.18 {Vl/751 fixed tatare* high dree wn p id k m. 133J7 fflTt/W) . low 5063 (3/1/75) . Bads TOOs Gmenment SBcwWo* 1S/M7 
25 and Ftod Merest 1930 SE jcUvOjr nfcn rebasM 1874 


BOND FUTURES AND OPTIONS 


France 

■ NOTIONAL FRENCH BOND FUTURES (MAT?) 


■ NOTIONAL UK GOT FUTURES (UTET £50300 32nds at 100H 

Open Sett price Change Wgh Law EsL val Open W. 
Jun 105-30 104-28 -1-13 105-31 104-18 52416 119996 

Sep 104-00 -1-12 0 398 


FT/ISMA INTERNATIONAL BOND SERVICE 


■ LONG GILT FUTURES OPTIONS (LIFFE) E50j000 84the of 100% 



Open 

Settprtoe 

Change 

Wtfi 

Low 

EsL VOL 

Open InL 

Jun 

12054 

12050 

-0.48 

12092 

120 ® 

151,042 

139.444 

Sep 

11959 

119® 

-0.62 

119® 

119.70 

3503 

16539 

Dec 

119.HJ 

118.70 

- 0 .® 

119.18 

11870 

665 

3,121 


■ LONG ISIMFHBtCH BOW OPTIONS (MAT1F) 


Strike 

Price 

Jun 

■ CALLS 

Sep 

Jun 

• PUTS 

Sep 

~ US. DOLLAR STRAIGHTS 

Abbey Nad Traoaiy 6 % 03 

1000 

92 

82% 

ft 

7JB 

104 

1-60 

2-41 

0-58 

2-41 

AfcocAmteeeft95 

.800 

104% 

104% 

ft 

106 

109 

1-14 

2-11 

1-22 

3-11 

Austen 9% 00 

.409 

TOft 

106% 

ft 

728 

1 ® 

051 

1-50 

1-59 

3-50 

Banket Tokyo 8 % 90 

. 100 

103% 

103% 

ft 

857 


listed are the fetes Maradonal bonds tar oHch teere te on adequate secondary marteL Latest prices at 7M0 pm on Mqr 3 
teeueri BB Offer Qhg. Yield laraed BH Offer Chg. MeM 

US. QOUAR STRWGHTS Unted fOngdoni 7>» 97 5500 HB*j tOft 537 

fiUay Nad Tieesuy 6 *z 03 1000 92 9ft ->+ 7JB Vcfcswager Wfin 703 WOO 9^* 1004 700 


1— ted BM Offer Cbg. YMd 


537 Abbey /tUTtoaauy 8 03 E. 
730 Mam Laka 11^972 — 


.2000 25*2 26 662 BriMi Land 0% 23 E . 

.3000 Ml -% <U0 BB 1067? 


Eat Hi M, Crib 3874 Pub 5534. Pnntous Oqfm open C4a 08548 Pula 77QK3 


Strike 

Price 

.Ate 

- CALLS - 
Sep 

Dec 

Jun 

— PUTS 
Sep 

1® 

153 

1.80 

- 

a® 

258 

121 

0.76 

- 

180 

1.19 

- 

122 

056 

0® 

- 

1.79 

- 

123 

a»3 

054 

0.75 

258 

- 

124 

0.05 

0.® 

- 

- 

- 


Est «L total. Cole 34461 Puts 40,728 . PiMous ria/a open Int, Cals 426310 Puts 309377. 

Germany 

■ NOTIONAL GERMAN BUND FUTURES (LIFFE)* 0M25Q300 IQOlhsol 100 % 

Open Sett price Change Mgh Low EsL vol Open InL 
Jui 95^ 9438 -034 9530 94.72 90902 167658 

Sep 9438 94.46 -019 94.72 9439 859 13554 


Ecu 

■ ECU BOND FUTURES (MATTF) 

Open Sett price Change Ugh Low EsL vol Open int 
Jun 87.60 8738 -034 87.76 8730 2,882 7.740 


■ US TREASURY BOND FUTURES (CHO *100300 32ndB aflOON 


■ BUND FUTURES OPTIONS tUFFQ DM260,000 points of 10046 


Strike 

Price 

Jun 

■ CALLS 

Sep 

Jun 

- PUTS 

Sep 

9450 

a® 

152 

0.® 

156 

9SOO 

0.70 

1-27 

052 

1.81 

es® 

0.48 

1.06 

1.10 

2.10 



Open 

Latest 

Charge 

HHjh 

Low 

EsL voL 

Open InL 

Jun 

104-12 

104-13 

-0-02 

104-15 

104-02 

873,675 

413,643 

Sep 

103-13 

103-15 

- 

103-18 

103-04 

7,983 

55567 

Dec 

102-18 

102-27 

-0-09 

102-27 

102-16 

1.895 

33.161 


EsL w*. tore. Caere ues7 Puts itma. ftwtow dsy^ open bit. Oato 33439 s nee 300038 


■ NOTIONAL LONG TERM JAPANESE GOVT. BONO FUTURES 
(UFFE) YIDOm lOOths Q< 10014 


■ NOTIONAL MBNUM TEHM GERMAN GOVT. BOND 

(BOBDUFFQ- DM250300 lOCMha of 100% 

Open Sett price Change Hgh Low EsL vol Open InL 
Jan 100.00 100.05 -033 100.00 100.00 16 1880 


Open Close Change Hgh Low Est val Open Oil 
J un 11202 113.11 11282 380 0 

* UFFE co ntorts (reded on APT. M Open Here* age. are to pnwtaua day. 


UK GU.TS PRICES 


Bdfrn^iW 

WOE 7* 97 

EHHiG»021 

Canada 3 96 

Chong Kong Rn S >2 88 . 

Otn 6*2 04 

Cand Bicpe 8 96 

CraH Fender 9^2 99 — 

DenrakAga 

ECSC 8*4 38 

ffiC6*4 96 

09 7*90 

BB9V87 

Bee do France 9 90 

&IU&TH S'i 96 

&-*n BOA Japar 8 02 - 

ErpotOevCorp 91? 90 - 

FHand 7% 97 

ftrrttl Expert 9*8 95 — 
Fad Motor Oe* 8l| SB. 
GenBcc Capitri 9%90 - 

GMACa 1 ? 96 

hdBk.fcpanfti7%97 _ 

Her Amo- Dw 7% 93 

toy 07, z3 

J^reDerBh8%01 — 
Ksem Bee Par 10 96 — 
Korea Sec Purer 8>g 03. 

LTCBFh0 97 

MttugteBeeT'+tB — 

Mppon Oed Bi 10^95 _ 

Ncm»7>4 97 

OW *0 7* 03 

Osier KbnMbi* 8<2 01 


. 250 1Q9 IQOli -U 705 
. ISO «J2% 103% -Ij BS9 


8MBB8 FRANC SJTMGH18 


.130 111^ lift lip 630 MtoioHwe. 

Hanrenlt^srC. 


WOO 96 s * 95% J* .872 

-tt» W9l( 1 Vfit +1, i~ 783 

-150 90% S1*a -IV.W.W 

- 657 MS*b 1002 -k - M3 

-100 ida% wt 4, :t »2 


. 1500 10*i 10 % ->2 850 AsknOev Ba*B 10. 

. 1000 TOM* 105 J« 813 Artn4»2 00 


KSBCHottnoa 11J00O2E 

539 WyiOfjMS 


.600 106*2 108% . .-i». Hltf 

.163 113% 1M% 824 


.900 90*2 81% -A aw Cnnd&mpeA 96 . 


DrenaA4l4 99 


tooo 100 100 % ^ 450 JapanDwBk700e 

.250 101 >2 102'+ -h 431 land Secs 9% 07 E . 


. too 1031a M3* -h 844 EBSl* M 

.300 10B4i ItS 3 ! -*4 7.17 Bsc de Fence 7X( 06 . 


1000 90% 99 +% 448 Oftrio 11% 01 E _ 

- 300 W0t 109 564 PowwgBn8%03£ 


1000 90% 07 -% 574 FMand 71*99 

- 193 103% W% -% 609 Hyindal Motor Fh0lj 97 , 


100 KOJ* 1044* 


630 fceknd7%00. 


- 250 102% WA -% 834 KcbeS 3 ! 01 

1000 W7ie IOTVj -% MB 0pttto6>*03 

.200 100% W6% -*4 785 Ouatwc Hyrta 5 08 . 


.100 105% Its 5 * ->4 022 SNCF704 

500 «?«2 102% -*< TJST Vtbritt ftrit 5 03 . 

.150 108% 100% -% 7.11 WpU Bar* 701 . 


. _ VBBC HakSngs 11J0B R B W3 113% 114% -%k M* 

WO W6»2 1W% 530 108- 10*2 14 £ 400 112% lift -1.RQ5 

HOT 100 HJft +1* 450 Japan Dev 0(7 00 £ 200 91% 96>« . ^t ' 883 

250 101*2 102*4 -*9 431 land Secs ft 07 E 20 Q 101% 10ft r-v -938 

1000 9ft 99 4% 448 OtotolftOIE WO 111% lift -V 872 

300 Wft 109 854 PowwgonfttCE 200 10 ft fCft ft Z.SBI 

WO 111 112 891 Soren Tnmt 11^968 WO lift lift' - BJQ 

300 Wft lift ft 814 Tofcjc Bee R>w» 1101 C wo lift Itft ft - 861 

100 107 108 ft 611 Wold Bo* 11% 96 £ 103 105 Wft ft • WO 

100 1W 111 567 Abbey NatetiO 96 NZ$ WO 82 % 83% ft 807 

240 107% 108 ft 510 TCNZFtoft 0?NZt - 76 106% Wft ft'* 22 

400 104% 10ft 582 CEPHE 1096m 2000 104% 104% . -804 

100 9ft 9ft -ft 547 Sao de Force ft 22 FFr 3000 110% lift -4% .?t8i 

450 112% 112% -% 5X3 S7CF 9% 97 Fft _______ 4003 107% 106 -V A 832 

ISO 98 99 -1 53H • - 


■ WO 111 112 591 Sewn 1te« 1ft 99 E_ 

.300 Wft lift ft 5.14 Tokjw Bee RM(r 11 01 £ . 

.100 107 106 ft 811 Wald Barit 11% 96 £ 

-100 1W 111 567 Abbey National 0 96 NZS_ 


.190 98 99 -1 530 


.200 103% Wft 


. 600 111 111% 


3.05 FUMTVKI ROE NOTES 


-200 104% 104% -% au YENSnMKMlS 
1300 97% 97% -% 7JS M0um5BS 


• V ' 
v-V".*- 

Od - Otor • ;Gqp 


.300 Wft 106% -% 841 BB 8% DO 

.200 Wft 104% -% 867 FWandft96 

.200 102% Wft -% 780 Inter tore Oev 7% 00. 


■ 7SOOO 106% Wft +% 388 «**y NMT/rawy-i 99 . 
100000 113% lift +% 400 B*X»FtamO90 


-200 103*2 10ft -% 642 fc#ft01 

.3500 64% 8ft -% 849 Japm Oe* Bk 6 06 - 


.500 104% 105% -% 7.46 Japan 0e> Bk ft 01 . 

.330 106% 10B% ft 833 ftpon Td Td 5% 96 


.1350 07 87% -% 865 Noway5%97 — 

_ 200 102% 103 -% 898 9CF6%00 

.1000 9ft 97% -% 781 Spain ft 03 

_ 150 Wft 104% -% £28 9oodan4%98 

.1000 101% ICC -% 867 Vtorid Boric 5% 02 . 


- 50000 100% 107 +% 102 &09*>™ is 97 DM _ 

- 30000 117 117% ft 402 WOE-<U>2fl6 

30X00 9ft 8ft ft 439 &*M*0.W96e_ 

.wmo 105% 105% ft 180 

.120000 lift 114% ft 417 OXSOWEw 

- 90000 106% 10ft ft 288 Q«ff Uwrtb & « 


.150000 Wft 105% ft 827 
-30000 113% 114% ft 403 


.125000 109% 109% ft 438 ^ Sat HO 97 

.150000 103% 103% ft 381 firts " 30 ® 


. 3030 97% 98% -% 703 

-200 105% 10ft -% 7M OTISRSIRNGHT3 


. SSOOOO W7% 107% ft 4,13 


— YWd_ -.1994-. 

U Had Price £ *or- Hri> Low Horn 


arete" (Unas re to Rw TMff 

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12pC 1995 11.45 

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lOUpc 1995 9.74 

rrea 12%pc 1985# — 11.63 

14pc 1996 1245 

15%pelB96tt 11.13 

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9%pc 1988 - 813 

frees rtipe 1990# 

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&•* 72*1590 10.39 


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4S7 IK & 
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489 98 

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810(09%* 
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654 110% 
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119 

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(I) (8 Mat *ot- Mrii law 


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ft 143* 
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112 138 172% 

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329 148 162* 

134 351 133* 


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FINANCIAL, TIMES WEDNESDAY MAY 4 1994 


COMPANY NEWS: UK 


Brown & Jackson still 
in talks with Pepkor 


Bolger In London 
and Marie Suzman In 


Pepkor, the South African 
retailer, fe still . hiding t a iv 0 
with Brown & Jackson, the 
troubled discount retailer 
which last month announced a 
rescue deal with the Weisfeids, 
the millionaire couple who cre- 
ated the What Everyone Wants 
chain. L 

B&J sharehoilders are sched- 
uled, to vote -at an EGM next 
Monday on -the plan for Mr' 
Gerald and Mrs Vera Weisfeld ; 
to inject £6m to meet the loes- 
making group's immediate ■ 
workin g capital heeds, in 
return for a 19. per cent stake 
and two seats on the board. 

A Pepkor director said In 
Johannesburg: . “We certainly 
are negotiating but . discussions 
are at a very sensitive stage 
and we cannot yet confirm, ihat . 
we are making a bid for the 
company.” 

Neither Mr Christo Wiese, 
Pepkor 1 8 executive chairman, 
nor Mr CE Moore, the group's, 
finance director, were in South 
Africa on Monday - even 
though that was the - day of 
Pepkor’s annual results. Both 



Gerald and Vera Weisfeld: planning £6m injection 


are currently believed to be in 
England. 

; B&J r which owns the Pound- 
stretcher chain and had been 
in talks with its bankers, said 
last night: “We will not com- 
ment on market rumours. Ever 
since our problems began, a 
number of people have been in 
touch. The only people to put a 
deal on the table are the Weis- 
feids - and we are pleased with 
that and them.'’ 


Pepkor is Africa's largest 
mass-market retailer. 

The group's core business, 
PEP, retails goods to a 
pre dominant ly black customer 
base. 

Its international presence 
has been hitherto restricted to 
Scotland but it has been on the 
lookout for further interna- 
tional acquisitions. 

B&J's shares were 
unchanged at 5Mp yesterday. 


Powell Duffryn unwinds 
Spanish joint venture 


Powell Duffryn aud its partner 
CEPSA have. sold Proqumdca,. 
their joint chemical storage 
. business ^venture in Barcelona, 
Spain, to Terminates Portu.-.' 
arias for Pta2.09bn ■ (about 
£idm). . . 

The sale follows CEPSA's, 
strategic, decision not to main- 
tain an investment In chemical 
storage facilities - In the 
fixture. . - J .* . - ,- r . 

The company;: which, also 
0WH8 bulk :Storage ,irj, 

the UK,.’,' OS,.' Australia ’and-" 


Smith Africa, -intends to rein- 
vest the proceeds in upgrading 
and extending iha range of ser- 
vices offered through its other 
storage activities. . 

Mr Bill Andrews, -Powell’s 
chief executive, said that CEP- 
SA’s decision to withdraw “led 
us to . conclude .that our bulk 
Mqidd storage activities would 
be better serveiby redeployiiig 
resources ' to our other terminal 
locations, rather than Jncreas- 
tag .out investment in Barce- 
lona”; • 


DIVIDENDS ANNOUNCED 



Curnbrit 
- ’ paynwit 

r r- 'r -j. - ’ CO»TW - 
Datrof - poruflng 
payment. ..dMctond. 

Total 
for 
ym r 

Total 

last 

year 


are 

vh«s.30 - 0.15 

033 

03 

GBEIntt — 1 

— »«» Jta . -125- 

. :■ 05 

155. 

05 

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Jufy i . ■ 055 

T.15 

095 

Jnw Iw Tro»t_ 

s.b¥ 

May ai--- 2.8 

an 

5JB 

IdazzaninaCap,. 

jus 

--July 20 -755 

1fi.75¥ 

.18.75 

SBRntetyht: ■ .wii'.i 


J..- &7B-. . 

.8 

_8 


DivkJends.tfxw^ pwtoffpW bet, flodud»*pecl(t 


Govett 
Oriental 
assets rise 

Surging Pacific stock markets 
during 1993 led to a 52 per 
emt rise to net asset value per 
share at Govett Oriental 
Investment Trust over the 
year to March 31, writes 
Bethan Hutton. 

The figure grew from 
262. 07p to 397.63p, but more 
than half of that rise was 
achieved by the interim stage. 
Falls in most Asian markets 
since the start of 1994 have 
limited second half growth. 

Available revenue was 
£2Mtn (£2J54m), for consoli- 
dated earnings of l^p (1.41p) 
per share. A proposed final 
dividend of 0.75p makes a 
1.1 5p (CL95p) totaL 

As at end-March, 31-3 per 
emit of file trust's assets were 
in Japan, compared to 25 per 
cent six months earlier. 


Institutional unease over Lasmo bid terms 


By Robert Corzine and Peggy HoUhger 

Shareholders in rival explorers 
Enterprise Oil and 'Lasmc were yester- 
day exp ressing unease over the terms 
and structure of Enterprise’s hostile 
£L5bn offer. 

Some of the Largest institutional 
stakeholders say they are not yet con- 
vinced by Enterprise's arguments that 
it needs to reach a “critical mass” in 
order to increase the return to both 
companies’ shareholders in a donate of 
low oil prices. 

“Enterprise would have to put 
together a more compelling argument 
for merging the two businesses,” said 


one institutional investor in both com- 
panies. 

Enterprise yesterday posted its offer 
documents to Lasmo shareholders, 
prompting Mr Rudolph Agnew, Lasmo 
chairman, to charge that the bid 
“smacks of desperation and the pursuit 
of size for its own sake”. 

Shareholders' main concerns appear 
to be the valuation placed on Lasmo, 
which so far excludes a cash alterna- 
tive, the unusual equity structure and 
the thping of the bid. The offer of 27 
Enterprise A shares and 12 warrants for 
every 80 Lasmo shares, in effect creates 
a new class of shareholder with limited 
dividend rights. 


One Enterprise shareholder said the 
equity structure prompted fears that 
the company was seeking to offset risk 
which it was not prepared to take. It 
“raises suspicions that there may be 
something they might be worried 
about” the investor said. 

Another institution suggested the 
paper offer may have overvalued Las- 
mo’s assets. Enterprise says a cash ele- 
ment, either through a cash sweetener 
or underwriting arrangements, could be 
contemplated. But executives are con- 
cerned it would weaken its argument 
that the proposed financing arrange- 
ment gives Enterprise y warimurn flexi- 
bility to develop the combined assets 


of the two companies. 

Mr Andrew Shilston, Enterprise 
finance director, said yesterday that a 
cash hid “forces you to run the assets 
for cash, and therefore doesn't give you 
scope to unlock all the value of the 


Enterprise is expected to try to per 
suade shareholders that an independent 
Lasmo will miss opportunities while it 
completes large development pro- 
grammes, such as Liverpool Bay. But 
Mr Joe Darby, Lasmo chief executive, 
yesterday said “he wouldn’t be too 
happy" spending much more than the 
£50m a year on exploration and assess- 
ment given the uncertainty over prices. 


Laura 
Ashley 
sells $27m 
US stake 

By David Btackwefl 

The DS subsidiary of Laura 
Ashley, the clothing and fur- 
nishings retailer and manufac- 
turer, is selling its 44.4 per 
cent holding in Revman Indus- 
tries, the North American bed 
linen designer, manufacturer 
and wholesaler. 

Laura Ashley will receive 
$27.lm (£l8m), comprising 
$19m in cash plus the redemp- 
tion at par value of preferred 
stock which amounts to 
38.05m cash. 

The directors stated that the 
company would also receive 
accrued dividends on the pre- 
ferred stock. 

The purchaser is Aeon 
Group, the Japanese store con- 
cern, winch holds 15 per cent 
of Laura Ashley and is its joint 
venture partner to Japan. 

Mr Andrew Higginson, 
loora Ashley’s finance direc- 
tor, said the disposal was part 
of the group’s policy of return- 
ing to its core business. 

The proceeds could help 
accelerate capital expenditure 
plans, including doubling the 
number of European stores to 
120 . 

The improvement at the 
lossmaking US subsidiary was 
continuing, he said. Revman 
would continue to sell Laura 
Ashley bed tinea, the best sell- 
ing brand In the US, under 
licence. 

Last year Laura Ashley's 
share of Bevman’s profits 
came to more than £2 ul 


Uncertainty is the only certainty 

Heron bondholders meet again on interest deferral. Maggie Urry reports 


O nly one thing is certain 
when Heron Interna- 
tional's bondholders 
meet again this morning to 
vote on a deferral of bond 
interest This time there will 
be a quorum. 

When they first met, on 
March 31, holders of only 35 
per cent of the bonds voted. 
The quorum was 50 per cent 
Today the quorum is only two 
bondholders. 

The conclusion of the votes, 
though, is by no means sure. A 
yes vote would mean that the 
interest payment, which was 
due on March 31, would be 
deferred to June 30. But there 
is a strong chance that bond- 
holders will vote no. 

However, a no vote has 
become almost Irrelevant to 
Heron. Events at Mr Gerald 
Ronson's property and trading 
group have moved on since it 
originally warned bondholders 
in March of a “significant 
potential for cross defaults" if 
they did not vote in favour of 
the deferral. 

After the March 31 meeting 
Heron was technically in 
default on the bonds. But 
investors did not require the 
trustee to take action for early 
payment of the bands and the 
Heron empire did not collapse. 

Instead, Heron is embroiled 
in another full scale restructur- 
ing of its balance sheet, only 
months after the completion, 
last September, of a refinanc- 
ing of its then £1.4bn of debts, 
which included a swap of some 
bank debt into equity, and the 
replacement of other bank debt 
and grfat in g bonds with new 
bonds. 

Inevitably, the ’.second 


restructuring must bring more 
equity into the group. Mr Basil 
Vasiliou, who chairs VasiHou 
& Company, a New York debt 
trader which, with other Wall 
Street houses, reckons to speak 
for about 20 per cent of tbe 
senior bondholders, argues 
that “the solution la very 
apparent”. 

He advocates swapping all 
Heron's remaining debt into 
equity, and then arranging a 
listing for the shares which 
would provide liquidity for 
landers seeking a cash exit 

However, bank lenders are 
unlikely to find that an attrac- 
tive route. Many banks still 
have both a philosophical and 
a balance sheet problem with 
taking equity, even though in 
Heron’s case sailor Hawk lend- 
ers have already had 70 per 
cent of their debt exchanged 
for equity and can now see 
their remaining senior debt 
trading at about 45p in the 
pound. 

A listing could take some 
timp to arrange, and might not 
be possible until 1996 or 1997, 
although some off-market 
transactions, for example 
allowing banks to sen shares 
to institutions, could take 
place first 

A less attractive, but more 
likely solution, is that a bidder 
comes in to buy all the group's 
debt and equity. Heron’s pre- 
ferred option seems to be that 
a bidder would provide a cash 
exit for those lenders wanting 
to realise and give others a 
continuing equity interest in 
the group. 

A bid is likely to be worth 
substantially less than the 70p 
in the pound of assets which 



Gerald Ronson: group's future 
should soon be secured 

Heron has to cover its £300m of 
senior debt, and nearer the 45p 
where that debt is trading. But 
it would be more than the 30p 
or so that a receiver might 
recoup. 

As one interested party 
observes: “Cash is always more 
persuasive than equity in a 
bank’s short-time horizon”, 
a nd of 45p now might be 
more attractive to banks than 
70p in the medium term, and 
the possibility of even more 
later. 

UBS, Heron's adviser, is 
understood to have found good 
interest among a range of 
potential bidders from venture 
capitalists to wealthy property 
investors. Already some are 
said to be doing due diligence 
investigations and Heron is 
believed to be confident that a 
firm offer null be available for 
board consideration by the mid 
of May. 


That should enable proposals 
to be put to creditors by the 
end of June. 

Whether or not the present 
management would be kept on 
by a new owner is another 
matter, though many creditors, 
Mr Vasiliou included, are sup- 
portive of Mr Ronson and his 
team. 

With the prospect of a bid in 
view, a no vote at today's meet- 
ing would not result in bond- 
holders flurwflTiHTTn* action from 
the trustee. 

Rather, bondholders are 
tempted to vote against the 
deferral as a protest at the 
behaviour of one of Heron’s 
groups of bank lenders. 

These are the lenders to the 
Heron Corporation (HCP) sub- 
sidiary which are seen to be 
obstructing the passing of 
£7flm of cash to HOP to the 
“head office” company which 
would more than pay the bond- 
holder's interest 

These lenders, of which 
about Half are also lenders to 
the “head office” group, have a 
right to complete repayment of 
their loans before any cash is 
“upstreamed” to the parent 

The 40 HCP lenders are 
enforcing this right although 
HCP has assets reckoned to be 
worth at least twice its debts, 
and the lenders have already 
been repaid substantial 
amo unts early. These indude 
El50m paid last November 
which was due in March this 
year, and a £67m payment last 
week of £160m due next March. 

While Heron's future should 
soon be sectored, some doubt 
must remain while poups of 
creditors with differing inter- 
ests continue to fight in public. 





invest o r 

r e 1 a t i o n s 

m d s a : i n c 


t U> a T Cl : 


n s w 4 


j-i :;Sm>C!4!>4; 4' 

j..( v \v«; ; \L "nNH'4 


Important Results 
announcement 

Investor Relations Magazine 
Award Winners 1994 


London Hilton on Park Lane 
Tuesday 21 June 1994 

The awards are based on a MOW survey of 
fund managers and analysts who are asked 
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To discover this year’s winning companies, 
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TENDER NOTICE 


UK GOVERNMENT 
ECU TREASURY BILLS 


For tender on 10 Way 1994 


1. 


The Bank of England announces the issue by Her 
Majesty's Treasury of ECU 1,000 mfflton nominal of UK 
Government ECU Treasury Bills, for tender on a 
bid-yield basis on Tuesday, 10 May 1994. An additional 
ECU 50 mfUton nominal of Biffs wfll be allotted directly to 
the Bank of England for foe account of the Exchange 
Equalization Account 

2 . The ECU 1,000 million of Bills to be issued by tender 
win be dated 13 May 1994 and wB be In the following 
maturities: 

ECU 200 million for maturity on 16 June 1994 
ECU500mlUkmfcH , mtourttyon11 August 1994 
ECU 300 minion for maturity on 10 November 1994 

3. All tenders must be made on the printed application 
forms available on request from the Bank of 
Completed application forms must be ' 
at the Bank of England, Securities Office, 

Street, London not later than 10.30 a.m., London time, 
on Tuesday, 10 May 1994. Payment for Bills allotted wfll 
be due on Friday, 13 May 1904. 

4. Each tender at each yield for each maturity must be 
made on a separate application form for a minimum of 
ECU 500,000 nominal Tenders above this minimum 
must be In multiples of ECU 100,000 nominal. 

5. Tenders must be made on a yield basis (calculated 
on the basis of the actual number of days to maturity 
and a year of 360 days) rounded to two decimal places. 
Each application form must state the maturity date of the 
Bills for which application Is made, the yield bid and the 
amount tendered for. 

6. Notification will be despatched on the day of the 
tender to applicants whose tenders have been accepted 
In whole or in part For applicants who. have requested 
credit of BiUs In global form to their account with ESO, 
Eumdear or CEDEL, Bills wffl be credited fen the relevant 
systems against payment For applicants who have 
requested definitive Bills, Bills wifi be available for 
cod action at the Securities Office of the Bank of England 
altar 1 BO p.m. on Friday, 13 May 1994 provided cleared 
funds have been credited to the Bank of Ehgtencfs ECU 
Treasury Bffls Account No. 59005516 with Dayds Bank 
Pic, International Banking Division, PO Box 19, Hays 
Lane House, 1 Hays Lane, London SE1 2HA. Definitive 
Bills win bo available in amounts of m . 

ECU 10,000, ECU 50,000, ECU 100,000, ECU 500,000, 
ECU 1,000,000, ECU 5,000,000 and ECU 10,000,000 
nominal 

7. Her Majesty's Treasury reserve the right to reject any 
or part of any tender. 

8. The arrangements for the lender are set out In more 
detail in the Information Memorandum on the UK 
Government ECU Treasury BID programme issued by 
the Bank of England on befraff of Her Majesty's Treasury 
on 23 March 1989, and in supplements to the 
Information Memorandum. AH tenders w® be subject to 
the provisions of that Information Memorandum (as 


9. The ECU 50 mfflton of Bills to be allotted directly to 
the Bank of England for the account of the Exchange 
Equalization Account wffl be for maturity on 10 
November 1994. These Bills may be made avaHable 
through sale and repurchase transactions to the market 
makers listed in the information Memorandum (as 


10. Copies of the Information Memorandum (and 
ppiements to it) may be Obtained at the Bank of 
UK Government ECU Treasury Bffls are issued 


,sr the Treasury Bffis Act 1877, the National Loans 

Act 1968 and the Treasury Bills Regulations 1968 as 
amended. 

Bankof 
3May1 



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26 


Notice of Meetings 



Incorporated wish limited liability in the Republk of France 


Share Capital: FF678, 898,020 

Head Office: 7 rue de Teheran, 75008 Paris, France 


Since the Extraordinary General Meeting held on Tuesday, 26th April, 1994 at 3.00 pjn. was held to be 
inquoriie, shareholders are hereby informed dm an Onfiovy General Meeting and an Extraordinary General 
Meeting wil be held at the Hotel Mcridica Erode. 81 Boulevard Gouvion Saint-Cyr 750T7 Pads an Tuesday. 
10th May, 1994 (AGM ar 10 JO ajn. EGM afterwards) to consider die same agenda; 


Armani General Meeting 
Report of the Board of Directors and the auditors: 

Approval of oansacaaos falling within Article 101 of the law of 24th July, 1966; 

Approval of die accounts for die year ended 31a December. 1993 and quma to the Board of Directors. 
Allocation of profits and determination of dividend; 

Proposal for payment of dividend in shares: 

Re-election of Pmecrors; 

Renewal of die authorisation to the Board to deal in shares of the Company on foe Stock Exchange; 
Power of Attorney far carrying our formalities. 


Extraordinary General Meeting 

Reports of the Board of D i rectors and foe audito r s; authorisation to be conferred on the Beard of Dtrectua; 

1. ro increase the capital, on one or more occasions, up to a nominal value of h KlQQ million by asuing aew shares 
of an existing far cash with subscription rights reserved for shareholders as prescribed by law; 

2. to issue, on one or more occasions, in France or abroad, marketable securities, giving foe right through 
conversion, exchange, redemption, p res entati on of a warrant or otherwis e , to foe allotment of shares foe 
maximum nominal value of shares issued pursuant to such allotment being Hna'rrd to FF150 million, with 
niamtenance of foe shareholders’ preferential subscription rights; 

3. to issue, on the conditions set out under resolution 2. marketable securities with wai ver of shareholders' 
preferential subscription rights; 

4. to aaue, on one or mor e occasions, in Fiance or abroad, warrants to subscribe far shares, up to a maximum 
nominal amount ofFF5,000 million, the maximum nominal value of shares issued pursuant to such aUotmcnt 
being limned to FF150 million, with waiver of shareholders' prefe re n t ia l subscription rights; 

3. to issue, on one or more occasions, in France or abroad, bonds convertible into shares up to a maximum 
nominal amount of FF7.50Q million, with waiver of shareholders' p re fe ren tial subscription rights; 

6. to limit to FF150 million the total amount of foe increase in c apit al that may be per mi tted by virtue of the 
authorisations contained in resolutions 2, 3, 4 and 5 above and foe authorisations contained in resolutions 5. 7, 
9 and U of the EGM of 30th May, 1990 which remain in force; 

7. to increase the share capital, on one or more occasions, in foe event ofa cash or share offer for the securities of 
foe Company, up to a limit ofFF300 million, by the issue of new shares, with maintenance of shareholders’ 
preferential subscription rights; 

8. to increase foe share capual. in foe event ofa C 2 sh or share offer for the securiries of foe Company. jg permuted 
bv vmue of the conditions in resolution 7 with waiver of shareholders* pre fere ntia l subscription rights; 

9. to issue, on one or more occasions, in the event of a cash or share offer far the securities of die Company, 
shares with warrants attached up to a maximum of FF150 million, the maximum nominal value of such an 
issue being (united to FFI50 million with maintenance of shareholders* prefer e nti al subscription rights; 

10. to increase the share capital in the event ofa cash or share offer for foe securities of foe Company by virtue of 
die conditions in resolution 9 with waiver of shareholders 1 pr eferenti al subscription rights; 

IL to limit to FF300 million foe total amount of increase in capital tfaar may be permitted by virtue of the 
authorisations contained in resolutions 7, 8, 9 and 10, 

12. to granr foe power of attorney for carrying out formalities. 

AD shareholders will be entitled to attend the Meeting, regardless of the number of shares held. 

To be entitled to attend or to be represented at the Meeting: 

- holders of registered shares must be recorded in the Company's share register at least five days before the dace 
of the Meeting 

- holders ofbesaee shares must deposit ac the head office of foe Company or zr a branch of die tmticutuns fined 
below, at least five days before the date of the Meeting, a certificate evidencing that foe shares have been 
deposited with authorised intermediaries until die dare of die Meeting 

Lazard Brothers & Co„ Limited, 21 Mooriields. London EC2P 2HT, ENGLAND. 

Larard Frcres « Cie, 121 Boulevard Haussmann, 75008 Paris. FRANCE. 

Credit Lyonnais, 19 Boulevard des I aliens, 75002 Paris, FRANCE. 

Banquc Paribas. 3 Rue d'Antin. 75002 Paris, FRANCE. 

Barque de Ncuffize. Schlumberger, Malice, 3 Avenue Hoc he. 75008 Paris, FRANCE 
Cretin Induscriel et Commercial de Paris. 66 Rue de la Victoire, 75009 Paris, FRANCE. 

Sodete Generate, 29 Boulevard Hausmann, 75009 Paris, FRANCE. 

Banquc Transadantique. 17 Boulevard Haussmann, 75009 Paris. FRANCE 
Credit du Nord, 6 et 8 Boulevard Haussnurm. 75009 Paris, FRANCE 
Lytxuuise de Banquc. 8 Rue de la Rtpublique, 69009 Lyon, FRANCE 
Banquc Nanonale de Paris, 16 Boulevard des I aliens, 75009 Paris. FRANCE. 

Generale de Banquc, 3 Monagnc du Pare, Brussels, BELGIUM. 

Banquc Indomez, 96 Boulevard Haussmann. 750 08 Paris , FRANCE. 

Lombard, Oilier ct Cie. 11 Conateric. Gene va, SW ITZERLAND. 

A. Sarasin et Cie. 107 Fraestrasse, Basle, SWITZERLAND. 

J. Vontobel ec Cie, Bahnhafstrasse 3. Zurich, SWITZERLAND. 

Banquc Worms. 1 Place des Degnss, 92059 Paris la Defense, FRANCE 
Banquc Demachy et Assories, 223 Rue Saint Honore, 75001 Paris, FRANCE 
Cause des Depots ct Conrignanons. 56 Rue dc Lille, 75007 Paris, FRANCE 


Any SuichoUer wishing to mend die Meeting in person should reques t an entry ticker tnxnt one of tile above uwnuooai. 
H*e *y Forms muse he received by die Company U lean five day* before tbe time of (be Meeting A Shareholder can only be rtpreenled 
either by anodw member of the Meeting, or by bn spatur nr legal lepmcnaave. 

Proxy Forms sent to the Company for the Meeting on 26di April 1994 remain valid for foe second Meeting on Kkh May. 1994. 
Shareholders who hive not returned their forms can do so under the ddiw of foe above Concfakm. 


FIDELITY INTERNATIONAL FUND 
Socictfi d’lnvestissement & Capital Variable 
Kansallis House 
Place de I'Etoile. BJV 2174 
L-1021 Luxembourg 
Luxembourg B 24 054 


NOTICE OF ADJOURNED EXTRAORDINARY GENERAL MEETING 


The Shareholders of Fidelity International Fund (the "Fund") are hereby reconvened to an 
Adjourned Session of April 15, 1994 Extraordinary General Meeting oF Shareholders to be held 
on May 20. 1994 at the registered office of the Fund, Kansallis House. Place de I'Etoile, in Lu- 
xembourg at 12.00 am, with the following: 


AGENDA 


To approve the merger of the Fund into Fidelity Funds, a ’Socidtfi dTnvestissement a Capital 
Variable" under the laws of Luxembourg having its registered office at Kansallis House, Place de 
I'Etoile. Luxembourg. 


Upon hearing 


(i) the report or the Board of directors explaining and justifying the merger proposal published in 
the Memorial. Recueil Special of Luxembourg on November 25, 1993, no 56 J. 

(ii) The audit report prescribed by article 266 of the law of 10th August 1915 regarding com- 
mercial companies prepared by Coopers A Ly brand, Luxembourg, 


and subject to approval of the said merger proposal by the shareholders meeting of Fidelity 
Funds, ffany. 


1. to approve such merger proposals; 

2. to approve the allocation of shares in Fidelity Funds - International Fund in exchange for 
the contribution of all assets and liabilities of the Corporation to Fidelity Funds - Inter- 
national Fund, a fund set up within Fidelity Funds at the ratio determined ou the effective 
date of the merger on the basis of the respective net asset values per share; 

3. to state that upon the issue of the shores of tbe class International Fund in Fidelity Funds to 
the shareholders of Fidelity International Fund, all the shares of Fidelity International Fund 
in issue shall be cancelled and Fidelity International Fund shall be dissolved ; 

4. to approve that all steps shall be taken by the Board oF directors of the Corporation for the 
implementation of the merger proposals. 


Resolutions on the agenda of the Adjourned Extraordinary General Meeting will be adopted if 
voted by two thirds (2/3) of the shares present or represented. 

The following documents shall be at foe disposal of die shareholders for inspection and for copies 
five of charge at the registered office of the Corporation : 


1. ihe Merger Proposals and the related Merger Agreement, 

2. the annual reports of the Corporation and Fidelity Funds For their respective last three 
financial years, 

3. the semi-annual report of the Corporation for the period ended May 31. 1993. 

4. interim financial statements as at October 31. 1993 for the Corporation, 

5. the reports of the Board of directors of the Corporation and of Fidelity Funds, 

6. the report of Coopers &Lybrand relating to the merger proposal. 


In order to take part to this General Meeting, owners of bearer shares will arrange for evidence of 

the deposit of their shares to be sent to: 


Kredietbank SLa. Luxembourgeoise 
43. Boulevard Royal 
L-2955 Luxembourg 


On behalf Of 

The Board of Directors 


Fidelity 


Investments 


prTtf anCIAZ. 1 '""V MAY 4 .19* 

COMPANY NEWS; UK H— — 

Manchester United’s non-football activities have a growing importa nce. Tim Burt reports 

Reds launch an attack 




,r fe: 


w 


on off-field operations 

O n May 8, more than ■? S ^ ' 

fotnnn nf the faithful .2..-*: i.x- 


O n May 8, more than 
44,000 of the faithful 
will file into Old Traf- 
ford to watch one of Britain's 
more successful small compa- 
nies at work. 

When Manchester United 
t-nfrps the fteid tor its last home 
game of tbe season, all minds 

will be concentrated on foot- 
ball, Its core business. 

But for the directors watch- 
ing that afternoon’s dash with 
Coventry City, the Reds repre- 
sent much more than a tal- 
ented squad dominat ed by Eric 
Cantona, Ryan Giggs and And- 
rei RgTirjfralslriB. 

It has become a multi-lay- 
ered business In which turn- 
over from gate receipts has 
bean outstripped by secondary 
income from merchandising, 
television, sponsorship, the 
conference business and Cater- 
ing- 

Underlining their growing 
Importance to the club, these 
non-foot balling activities 
helped lift first-half profits by 
66 per cent to £7.6m. 

Together they contributed 
more than £12m to turnover 
which rose 75 per cent to 

WW Bin in t-Tiw air Tnrmthu to 

January SL 

While the fans savour the 
prospects of the doable - 
adding the FA Cup an May 14 
to the Premiership won earlier 
this week - the board has 
turned its mind increasingly to 
off-field activities which, it 
believes, could safeguard the 
company’s flnawrftg should the 
team be hit by a run of poor 
form, injuries and failure to 
succeed in cup competitions. 

That H air is minimised pri- 
marily by season ticket sales, 
which swell the dub’s coffers 
in the July before each season. 
Following the completion of 
the £10.3m Stretford End stand. 




Elswick 
focuses on 


core areas 


Elswick reported pre-tax losses 
of £L48m In a year of increas- 
ing focus on its core areas of 
specialised print and packag- 
ing agrochemicals. 

The outcome for the 12 
months to end-January, struck 
after a restatement of £5. 59m of 
goodwill written off in prior 
years, came from turnover up 
by £3.7m to £54^m and com- 
pared with a profit of 
£1.9lm. 

The restatement of goodwill 
arose on the disposal of Bom- 
ford Turner, sold for £7.7m last 
November, which helped to 
eliminate net borrowings. 



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1760 





= 15 % 


Up to 

off electricity 


021 423 3018 

Power line 










boasting 49 boxes and 864 dub 
class seats, the portion of 
advance sales has increased 
sharply and helped lift average 
turnover for each bm p* game 
from £580,000 to £767,000. 

Non-season ticket receipts, 
meanwhile, have been matched 
by sales from other sources 
such as cateri n g , programmes 
and merchandise. 

Mr Robin Launders, finance 
director, believes the growth of 
non-core activities, including 
financial services, sets Man- 
chester United apart from 
almost every other football 
dub. 

Their year-round contribu- 
tion offsets the seasonal aspect 
of the footballing business and 
gener a tes profits long after the 
players have hung up their 
boots. 

All this enables the board to 
estimate, conservatively, what 
the company will earn each 
season. It can calculate 
receipts from the guaranteed 
number of home games, likely 
television distribution revalue, 
and profits on sponsorship, 
royalties and merchandise. 


NEWS DIGEST 


At the operating level, prof- 
its rose by 23 per cent from 
£2. 80m to £3.55m, of which 
£1.35m came from discontinued 
operations. 

An exceptional provision of 
£400,000 was made at the year 
end in connection with surplus 
leasehold properties, compared 
with a £248,000 gain last 

rime. 

interest charges were cut 
from £971.000 to £536,000. 

Losses per share emerged at 
I.14p (0.78p earnings) and a 
final dividend of 0.l8p is pro- 
posed, maldwg 0.33p (0.3p) for 
the year. 


maker which ban undergone 
refinancing and res tr u cturing, 
announced a pre-tax profit of 
£785,000 for the year to Janu- 
ary 31 1994. 

The outcome compared with 
a restated loss of £7-51m. Turn- 
over was £26. 6m (£29.9m). 


GBE Inti rises 
18% to £2.8m 


Charles Letts shows 
£785,000 profit 


In its first results since being 
bought by its management, 
Charles Letts Group, the diary 


Profits of GBE International, 
the engineering equipment 
group formerly known as 
Downiebrae, rose by 18 per 
cent to £2.8m pre-tax over 
the year ended December 
1993. 

Turnover expanded from 
£34.7to to £37.4m while earn- 
ings per share improved from 
3D6p to 3£2p. 

The single dividend is lifted 
from 0.5p to L25p. 


NOTICE OF REDEMPTION 


Arab Banking Corporation (B.S.C.) 

(incorporated with limbed UobBUj In die state of Bahrain) 


U-S3 150JM8^00 Floating Rate Nates doc 2000 (tbe "Notes") 


Arab Boating Corporation (BS.C.) hereby gives notice that pursuant to 
Condition 5(b) of the Notes k bis elected to redeem all of fee outstanding Now on 
the Interest Payment Dae Ming ot lOtto Jure, 1994 (the ■Redtsnptioc Bafc"). 

Payments of principal snd inlaest wiD be made Kamt Ibcsunraderof. respec- 
tive. Notes artimaimrfCoapoas. at any specified office of any Paying Agent, by 


a bank ia New Yoric Dry subject is til cases id any fiscal or otter laws and 
regntaiioas described in Condition 7 of the Notts. On fee Redemption Date rf fee 
Noes, til mu mmi ed Coupons [dating thereto (whether or not studied thereto) 
shall be void and no paynmns shall be made in respect thereof. 

Notes wiUbeiaiiBe void nnless presented far payment wfchai ten years and matured 
Coupons within five yeas from their respective Relevant Dates (at d efin e d in 
Conation 7 of tbe Notes). 


Principal Paying Agent 

Sodete Generak Ahadame de Banqne, 

15 ave n ue Em ik Renter, 

P.O.Box 2 108, 

1021 Lnatixng. 


Morgan Guaranty Trust Company 

rf Nor York, 

Arana des Aits 35, 

B-1040 SrnsRfs. 


Morgan Grarantj Trust Company 
of New York, 

Mainzer Ladestnse 46. 

06000 ftadiftit an Mam. 


Morgan Guaranty Trail Gwipanj 
of Nm York, 

60 Victoria Sntaflhncst. 

London, EC4. 


Swiss Bank Corporation, 
A e a cten wm afc 1. 
CH4(X>ZBsk. 



ft*' P'u9 

Arab Banking Corporation (B.5.C) 

ABC Toner, Pt pfc — tt e Arao. F X>. Box 56 W . M— m» . Bahrato 
CJLNdl 1(099 


fthaaemne to ttm attention of the Insu ran ce Authority that an IsfootMan ragjateiod 
company by tbe namt at 

ImrasarancE t jmj**^* 

Registered Office: 19 Fed Road, Dongtes, Isle of Man j 

Place of Business: 2Q3 me de Bflk, 68100 Mulhouse, Franor 


may be conducting losnrajice business which requires antborisution under the 
Insurance Act 1986. 


Tbe fosnrmKeAuriMrltj wishes ta confirm that- I 

s) toOBSnrance limited does nm bold any such authorisation; and | 

b) conducting nch business without appropriate authorisation constitutes a 


criminal offence. 


Any person) atrare of tire activities of Imrasurasce Limited should contact Ibis 
office- 


Isk of Man Government insurance Authority 

SAFfiaore 

12/14 Ridgeway Street 

Douglas 

1 st of Man IMI1EN 
Telephone: (0624) 68569W7 




/ * ^ 




It allows Manchester United 
- one of three quoted dobs - 
to set aside a portion of after- 
tax earnings for its transfer foe 
reserve - essentially a pot of 
distributable cash for buying 
and selling players. 

“We always budget for the 
worst scenario: that we are 
hovering near the relegation 
zone and have failed in the cup 
competitions” says Mr Laun- 
ders. ’Tfs then that we would 
fall back an the transfer foe 
reserve to rebuild the team.” 

Profit from cup competitions 
can, therefore, be treated as 
exceptional which w>n 1)0 
need to top up the reserve and 
fnnrease the club's ability to 
buy new players. 

The size of those profits will 
be substantially boosted next 
season by inclusion in the 
European Cup competition - 
the Continent's premier cham- 
pionship. 

Seeded along with the likes 

Of AC MTIhti and Ajar, I talian 

and Dutch champions respec- 
tively, the dub will accrue the 
benefit fro m three home ties in 
the league stage, along with 



.5 . • 

IS 




a\ Jo! 




con 


Ryan Giggs; key member of tiw United team chasing the double 


about £500,000 from UEFA. A 
reasonable run in the competi- 
tion could bring in about £2m. 

Mr Launders regards the 
prospect as a virtuous circle, 
which will prompt increased 
demand for season tickets and 
non-core products such as 
videos, souvenirs and even 
financial services. 

“If we can play football 
in an attractive way which 
wins competitions it Is a 
boon. 

“We already have a guaran- 
teed income, but if we can per- 
suade more people to support 
us it creates spin-off benefits 
for our other businesses." 

So for this year, success on 
tiie field and lucrative sideline 
businesses have left the dub 
with a transfer fee reserve 
increased from £2.25m to 
gL2Bm 


It has also generated £5-9m 
net which, true to his con- 
servative ffnpTirial principles, 
Mr Launders has invested 
mostly In gilt-edged stock. He 
says such investments not only 
give the dub fixed interest 
rates, but 48-hour access to 
funds should it need a large 
sum to buy a player. 

More importantly, it gives 
Man chester United financial 
stability in a notoriously 
uncertain industry. 

“We're In a unique position 
compared with most clubs," he 
says. "New businesses like 
wholesaling have brought in 
more revenue and we don't 
need to borrow to buy new 


It shows we are still a foot- 
ball team, bat we're prepared to 
seize every flnandtal opportu- 
nity which comes out of that" 


Orders anticipated tn the last 
quarter failed to materialise 
and this was expected to affect 
operations during the opening 
half of 1994. 

However, those orders had 
now been received and with a 
good order book at good mar- 
gins directors expected the sec- 
ond half performance to be 
"excellent'’. 

Nevertheless, the shares 
closed 8p lower at 66p. 


income share of 7.1% (89%). A 
second interim dividend of 2L9p 
(2.8p) Is declared, which with a 
special dividend ad lp makes a 
total for tiie year of 6Bp (69p). 


Deficit for Premium 
Underwriting 


Jove Investment net 
asset value at 66.99p 


Jove Investment Trust 
reported net asset value per 
capital share of 6&99p at Feb- 
ruary 28, compared with 3&38p 
a year earlier. 

Net revenue lor the year to 
end-February was £1.01m 
(£841,226) for earnings per 


As promised in its prospectus, 
Premium Underwriting issued 
a progress report yesterday 
showing pre-tax losses at 
£32,442 for the initial period to 
February 28. 

The prospectus statement 
expected costs to exceed 
income until 1997 when Lloyd's 
results for 1994 were declared 
and paid.. 

Although it was too early to 
make predictions of the under- 
writing results for 1994, the 
directors believed the year had 
“started satisfactorily". 


PolyGram 


DIVIDEND 1993 


At fba annual general 
meeting of stmatoriders of 
PolyGram N.V. held on 29 
April 1994 a dividend ia 
cash tor the financial yea- 
1993 has boea declared of 
D.75 Netherlands guilders 
per share on the company's 
outstanding common shares 
of 0.50 Ne&erUmds guilders 
par value. 


The dvidend lor heddera of 
bearer shares wffl be payable as 
a! 1 6 May 1994 on defivery otthe 
(Svtoerxj coupon Number 4; 
payment to subject to deduction 

of 25 per cent Netherlands 
withholding tax. The dividend 
coupon Number 41e payable at 
the ABN AMRO Bank N.V, 
MorongrachtS05, Amstardam, 
The Netherlands. 


Hotdars of CFcertffcates are 
antifled to the dMdend provi d ing 
that they have deposited tfielr 
dividend sheets by Ihe CF 
doeing date of 29 Aprfl 1994 
with a custodian affiliated 
to the ‘Centrum voor 
FondsenadmlntetjaUe ELY.’; 
payment is subject to deduction 
of 25 per cent Netherlands 
withholding tax. 

The dividend far oharehokiere 
on the oompanyta register 6n 
Beam as at 29 AprB 1994 wB be 
wired on 10 May 1994 to the 
stwrehoWersrancefned.aftar 
deduction of 25 per rant 
NethertandewKhhokfeig tax. 
The dMdend lor shareholders 
on toecompany S ragistarln 
New Yoric as at6 May 1994 wffl 
be payable on 24 May 1994. 
Sharahaktars wfll receive edvtee 
by mad regarding payment and 

wtthhottSng tax arrangements. 


iniiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiimiiiiijjjgijjjji 

Residential Property 
Securities No. 2 PLC 
£200,000,000 

Mortgage Backed Floating Rate Notes 2018 


!*“ *1* ««* period 29th April, 1994 to 
29th JaJy, 1994 has been fcred atsJvptiamc. pSuom. 
Coupon No. 24 win therefore be payable on 29th July, 1994 at 


£1,389.93 per coupon. 

Aggregate interest charging balances of Mortgages redeemed during die 
previous Interest Period: £4,355380.31 . 


— inmnneo aunssg a 

previous Interest Period: £4355380.31 . 

Aggregate interest charging balances of Mortgages redeemed as at 
29tfa April, 1994: £203,99 3.M8JL9 
Tire ^B&tegate priadpa) smotmr of Nors outsuitdine as at 

29th April, 1994i £85,400,300. . 


S.G.Warburg & Co. Ltd 

Agent Bank 

iiiiiiiiiiiiiiiiiiiiMiiumiiimiiiimiiiiiiimii 


'sigcnicnt 

r-our at 

sGias* 


RFM 




’* ‘-c •’ , . 






r* 




gSDAV , 



I B«rt FINANCIAL TIMES WEDNESDAY MAY 4 1994 

‘ '-Dr^ — — — — 



COMPANY NEWS: UK 

Budget fears dampen Silentnight sales 

— rvnrioc asAA the nroduc- businesses had continued 




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£■*•*>> t - 
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ByAncbawBolser 


The change to a November 
Budget hindered recovery in 
.the. UK_ ftmiture market, 

' acbortfiug to: Sitentn ight Hold* 
jtrigs, Europe's biggest manu- 
- gicturer off beds. 

' .-The t ancashir e-b a se d group 
_aaid retailers found that the 
run-up to the chancellor’s 
package In November created 
finandal uncertainty during 
what had historically been its 
main selling, season, before 
Christmas. . .- 

' It added:. “The announce- 
ment of tax increases to take 
effect in April 'undoubtedly 

hit QATiqmnw t-rniflriapc ft and 

hart a dampening effect on 
.sales.” . 

Sflentnight, which issued a 


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*»N- i 


J*f.* p> " 

or* *■* • 


.. 

irC*:-. 4 

m&s& x * 


*V^ : -• 


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:tV‘T 


profits warning in March, yes- 
terday reported a 8 per cent 
increase in pre-tax profits to 
gig Am in the year to January 
29. Sales rose by 9 per cent to 
£107m. 

Mr Bill Davies, executive 
rhairmaTi t said: "There have 
been few tangible signs yet of 
an improvement in the UK fur- 
niture market” 

He added that the sale of big- 
ticket price items was very 
sensitive to changes in con- 
sumer sentiment particularly 
in the mi/wip to lower end of 
the market, although the top 
eyd was more stable. 

The group’s UK beds busi- 
ness experienced si gnifi c a nt 
marg in pressure and profits 
rianiinad, although sales rose 
by 2 par cent to ElOlm. 


Mr Davies said the produc- 
tion of Silentnight beds was 
fr^ ng concentrated in one fac- 
tory, with the existing plant at 
Sutton being closed. This 
would involve toe loss of about 
70 jobs at a cost of £7 50,000 , 
which would fall in the current 
year. 

Sales in the UK cabinets 
business rose by 15 per cent to 
£43m and profits also 
increased. Silentnight contin- 
ued to invest about half its 
capital expenditure of £8,7m 
(£8 -8m) in the cabinets busi- 
ness, which increased its esti- 
mated share of the UK market 
from 5 per cent to 6 per cent 
The group’s share of the UK 
bed market was stable at 32 
per cent 

The group said overseas 


businesses had continued to 
improve. Its German manufac- 
turer of beds and mattresses, 
bought in 1992, contributed 
sales of £H5i and continual 
to provide a good return. The 
previously lossmaking US sub- 
sidiary was now breaking 
even. 

Earnings rose to 17.02p 
(17.l4p). A 05p cut in the final 
dividend to 5J5p maintain s the 

total at 8p. Mr Davies said this 
was intended to restore the 
one- to- two balance between 
interim and fin al pay men ts, 
reflecting the group’s strong 
seasonal bias to the second 
half 


_ COMMENT 

While accepting the Budget 
posed a particular problem last 


year, analysts were surprised 
the group gave such a down- 
beat view on the trading out- 
look. One asked whether the 
continuing pressure on mar- 
gins meant the strategy of hav- 
ing several brands in the 
mature market for beds was 
fundamentally flawed. 
Whether or not it signals any 
more rationalisation, the com- 
bining of the SQentnight plants 
will hit first-half profits. There 
is also irritation that the group 
will not identify the profits 
contribution from c abi nets, in 
which it has been investing 
heavily. Forecast pre-tax prof- 
its put the shares, unchanged 
yesterday at 304p, on a pro- 
spective multiple of 16.1 - a 5 
per cent premium to the mar- 
ket, which looks high enough. 


Substantial 
increase 
to A$76m 
at ICI 

Australia 

By NlkW Talt bi Sydney 




Murray Johnstone launches 
smaller companies trust 


By BethanHutton 


Murray Johnstone is seeking 
up to £6Qm with the launch of 
Murray Acorn, an investment 
trust concentrating on the 
smallest end of the smaller 
company range. - 
The trust wifi, invest in com- 
panies with, a market capitalis- 
ation of £5Qm or less, and prin- 
cipally those of less than £30m. 
Up to 10 per cent of the fund 
may be Invested hi unquoted 
co m pnrripja, mainly those in a 
pre -listing phase. Special situe- 
tions, such as management 
buy-ins or refinandnga, may 
ftwmnt far up to 30 par cent. - 
Shares will be issued at lOOp 


on a partly-paid basis, with 50p 
due when the public offer 
closes on June 16, and the bal- 
ance due on November SO. This 
is to allow a more gradual 
investment of the fund in what 
i-an be an illiquid, market. 

There are several smaller- 
company investment trusts 
listed in London, but most 
invest in much larger compa- 
nies than Murray Acorn's 
-planned targets, often having 
market capitalisations of up to 
y flfl ftm. However, two relatively 
new trusts, Pilot and Eaglet, 
have similarly low-cap findtel 
• Murray Acorn will be aiming 
-mainly for capital growth 
rather than income, and wm 


take the Extended Hoare 
Govett Smaller Companies 
Index (excluding investment 
Ixu s t s) as a benchmark. 

• Sbirescot, the Shires High- 
Yielding Smaller Companies 
Trust, managed by Glasgow 
Investment Managers, Is hop- 
ing to expand by up to 225m 
with a placing and offer for 
subscription of conversion 
shares. The shares will be 
issued at lOOp and on conver- 
sion, which will take place by 
October 14 at the latest, war- 
rants will he attached on a 
l-farv5 basis. The public offer is 
due to open an May 16, closing 
on June 7. First dealings are 
expected on June 15. 


Compass turns to 
France for growth 


By David Bladcwefl 


rv imp afiK Group, the catering 
and healthcare company that 
last week announced plans to 
buy Canteen Corporation, the 
third largest US caterer for 
?450m (£3 08m), yesterday 
switched its attention to 
France. 

It is acquiring, through Scan- 
dinavian Service Partner, its 
European airport catering arm, 
the airport restaurant division 
of Saresco for £10.7m cash. 

The b usiness ’s main contract 
is with Charles de Gaulle Air- 
port in Paris, although it also 
operates at Strasbourg and 
Toulon. 


It has 28 restaurants mid 
bars and made pre-tax profits 
last year of FFr3m (£350,000) on 
turnover of FFrl27m. 

Assets were about £4.5m at 
the year end, including net 
(wah of £2m. 

Mr Fritz Temofeky, chief 
executive of Compass’s Euro- 
pean catering operations, 
described the acquisition as an 
“ideal first step for the group 
in France". , 

Hnmpass surprised the City 

with its US acquisition plans 
last week. Mr Francis Mackay, 
chief executive, said the 
group would continue to 
expand organically in 
Europe. 


ICI Australia, the quoted 
Australian company in which 
Imperial Chemical Industries 
holds a majority interest, 
reported a sharp increase to 
A$76.4m (£36. 7m) In profits 
after tax for the six months to 
end-Marcfa. .. . 

The outcome compare d wi tn 
A$48.4m last time, struck 
before abnormal Items of 
AyiH-fim. There were no abnor- 
mal charges in the lates 1 1 “* 
figures. 

ICI attributed the upturn 
to a 7 per cent volume 
increase, control of costs 
and a reduction in interest 
charges, down from A$19m to 
A$ 1341m. 

In divisional terms, the 
chemicals business saw trad- 
ing profits little changed at 
A$49m (A|50m), with demand 
healthy but caustic soda prices 



NEWS DIGEST 


Management 
buy-out at 
GB Glass 


(3 Glass, the Doncaster-based 
glass and fighting comp onents 
maker jointly owned by Oscam 

and ' Thorn EMI, , has .been 
bought by its management for 
£25m with backing frim-3i, the 
ven t u r e capital group. • - 

For the WBB year GB-Oass 
returned: pre-tax profits of 
53.1m ixtL sate of: £®»y 
thaiy hal f w tdch^CTfr to 

export maitote.; 


St . is Jeadmg a syndicate of 
investors, i ncluding Pr udentia l 
Venture Managers, to provide 
59m. of equity and m ezz anin e 
ddbt Senfor debt and overdraft 
fia-llifles were provided by Mid- 
land Bank. 


adjusted losses of £1121m last 
time, from turnover on con- 
tinuing operations of £993,150. 

Tforntng B per share were L5p 
(losses lL4p). 


Exceptional lifts 
CRPLefeaffe 


. Gartmore European 
net assets ahead 


pany estimates positive earn- 
ings for the year. 

The trust reaffirmed its pol- 
icy that dividends were of sec - 
ondar y importance to capital 
growth and future payments 
would be paid out of earnings. 
i jist year’s final was 03p. 


per share of Lip (Ip)- An ini- 
tial final dividend of lp is rec- 
ommended. 


After an axceptimaT credit of 
£529,655 following a loan 
waiver, CKP Leisure produced 
pre-tax profits at £245,726 for 
the year to October 81 from 
tonmver of£64i73k_ 

This compered with rna o 


Gartmore European. Invest- 
ment Trust raised net asset 
value per share by 11 pe r cen t 
to 15L4p at March 3L against 
13&3p six months earlier. 

Net losses for the six months 
came to £194/X». (£77,000) giv- 
ing a deficit per share of U3p 
(0J38p). At present, the com- 


New Guernsey 
Securities assets rise 

New Guernsey Securities Trust 
reported net asset value per 
share of 123 -3p at December 3L 
against lflLBp a year earlier. 

pre-tax profits for 1993 were 
528491 (£26,197) for earnings 


Low & Bonar makes 
disposal in US 

Low & Bonar, the international 
packaging and materials 
group, has sold Bonar Fabrics, 
its non-w ovens business in 
South Carolina, to HDK Indus- 
tries of Tennessee for $2.7m 
(£L84m) cash. 

The sale completes the 
group's exit from this business 
se ctor following the closure of 
its Scottish plant in 1993. 


The plastics division 
incurred a reduced loss of 
A$8m (A$12m) as it continued 
to straggle against low world 
prices. 

Trading profits from fertilis- 
ers and crop-care rose from 
A$8m to A$15m> while the con- 
sumer and effect products divi- 
sion contributed A$76m 
(A$55m). m . 

ICI added that “while prices 
generally seem likely to 
remain low and competition 
keen, result far the full year 
should satisfactorily exceed 
1998 tf the improved business 
i-irmate is maintained”. 

The interim dividend 
goes up from 7 cents to 11 

cents. , , 

The company also revealed 
that a decision is likely 
to be reached this week on 
whether to proceed with toe 
construction of a A$200m-ptos 
ethane pipeline, linking S outh 
Australia’s Cooper Basin with 
ICTs ethylene plant at Botany 

Bay. ^ „ 

ICI said that negotiations 
over terms far the supply from 
the South Australian gasflelds 
were at a critical stage and 
that toe tinting necessitated a 
decision this weds, although 
aw announcement might not 
be made immediately. 


BTR spins off Darlington 

Crystal gazing - Mr Eric Dancer 

Dartingtontoystel* and Mr Russ Cum^s of 

i rr lf j.1.. offtware and tableware producer which has been 

a £10m deaL writes 

P ^d«rtiwtenns of the transacti on, w hichis 
venture capital group, BTfi’s Kockware Group receiv ®^J^ 1 ™ 
tamper cent bolding as well as repayment of 

Hall Trust, which funded ^ the ^ 

1967 to create employment in north Devon, has also sold its 

P ^ l < Sdtoto ^urtb^to n Crystal will receive £2m from the deal 

to ,T!!^SJ r 2?t£rfbi» company 

nnd er writ ten the transaction, while Bank of Scotland was pro- 
viding debt and working capitaL 


Thos Cook expands 
by 25 % to £ 31 . 6 m 


Thomas Cook, the travel and 
fiwMnrial services group which 
is owned by Westdeutsche Lan- 
desbank, increased pre-tax 
profit by 25 per cent to £8i.0pi 
in 1993, w rites Michael Skapin- 

ker. , .. 

The increase came in spite of 
the continental European 
recession, companies cutting 
business travel costs, and low 
interest rates which depressed 
travellers' cheque ea r nings - 

Revenues rose 22 per cent to 
£595Bm. 

Mr Christopher Rodrigues, 
chief executive, said leisure 


travel proved resilient in most 
markets. He said holidays were 
-now considered an essential, 
not a luxury, for people 
throughout the developed 

world". . , , . 

Mr Rodrigues added that 
business travel, by contrast, 
was going through a big 
change as companies sought 
ways of reducing costs. 

There was evidence of 
increased demand for business 
travel as companies come out 
of recession, but this, he said, 
remained a highly competitive 
market. 



INVESTING IN FRANCE 

— - ^a: 


f/ /Jil/4 


Pafarrnimces SjL 

Management Buy-Out 
Led by : . ' 

Hambro Europe 011 Ventures Limited 
Other JEqubty Providers: 


' In-Com : 
SJ8X& 

M.T. Participations 




Mason Fnmadse de Distribution 


Management Buy-In 
Co-Led by: 

Hamhro European Ventures limited 


Other Equity Providers: 

LTJone 

Jean-MlcheL Monnet 
Gerard Vaghet 
Debt provided by: 
Unlcredit 
Legy advice pond'd 


James Weir ... 
Hambro European Venom® ^ tcd 
ix place Vendome 75001 Pans 
Telephone: 010 331 42« 57 17 
- Facsimile: 016331 42 86 90 19 


Ert i pimri Truell 

Hambro European VentmM Umj^d 
41 Tower Hill London EON 4HA 
Telephone: 071-865 1829 
Facsimile: 071-702 9827 


HAMBRO EUROPEAN VENTURES 


Member ot IMRO 




!^~~5SKE3SS3£2SSS2 

lltayl» 4 '‘ hosbn ^ 

of 21 April 1994 to an — i — « r ,nH»-r>rari'ves and 

. a. 


of 21 April 199 4 10 OMMgmOT. cmploy« BpiBraon™ *od 

tk-c fallows exhaustive discussions ajnrken fhg obtaining of «n interim couff 

from d* tordtod d* 

^plo^s 60® "“““T -"nnjxe&aa. production. Uorfc^oaod prodocrion ^enmoo. 
The iodutiriti -ri- « “j^d in ,ce®nooof d« 

^ for eight woda-8 ^riao, « eoon « partible. Itareeet. bet»se 


2 May 1994 



^ ASRNAG 


C.S. 5200,000,960 

Guaranteed Floatin* Rate 

Notes due 1996 

Tn a«orfance with tteppwai oy of 
the Notes, notice js 
that the Raw of bm nst k tt me 
three month periodWKtag4m 
August, 1994 has bora fe ed * 
per amram. The 

accruing far soch three n*?* 1 * 
Sodwfll be U-S- SJp 7 ® Pf 



11 ir T*TN1\FSS 

■ -nnth P FT.A. and its sh: 

l Hr. ik iiim-- 1 - 1 

SECTION 

1 1 

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Itri tajaica oo 07WB AW 
^wdMioifeaaK The PfcaodU Tone*, 
0paSfl|flw*4r'B>tfn'i 
lifoe fflUHL 







WEDNESDAY MAY 4 1994 


COMMODITIES AND AGRICULTURE 


London coffee futures 
surge past $1,600 mark 


Copper price rise forecast 


By Kenneth Gooding, 
Mining Correspondent 


By Alteon Matttend 


Coffee 


Coffee prices surged 5 per cent 
to fresh five-year highs on the 
London Commodity Exchange 
yesterday, surprising even 
bullish traders by the speed of 
the rise. 

The continued tightness of 
physical supplies, coupled with 
a shortage of stocks, pushed 
the July second position for 
robusta futures to a peak of 
51.655 a tonne. A buoyant open- 
ing in New York helped Lon- 
don maintain most of its gains, 
with the July contract closing 
580 up from Friday’s close at 

51.643. 

In early afternoon trading in 
New York, the second position 
arabica contract was 3.80 cents 
higher at 93.65 cents a pound. 

Yesterday’s surge through 
SI, 600 in London came less 
than two weeks alter the July 
contract broke the $1,500 bar- 
rier and put it 37 per cent up 
on the year so far. The market 
is at its highest level since 
mid-1989. 

Growing interest in soft com- 


Lordon Robusta 

2nd poston. S per tome 

1,700 


800 1 ' » ■ ■ 1 1 ■ 
May 1803 
Source: Dotastream 


modifies among investment 
funds looking for diversifica- 
tion is helping to fuel a market 
driven by a lack of readily 
available robusta from west 
Africa and Indonesia and fall- 
ing consumer stocks, said one 
trader. 

“It’s a little bit of every- 
thing.” he said. “But even so 
the severity and speed of the 
move, particularly today, is 
surprising.” Buying came from 


the trade as well as chartists 
and funds. “There were just no 
sellers around from the begin- 
ning." 

The continued squeeze on 
short positions was reflected in 
the nearby May contract’s $57 
premium over July. But Mr 
Lawrence Eagles, analyst at 
GNI. the London brokers, 
pointed out that July was at a 
growing premium to Septem- 
ber, “which means people 
think this tightness could last 
through till then.” 

The fact that the world price 
for robusta has now reached 
the level where export stocks 
can been released appears to 
be having little effect. The 
Association of. Coffee Produc- 
ing Countries is not due to dis- 
cuss the release of stacks until 
a meeting an May 23. 

• The LCE yesterday reported 
a 41 per cent rise in volume in 
April compared with March, 
with 333,874 contracts traded. 
That reflected more active 
physical markets and growing 
investment fund interest, it 
said. 


Copper is benefiting from 
rising European demand, ana- 
lysts suggest, and prices 
Should be sharply up in the 
last quarter of 1994. 

The market may see a supply 
deficit of 225,000 tonnes tills 
year and of 350,000 tonnes in 
1995, according to Mr Fred 
Dernier, analyst with the 
E.D & F. Man commodities 
group. 

“This builds a case for vola- 
tile and rising prices, despite 
the large Increase in primary 
output [expected] in 1995.” he 
adds. Man in its latest metals 
markets review is forecasting 
copper prices averaging 95 
cents a pound in the Aral quar- 
ter of this year. 


Merrill Lynch Is even more 
bullish and says $1 a pound is 
“not an tmreasonble objective" 
while % cents seems to be the 
bottom of the trading Tange 
Merrill says in its Weekly 
Futures Report that the second 
quarter could see same prices 
weakness develop but so for 
“demand from Europe has 
taken some of the pressure off 
the inevitable slowing of US 
demand We believe that the 
potential correction in copper 
prices will not be as great as 
some are anticipating". 

European copper consump- 
tion rose about 4 per cent 
above late-1993 levels at the 
begintag of this year, Blooms- 
bury Minerals Economics 
points out In its Copper Brief- 
ing Services. The turn-round in 
the automotive industries of 


tiie UK, France and Spain was 
the most important teeter. 

Mr Peter Hollands of BME 
says that the most important 
source of uncertainty ts China. 
However, he guesses that light 
Chinese selling may occur 
every time the. copper price 
nears 90 ce nts and there may 
be speculative buying when it 
feUs below 85 cents. 

“Two-way Chinese trade 
i ntflli i - keep ttie price within a 
fairly narrow range for some 
time," he adds 
Nevertheless, BME suggests 
the copper price win bottom 
out at 83 to 85 cents in the next 
few weeks, then will trend 
. slowly upwards through Octo- 
ber to about 90 cents and 
“thereafter there looks likely 
to be scope for rapid price 
. increases towards 51 a pound". 


Charges reduced for 
Chile's Codelco three 


W£ 


By Jason Wabb in Santiago 


Santiago's Court of Appeals on 
Monday ordered the release 
from prison of three former 
caitx? executive's of Codelco, 
the state-owned Chilean min* 
lug group, and drastically 
reduced charges against them 
over futures trading operations 
that resulted in losses of 
USS2Q7HL 

Mr .Juan Pablo Davilla, 
Coddco’s former chief futures 
operator, is now charged with 
causing the company losses by 
deception,*' which carries a 
maximum sentence of 541 days 
in prison. His two immediate 
superiors are now charged 
with being accomplices, for 
having foiled to keep a check 


on his activities, and face a 
maximum sentence of 66 days. 

Previous charges against all 
three of having defrauded the 
state were dropped because 
Codelco workers are not classi- 
fied as public employees : for 
penal purposes, although , the 
company is 100 per cent state- 
owned. Those charges cpuM 
have resulted in -five-year. sea-, 
fences, as well as hefty flues. 

None of.the three was had to 
put up fail as the new.cEarges 
were not considered suffi- 
ciently serious. Mr Davffla had 
been in custody since March 11 
and the others since April 8. ' 

Codelco, which, lost $l3m 
after tax in 1993, compared 
with a «03m profit ^ *» 
longer trades fixtures. 


Foreign miners not ready to invest in China 

Progress has been made on liberalisation, but more is needed, writes Tony Walker : 

W hen representatives stage. “China is very much one development bureau admitted into line internationally on while China's minmg Indus 

of some of the of the countries we are moni- in an address to the forum that standard royalties of between 1 ranked fourth m toe worm 

world's leading min- toring carefully " he said. “But a 1986 mining law was now and 5 per cent output value, it was operat 


MARKET REPORT 


Alumi nium breaks stubborn resistance 


ALUMINIUM and COPPER 
prices closed firmer at the Lon- 
don Metal Exchange yesterday 
and looked set to clock up fur- 
ther gains, dealers said. 

Aluminium finally broke 
through stubborn resistance 
just above the $1,320 level, [or 
three months delivery, and fin- 
ished at the highs, with final 
business at $1,328, a 525 g ain 
from last Friday's after hours 
"kerb" close. 

“This Is a very good close, 
and should bring in some fur- 
ther buying,” one trader said. 

Capper lost some impetus in 
the afternoon, but remained 
underpinned by earlier specu- 
lative buying, and was content 
to hold just below the $1,970 
level, prior to another attempt 
to break overhead resistance, 
dealers suggested. 

Other metals traded less 


actively, but were generally 
supported by the overall 
upward trend. 

LEAD advanced steadily in 
the afternoon, confirming a 
break above the $470-a-tonne 
level for the three months posi- 
tion, which finished at the 
day's high of $474, a $9 gain 
from pre-weekend levels. 

ZINC matched other metals, 
and was supported on dips 
towards $950 a tonne. Final 
business was at $953, up $5. 

TIN prices were steadier 
throughout but were unable to 
attain a $5.500-a-tonne upside 
target for three months deliv- 
ery and the market eased back 
from the highs. 

PRECIOUS METALS trading 
was mildly weaker after the 
New York markets opened qui- 
etly and below previous closing 
levels. There was little obvious 


reaction to the continuing vote 
count in South Africa, which 
showed the ANC, as expected, 
winning a clear majority. 

PLATINUM saw some profit- 
taking mid-afternoon taking it 
back to under $400 a troy 
ounce and paring weekend 
gains. 

COCOA prices picked at the 
London Commodity Exchange 
in the afternoon in response to 
investment fluid buying in 
New York. Near July closed 
£26 firmer at £885 a tonne. 

One trader said the latest 
traders' commitments report 
showed investment funds still 
had plenty of room to get tnto 
the market But a volume of 
5,249 lots, including 1,163 cross 
trades, reflected the fact that 
this was not a move generated 
in London, he added. 

Compiled from Reuter 


W hen representatives 
of some of the 
world's leading min- 
ing companies gathered in Bei- 
jing earlier this year for a min- 
erals forum there was more 
than usual interest in China's 
proposals for a new regulatory 
regime governing foreign 
investment 

China's mining sector has 
lagged well behind others, 
including notably oil 
in efforts to attract foreign 
involvement. Foreign invest- 
ment and with it new technol- 
ogy is now critical to China if 
it is to make up for lost time in 
exploiting its miner al deposits 
to support a rapidly developing 
economy. 

Senior executives of compa- 
nies like Teck Exploration of 
Canada, and CRA and BHP of 
Australia ramp away encour- 
aged by what they had heard 
from Chinese officials. But to 
the question of whether they 
would co mmit large resources 
to exploration in China their 
response was; “Not yet". 

Mr Ian Gould, responsible for 
CRA's exploration worldwide, 
provided a typical industry 
view of China prospects at this 


stage. “China is very much one 
of the countries we are moni- 
toring carefully ," he said. “But 
it is not quite at the point 
where CRA might be prepared 
to come in.” 

However, mining executives 
and academic experts involved 
In the minerals forum organ- 
ised by the Pacific Economic 
Co-operation Council, which is 
sponsored by Pacific Rim coun- 
tries, said China was making 
definite, albeit relatively slow, 
progress in clearing away bar- 
riers to foreign involvement. 

For the first time, according 
to Mr Gould. Chinese officials 
had begun speaking publicly 
about a specific “contract of 
work" for mining ventures that 
would help facilitate negotia- 
tions that might otherwise 
become bogged down under 
cumbersome state mining leg- 
islation. 

Among regional countries, 
Indonesia has used the “con- 
tract of work” approach to 
good effect in attracting for- 
eign investment Foreign min- 
ers believe the Chinese should 
follow the Indonesian model. 

Mr Fu Mmgfce, deputy direc- 
tor of the Ministry of Geology's 


development bureau admitted 
in an address to the forum that 
a 1986 mining law was now 
“incompatible" with China's 
own market-oriented economy. 
It was also “incomparable" 
with mining laws internation- 
ally. 

He acknowledged that the 
framing of a mining law would 
be comp 1 ** and tim&cansnm- 
ing, and therefore in the mean- 
time China would “develop a 
standard Investment agree- 
ment [or contract]. . . as a 
document supplemental to the 
milting regulations". 

Mr Allen dark, assistant 
director of Resources Pro- 
grammes at the East-West cen- 
tra in Hawaii, said there had 
been a “very substantial 
change" in China's basic 
approach to opening the coun- 
try to foreign miners. 


T he country still had 
some way to go, how- 
ever, before it could be 
regarded as an appealing loca- 
tion. Indications that the gov- 
ernment was planning a 
“resources fox" of up to 30 per 
cent suggested that the Chi- 
nese were not yet ready to fall 


Commodities .prices 


BASE METALS 


LONDON METAL EXCHANGE 

(Prices from Amalgamated Metal Tradng) 

■ ALUMINIUM. 89.7 PURITY (S per tome} 


Precious Metals continued 

■ GOLD COMEX (100 Troy S/troy ol) 


GRAINS AND OIL SEEDS 



Cash 

3 tilths 

OOSQ 

1292-3 

1317.5-8.5 

Previous 

1281-2 

1306.5-7 

tfigh/tow 


1328/1307 

AM Official 

1294— 1.5 

1319-20 

Kelt) dose 


1327-9 

Open inL 

249,408 


Trial daily turnover 

47.963 


U ALUMINIUM ALLOY (5 par tonne) 


Ocoa 

1310-5 

1315-20 

Previous 

1315-25 

1320-5 

Htgh/low 


1320 

. AM Offloal 

1310-5 

1315-20 

! Koifo dose 


1315-20 

] Open bw. 

4.087 


I Total daBy unovar 

469 


■ LEAD (5 per tonne) 




Sett Daft Open 

price ctaflge Hgfe lor M nL 

May 375.6 >0.8 - - - - 

Jm 376J -0.6 377.5 37SJ 92,168 15,694 

Jnf 378.1 -08 

Aug 37H.5 -Oil 379.8 375.7 12.222 951 

Oct 3825 -OS 3835 381.5 5.119 108 

OK 385.6 *05 3603 3847 14,218 1,348 

TOW 150379 10880 


PLATINUM NYMEX (50 Troy at. Srtroy az.) 


Jri 401.3 -4J 408.0 4000 17.198 1809 

Ott 40X3 -4.5 404.5 40X0 Z3S9 162 

Jan 404.4 -4.5 406.0 406.0 843 3 

Apr 405a -45 «K,0 405JJ 962 7) 

TOW 21363 4,105 

■ PALLADIUM NYMEX (100 Troy at; S/troy oz.) 

JWI 141.10 -1.05 14X00 140.10 1725 1.062 

Sep 14005 -1.30 14X00 14000 1.103 410 

OK 14085 -140 141.75 1404X1 467 169 

Hr 14035 -1.30 - - 8 5 

Total 5*361 1,670 


High/low 


475/467 

— 


AM Official 

453-4 

469-9.5 

Hoy 

5237 

Karto dose 


474-5 

Jan 

529.4 

Open inL 

33.883 


Jri 

528.0 

Total daily turnover 

8.388 


Sap 

5325 

■ NICKEL ($ par tomqj 


JIM 

541.6 

Close 

5515-25 

5590-6 

Trial 



-6.1 5295 52X0 3,4)7 1.264 
-03 534.0 53X5 5 


1 7592 118 

J 11.418 228 

32 

12X330 1X742 


Previous 
Hghflow 
AM Official 
Kerb dose 
Open mt 

Total dolly turnover 
■ TM (S per tome) 


5590-5 

5630/5500 

5810-6 

5616-20 


■ WHEAT LCE R per tonro) 


Sad 

o*f 



Opan 



mka 

atop* 

to 

LOW 

lot 

VbI 

*®T 

114.70 

+0.70 

114.75 

114.75 

493 

7 

Jub 

114.75 

+055 114.75 11450 

1842 

100 

Sap 

9750 

*0.70 

97.75 

9750 

sot 

34 

to 

9885 

+0.85 

38.75 

38.10 

1.648 

130 

Jn 

100.75 

+080 

100J6 

100.10 

972 

121 

Mar 

102.40 

♦MS 

- 

. 

321 

• 

Triri 





5889 

402 

■ WHEAT CBT (S.OOObu mfrt: cants/BOlb bushel) 

tor 

330/9 

-2/0 

333/2 

328/4 

4845 

4800 

M 

330W 

-4ffi 

334/4 

329/4144855 56.810 

Sap 

333/2 

-3ffi 

337/4 

332/4 31,105 

4J55 

Dee 

342/4 

4/5 

347/0 

341/4 34.825 

9.920 

to 

345/2 

■4/2 

3490) 

344/4 

1875 

30 

to 

341/2 

-4/2 

- 

- 

120 

- 

Trial 




218,038 75520 

■ MAITR CBT 15500 bu min: oaras/56&] bushel) 

to 

261/6 

-7/4 

267/6 

aSOC 76880 63^35 

Jri 

2B4/B 

-7K 

293/8 

283/4880.620177850 

to 

258/4 

-8/2 

263/0 

25am 165.810 23.620 

Dm 

24712 

-02 

252 m 

247/037352S 55,780 

to 

254/2 

-8/D 

257/4 

253/8 34595 

1825 

to 

256/5 

■7/5 

280/0 

258/4 

3840 

116 

Taw 




U5W323Ln5 

■ BARLEY LCE (E per tonne) 




to 

10350 

+050 

_ 

_ 

58 


to 

87.65 

+08S 

- 

- 

136 


to 

9950 

+0.70 

- 

- 

185 


Jon 

10050 

- 

- 

- 

30 


to 

10185 

- 

- 

- 

5 


to 

103.75 

+050 

- 

- 

5 


ToW 





399 



SOFTS 

■ COCOA LCE (SVtonrw) 


MEAT AND LIVESTOCK 

■ LIVE CATTLE GME (40,0000m: cants/lbs) 


Sett Day** 
price eta age H 


858 430 655 835 13578 848 
685 +26 885 865 21900 2.999 


906 +29 909 885 14JKB 7t0 
931 430 931 910 19.024 487 


953 +29 953 933 27,228 148 
965 426 S4S M 10,195 50 


Sri! Defa Open 

price dtmge fflg! t Leer M W 

69275 -1.125 711350 89025 31039 8.967 

68275 -0225 69.175 B8JCS 13242 3,449 

7H675 -0775 71.475 70.400 11239 2^17 

71250 -0.750 72200 70.875 7261 808 

71.250 -0.750 72200 71250 2232 282 

7X500 -0-700 7X200 7X400 1.034 83 


tri 18*288 saw 

COCOA CSCE (10 tomes: S/tonnes} 


LIVE HOGS CME (40.000BW; certa/ttH) 


1180 

+23 

11® 

1134 414 

177 

Jm 

518® +0875 51.1® 50.425 

10473 

2892 

1188 

+33 

1172 

1138 38,730 8827 

Jri 

50900 +07® 508® 50.1® 

5810 

18® 

1191 

+21 

1195 

11® 1*810 

840 

Aag 

46.700 +0375 48J® 48.1® 

9.422 

444 

1230 

+21 

1231 

1202 88® 

304 

Oct 

44200 +0425 443® 438® 

2827 

27B 

1254 

+21 

1259 

1235 10878 

171 

Dac 

44 . 4 ® +04® 44.4® 438® 

2J59 

149 

1294 

+21 

1287 

1270 4803 

1® 

to 

443® +03® 443® 438® 

438 

51 




B28S51Q8I9 

Total 


32805 

AM 


Hay 1294 +21 1287 

Tetri 

■ COCOA (1CCQ) (SORVtonne) 

Apr 29 Mae 

Daily 87X55 


PORK BELLIES CM5 (40.0008W; cents/lbs) 


TO Oat uwraua 


■ COFFEE LCE (Vtanno) 


to 

IBM 

*64 

1719 

1654 3872 391 

Jri 

1642 

+79 

1655 

15® 183® 3881 

to 

1914 

+® 

1625 

1664 11.477 2,734 

to 

1601 

+73 

1614 

15® 4828 1825 

Jm 

1593 

+76 

16® 

1562 5.717 111 

to 

Talal 

1581 

+78 

15® 

15® 1882 23 

40,182 8,191 


48KI25 +1.175 49.150 47.500 480 614 

4&350 40750 *9500 48250 6.102 2261 

47.475 +0.625 47200 46275 1232 318 

31.700 40.450 52300 51.400 257 93 

50200 +0.100 50200 - 20 2 

52250 40250 52250 52250 14 2 

MB VHP 


LONDON TRADED OPTIONS 

Suttee price 9 tonne — CriRs— ■ -— Pate — - 


■ COFFEE ‘C CSCE (37,500 toe; oonts/bi) 


ENERGY 

■ CHIOS CHL NYMEX (4X000 US gal la. S/bom*) 


■ SOYABEANS CST BjQOOUi MX canta/BOta PuffiN) 


Ctose 

Previous 
HigMow 
AM Official 
Kerta dose 
Open bit 


5375-80 5440-50 

5395-405 5460-70 

5480/5415 

5393-8 54«0-5 

5440-60 

17.164. 


Total dally turnover 3,013 
■ ZINC, apodal high grade (5 per lame) 


Latest Day's 
price rings Hgb 
1&25 -091 17.19 

16.70 -024 1625 

1627 -0.17 1624 

1068 -012 1080 

18.70 -027 16.79 
1070 -(LOG 1620 


Close 931-2 

Previous 932-3 

Hlghflow 927.5 

AM Official 927-8 

Kerb dose 

Open InL 101272 

Total dally cumover 13.443 
■ COPPER, grade A (S per tonne) 


Open 

Low ta W 

1483125251 56225 
18.70 87,467 25203 
16L68 33287 10279 
1685 23237 8263 
1628 17262 3,613 
18.70 11298 2221 
421(9641201174 


■ CRUDE Oft. IPE (S/barrel) 


1047-6 

Previous 1536.5-7.5 1952-3 

HHjh/taw 1951/1950 197S/1965 

AM Official 1950.5-1 1967-6 

Kerb dose 196&-9 

Open mL 182.723 

Total OeOy turnover 87,375 
m LME AM Offidri E/S rate: 12109 

LME Closing QS rata; 12130 

5pflC1J135 3 mffK I.5MH 6mflKlJflS0 SfWKlJOW 
■ HIGH GRADE COPPER fCQMBQ 

tor* Open 


1984-5 

1952-3 

1975/1965 

1967- 8 

1968- 9 


Laris Dai's Open 

price ctaage Iflgfa Lon tat DU 

15.48 -021 1525 15.47 75J88 26.442 

15.40 -0.16 1567 1540 48,125 10257 

1542 -006 1558 1542 1B2Z7 1245 

1547 4022 1525 1541 11,108 1.038 

1549 4025 1558 1545 4220 274 

1521 4023 1526 15.45 3.709 20 

163299 40260 


■ HEATING OIL NVIEX (4&ffiH U5 pafe; cUS priaj 


Laris! Days 
pries change Ugh 

4725 -052 4725 
4720 4)45 4720 

4820 4X20 4837 
4SJ0 -025 4050 
5025 -0.16 50.40 

51.10 4X25 51.10 


Lew M Vd 

4720 47205 11.83? 
4725 32240 4241 
4515 13216 721 

40.15 70.827 410 

5025 6221 183 

51.10 5,393 563 

143282 20210 



Ctae 

cto® 

Wgh 

km 

hi 

W 

to 

9330 

+030 

9135 

92.65 

7,771 

11 

Jut 

6125 

-a 30 

9225 

9025 

IMP 

23 

Jri 

9330 

+025 

93.40 

90.55 

37846 

379 

to 

9289 

+0.15 

- 


427 

7 

to 

92.® 

- 

32.70 

9185 

B877 

7 

Oct 

92-40 

+005 


- 

201 

10 

Total 





G33S5 

678 


PRECIOUS METALS 


■ LONDON BULLION MARKET 
(Prices suppled by N M Rothactifd) 


■ GAS OIL PE |Sftnm») 

Sen Defs Open 

price Cftauge tflgb Law M *ol 

to 15025 +Z00 15500 15025 25230 4259 

An 15025 +220 16125 15020 24289 4233 

Jri 150.75 +220 15220 15875 18,814 1224 

JU19 15150 +125 15320 15220 6*48 258 

Sep 15420 +250 154*5 15325 5*38 267 

Del 15650 +275 15620 155.75 5206 212 

ToW 105*86 12*79 

■ NATURAL GAS M7M&X (11X000 nmftu.: Sfenftuj 


to 

862/5 

-7/0 

669/0 

661/0 43830 332® 

JW 

883 « 

-ae 


OR® 330.085 >33325 

to 

6505 

-6ffi 

685/0 

657/D 56835 

6870 

to 

638/4 

-am 

644/0 

638ffi 32,485 

2,«05 

to 

82210 

■OB 

829/0 

mamziifiio wets 

Jan 

627/5 

-5/4 

635/D 

627/0 14.7® 

1.170 

Total 




707,4® 288876 

■ SOYABEAN Oft. CST (BaOOQfos: cenisW 

to 

28.® 

■030 

28.73 

2830 6,7® 

2^20 

•M 

26.34 

-CL2B 

2837 

2aiB 40821 

11315 

to 

28.® 

-025 

3830 

2788 11.787 

784 

to 

27.44 

-036 

2770 

2730 11885 

576 

Oct 

28.47 

-033 

28.70 

28.40 8,1® 

589 

Sac 

25.69 

-025 

&05 

2S88 15333 

1,772 

Total 




968® 17841 

■ SOYABEAN MEAL CBT (100 tana; 4/ton) 


to 

187.1 

-18 

1888 

186.7 4,740 

5837 

Jri 

1884 

-1.0 

1893 

187J 38,493 

15.1® 

to 

1878 

-1.1 

188.7 

187.5 12.431 

1396 

to 

1868 

■OJ 

187.5 

1®1 7832 

466 

Oct 

1848 

-0.4 

1853 

184.1 5845 

287 

Dec 

1618 

43 

1B43 

1828 15,143 

1A® 

Total 
■ PO 

FATOES 

LCE (SV 


88872 238® 

to 

252,3 

■4.7 

291.0 

2458 310 

£5 

■Jan 

2625 

- 

- 

2 

- 

to 

®0 

■ 

- 

- 

- 

to 

1058 

- 

- 

- 

. 

Apr 

1328 

+18 

1338 

1328 488 

2t 

fey 

140.0 

- 

- 

- 

m 

Total 




7® 

52 

■ FREIGHT (BIFFEX) LCE ($10/bid« point) 


May 

14® 

+11 

14® 

14® 869 

21 

Jbn 

1298 

+12 

13® 

12® SOS 

S8 

Jri 

12® 

+15 

12® 

1180 6® 

18 

Ocf 

1296 

+13 

1295 

1295 271 

ID 

Jm 

1345 

+3 

- 

144 

. 

Aftr 

1383 

+28 

- 

10 

- 

ToW 

Ctasa 

Aw 



135 

SR 

1420 

1414 





Nay 9195 +4.15 9420 92*5 1*04 146 

Jri 94.05 +4*0 94.40 92.10 34*44 1634 

Sap «4*S +320 9420 92.40 11,171 1246 

Dec 95.05 +J20 65*5 9115 8234 1230 

Mar 95.30 +3.85 96 M B3JS0 2,424 78 

May 9520 +140 96*5 94*5 352 6 

ToW 56*63 M38 

M CQFEfcE (ICQ) (US CTnlo/pound) 

■tor 2 Price Pm. toy 

Comp, daly 86.48 8823 

15 day average 82*8 B1.B9 

■ No7 PREMIUM RAW SUGAR LCE (centals) 


Jri 11.73 4X15 - 2229 

Oct 11.64 -0.14 1128 1128 292 500 

Jan 1122 

Tots! 3,188 500 

■ WHTTE SUGAR LCE (S/tonna) 


324.40 -220 33520 32320 9291 889 

30920 -220 30820 30920 6213 513 

30170 -2*0 305. DO 30520 306 1 

300.70 -120 30220 30120 1 201 13 

30120 -120 30220 302*0 198 2 

30420 -220 - - 215 


■ ALUMINIUM 

(99.7%) LME Jri 

1300 51 

1325 27 

1350 27 

■ COPPER 

(Grade A) LME Jri 

1800 88 

1950 58 

2000 35 

■ COFFEE LCE Jri 

1500 160 

1560 123 

1600 91 

■ COCOA LCE Jri 

878 33 

900 21 

925 13 

■ BRENT CRUDE IPE JUn 

1400 

1450 - 

1600 66 


Oct 

Jri 

Oct 

86 

26 

36 

71 

37 

45 

59 

51 

56 

Oct 

Jri 

Oc* 

115 

22 

42 

86 

41 

63 

63 

67 

68 

Sap 

Jri 

Sop 

154 

18 

40 

122 

31 

58 

95 

48 

81 

Sop 

Jri 

Sop 

61 

23 

30 

48 

36 

42 

37 

53 

66 

Jri 

Jjn 

Jri 

- 

3 

- 

. 

8 

. 

- 

6 

28 


Hay 30120 -120 30220 302*0 198 2 

tag 30420 -220 - - 215 

Total 18*38 1*18 

■ SUGAR if CSCE ni2,000»Da: centMba) 


LONDON SPOT MARKETS 

■ CRUDE OIL FOS (per barreVJun) +or 


Jri 11.50 -0.03 1120 11.46 80269 7,423 

Oct 11*5 -0J H 11.41 U*0 32243 2201 

«ar 11.14 -0.02 11.18 1129 16.149 539 

Maf 11.14 -0.02 11.18 11.14- 2,381 15 

Jri 11.12 -Q02 - - 1,197 10 

Ori 11.10 -0*2 11.12 11.12 344 

Tetri 183.72210284 

■ COTTON NYCE (50*00t»; cantB/fcp 

fey 86*8 +1*3 86*0 8420 1*97 283 

Jri 84.08 +021 84.15 83*2 27*31 6*26 

Oct 76.17 +6.72 76*0 75*0 4276 397 

Dee 7180 +6.74 7320 73.05 17*48 2*06 

to 7425 +025 74.75 7420 1248 199 

VOt 75*5 +095 75.10 7426 828 SO 

TOM 92*25 8*41 

■ ORANGE JUICE NYCE (1&000BK ctfltato) 


Dubai 514.1 6-4*9y +0-1B 

Brent Bland (dried) $1524-5*6 +0*75 

Brent Stand (Jun) $1524-5.68 +0*05 

W.TX (1pm ere) $16.96-6-98 +0.17 

■ OIL PRODUCTS TWilE prompt driNay OF Ootine) 


Premium Gasolne 
Ges Ol 
Heavy Fuel OB 
Naphtha 
Jri Fuel 

Rrimfeum Argus Erit iw tet 
■ OTHER 


$175-177 +Z.0 

$151-162 +2* 

$7680 

$149-151 +4L5 

$162-184 +2* 


GoW (Trey az.) $ prise E eqriv. 

Close 375.10-37S.50 

Opening 37620-376.40 

Morning to 375.70 348-479 

Afternoon fix 375.10 248*09 

Day's High 376*0-376.90 

Day's Low 37S.10-37 Sj50 

Previous dose 37520-376*0 

Loco Ldn Mem GoM LentSng Rates (Vb US$) 

1 month 3.62 6 months 4.00 

2 months 171 12 months ....,^,.4.60 

3 months 3.78 

Stow Rs p/tray oz. US cte equhr. 

Spot 348.95 528.75 

3 months 354.15 534.00 

8 months 358.65 64035 

1 year 368.50 554*0 

Ootd Coins S price £ eqt*/. 

Ktueenand 381-584 252-255 

Maple Leaf 385.75*388.15 


LriBri Bay's 
pries ctnpgs Ugh 

2*05 4X004 2220 
7.032 -0.011 7250 

2257 2214 2271 
2280 4X005 2.105 
2.140 -0005 2.150 
2*25 +0202 2*40 


Law U W 

1285 16*7B 11159 
2230 12*72 4*40 
2.050 11437 1*72 
2290 10*72 729 

2.135 8*36 423 

?wa 8*82 288 

110*15 21*88 


10420 -120 10820 10420 1256 324 

10125 -2*0 10185 1 04 75 13*02 1*89 

10150 -1*0 11020 10125 2.403 151 

108*5 -2.00 111.00 109*0 1,19 82 

1DB2Q -1.75 111*5 109*0 2*74 88 

112*0 -2*0 113*0 111*0 642 31 

29*24 2*64 


Oct 2.140 -0005 2.150 2.136 5*36 4! 

Ho* 2*25 +0*02 2*40 2223 8*82 2 

Tfltri 110*15 21*1 

■ UNLEADED GASOLINE 

HYMEX (42*00 US gaM+dUSprisJ 

Lriasl Day's Opto 

(itoe toa npa 8$ Lm ht Ml 


New Sovereign 


p/tray oz. 

US da equhr. 

JH 

49® 

-Ori? 

348.95 

528.7S 

Jri 

60X6 

-065 

354.1E 

534.00 

to 

50.10 

-0.48 

359.65 

54(05 

to 

49.® 

-0.53 

368.50 

554.50 

Ori 

48-10 

-0.32 

S price 

£ eqriv. 

to 

47® 

•157 

381-384 

262-255 

Total 



365.75*388.15 

- 




88-91 

58-61 





7.882 315 

1,438 50 

2.116 4 

98*48 17*53 


European free martajt, from Metri BuDeUn. $ 
par ib in ureraftousa, unless otherwise stated 
pest week'll in brackets, where changed). Antl- 
morop 99.8%. S per tonne. 2*00-2*00 E.04&- 
2,100. Btamuth: min. 99*9%, tome lota 2*6- 
2.40. CwMum: irin. 96*%. 75-85 certs a 
pound. Cobalt MB free marfoet. 99*%, 24*0- 
25.00 (24.80-26.50); 99.3%, 18.80-19*0 
(20.30-20*0. Merewy. iria 90*9%. S per 78 
Ib flank. 90-100. Maiybdanum: drummed 
motybdlc oxide, 3.16-3*5 (3.10-3*0. Sele- 
nium: mh 99**6, 3*<M55. TUngafen ore: 
standard irin, 65%, S pw tome unit (l°fr9) 
WOv cK, 33-45. Venodun: rrtn- 98%. rif, 
1*5*1.45. Uraitkinu Nuexco ^change vriue. 
7.oa 


VOLUME DATA 

Open Merest and Volume data shown for 
contracts traded on COMEX, NYMEX, CRT, 
NYCE. CME. CSCE end IPE Crude Ol ere one 
day in arrears. 


INDICES 

■ REUTERS (Base: 18/9/31=100) 

Mays Mur 2 month ego ye*r ego 
1848* (c) 1826.8 1687.7 

■ CRB Putowi (Base; W58=l0q) 

May 2 Apr 28 month age year apo 
22&JM 223.16 228-02 20935 


Gold (per trey 02 }$ 
Suer (per tray oitf 
Ptatfrwi (per rroy at) 
Ptoarium (per tray az.) 
Copper (US prod.) 

Lead (US prod) 

Tin (Ktrela Lumpur) 

Tin (New YOrt) 
zme (US Prime W.) 
cents (Bwa welgWjr 
Sheep (Uve waightjT4 
PUP (Bve wetgt*) 

Lon. day augur (raw) 

Un. day auoer (wtfl) 
Tats A Lyle export 
Bortey (gng. feed) 

Metze (US NoS Yritow) 
Wheel (US Qaric NortftJ 
Rubber yurjV 
Rritoer 

Rrirber(KLRSSton Jun) 
Caoorot Oil (PM)5 
Palm 08 (Mrisy)S - 
Copra miq§ 

SayatMona (US) 

Conan OuOooic A Mdn 
waaltQps (84s Suped 


S376J30 
524.50a 
*400*0 
SI 39.90 
97DOC 
35.00c 
14*6r 
26050c 
Unq. 
125/46P 
148*3p 
74JB3p 
8274*0 
$33000 
£29000 
Unq 
*1305 
eiaoDx 
7O50p 
70*6p 
254.00m 

S£B2£z 

$475by 

$375.0 

£213.0 

88.10c 

402p 


E par lerew iston rthrifee VMM. p pm«ka .c eenrih 
rring 9 M»ffi“ri»rtorte*ia» 0 . iMeWM. r«*jJtL wMay- 
1 McyUuv * AprfMay. V London Piw*sL 5 OF RaOri- 
den. f Britan marine due. ♦Sheep {lire wrigl* Priced- * 
Ctono* on wo*, provistond 


into line internationally on 
standard royalties of between l 
and 5 per cent 

Mining companies entering 
China now Twight be liable- to 
an effective tax rate of 45 to 55 
per cent, Including taxes on 
profits and other levies , com- 
pared with an international 
average of 30 to 40 per cent. 

China, according to Mr 
Clark, was also mistaken In its 
apparent strategy of offering 
marginal projects to foreign 
miners rather than "green- 
field'' sites. Chinese officials, 
fearfol of criticism that they 
might be selling oat the coun- 
try's birthright, are excessively 
concerned about a foreign 
miner happening upon a 
high-grade and very profitable 
deposit 

But in the end, foreign min- 
ing experts believe, enormous 
pressures on the mining sector 
from the China’s leadership to 
provide more of the country's 
haty motel and other miner al 
requirements will inevitably 
force speedier liberalisation. 

Mr James Dorian, co-ordina- 
tor of the China Energy Project 
at Hawaii's East-West Centre, 
pointed out at the forum that 


while China's raining industry 
ranked fourth in the world in 
output value, it was operating 
wen below its potential. China, 
in fact, had a “very low" per 
capita production of metals 
pnd minerals. 

Billions of dollars were 
required, Mr Dorian said, to 
modernise the industry, which 
was suffering from “numerous 
problems", including low effi- 
ciencies in recovery, produc- 
tion anil utilisation, outdated 
mining equipment and technol- 
ogy and severe transportation 
bottlenecks. 

He added, however,, that 
companie s interested in busi- 
ness opportunities in China 
would need to “remain flexible 
and patient” in seeking to 
underatand not only th& indus- 
try, but the “often confusing*’ 
bureaucratic systems. 

“The plann ed expansio n and 
modernisation of China's min- 
ing industry will require tre- 
mendous influx of foreign tech- 
nology and financing ,” he said, 
“firms that are able to estab- 
lish a successful track record 
today in China may be able to 
reap more substantial rewards 
in the long term.” 


CROSSWORD 

No. S, 444 Set by DINMUTZ 


pH 1 1 h WM* T 7 Ib 


ACROSS 

1 Needed to garage a car that is 
guaranteed (9) 

6 Round, soil swelling (5) 

9 Left with a £1 note, he has no 
dose friends (5) 

10 Five-mile coarse from which 
people watched the bay? (9) 

12 Manifestly, fragrant cargo 
placed behind peacocks (10) 

12 Hoy sandbanks in river (4) 

14 Boast of British and Ameri- 
can glory (7) 

15 St Paul, a sort of blade? (7) 

17 Overdose in hallucinatory 
effects of drug, but still 
stands! (7) 

19 Highlight for drivers (7) 

20 hooters not banned alter 

dark? (4) 

22 Stimulating, elite Irish coterie 
<10> 

29 Honey-dish broken, as in a 
ramp (9) 

26 Principal eastern state? (5) 

27 Notedly slow longboat (5) 

28 Blunders and flukes (9) 


DOWN 

1 Wfld country to borrow, we 
bear ® 

2 These buttercups uncurl in a 
storm (9) 

3 Treatment from psychoana- 
lyst for tar allergy? (10) 

4 Potter, perhaps, an illegal 
bowler (7) 

5 Medical attendants caught 
indoors (7) 

6 Call It a day and retire with 
plenty of money? (4) 

7 Such an edict brings a sea- 
change to the United King- 
dom (5) 

8 Weapon of personnel support- 
ing President Eisenhower? (9) 

13 Washers many, ruled out 
before noon (10) 

14 Plight of Albert, hot, In a 
fever? (9) 

26 Getting rid of Dutch, say (9J 

18 In films one fires all over thp 

place, with high frequency (7) 

IP Almstrong rested, with com- 
panion, on one half of moon 

cn 

21 Hen? Yes, if held in both 
hands (5) 

23 Fancy part of brogues solidly 
built (5) 

24 Object of the lady’s love? (4) 


Solution to Saturday's prize puzzle on Saturday May 14. 
Solution to yesterday's prize puzzle on Monday May 16, 


Of broking and jobbing the Pdiken's fond. 

See how sweetly he puts your word onto bond. 


SblUum © 


JOTTER PAD 


jjSUP 




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financial TIMES 


MARKET REPORT 


WEDNESDAY MAY 4 1994 


LONDON STOCK EXCHANGE 


Bonds weakness drives Footsie down to 3,100 


ByTerry Bytand, 

UK Stock Market Editor 

Weakness in sterling and in UK 
government bonds left the FT-SE 
100 Index down 2> points yesterday 
and straggling to hold on to the 
3,100 support lever Trading volume 
‘was not heavy but the announce- 
ment that Britain’s MO money sup- 
W? jumped by an annualised &2 per 
cent in April emphasised the mar- 
ket s growing fear that the next 
move in domestic interest rates 
could be up, rather than down. 
Losses in long-dated gilts were 
extended to nearly two points in 
late trading, and the investment 
mood turned significantly bearish. 

The bears justified yesterday’s 
downturn by pointing to the UK- 
local elections to be held tomorrow, 
at which Mr John Major’s govern- 


ment is widely expected to suffer a 
setback. As always, political ner- 
vousness was more marked in the 
foreign PVPhnng n markets than in 
domestic equities. 

These factors combined to set an 
unhappy background to this morn- 
ing’s routine meeting between the 
chancellor of the exchequer and the 
Governor of the Bank of England. 
The surge in money supply is likely 
to increase the Bank's caution 
towards any suggestion of cutting 
UK interest rates at present. 

Early deals brought a' rash of 
gains in share prices as London 
hoped that the closure of Japanese 
markets for the Golden Week might 
lift the pressure from the US dollar. 
But initial firmness in stock index 
futures quickly disappeared when 
the money supply figures were 
announced, and from then on, the 


Account Pealing Dates 

ApK VUy IS Ju 


My *3 Jul a Jun 17 

Aceouri top: 

Mg 83 Jun 13 Jm 87 

•Now 1M daaBogj may taki p toe* from 


equity market unravelled steadily, 
with the stock index futures at a 
discount for much of tire session. 

London tried to rally when Wall 
Street opened but, with the Dow 
Industrial Average uncertain and 
down 2JJ7 in UK hours, there was 
little to help the Footsie resist 
renewed losses in gilts. 

The FT-SE Index was 25.3 down at 
3.100 exactly, having rallied from 
3.095.8 at the day's low. The Footsie 


has been jousting with the 3,100 
support level since the middle of 
March anH traders sounded uncon- 
vinced last night that this impor- 
tant benchmark level would be held 
if bond markets continued to slip. 

The wider market, less closely 
linked to the futures contract, per- 
formed somewhat better than the 
blue chip sectors and the FT-SE Mid 
250 Index foil only 5.8 to 3,775.3- 

The market setback was all the 
greater in that the pharmaceutical 
shares, which are heavily weighted 
in index terms, were in good form 
following news of nearly $8bn in 
acquisition daals in the US by lead- 
ing multinational companies. 
SmithKline Beecham jumped 
sharply after paying $2.3bn for 
Diversified Pharmaceutical Services 
of the US. hard on the heels of the 
£5.3bn purchase -of Syntex by 


Roche. 

The renewed focus on company 
takeovers kept the spotlight on 
Lasmo, although the shares contin- 
ued to weaken behind its predator. 
Enterprise Oil, which is bidding in 
paper;there was little immediate 
reaction to a formal offer document 
from Enterprise. 

Trading volume increased, as 
share prices gave ground, but the 
final total of 559.4m shares traded 
through the Seaq, network was still 
below Friday's figure. Several trad- 
ing programmes were identified. 

Traders drew little comfort from 
the moderate turnover, however, 
and the market closed on a dis- 
tinctly unhappy note, with the 
domestic scene clouded over by 
prospects for sterling and the inter- 
national scene by those for the US 

dollar/yen. rate. 


FT-SE-A AD-Sharo index 


\jsrs ~ 

1.680 \A 


iaos rY 
1.600 

■1,575 — • 


Sara FT&apha* 


Equity Shares Traded 

Tunxrar tsy v^uim (misor^. Exfcfcxbig: . 

— ' wntmariatbustowBS a* pun*** tuncww 
■ 1.200 — - — r 1 — ~ 

."■•■i.oao — ^ 

800 

““ 600 
“ 400 

- 300 

'■ 6 


IflW 



■ Key Indic a tors 
(mfices and ratios 


FT-SE 100 

3100.0 

- 25 ft 

FT Ordinary Index 

2484.1 

- 11.7 

FT-SE Mid 250 

37751 

- 3.8 

FT-SE-A Non Fins p /8 

20.49 

{ 2057 ) 

FT-SE-A 350 

1577.9 

- 10.4 

FT-SElOOFut Jun 

3091 .0 

- 48.0 

FT-SE-A AB-Shara 

1570.95 

- 9.48 

10 yr Gilt yield 

8.15 

(W 

FT-SE-A/W-Sham yield 

3.69 

( 3 . 67 } 

Long gft/equity yW ratio: 

2-25 


Best performing sectors 


Worst perfbrmfaig sectors 


1 Pharmacauticais 


+13 

1 Tobacco 


- 2 ft 

2 Other Services & Bans 

-... + 1 ft 

2 Banks . 


..—-2ft 

3 Health Care 



+ 0.5 

3 Ufe Assurance — 


- 1.7 

4 Consumer Goods 

.. 

+ 0.4 

4 Gas Dtstrubutfon 


- 1 ft 

5 Other Financial .... — 


+ 0 A 

5 Water _ 


- 1/4 


Gas up 
on broker 
meetings 

A series ' of . broker-hosted 
meetings between Ms Glare 
Spottiswood, director-general 
of Ofgas, the gas industry regu- 
lator, and many of the Scottish 
Institutions saw British Gas 
shares the most heavily traded 
of the FT-SE 100 constituents. 

Gas' shares, one of the FT-SE 
100‘s worst performers last 
week after the group Issued a 
profits warning at its annual 


meeting, fell 4%, or 1.5 per 
cant, to 281 !4p yesterday com- 
pared with a 0.8 per cent 
decline in the Footsie. Turn- 
over in Gas reached I3m 
shares. 

Dealers said the stock had 
attracted hefty selling by US 
institutions late last week but 
that much, of that had been 
countered by keen support 
from UK-based income funds. 

There was also increasing 
nervousness among dealers 
ahead of the politically sensi- 
tive joint Department of tbdus- 
try/Ofjgas report on the struc- 
ture of Gas, expected next 
Monday. A second report, pre- 
pared by Ofgas, dealing specifi- 
cally with stock market sensi- 


EQUITY FUTURES AND OPTIONS TRADING 


Weakness /n sterling and gilts, over ifw derivatives sector, 
higher than anticipated money ' writes Joe/ Ktbazo. 


supply- figures together with 
political uncertainty in the~UK 
combined to cast awhadow . 


In figures, traders initially 
attributed- the poor opening 
in the June contract on the 


■ FT-3E100WPEX FUTUBEsjiFf^ca^ par rtjfetor print ' • IfiPT) 

Opart. Sett price Ctiango H& '- Ixm Est vd Open hL 
Jun 312Bft 3091.0 - -4X0 31400 - 30800 12878 32237 

Sop - - 312X0 1 3109.0 ' . -48ft 3123-0 -3109.0 105 . 717 

Dec 31205 . -48 j0 - . . O- 210 

■ FT-SEMP2S0— XX FUTURES gJFFg go par ftft Wan point 

Jun - 3750.0 3700ft ' ^SOO \ ' S7B5UO ‘ ;S75O0 - .101 / 3575 

M FT-SE MD 250 INDEX HJIUHESfJMUQ ClOper mpdexpdfcit - 

Jin 37700 37700 : . 37700 • 37700' 12 SOI 

At open intewttgirawo Igr proto* day, t Bant tom* (ton. 


■ ft-se ioo mdex option i 


( £10 perM Into poht 


2990 - 3000 ' 3000 . - 3100 • 3190 3300 3SS0 3300 

c s a -p o p q p c p c p c p c p 

ft* KB 6 HRf 13 - WYSSfc » 12 ft 3 imja 1 2 tft 

Jtn -.Oft. n : 105 2 ft 13 ft 1 ft IWz • aft 

Jqt 18 S 4 ft KB :- 5 C ffft 73 - 09 84 N 12 ft * IS Bft 1 flft 2 ft 2 » 
ho mh 57 tlftflft KB tfttiftlflft » 13 T ^ ift wft « 200 * 23 7h 
Set 7 » IK - 1 » 15 ft . Uft 2 Qft W ZWa 

OKUWMI43Q . ■ 

■ euro STYLE VTSE-mWVQL Qpnbw par MUn** poteft 


- 2939 2975 . 3029 - 3079- - ■ -313S 3126 -- 3ZO . 3K/6 

MW Oft 4. Eft 9 B2l* 1ft * 2S 5ft 1ft Sft 4 13ft ft 
Jn -KB » 14B aftttft 45 8ft Bft 5ft«ft3ft 120 2ft w tftiaft 
Js| aft 32 13ft n- - -7* MB; - 42 16ft 


in aft 
211 h 119 


114 130 
157 \S\h 


SB 22ft 55 1® BBh 114 1® 7ft 1® 

Scf 27ft 87 211*2:119 . 157 Wft 112 213 

CXs m Puis 688 * (Maytag Wo «feas. Pnadou 4nn n band m WSHM pita, 
t Ung dM mi iry 

■ EURO STYLE FT-SE MD 230 {OKOTg £10 per4u> index point 

3750 3800 3660 3800 38 ® . 40 ® 40 ® 41 ® 

Hay 46 3 ft 70 1ft IK 10 . . 

o* 0 Puls Q SuOtomt prtca and ntan aa Wm * *30fa- 


tive areas such as rate of 
return and pricing formulae, is 
expected at the end of this 
month. 

Reuters active 

News and financial informa- 
tion group Renters Holdings 
was the most significant casu- 
alty in the basket of leading 
UK stocks as a large trade 
added to pressure on the 
shares following weekend 
press comment 

Dealers said the shares were 
restrained in early dealing in 
reaction to negative commen t 
in the Sunday press. Then, in 
mid morning, securities house 
James Capel found a buyer and 


FT-SE at 3,129 to a 
“correction’’ after Friday's 
strong finish. Light buying In 
the first hour saw the contract 
touch 3,140 but this faded 
after the release of the money 
supply data. The figures were 
higher than anticipated, 
increasing doubts about a 
. further reduction in UK interest 
rates. 

The decline of starting and 
the retreat in bonds increased 
the seffing pressure, as did 
nervousness about the 
outcome erf tomorrow’s local 
elections in the UK. it left June 
to trade at a substantial 
discount to cash for a large 
part of the session. Monument 
Securities and Gokknan Sachs 
were said to have been among 
dm day’s man sellers. 

June dosed at 3,091. down 
43 on its previous dose. 
Volivne was 12.87& The June 
mid 250 contract fewshed at 
3,760 after trade of 101 tots. 

Traded options were 
particularly did with a mere 
21,119 lots dealt by the dose. 
Vofume in the FT-SE 100 
option was 6,818 contracts 
and 1,547 in the Euro FT-SE 
100 option. HSBC was the 
most active stock option with 
a total of 2,163 lots dealt 


FT - SE Actuaries Share Indices 


FT-SE 1 ® 3100 J 

FT-SE MM 2 ® _ 

FT-SE MW 2 ® ox In* Trusts 37 “ ,J 

FT-SB-A 3 ® 1 ST 7 J 

FT-SE SBWGCsp 19 *^ 

FT-SE SmaflCap m fcw Trusts 1*j»* 

FT- 3 E-A ALL-SHARE 

■ FT-SE Actuaries All-Share 


10 MINERAL ExnwcnoNtfei 
12 ExbSCttws Muatri89(4) 

15 Oft, Mag MMdOl - „ 

16 Ofl * Prodfll) _ 

20 QBt MANUFACTURS*S< 2 e 2 } 

21 8u*8ng & CorwmjetSon(31) 

22 euaclng Malta 4 MatJapO) 

23 Chomkalspl) 

24 Otvodliad KvtustrV4a(1^ 

25 Etoctrente a Soot EqMp(34) 

26 EnQtMwtnstTI) 

27 Ensinosrfnft 

28 Prinftis. Papa- & Pd&27} 

g Tfiffla * Appatrigoi — 

30 CONSUMER QOODSJtq 

31 BravmlastIT) 

32 SpMis. Wknss 9 CWentlQ 

33 Food Msnu(actiHws(229 

34 HoUMtMd Goodstl^ 

38 Health Cars(20) 

37 FTtannacauticafafni 

38 TgSggsa Cl — — 

. 40 SERWCEStSfl 

♦1 DWtoutartOl). - 

42 iriourt & HosefePS) 

43 MsctapS} 

44 Aston** FoodhTJ 

45 B«saora, 

49 Support. Ssniosa(«B 
49 TVanaponne 

Si OW ft -vlnns & BugnBaapiq 

6o umnEB&q 

62 Bactricfty(l7} 

04 Q» DWi»u»)rt« . . 

66 TNsconsnunicsBomW 
aaWatari^ — — — ' 

so insfmsSBSSm — — 

70 IWNOALStlOBl 

71 Barita(Ufi 
7fl hwuancad^ 

74 Ufe Atwmifl 

75 MerctanlBart^ 

77 Othor FnandB^Zfl 

J5L55ES31S© — m 

HO 

89 nr-s&-AAu>SHARep«s 

■ Hourly mw« ,wrt * 

Opao__®f?L 


1967/48 

2115-65 

1909^4 

207BS9 

2648/10 

2H5J5 

2065.70 

tS8&95 

246046 

2990-20 

1826.® 

2785.83 

228026 

2964/89 

23B2JX 

27S2JBS 

171ft® 

2861® 

3846.40 

2042-35 

3060® 

2249® 

3118.43 

1560-67 

1756.10 

167&4U 

2516^2 

120*M 


o*fa YW ». 

choe* Apr 29 Apr 26 Apr 27 aflo yMrfi t 

-08 31283 31262 31SOO 28120 3S 

-04 37B1.1 3797.4 979X8 31336 3 2 

-0.1 SMI# 381i8 3809-0 3166.1 33 

-0.7 15883 15B1.7 1699.1 1402ft 3.7 

*01 104306 1942,90 193335 16B0JB3 2ft 
+02 1820.44 1813® 181361 100227 3ft 
-06 158044 1S83ft1 16®23 138312 3ft 


Day’s Tear Oh. Earn 

etas% Apr 28 Apr 28 Apr 27 ago yhU% yfcWX 

-1.1 2852 ft 9267 S.tt> 2709*4 aOBZftO 360 4 ft 8 

-07 388336 386002 3883 ® 302090 338 5.12 

- 1 ft 2686,17 291037 2646.73 1988 ft 0 3 ® 4 J* 

-Oft 1986 ft 02036 ft 9 a®a 43 198320 3.42 136 

-05 2126 ft 52 t 2 a 472 t 2386 1794.70 3 JS 6 431 

- 04 1311 . 961327 . 66 133338 1081 JO 2JBS 3 ft 9 

- 1.1 210007 2124 ® 212494 1641.70 343 364 

2549-25 264072 23 S 2 ftS 2161.30 381 4^7 

- 1.1 213394 214307 214342 1848 ft 0 4 ftS 4 ® 

- 0.1 205807 205483 ZOSOft 0 182380 367 029 

-03 199316 196381 197357 149360 2.78 372 

+ 0 ft 2464 ft 8 247036 2486 ft 6 179020 4 ft 6 319 

+03 298362 2996.43 294474 238310 377 4,77 

+ 0.1 182403 1826-03 182319 183080 3 ft 1 346 

+04 276369 273048 2727 ft 7 274340 420 7.43 

-Oft 229310 228637 22 H 7_98 209430 4 ft 0 7 ft 4 

- 1 ft 30 ®ft 72979 ft 7 299039 2823 « 364 058 

-02 236032 237067 237342 2833 ® 402 7,44 

‘ -O 2272378271341270384 2273 ® 323 OB 4 

+ 06 171316170368 1707 . 38 1 B 86-70 321 352 

+33 278050 271375 2687.78 303300 448 7 . 7 C 

-aft® 38 ft 8 3871 ft 638 B 7 ft 7 373830 048 098 

- 0.6205443 2055 ft? 205459 5757.80 388 382 

-Oft 309738 ® 91 .S? 3083462636410 3 ® 6,12 

-04 226337 2253 ® 226389 1706.40 319 412 

- 1.4 3162.18315352314029 224310 2 ft 7 4 ® 

- 04 1588 ft 9 157&18 157320 181300 4 ft 8 102 

-02 178024 1761.40 178344 1501.70 2 ft 6 3 M 

- 03 188028 1678.10 168399 150380 334 

-07 2533.43 2542 ft 5 23 233 8 197360 3 S 5 388 

+1ft11®73 1183B8 1173® 1230® _ 444 _2ftj 
-Oft 2221.75 2841.78 2285.79206030 AM 7 ft 1 

-Oft 21 Q &33 2132 ft 0 21 S 45 B 168380 398 11 ft< 

_ 1 ft 1913 ® 187381 1983252017.50 658 1 

_nfl 1371.43 1996.79 2 ® 9 ft 6 1678 ft 0 403 017 

.4 is® 75 1717 - 30 1747831697 . 30 - AS 7 ISftj 

JiJL 171492 171064 172829 15 1757 3 ft? Sft 8 

- 1 ft 218397 21 M.TS 221379 M ®40 418 7M 

-25273328 275365 278 ai 5 2328^0 . 4 ® 1* 

_ 0 ft 129087 131323 133028 180370 4 to 10 « 

-1 7 2407 . 48 2447.23 247856 248330 MS 7 Jt 

-a 7 2969 ft* 295551 29G&JX2MBM 324 a 71 

188858143040 M 9 W 

!o 7 1 B 4 ft» 1940.11 laaift* 120060 3J £ — 52 

2848-37 P^7-532gaft4 2Z3390 2J6 TM 

“ ‘ - 06 168044 188361 133053 1389.12 388 ft® 


The UK Series 


PYE Xd acf. 
taUa yU 


ast 

8>1 

1374 

33® 

1151ft9 

326 

340 

22.87 

3320 

1384ft1 

338 

Sftl 

2123 

3342 

138640 

ire 

8.17 

1154 

17ft0 

1189.41 

2ftfi 

4,12 

29® 

1310 

148395 

3ft5 

4ft6 

27.38 

1324 

147336 

36B 

6.02 

20.04 

17.11 

1213® 

D*. 

Earn 

P/E 

Xd ad). 

Total 


FT-ee 100 
FT-SE Wd 260 
FT^&A350 


3131ft 31281 

3786ft 

1581ft 139a0 


IlflQ 13® 13® HftO W* 

4108ft 31085 -3107.1 31025 3108ft 

IS 3779ft 37708 ’ 3778ft 3777.7 

KM* 1661ft 167W 15808 


•88 28,75 SlftS 1M9.72 

5.12 24/47 42.75 1052.73 

4-96 25.10 3288 1032-74 

136 80001- 1536 1127/44 
431 23.17 23.74 1061192 

389 3443 1227 101081 
384 3538 2058 96ft® 

447 27ft7 2839 111182 
438 2989 3045 106381 

839 19ft3 1272 98387 

3.72 3331 15,77 111984 
219 63.18 3242 1178.71 
4.77 2536 2689 116132 

545 2381 2085 1019.74 

7.43 16.75 4189 93684 

784 1630 1181 999.® 

683 17.® 41.70 88059 

7.44 16.77 3888 961® 

684 1888 3667 96832 

552 2182 1ft® 967.11 
7.70 14® 41.70 89021 

886 1288 10235 85682 

583 21.46 13ft4 98736 

5.12 2380 31® 104784 

4.18 2&® 1883 106224 

485 2580 3389 1074ftS 

1022 1213 1203 . 91X87 
589 2240 5.48 91256 
690 1682 938 IMS. 40 

296 2&88 15.14 97082 
224 8QQ0t 591 101980 
7ftl 15.® 580 82486 
'184 1038 1585 84484 

X to® 83208 
617 1279 OM 81539 
1531 788 3M 796.17 

Sft3 2049 16X9 110538 
7,46 1585 3257 83062 

7ft2 1589 5586 78080 
1085 1037 27.84 87243 
7 JO 16® 66® 89889 
art 1288 2326 871.97 
ftS7 1630 1085 987.72. 
278 33117 021 917-58 
1.® 5630 1984 94438 
ft® 2004 17.11 1215J0Q 


16.10 ffiflh/'rfsy tWtfay 

91001 3133ft 3053 

3773ft 37801 3773.1 

1577ft 1591ft 15761 


a seller for 2 3m shares and 
crossed the block at 613p. Also, 
the SEAQ trading screen 
showed a block of 4m shares 
traded at 5l5p on the official 
close. 

News that U fie and the DTB, 
the UK and German futures 
exchanges were in final negoti- 
ations over Globex, Reuters 
derivatives product, came too 
late to prevent the shares fall- 
ing 24% to 507p on exception- 
ally heavy turnover of 13m. 

SmithKline deal 

Pharmaceuticals group 
SmithKline Beecham jumped 
6.5 per cent in a falling market 
as early US support was fuelled 


TRADING VOLUME 


■ Haior Stocks Yesterday 

Vat Closing Dafa 
000 b prioo Chongs 

ASOA Groupt 4800 S&* -J* 

Abbsy NBbonsft 2.700 427 -« 

MotfWar l.fOO 67 -I 

MBftUrswt UNO 579 -B 

KngknWnr 205 460 -0 

Aigds >X»0 388 +1 

AJVrfGfOupf 4,100 Z3B -J 

Arp WtooVof 806 313 -3 

MkM FOOdsf MUR* 1 ] 
Assoc. Bnt Peru 184 277 -2 

BAAt 805 Wh -Oh 

BAT bids, t 5.400 499 

BET 2.400 127 *3 

BIX 870 463 *1 

BOCf 1JO0 708 +t 

BPt 7.400 382 ~t 

EPBtolX 2300 334 44 

BTf 6600 367*2 -1 

BTflP akfl I AW 240 -2 

amt iojooo 304 -ah 

B*T* of SccOanrff' IftOO 184 -h 

Baftjoysf IftOO 50* -7 

Baasf 1AXJ 385 -6 

Btocsnet 6800 298 -a 

Boctar 213 403 «1 

BO«t 1JQOO S53 rS*2 

Botatof 1.100 477 +11 

Bri. Acroviacvt 702 488 -1 

BdbhMnraf zxo -i3&h -2 

afcshGwt f3A» an *2 ~*h 

BrtahUm 192 405 

BrUSMt 5200 153 

Bmt -ftn 162 -1 

Bsrmati Caanotf 271 844 ♦« 

Bra ^ W 6ft •* 

CBUBBIMtat . 2.7D0 444 -8 

CHbaySdMfoait 522 <73 

Cakjtdnup 3* 333 

Caodoflt , 1^00 345 -8 

UWCmt 1J300 902 -flU 

Cats W) B it . 614 238 -1 

Comn. (Moot 338 5*7 -2 

Codam 1 JXO 279 

CcuTouktat 618 578 <2 

OtSHW 210 S -I* 

DMom 158 200 -7 

Ewan Sea. 60 571 4 

Ebb l&Ssnd Bed. 553 549^2 -e^ 

EagCriosOaya 305 485 f3 

EatBpaeOif 1.100 410 -8 

EumrmelUnBs S8 484 -5 

BO 738 199 

fisom 1.000 155 +1 

Faw 6 Cct IT. • 903 140^ 

F«wf 1.000 234 -2** 

04D. Acddenrt 8is 56i -4 

QMiSBKtl 302 ~1h 

Gtot 8.100 EB8 +11* 

Oibim 20 378 

Oranadrrt ^ 6700 6*8 -10 

Good Uett 2-BCC 4C8 -8 

GUSt 1.M0 509 -2 

C3REf 874 181 *2 

ONV 1A» S3 

Gr4raait 43OO 47b -6 

H3SC (7Sp Sfifllt 7ft» 678 -37 

Mwmwn 236 3BB *T 

Hanont 6,000 2671. -61; 

HmosoBCraMd 1200 1«2 -3 

Hays 254 308 -3 

BBdoan 732 188 

M 1AO0 382 *4 

ten 1,200 819 -3 

inchrapnt 80 338 -11 

Jodraon Mtftfwr 217 O* < 

KkwMwt 1A» 68* *7 

I M9M 494 561 -1 

l«tarat ^ 4 1M -3 

Land SscuttaSt 986 861 -8 

lapote ^ 148 818 *1 

LsgM&Qantttft 801 4W -Sh 

UoyfettbM S3* 377 -3 

LOrC« BankT 2^00 573 -w 

LA3J40 7A» 148 -I 1 ! 

London BbcL m 56* -10 

Uxirha 1A» i«V 

InOS 1,300 207 

VEPGt 815 478 -8 

MR 4 168 

Mnnb . MS M 4 

UraaSpancat 1.700 *32h ^ 

Wcterxto SoS. 507 571 *3 

MFCt ^ 1AX1 229 -2 

MOVaat Brtrt 3A» 442 -10 

MBaWPWMrt 1300 427 -1 

IM ^ 1300 224 

norm WBItt W Wa tf 810 476 -4 

Nortiwn Satt. t 478 812 -10 

WwtfwnRsodBt « » +1 

NonBb^ ^ 6® -12 

pBewrrt 1ft» 848 -2 

PiOf IftOO TO -8 

P B»«(» 3 M3 205 • 4 

sssst J s 

FMCt CT 818 ^17 

RTZt 1.100 640 -8 

Paot , 1.000 239 

PJrtlOrat ^ 1.700 +33 +3 

Hedaidt IjOOO 838 -8 

Ftaed WLt 709 832 +8 

Bwtotflf 1 AW 235 -4 

ftUBBf 13,000 507 -24}* 

Bsasftocst . «■ 

Byl BkScoaiwft "2 

ftcwH kramocat • 1500 281 -3 

aStayt 2.100 371 -e 

Sctrodm 77 1288 *2 

ScottWhaMwr.t 1^0 BIB -« 

Sea LMo^et 8*7 237 -fl 

"teotBsto Powwt *77 348 -8 

S»st 2.7D0 WO -I 

S ^ 6 

aBT*rant 4J® 7W -10 

StoMf 888 818 -8 

fS?P^A W7 ^ *2 

rss ’S ^ 

SroWBeactam Lte-t lOftOO 384 

SnUsbidL ^ 55? W +1? 

Soumwi awLt IftOO 578 

&UtlVMMBwt 81 827 -10 

8oNW«4tWWr M ^ -2 

SbbAWHLBkL 361 ^ ■* 

SkxWMtnMttar 640 498 *8 

aer* jb b « 

iS S5 5 

TIGmist 7S8 4]1 ”1 

1681 1,300 210 -C 1 ? 

TAmaot xsoo in 4 

T«*&4* 2300 442 -4 

-TQtorWDOdnM IftOO J*6 « 

T«flcat 2 211 

Itanuimtvf 679 488 -11 

HwniaSt VO 1130 -2 

Toifttat U» g “< 


I3Z 

406 


5-200 

TS3 


-.fica 

182 

-l 

271 

84* 

•6 

tftOC 

58»J 

*2 

2200 

44* 

-8 

522 

<79 


« 

333 


1200 

3*6 

■8 

lftOO 

902 

-Ah 

81* 

238 

-1 

338 

5*7 

-a 

1,000 

278 


618 

578 

«e 

B 

*58 


210 

323 

-h 

ISB 

200 

-7 

863 

674 

-4 

aa 

306 


-8*2 

*3 

1,100 

*10 

•8 

SB 

*84 

-5 

798 

199 


1,000 

»as 

♦1 

900 

140*2 


UX» 

234 

■ah 

SIS 

581 

~4 

2000 

302 

r!i? 




Ryl BkScoi 


H FT-ae Actuari»5 3 50 5^* 8 ^ X) „A0 ia® iftflfl <fti» Cte® 

O pen ',238.7 12367 1Z38J 1Z38.7 1238ft 18*7.4 -8ft 

nSn 1347ft 12*W ]»0-4 ^0 1®* ^^3 2634ft 26243 2822-4 27308 +«1ft 

Bfcjfl&Clwai 2805 ft 278*2 ^ ^03 ZBWft 1654 a 1054. 1 1878.1 ^60 

^ SS SS K »« SB 2717, n». *7072, 277.4 40 

BonkB 27662 27 


Wrtiig^ GTi 

WBeVMw 


Vflfc Coneon 


nrarf ratolfolBli lli— MhlPfillhiftiprfliTfcdW 



to* ti M UnlMd rf! UubB ink a mW v* e* *rowid nlw. 




640 498 *8 

306 960 -38 

ijooo tiB 

547 319 -8 

1300 244 -1 

238 411 -1 

1300 210 -eh 

3JJ00 181 -6 

2300 442 -* 

1300 148 +1 

2ft» 211 

679 488 -11 

440 11® -2 

1.800 261 -3 

780 IQS 

£70 » *1 

822 1087 -8h 

IjOCO 360 -1 

254 630 « 

6400 642 1* -1*2 

£80 717 -14 

3JS00 547 rsa 

227 SOB -* 

108 sas « 

1300 B*3 -h 

23® 3® -3 

850 228 -1*1 

341 IBB -a 

722 878 -11 

138 657 -4 

137 477 -fl 

2 AW see +io 


by news that the company was 
making a $2 .3m (£137 m) acqui- 
sition in the US. The shares 
were easily the best performers 
in the FT-SE 100 and led the 
pharmaceutical sector higher. 
The A’s gained 25V* to 4l5p on 
turnover of 7m and the Units, 
which tend to reflect US inter- 
est, leapt 28 to 384p with 10m 
traded. 

The purchase of Diversified 
Pharmaceutical Services (DPS) 
is expected to enable the com- 
pany to compete more effec- 
tively with Merck of the US, 
which has recently bought 
MedCo. 

SmithKline said the acquisi- 
tion would result in earnings 
dilution of around 3 per cent 
this year and be earnings 
e nhancing after that It is fund- 
ing the purchase by the issue 
of commercial paper and exist- 
ing ragh reserves and analysts 
were enthusiastic. Mr Paul 
Kinder of Goldman Sachs, the 
US house which is advising 
DPS’s former owner said it rep- 
resented ‘toothing less than a 
breathtaking example of a bold 
and creative management” and 
Mr Paul Woodhouse at Smith 
New Court “It is a good move. 
DPS is the pick of the bunch." 

The move enlivened a sector 
desperately in need of some 
focus after months of depress- 
ing news. And it followed a 
slight shift of focus on Friday 
and a $5.3bn agreed bid on 
Monday. TOe bid by Roche of 
Switzerland for Syntex of the 
US was considered expensive 
hut whetted the market's appe- 
tite for further moves. Peren- 
nial speculative targets Fisons 
and London International 


NEW HIGHS AND 
LOWS FOR 1994 
new warn i«v 

BLDO MATLS 8 MCHTS OWranv Khgspan. 
SL0Mrin.CHEMCAtSI3IAlB0.Aaed 
Cedridt. CmataridB. DtsmBuiORB (9 Adm 
A Harvey. Oi tra . B4CT1WO 8 H-ECT 
BQUP n BHUKEHM (5) ASM. Chambartn « 
HO, Oomnfcfc Human 8KF. Vfcfeaca. EN% 
vavCLBS n Oeenkr-Bent Volw B. 
EXntACIWE IM3S £9 Ans* 9 Amv. Cool 
StftonMin. MVESIMBIT TRUSTS (3) L8SURE 
8 HOTELS 03 Ovyrfda, PoHcan, MEDIA (0 
MS3CHANT BAMCS ft) OeaBiDA, 06 
EXPLORATION A PBOO tO &. Co. LouWana. 
06, (NTBBRATED (1» PBWflna. OTHBI 
HNANC1AL W Parartri. OTHER SEPNS & 
6USMB fit CaM 7p At 2002 FRTMOL MPER 
A PACKS (t) Com & Bqnar. RETMLB4S. 
CENBUL (N Austin Hwxl lAxsrty, Do MV. 

Uoos Brm, S 9ML SUPPORT SOWS (1) Santa, 
TEXTILES A APPAREL ft) Manoris Wwra». 
TRANSPORT fl) SeaMd, AMERICANS (3) 
SOUTH AFRICANS P) 

N2W LOWS (14^. 

OATS pm OTHST FIXED INTSIEST RT 
BAMC8 M BU8JM40 A CMSTHN (3) AtWC 
OSp Prf, Baraom. Bortmtor. BUXk HAILS A 
MCKTSm CtORCALS ffl WartaSua^ 
TOTT8BUT0RS (1J Dtptorae. DNBOTtD 
INDIS (9 HuKft Wlinp. PariBc Ounkip. 

wraa 8p Plf . BftemctTY n Baatanu 

Lumjon, reaoOBnu rUinl, wnani, mrew. 

Sodtl Pewar, Squbmoi. YcAcaMn. EXTRACTIVE 
MM CM FOOD MANUF « Canarian Ptaa. 
ans, M8URANCE (I) HCC Uoydx 
UMBsndT TTMSTB (90| MVBSnMfT 
COIMAMBS Hi LM8URE 6 HOTBS fl| 
Marriartt Orient UfE ASSURANCE {3} Lagri 
SOonent. RudanlM, OB- EXPLORATION A 
PROD P3 Energy Equity. Pan PacAc, (MU 
MTEORASBI fl) Bra. OTHER FMANCtAL (3) 
HendeiMn Aden, M. A O. Meray Aieet 
WgraL. OTHHT SERVS A BU8N8 tR Capa 
Range, PHARMACEUTICALS CB (ReRedeiL 
protaua MTU PROPERTY 88 RETMLERB, 

POOD « Btri» Broai. KWfc Save, Teaoo Cap. 
9pC Oa. 2005. RECMUER6 OENBlAt (I) Cue* 
Afyer. SUPPORT 6ERV5 Oadridari. 

Vrluakly. TELECOMUUMCATIQN8 P) 
TOBACCO (0 RWTBI m AMSBOUn (31 
CANADIANS RL 


group rose a penny to iSSp and 
8 to U2p respectively. Heavily 
sold Wellcome bounced 23 to 
547p and hard hit Glaxo recov- 
ered 11% to 588p. 

Hie oil majors were hit by a 
flurry of US selling as many 


transatlantic investors locked 
in profits ahead of first quarter 
results from both BP and Shell 

Shell, now the UK’s biggest 
company measured by market 
capitalisation, slid 10 to 7l3p 
after turnover of 4.7m shares. 
BP, scheduled to announce 
results tomorrow, and whose 
shares hit an all-time closing 
high of 399p last week, fell 4 to 
332 p on turnover of 7.4m. 

The Lasmo takeover saga 
rumbled on with oil sector spe- 
cialists noting the market's 
con tinuing dissatisfaction with 
Enterprise’s all-paper bid and 
with Enterprise's strategy. 
“Although it’s early days in 
the bid timetable, there is defi- 
nitely a feeling that Enterprise 
may already have blown its 
chances," said one analyst A 
counter offer is still expected 
by many oil sector observers. 
Lasmo slipped 1% to 148p On 
turnover of 7.2m shares and 
the nil-paids % to 44p bn 4£m 
traded. Enterprise fell 6 to 
41Qp. 

Credit Lyonnais Lalng was 
said to have been the driving 
force behind the weakness in 
Abbey National, which fell 9 to 
427p. 

Hong Kong-sensitive banks 
received a rough ride following 
a steep overnight fell in Hong 
Kong stocks. HSBC plunged 27 
to 67Sp. Standard Chartered 
settled 38 off at 959p. 

Water and electricity sectors 
came under renewed fire as 
dealers took fright at the latest 
big slide in gilts and on the 
prospects of a local election 
hammering for the Tories in 
tomorrow's elections. 

A series of presentations in 


the City were said to have 
lifted Upton and Southern, the 
ambitious regional retailer, 2 
to S2p. 

Stores analysts were specula- 
ting over the scale of write-offe 
set to be announced by WH 
Smith and Boots for their Do It 
All home improvement subsid- 
iary, expected shortly. The 
interest was sparked by week- 
end press comment, but 
reports in some newspapers of 
an £80m provision found little 
support The consensus is that 
the two groups will make pro- 
visions of nearer £55m and 
announce the closure of 
around 60 of the 220 Do It All 
sites. 

Around half those ear- 
marked for closure are thought 
to have been sold to other 
retail groups, including Asda, 
Dixons for its PC World stores, 
and furniture and bedding 
company Staples. Boots shares 
advanced on the back of the 
day’s pharmaceutical activity, 
the shares dosing 514 forward 
at 553p. Smith slipped 2 to 
496p. 

Dixons slid 7 to 2Q0p follow- 
ing tlje company’s decision to 
treat its interest in Flutter of 
the US as a fixed asset invest 
mpnL There were also said to 
be negative comments from 
Ho are Govett and Morgan 
Stanley. Asda shares were 
steady at 55V&p. 

MARKET REPORTERS; 

Steve Thompson, 

Chris Price, 

Peter John. 

■ Other statistics. Fag* 


LONDON EQUITIES 


L1FFE EQUITY OPTIONS 


— — Cits • — 1 - puts — — 
Jri Oct Jw to Oct Jan 


RISES AND FALLS YESTERDAY 


Opt m Jri Ori he Jri Ott Jan 

MbMtobs 540 48 RH - 14 20» - 

rsaoj S89I7U2M -38H46H - 
Afgjfl 220 t7H 2ZH 16 ISM 1SK 22 
{*228 ) 240 8 m 17tt 26* 31 34 

ASHA » 8H 10 It 2M 4 S 

(-56 \ BO 3 5 W T» 10H 11 

M AkMjS 420 23 34* 40* 22 29» 34* 
P42S ) 480 8 18 25 49 54# 59 

®0B3aA 390 38 48 13 20V, 28 

{*414 ) 420 ZDV4 30 37 28 3*14 40H 

Boots SS02ZM 35 44 26 33 3914 
(-552 ) 600 116*4 24* 62 08*71* 

BP 380 34 41 48% 1 0H 15*4 18** 

(-3*1 I 300 T7 aa lit 2129X33)4 

ftflsbSEd 140 19 23M Z7 5M 9 11V* 

H53J I® B 13 18*4 15 19 22 

Bn 550 34*4 « 57 20» 27*4 38*4 

rSBS ) 600 13 Z7 33 SI 561* » 

CBfc&Nn 425 34 - - 1* - - 

(■443 ) 450 21 - - 29*4 - - 

Cuftuttl SO 42*4 57 86*4 17*4 28*4 3814 
rsn ) 800 1«i S3 43 47 SOi « 

GflMlUon 500 68*4 63*4 78 5*4 13 13 
PS48) SO 29 31 3BH 23 34 33# 

O 800 SI 84 76 25*4 42*4 SIN 

(*18) 880 29 41 N 53*4 52*4 89*4 77*4 

tanotaMT 530 4BN 98*4 88*4 17*4 27*4 34 

("S83 ) 800 2014 32 44*4 4414 M80M 

Ln Sear SO ZB 36 42V4 24H SZ SB 
cm ) 700 8*4 18*4 M 62 65 6854 

mas 5 S 420 23 33 39 13*4 17*4 22 
(-432 ) 460 7N 16 21 30 41 44N 

Nritori 420 41 48*4 54*4 12 2015 22 
{■441 ) 480 10 26 35 31*4 39*4 43*4 

SriUtary 380 2314 88*4 39*4 18 26* 29 
ran ) 390 11 21H 28*4 38*4 43*4 46)4 

Star Tool TOO S7 4957*417*130*4 35 
rm ) 750 U 25 34 44 5714 63 

Stntatt 2Q0 22 27 30*4 6 9 12 

CBS ) 220 9T* 18** 20*4 16 19 2ZH 

TMrigar 97 14 - - B - - 

H04 ) 106 8 - - ION - - 

turner 1050 53 77*4 9W4 2414 34 42*4 

(*1068) 1100 27*4 82 65 52 60 87 

Zeneca 850 87 78*4 88*4 ION 22 28 

(-696 ) 700 34 47*4 58 29 43*4 SO 

Opt® afar abb aor Mar »» 

&BndMri 480 13*4 31 42 4*4 20*4 27 
M68 ) SOO 1U13NMM 34 44N50N 
Latafe in 9 18*4 23 3*4 11 16*4 
(*1B3) 200 1 BUN 19 23*4 29 

UM BtecriS 380 7 »4 35 7*4 17*4 25*4 

nan no t mzasm sr<3H 

OpBon Jan Sap Dae Jan Sap D8C 

Sob 140 19*4 27 30*4 3*4 9 *3*4 

p 54) 160 7 18*4 20*4 12*4 19 24*4 

Opacn 1187 fag Waa May Anq *tw 

nS 480 32*4 82*4 7B 4 27 » 
(*480 1 599 aemSMSW 45 60*4 

BAT Us 4»CV4 54N 80 1 7 15*4 

T4») 480 7 27*4 38 8* 22 33 

SIR 3® 7*4 38 5 16*4 25*4 

(•393 ) 420 1 11 19N 20*4 34*4 43 

Ulton 380 5*4 23*4 29 2*4 1814 22*4 
(-3S7 I 390 1 10*4 15*4 B W « 

OrriwjSri 453 20*4 - - 1 - - 

p(79 ) 493 2*4 - - 17*4 - - 

EatoBx 550 23*4 44 91*4 3 B 33*4 

KGS) no 2 17 28*4 33*4 67 6314 
Brines 460 19*4 34*4 44*4 2*4 15 22 
Wt) SCO 2 14*4 24*4 22*4 37 46 
GEC 300 > 13 20*4 4 17 21 

C3B2) 330 1 4*4 9*4 30 38*441*4 


(*2S8 ) 
(jam 
P48) 
Ucs Ms 
(*206 ) 

F 8 0 
PB) 


(*365) 

Opto 

BAA 

r®8) 

ThawiWIr 

r«) 

opta 


rw4> 
Oua era 

C3SJ) 


Ca8s — — ns 

May Ana Baa Hay Aug tto 

350 10 17*4 22 U4 9*4 14 
280 1 8 U W 21 25 

(34 18)4 it 2SW 2 7 tO 

154 4 12 15 9*4 16 16*4 

200 8 » 29 2*4 10*4 16* 

220 1*4 6*4 15*4 18 22 28*4 
700 13*4 44 38 11*4 3S4 51 
750 IN 22 38 SOM 03 82*4 
200 B >7*4 28 3 119 >8 

220 1 8*4 17*4 17 23M 27*4 

290 21 30 39 I 6*4 12*4 
300 5 17*4 23*4 6 1414 22 

800 44 71*4 87 2 22M 37M 

850 6*4 43 98 18 44M 81*4 
500 41*4 m 86 1 12 23 

560 4 28 41*4 18*4 31*4 47 

240 24 34 41*4 1 7 14 

280 8 22 31 5*4 15*4 23*4 

280 13 22 27 1*4 714 12*4 
220 2 11* 17 12 IS 23 

500 41 61 76 1 14 22H 

550 SN 33 58 13 35 46 
354 14 27*4 38 3 12 16 

384 1% 13 20* Z1M 28*4 34*4 
Jri Otf Jan Jri Ori Jai 
950 48 88 81 31 42*49)4 
(000 24 44* 87 « 69* 7B 
480 » 27 31 25 31*4 38* 
S® 813*18* 56 504 85 
Jun Bap Dae to 9ep Dec 

42028*33*42* 11 22* » 
460 6 1825* 3845*50* 

30 < 6 7 2 3* 4* 

35 2 4 5 4* 8* 7* 

500 a 37* 49 19* 29 37* 

550 817*27*50*80*68* 

290 304 38 39* 5 (2 IS* 

300 12 24* 29* 18* 21* 27 
280 3* 16* 18* 15 IS 26* 
300 3 8* 11*30* 33* 40 

200 9* 17* 72 9* 19 22 
220 3 8* IS 23 32* 35* 

180 13* » M 3 6 9* 


Britten Funds 

Other FUed Interest 

Mineral Extraction 

General Manufacturers 

Consumer Goods 

Services 

Utfttes 

HnanoiaJs 

Investment Trust3 

Othera 

Totals 

Den baaed on rioae c m npanlea I 


TRADITIONAL OPTIONS 

Fbtt Dealings Aprils Last Declarations Ju*28 

Last Dealings April 20 Foraetttanert Aug « 

CaflEC ABFOoda, Acom Corapt, AntatyOtPr Bt*l Investment Co, Worth Uw. Tat 


Rfeaa 

FOa 

Same 

i 

65 

7 

0 

3 

12 

47 

80 

74 

149 

117 

403 

46 

30 

114 

91 

33 

332 

7 

30 

9 

1® 

B9 

167 

53 

129 

290 

64 

38 

28 

562 674 1456 


LONDON RECENT ISSUES: EQUITIES 

Issue Amt MM. Cto» 

price paid cap ' 1994 price 

p UP (EmJ Ugh Low Stock P 

1® FJ». 404 102 98 AbOuat High Inc 101 

- FP. 1J34 IQ 9 AMnot Soot INKS 10 

- FP. 1ft43.1 £14% £1412 AatanB Odd £14^ +1« 

- FP. 806ft 227 205 Capital Shop CTre 223 -2 

- FP. 9.12 E87*j £82*2 Chaster Water £82>2 


Net Div. Gm RflE 
<9v. eon. yid net 


U66 a7 3L6 667 
t235ft 43 3J8 65 



FJ>. 

lift 

30 

28 BrinOgh. Inca Wts 

28 


- 

- 

- 

_ 

FP. 

104/4 

483 

4«0 Govrit Gtobri Srr* 

480 

-1 

“ 

- 

- 

110 

FP. 

21.1 

118 

110 Groups Chez an 

113 


b- 

- 

- 

1® 

FP 

420ft 

191 

178 House ol Frow 

183 

-5 

ua.o 

Z2 

14 

155 

FP 

840 

184 

152 Nottkigham 

160 

-1 

i£J$2 

1.8 

43 

80 

FP 

27ft 

87 

73 CBrfort Moiecriar 

74 

-a 

- 

- 

- 

200 

FP. 

71.1 

241 

216 Ptttco 

241 

■*4 

L5-35 

Z2 

2 -8 

1® 

FP 

21ft 

178 

IM Persona 

178 

+1 

IMM 

ZB 

ZJ 


FP. 

8J03 

80 

S3 Secure Rearomert 

60 

+1 

— 

— 


120 

FP 

28ft 

133 

131 St James Bcft Hot 

131 


RN3LS 


as 

1® 

FP 

13ft 

261 

1® Scpeiscepe VR 

280 


- 

- 

- 

1® 

F.P. 

42ft 

83 

91 Templeton Lot Am 

91 >9 


- 

- 

- 


FP 

4.18 

GO 

45 Do Wile 

45 


— 

- 

- 

_ 

F.P. 

143ft 

IM 

1® ftnpMw Emg C 

102*2 

-h. 

- 

- 

- 

1® 

FP 

609 

102 

99 Undenriued Aris 

101*2 



" 

■ 


220 203 Weflngun 


f«6> 
sntan 
(W) 

Sen 

n») 

F«W 
r»4) 

TfentHc 

(■181 ) 174 3* - — 19* - - 

Thom 91 1100 57*83* 183 22 55* 68 
Him 1160 31 57 rt 46 83* 95 

TSB 200 W 23* 27* 4* 11 14* 

(*210 ) 220 6 13* 17* IS* 22* 26 

Ttattm 340 77* 25 29 5* 12*16* 
r»1) 280 7 14*18*4 15* 24 26* 

mane soo w 75 84* 7 222a* 

r$44 ) 55024* « 6726* <5 52* 

Opbai jri oa jw Jri Oct Jw 

Ska SO ft 75 32 18 33* 41 

PS89) 000 33 48 66* 38 66* 88* 

IQCiWMl 00 86* 87* IM 29 46 56 

{*682 ) 708 41*82*80* 51*71* 81 

(MBR 500 33 44 63* 22 31 » 

rsn 1 512 27 87* - 28 37 - 

Opto mr hp to May faq to 

WMkyceltt 18 29*36* 1 7 12 

nth) 200 a 13* 10 7 18 22 

* UtdRlWU aBeH»y prica Pranriwe tnemti era 
briri on easting oo» pricae. 

My 3, Toiri esnnoaE 5uS to iftto Prie 


180 

4 11 14* 

14 IS IS* 







140 

11 18*23* 

7* 15* 18 







180 

4 11 15* 

a Z7M 31 







420 

17 26* SB 

18 as a* 







*60 

4 13 20 

*7 SZMB8* 







330 

28 » 48 

6 (7 a 

RIGHTS OFFERS 




3aOM*t9HS* 

20 32* 36* 

Issue 

Amount 

Latest 




120 

a a it 

8* 99 tm 

price 

P 

paid 

up 

Rerun. 

1984 


130 

2 5 7 

15 18* 18 

date 

Hflh 

Low 

Stack 

220 

3*0 

a 30 3IH 

• i8 a 

A Oh 13 

13 19 23 

ago 

M 

M 

17/6 

3pm 

39pm 

1pm 

28pm 

AMnot ScoOand 
Airbus 

155 11* - - 

6* - - 

52 

M 

2/6 

4*apm 

1*2pm 

Abort fisher 


El 6 NB 

96 Ml 

0 W 

25 Nl 

1® Nl 

I® Ni 

105 N0 

425 Nl 

1® Nl 

25 Nl 

45 N9 

100 m 

2 NB 

23 Ml 

330 M 


100 pm BA Bio-Tech Uts 
6pm (Me Bectric 
1 4pm Em 

9pm Guinness Peat 
19pm HcfftoCham 
Mpm HcntomAm**' 
ISpm LASMO 
54pm »sya 
4pm Mariam 
1 wro P«*» 
ton SlmMdc 
13pm Simon frig 
%pm Tamarts 
2pm TiyGmup 


WS.17 2ft 3ft 208 


Ctoalng +er- 
price 

P 

1 1 2pm 
37pm -2 
4 pm 

180 pm -ZB 
6pm -2 
■ftprir* 

3hpm 

43pm 

24pm 

i? pm 

67 %m th 


Bpm 42b 
26pm +1 
Vpm 
4pm 

3Spm -8 


3494.1 

2505ft 

2504ft 

2609ft 

2482.4 

2218ft 

2713ft 

24302 

189 

197 

3ft7 

137 

183 

4.16 

4jQS 

143 

5.42 

140 

6.41 

5ft8 

5ft4 

127 

5ft1 

182 

19.79 

18.87 

1185 

lSft8 

19.72 

1080 

33j43 

1046 

to® 

2177 

2175 

2080 

2068 

1149 

3080 

2037 


May * obf Apr lor Tear to* 52 MR 
2 tat 2? a » e® H® uw 

QgUBMatoes^ 1BB3A6 -0.7 189643 18M.73 1SS2.15 £62 238747 13tXM 


Seaed on Mne ririt lar a eslaolcn of tnafcr 
aaorito toRAmWi bn SEAQ syaam 
yeatasM wri 440pm 1*adu of one «Monw 
man era nondsd dean, t tatolai 4* IT-8S 
icoiedri c e Drtu aa 


Hrtang 2775.1 B +02 Z78U8 267190 198434 4.42 3440® 188150 

AusMBtaa 235169 -oa 236U7 296364 1631.16 200 301360 *56X32 

Ncrt) Anero (11) 156166 -1ft 1573.16 157&29 14*8.78 063 203165 135154 

Wofte Mdriri<ra>unt)0al«n?rilM. Bbnb US OaBan. Beaa Vriuae: looooo aVisftZ. 
pSSteaaxr CeU Mm tedras Mw S^SiOafa tonga: +lft jwHa; -ftar B0K W8.1 T FSrtiai 
Lattatprieeawto lanuatabla he Ma edrion. 


FWANCIAL TIMES EQUITY INDICES 


Old- dv. yMd 183 197 3ft7 197 189 4.16 4J» 143 

Earn. y*d % M 6.42 SftO 6.41 519 5A4 127 &61 182 

PIE ratio net 19.79 19ft7 1185 1188 19.72 10® 3X43 114ft 

P/E ratio nfl 20® 20.77 2075 20® 2088 1149 3080 2037 

Tar 1904. QKftwy 8m km rinee oorapWlan: H*l 37108 2flJ2«C; km 49 A eSW40 
FT Orri«y Sm Mbk bam c to 1/7M. 

Onlnary Shm hourly changes 

Open Bu® 10J0 IlftO 12J0 1100 I4ft0 19® HOP HI® Law 
2617.7 2515.7 25001 2 601ft 2502ft 2902ft ftttflft 25020 248Sft 25110 £4913 
May3 Apr 29 Apr 28 Apr 27 Apr 28 Vr®o 

SEAQ bwgrine 24ft32 £4ft22 28/405 24J083 27,128 27ft71 

Equity turnover (Drift - 1237.1 1771ft 12710 1667ft 10S3ft 

Equity bargalnet - 27.848 31.464 28ft® 3Oft04 3ZJ63 

Shares traded (mftt - 484ft 863ft 621ft nawg 487^ 

t Baduriog bm+RNket buawm and raenaae uamer. 




















































































































































































































































































































































































































































































































































1 


CURRENCIES AND MONEY 





MARKETS REPORT 


POUND SPOT FORWARD AGAINST THE POUND 


Dollar remains fragile 


Ctotfig Change BWoffer Dor's Md One month Three months One yasr Bar* of 
mid-point on day apread rtgh tow Rate %PA ftto HPA Rate %PA Eng- lmfa« 


The dollar yesterday fell to its 
lowest level is more than ox 
months against the D-Mark, 
but there was no public evi- 
dence of feather central bank 
support for the currency, 
writes Philip Geooith. 

The dollar closed in London 
at DML6462, more than a pfen- 
nig down on its Friday close of 
DML657. Against the yen it fin- 
ished at Y202.325 from 
Y10L485. 

Trade was fairly quiet, fol- 
lowing the UK long weekend 
and with Japanese markets 
closed for most of the week. 

The dollar’s woes spilled 
over into sterling, which fin- 
ished nearly three pfennigs 
lower at DM2.483, from Fri- 
day’s dose of DM2J5126. Politi- 
cal uncertainty ahead of tomor- 
row’s local elections is also 
weighing on the UK currency. 

Elsewhere, a controversy in 
Spain surrounding the disap- 
pearance of a former senior 
police official undermined the 
peseta and the escudo. 

■ While there was no repeat of 
Friday’s Fed support for the 
dollar, there was talk of con- 
certed European central bank 
dollar purchases at $1.6450. 
Since these activities are nor- 
mally conducted through com- 
mercial b anks , their origins 
are not always dear. 

Current market consensus 
an the dollar is that it is likely 
to weaken in the short term, in 
defiance of fundamentals. But 
Mr Avinash Persaud, head of 
currency research at JP Mor- 
gan (Europe), argues that “the 
dollar is technically ripe for a 
large correction, were we to 
see coordinated and sustained 
central bank intervention." 

He notes that a survey of cli- 
ents, trading with 1-3 month 
time horizons, shows this seg- 
ment of the market to be sig- 
nificantly short of dollars, for 
the first time in a year. Over- 
all, says Mr Persaud, the mar- 
ket remains long of dollars, but 
it is the marginal investors 
who will determine a turn. 

Mr David Cocker, currency 
analyst at Chemical Bank, said 
the US currency “would need 
very supportive comments 
from the Clinton administra- 
tion to really turn the dollar 
around." US comments so far 
had been too ambiguous to 
ease market nerves. 


Steeling 

Against the DM 03M pejf EJ 
2.85. — — ■ 1 



2.5a — 


. Fpb 19M 
Source: FT Gnrttto 

m PodK ( (a MW York 


Maya 

-Uahto 

-Pm. fere- 

Eapot 

1J14Q 

1-5100 

i iron 

15128 

151B5 

3Mh 

1-5109 

1^147 

lyr 

1.5078 

151 IS 


■ The D-Mark was stronger in 
Europe, helped by the 
improved outlook for the Ger- 
man economy. The feature of 
European trading was the 
weakness .of the Iberian cur- 
rencies. The peseta finished in 
Loudon at Pta81.84 from 
PtaS1.46 on Friday against the 
D-Mark, while the escudo fell 
in tandem to dose at E&103.1 
from from EslQ3 . 

The catalyst for currency 
weakness was the escalating 
political scandal about the 
police chief, coining on top of 
an earlier embarrassment sur- 
rounding a former Bank of 
Spain governor, which caused 
a minister to resign and prime 
minister Felipe Gonzales to 
cancel an overseas visit. 

But political scandal comes 
against a background of ner- 
vous investors searching for 
security in European bond 
markets, which works against 
high-yielding economies such 
as Spain and Portugal. Ms 
Wendy Niffikeer. senior econo- 
mist at IBJ International in 
London , said the scandal was 
“an excuse for investors to sell 
the Iberian markets, because 
the inflation outlook was not 
as good as for some other 
European economies.” 

■ The Bundesbank will 
anno unce today the results of 
its weekly repo tender. Market 
estimates are for the central 
bank .to allow the repo rate to 
fell by 5-12 basis points from 


5.47 per cent currently. It 
dropped by 28 basis points over 
the past two weeks. 

But Ms Phyllis Reed. Euro- 
pean bond strategist at BZW, 
believes the market is making 
the error of extrapolating hum 
past trends. With the mid-point 
of German call money yester- 
day at about S.55 per cent, 
above the repo rate of 5.47 per 
cent, she predicts a cut of only 
2-3 basis points. 

In the futures market the 
June euromark contract closed 
at 9189, down from 9192. 

E Sterling gave up most of its 
recent gains with the sterling 
index closing at T9 .6 from its 
previous close of 80.3. The 
pound normally trades in tan- 
dem with the dollar, so the US 
currency's weakness is one 
explanation for sterling’s 
decline. 

Political uncertainty is also 
weighing on the UK currency. 
Weekend press reports drew 
attention to the weak position 
of prime minister Mr John 
Major, and the market fears 
that heavy Tory losses in 
Thursday’s local elections will 
aggravate matters further. 

In the futures market, short 
sterling lost ground as the like- 
lihood of a further rate cut 
receded. Stronger than expec- 
ted growth in April MO was 
merely the latest in a string of 
data showing robust growth in 
the economy. The June con- 
tract closed at 9-L59 from 91.62 
on Friday. The longer con- 
tracts gave up more ground, 
with the December fixture fin- 
ishing at 93,82 from 93.88. 

Conditions in the money 
market remained easy as the 
Bank of England removed a 
smafi fiOOm shortage. 

■ The guilder was unaffected 
by elections in the Nether- 
lands, closing at Fll.123 from 
FU.122. Investors also stood on 
the sideline in Sooth Africa, 
awaiting clarity about the out- 
come of the election. The finan- 
cial r and firmed to R4.6 against 
ffie dollar from R 4.625. 


frrope 

Austria 

Bdgfiro 

DmmoK 

FMand 

France 

Germany 

Owece 

Ireland 

twy 

Luxeanbowg 

N ah ati nc fe 

Norway 

Portugal 

Spain 

Sweden 

Swttzartana 

UK 

£cu 

SDR 


(Seri) 17.4754 
(BBJ 51.1033 
(DKr} 9.7170 
(FM) 8.0571 
(FFj) 85056 
(DM) 24830 
(Dr) 368498 
<K) 1.0222 

(U 233333 
fJrt) 51.1033 
(R) 2,7884 

(NKi) 10.7738 
(Es) 255564 
(Pta) 203.188 
(SKr) 11.4018 
(Sft) 2.117B 
B 

- 1.2882 
- 0.841623 


-0.1463 676 
-OS328 639 
-00041 132 
-0.0362 477 
-40745 004 
-OOZ27 620 
-1752 111 
-00039 211 
-17JB 222 
-05326 639 ■ 
-0.023 870 
-40862 838 
-1.63 623 
-1.538 066 
-00620 633 
-40110 106 

-40081 873 


832 17.5610 
1 227 51.4679 , 
207 U 7658 
665 41100 

111 45801 

830 2.4999 

884 367.013 1 
233 1-0268 

484 2404.81 ! 
227 61.4879 i 
868 24064 

779 149521 ' 
345 264521 I 
311 204428 1 
890 115730- 
191 2.1260 


17.4716 03 17.466 02 

51.1233 -05 81.1583 -04 61.1433 -0.1 

9.7Z7Z -13 47405 -13 47S02 -43 

4512 -09 46183 -06 44963 01 

24837 -OS 24827 40 24601 06 


1.023 -09 
239493 -42 
51.1233 -05 
2.7881 0 2 

147882 06 
250969 -49 
20473 -42 
11.5125 -42 
2.1168 12 


-49 14279 -46 

-OB 244468 -22 
-04 51.1433 -0.1 
40 27724 46 

-06 147719 40 
-4JB 

-Z8 207450 -41 
-29 11.6878 -T9 
19 29812. 1.7 


7.2949 1-2873 f, 2832 -43 19902 -OS 19879 40 


Ausnttw (Peso) 19060 -091 055-064 Ml 33 13033 
Brad fCr> 202406 +1431 657-955 2034.00 198790 


Canada 

fCS) 

2.0678 

-00106 

868 - 886 

24945 

25827 

25691 

-a7 

9 11077 -AS 

2.1104 

-T.1 

864 

Msdco 

(New Pasq) 

4.9553 

-0.0028 

466 - 640 

45640 

45384 

- 

- 

- 

- 

- 

- 

- 

USA 

63 

15085 

-am 

081 - 088 

15160 

15OS0 

15071 

i.i 

15053 

05 

15025 

04 

84J 

PacttcABdrte EsaVAMoa 












Auatrata 

(AS) 

2.1350 

+00021 

337-3S2 

2.1373 

2.1232 

2.1335 

0.8 

2.1311 

07 

2.1292 

05 

- 

Hong Kona (HKS) 

11^531 

-00773 

486 - 565 

11J108 11JS337 

115401 


11X346 

06 

11 JS8S6 

05 

ta 

bxfla 

Pfte) 

474164 

-03200 018 - 311 

475530 47^400 

- 

- 

- 

- 

- 

- 

- 


Japan M 152929 -1.717 755 - BOB 154.120 152.755 152.454 29 151989 39 148984 41 

Malaysia (MS) 4.Q32S -09331 308-342 49698 49287 - - . - - - 

New Zetland (N2J) 29232 -0907 210 - 254 29326 29202 29261 -19 46304 -1.1 2930 -06 

Pldopfam (Pea o) 419352 -42768 993 - 711 429S3S 409857 - - - 

Seurt Arabia (SfiJ £8573 -a 0375 557 - 588 59852 46479 - - - - 

Singapore ESS) 29441 -00158 428 - 454 29563 29408 - ... - 

S Africa (Com) (R) 59486 +09001 462 - 510 69553 59101 - - - 

SAMcaCRnJ (R) 69389 -00614 222-566 89738 69204 - - - - - 

South Korea (Won) 1215.74 -1097 508 - 639 122396 121496 - - - - 

Taiwan 08) 389060 -0.1378 882 - 228 40.0400 309500 - - - 

Thailand (Bt) 37.8877 -02682 438 - 816 301580 379180 - - - 


f30R rate <or fer 28. OdMttr spreads to Ms Awn Spot tabl» Ujow tar tta fast Area metal 
bur on» bfetod by curen Ittiw sn Safes max calcfeted toy lha 8«h or Epfend- Brea 
the Defer Spat tfen dsrived tom THE MMEUISS CU3EMQ SPOT RATES. Sana vatoaa ■ 


DOLLAR SPOT FORWARD’ AGAINST THE DoLLA.r 


placet. Fonraad nare am not orecoy « 
MOBS 1BBS - 1DOBU. OSerand Md+ 
m muted by #■ F.T. 


Closing 

mW-paht 


Ctange BkVOfTar Daw's odd On month Ttwwa month* Orreywar JJP Morgan 
on fey spread Ugh lav Daa HPA Rata %PA Rate ttPA Max 


(Sett) 119850 -0921 826-675 11.8166 11.2590 119 -19 1191 -09 1198S3 09 
<B ft) 339780 -0.1285 730 - 830 339830 339500 33923 -19 33968 -19 33988 -09 


Denmart 

(PKi) 

64417 

-00104 

407 - 427 

6.4807 

04407 

04534 

S2. 

84702 

-13 

04770 

-06 

1033 

FMand 

(FM) 

53*13 

+0.0115 

363 - 463 

5^648 

03288 

03453 

-09 

53523 

-03 


-04 

77.1 

Pence 

IFFf) 

56388 

-00117 

365 - 410 

5.6590 

08330 

06482 -2LD 

53589 

-1.4 

53561 

-03 

1042 

Germany 

P 

15461 

-0004 

45a - 463 

1.6520 

1.5438 

1.6481 

-1^4 

1.6497 

-09 

13*97 

-02 

10*3 

Greece 

PO 

242300 

+046 

100 - 500 

243.200 242.100 

246.05 

-1BJ6 

253.425 

-134 

OW1 

-183 

70.4 

bfeand 

cq 

14758 

•00045 

746 - 770 

1.4828 

1.4708 

1.4732 

2.1 

1.4694 

1.7 

1.4613 

1.0 

- 

Kaly 

« 

158075 

-075 

625 - 725 

1591.00 1583-50 

ISC. 46 

-A3 

1601 

•03 

1627.75 

-23 

.783 

Luxamhawg 

OJ+1 

835780 

01285 

730 -830 

33.9830 833500 


-13 

%<RR8 

-13 

33388 

-03 

1043 

Nethertards 

CR) 

15485 

OOQ29 

480 - 490 

1.8555 

1^460 

13504 

-13 

13522 

-03 

13617 

-02 

1040 

Norway 

(NKi) 

7.1423 

00088 

413 • 433 

7.1735 

7.1381 

7.161 

—1.5 

7.1835 

-12 

7.1743 

-04 

95.1 

Portugal 

(Es) 

189.700 

+005 

500 - 900 

170900 160650 

171 


17235 

-7.7 

1782 

-50 

oaa 

Spain 

(Pta) 

134.700 

012 

650 - 750 

130300 1 34.650 

135.185 

-43 

1353* 

-3.7 

138375 

-23 

807 

Sweden 

(SKO 

7.61 02 

+0009 

144 - 219 

7.9827 

7.6007 

7.6417 

-3.7 

7.681 

-33 

7.7902 

-23 

BOO 

Swte»tand 

(SR) 

1.4040 

+00016 

035 - 045 

1.4065 

1.4000 

1.4217 

-153 

1.4028 

03 

1387 

12 

104.1 

UK 

R 

1.5085 

OOI 

081 - 088 

1^100 

1J0S9 

1J071 

1.1 

13053 

03 

13025 

04 

88.7 

Ecu 


1.1710 

+00005 

7D6 - 715 

1.1723 

1.1673 

1.1881 

2.0 

1.1868 

14 

1.1662 

04 

- 

SDR 

_ 

1.42469 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Amerkta 














Argentina 

(Preo) 

05984 

-0301 

983 - 934 

0.9984 

0.9983 

- 

. 

- 

- 

- 

- 

- 

Start 

(cn 

1345.13 

+21.82 

512 - 514 

1345.14 1345.12 

- 

- 

- 

- 

- 

- 

- 

Canada 

fc# 

13641 

+00022 

838 - 843 

13845 

1.3807 

1.3883 

-13 

13002 

-13 

14046 

-13 

830 

Mexico (NewPaaol 

33850 

+002 

BOO -800 

32900 

3^00 

3286 

-04 

32878 

-03 

32952 

-03 

- 

USA 


- 

- 

- 

. 

. 

- 

. 

- 

. 

- 

. 

993 

flrauMtr flai l ift i n-.KflMn — 
nacmoniuLH 












Australia 

IAS) 

1.4153 

+00107 

148 - 168 

1.4158 

1.4045 

1.4165 

-1.1 

1.4212 

-1.7 

1.4318 

-12 

85.7 

Hong Kong 

(HKS) 

7.72S2 

+00002 

247 - 257 

7.7257 

7.7247 

7.7282 

-05 

7.7342 

-03 

7.7588 

-04 

- 


kafe (Rs) 31.3675 -09036 850 - 700 31 9700 319650 31,4326 -29 319675 -29 - 

Japan (V) 101915 -0.46 290 - 340 101920 101.100 101.16 1.8 100.78 2.1 98955 2.7 1402 

Malaysia (MS) 2.6733 -0.0041 728-738 29785 29710 29683 8.1 2SS0B 94 2.7133 -19 

New Zealand (KZS) 1.738 0 +09068 379 - 400 1.7400 1.7348 1.7403 -09 19448 -79 1.7SB7 -19 

PMtppbtea (Paso) 279350 - 850 - 650 279850 273850 - - - - - 


fey 3 £ S 

Hmgoy 1SL7B1 - 15*003 101970 - 102070 
tin 28*390 • 25*890 174890 - 179090 

KrecA 0.4*05 - 04*80 02901 • 02909 

Mead 336686 - 337213 223&0 - 223500 
Rtatt 289568 - Z7W.74 1787.00 - 119390 
UAE 554S3 - 55S66 16716 - 16735 


Saud Arabia 

(SR) 

3.7504 

+00001 

502 - 505 

3.7505 

3.7502 

3.7511 

-02 

3.7534 

-03 

3.7649 

-04 

- 

Singapore 

(SB 

13S40 

-aoooi 

535 - 5*5 

13546 

1^35 

13S34 

as 

1^29 

03 

13515 

02 

- 

S Africa (ComJ 

P 

33458 

+00235 

450 - 485 

33455 

33120 

33623 

-53 

33883 

—43 

86813 

-33 

- 

S Africa (Fn.) 

P 

43000 

-OOI 

900- 100 

4.8250 

43750 

4.634 

-OS 

4394 

-82 

- 

- 

— 

South Korea 

(Wort 

805350 

-13 

700 - 200 

907300 805.700 

80835 

-43 

•1245 

-32 

83035 

-3-1 

- 

Taiwan 

a*) 

284550 

+0045 

900 - 600 

20.4800 28.4000 

263205 

-3.0 

28.621 

-23 

- 

- 

- 

Thafend 

(») 

25.1700 

-OOI 

600 - 800 

25.1800 2S.1600 

25 X 

-33 

25375 

-32 

2S3S5 

-23 

- 


TSDR ran tar May «L BWftrffcr grands to me Defer Spot aM ahow orfy the mi Sin 
but an knpbd by oonl Mere* racre. UK. Mmd 4 ECU an quotas to U6 Qrrency. 


n deebns) places. Fdnaonf rates me net reeeay qocred to an marioa 
4J>. Morgan nonMMCH% Z Brea remaps >990100 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


EMS EUROPEAN CURRENCY UNIT RATES 


May 3 


BFr 

DKr 

FFr 

DM 

K 

L 

R 

NKr 

Es 

Pta 

SKr 

SFr 

S 

CS 

s 

r 

Ecu 

Belgium 

(BFr) 

100 

19.02 

1665 

4859 

2000 

4683 

5.456 

21.08 

5003 

397.7 

2249 

4.145 

1.957 

4.068 

2353 

2993 

2321 

Danmark 

(DKr) 

5238 

IQ 

8754 

2365 

1.052 

2463 

2889 

11.08 

2634 

209.1 

1132 

2.180 

1.029 

2149 

1353 

1573 

1328 

ftance 

(FFr) 

6008 

11.42 

10 

2.819 

1202 

2813 

2278 

1236 

3003 

2389 

1331 

2490 

1.170 

2455 

1.774 

1793 

1314 

Germany 

(PM) 

2030 

3313 

3.426 

1 

0.412 

9633 

1.123 

4337 

1081 

6134 

4.627 

0353 

0.403 

0341 

0.600 

61-54 

0310 

Ireland 

«5 

5000 

0300 

8323 

2430 

1 

2341 

2728 

1054 

250.4 

1988 

1134 

2372 

0.978 

2043 

1.477 

1493 

1360 

Italy 

W 

2-135 

0406 

0355 

0104 

0043 

100. 

0117 

0.450 

1069 

8491 

0480 

0399 

0042 

0.067 

0.063 

6385 

0054 

Nsfharionfe 

(R) 

1833 

3485 

3.051 

0-891 

0367 

858L3 

1 

3383 

91.79 

7239 

4.121 

0750 

0359 

0749 

• 0341 

5431 

0462 

Norway 

(NKO 

47.45 

9.082 

7.696 

2305 

0949 

V3V> 

2589 

10 

2373 

1887 

1067 

1367 

0329 

1.639 

1401 

1413 

1.196 

Portugal 

(Es) 

19.97 

3.797 

3324 

0970 

0399 

035.1 

1389 

4309 

100 

7941 

4490 

0»7fl 

0391 

0316 

0390 

90.71 

0303 

Spain 

(Pip) 

2315 

4.782 

4.106 

1-222 

0.503 

1178 

1-372 

6300 

1253 

ICO 

5355 

1.0*2 

0492 

1.028 

0743 

7530 

0.634 

Sweden 

(SKr] 

4447 

8457 

7.403 

2.161 

0389 

2083 

2426 

0373 

222.7 

1788 

10 

1.843 

0370 

1317 

1313 

133.0 

1.121 

Switzerland 

(SFf) 

24.13 

4.508 

8018 

1.172 

0483 

1130 

1-316 

5385 

1203 

9534 

5425 

1 

0472 

0386 

0712 

7214 

0008 

UK 

E) 

51.10 

9.717 

8506 

2483 

1.022 

2393 

2788 

1077 

2553 

2033 

11.49 

2118 

1 

2088 

1309 

1S23 

1388 

Canada 

(C» 2*47 

4.654 

4-074 

1.188 

0489 

1146 

1335 

5.158 

1220 

9732 

5503 

1314 

0479 

1 

0.723 

73.18 

0817 

us 

SI 

33.08 

8439 

3637 

1345 

0377 

1586 

1348 

7.137 

1893 

134.7 

7314 

1404 

0663 

1-384 

1 

1013 

0354 

Japan 

00 

334.4 

6330 

5537 

1825 

8688 

15661 

1825 

7048 

1675 

1330 

7530 

1336 

8645 

1336 

9378 

1000. 

8429 

Ecu 


30.67 

7344 

860* 

1320 

0793 

1658 

2165 

8382 

1987 

167.8 

8921 

1344 

0776 

1321 

1.172 

1188 

1 


Mays 

Ecu can. 
rate 

Rate 

ogabntEcu 

Change 
on day 

96+/- bom 
can. ram 

96 ferae 
v weeks 

Waal 

0308628 

0794856 

+0003535 

-1.73 

433 


219672 

216687 

-000311 

-138 

854 

Batgkan 

403123 

387244 

-00833 

-131 

4.38 

Germany 

134964 

132964 

-03036 

-133 

4.18 

France 

633883 

861272 

-001305 

1.13 

138 

Daranark 

7.0679 

736435 

-002358 

1-72 

138 

Spate 

154350 

158018 

+0519 

244 

066 

Portugal 

192354 

198362 

-0314 

3.12 

030 

NON BM MEMBERS 





Oraaca 

284313 

284.163 

-0303 

7.43 

-432 

Italy 

179819 

186037 

+639 

3.76 

-082 

UK 

0780740 

0776195 

+000542 

-134 

432 


Van par 1900 Dartch Kroner, Ranch Franc. N a n - fen Kn 
■ OMSK FUTURES (IMM) DM 125,000 per DM 


I Sawfish Krona per itfc Balfen Franc, Escudo, Lba and Pm— per too. 

■ JAPANESE YEN FUTURES (MM) Y 01 12.5 per Yen 100 



Open 

Latest 

Change 

High 

Low 

EsL art 

Open bit. 


Open 

Latest 

Change 

High 

LOW 

Eat. vol 

Open int 

Jun 

00052 

06061 

+03007 

0.0074 

0.6044 

34,487 

110335 

Jun 

03064 

09887 

+00037 

09908 

03840 

14,651 

61344 

Sap 

06065 

0.6057 

+OXKKJT 

0.6067 

0.6055 

409 

3J346 

sap 

03855 

03946 

+0 . 0037 

08965 „ 

03845 

147 

337T 

Dec 

- 

- 

- 

- 

- 

- 

- 

Dec 

- 

- 

- 

- 

- 

- 

• 


Ecu carta rraae sat by the Baopaan Cmi towi n n.OiTindHene to d e tora sto p ratoUvafaranato 
Pam — gachregea ■+ tnrEac a poabhro change denotea a ware oCTncy. Orrai gu w ee ihu retea 
rafe bate rare mo apnada; iha paroerfaga (Mb— noa ben— an tba acare merfni M Ecu crew ifea 
Mr a cur— cy, and ara rn—nwn pemfead pereerrega davtelaa <4 tha cwraneire nrekat — kom lb 
Eoicaadna. 

Q7rt)M)9tefeq and Itofen Urawapeoded tan tefeateree irt i tew rt by tha Rnmdri Three. 

■ P WJmsLPWASEt/»OPHOIl8E312fiO{eenlaperpomt2 


■ SWISS PRAHC FUTURES (IMM) Sftr 125900 per SFr 


IIUWSPIM) CB290D par £ 


Jun 07130 
Sep 0.7151 
Dec 

07136 

0.7146 

+0.0006 

+03001 

07147 

07163 

0.7112 

07145 

13.140 

246 

40322 

765 

Jun 

Sep 

Dec 

13136 

1.5090 

13078 

1-5040 

13030 

-03000 
-0006 8 

13148 

(3090 

13070 

130*0 

13030 

0,003 

100 

22 

*8057 

1,170 

47 

[.WORLD- INTEREST. RATES 

W 


■ .. . . 



/ '•* y 


- i 

..•4aV. J-*-*- 





Strfta 

Price 

May 

~ CALLS - 
Jim 

Jtf 

Mey 

— PUTS — 
Jun 

Jto 

1+425 

821 

815 

830 

- 

003 

028 

1.450 

877 

538 

819 

- 

019 

064 

1375 

337 

330 

434 

038 

081 

125 

1300 

130 

218 

281 

033 

1.42 

221 

1-52S 

033 

136 

1.74 

135 

275 

332 

1360 

032 

0.44 

099 

4.09 

431 

524 


HONEY RATES 


1 MOHTH GUMHMKK I 


1 1UFFQ’ OMIm polnta el 10095 


May 3 

Owr 

right 

One 

month 

Three 

rrths 

Stx 

mta 

One 

year 

Lento. 

Inter. 

Da- 

rrin 

Betoken 

5fl 

63 

53 

5ft 

5ft 

7.40 

4.75 

week ego 

- 

53 

5B 

68 

68 

730 

4.75 

franca 

5% 

5% 

Bfl 

5ft 

5ft 

870 

- 

week ago 

SB 

Sft 

5ft 

5ft 

SB 

' 880 

- 

Germany 

532 

5.42 

532 

822 

820 

830 

800 

week age 

840 

842 

838 

532 

828 

630 

800 

Ireland 

SVl 

50 

0 

Sfl 

84 

- 

- 

week ago 

B 

SO 

Sft 

<3d 

04 

— 

- 

Italy 

09b 

84 

8 

8 

84 

— 

0.00 

weak ago 

8i 

Bi 

8 

8 

84 

- 

830 

Netherlands 

846 

526 

822 

821 

820 

- 

825 

week ago 

5.40 

826 

538 

538 

835 

- 

535 

n II i i 

OeiihOhaninj 

3S 

4 

4 

4 

4 

6326 

3.50 

week ago 

3to 

4 

4* 

44 

44 

8825 

330 

US 

3to 

4 

4ft 

4U 

Oft 

- 

330 

week ago 

3B 

4 

43 

44 

64 

- 

930 

Japan 
week ago 

2U 

2ft 

2 » 

2ft 

2ft 

2ft 

2ft 

za 

23 

: 

1.75 

1.75 



Open 

Sett price 

Change 

Hgh 

Low 

Eat vol 

Open bit 

Jun 

9431 

94.88 

•003 

94.92 

9437 

27689 

211984 

Sep 

9804 

9535 

- 

9530 

9802 

28017 

156519 

Dec 

9530 

8437 

-033 

95.00 

9436 

27797 

177153 

Mar 

9432 

9430 

-009 

9*33 

9438 

18000 

100334 

M THREE MONTH EUROURA WT JULTK FUTURES CUFF?) LI 000m polnta of 100% 


Open 

Sed price 

Change 

rtflh 

Low 

Eat wpl 

Open M_ 

Jun 

9233 

9227 

-039 

8233 

9335 

3383 

44828 

Sap 

B23S 

8237 

-002 

8230 

8234 

2005 

27500 

Dec 

ggjs 

9227 

•033 

9230 

9224 

2032 

316G9 

Matr 

0236 

0238 

■004 

9239 

0202 

810 

11405 


Ptavtoua (We ret, Cafle Sfe7 Pun 04*0 . Ptm. open tot, &fe 430X2 Pun 368929 


INTEREST 


LONDON MONEY RATES 

May 3 Ow- 7 days One Three St* One 

right notice month monllra months yey 

WsrtaK Sterfee 4%. 3 5 - Oft 5>s - S&- 5 A 6% -6\ 

Starling COs - - 5i - <fl S»* - 5, 1 . 6ft-5^ 5% - Bft 

TreawySSa 4% - 4» 4H - 4% 

Bank 86a - 4*-4ij4i|-4*5»*-$& 

Local authority dapa. *S - 4ft 4ft - *H 6^,-5 6A-6i S\-S>n Eft-S,; 

Dscaunt Mariat Daps *>1 -4 4^ - 44. - 


I MONTH EURO J 


■ 6RAIIC HITW8BS (LtffD Sfrltn pcWa of 10096 


■ S UBOn FT London 
Marta* Fixing 
week ago 
US DoBw CDs 
week ago 
SDR Unkad Da 
weak ago 


4fc 44k • 4* ■ si 

4J, 4M 4M 5!4 

3.84 4.14 496 5.15 

3.84 494 4.41 4.88 

3» 3* 354 4 

b 3« n 4 



Open 

Sett price 

Change 

Hqh 

Low 

Est VOl 

Open Int 

Jim 

0813 

9810 

-005 

9814 

0809 

2616 

23560 

Sap 

0812 

06.11 

-003 

9814 

9810 

044 

11023 

Oec 

90.03 

9804 

•003 

9804 

9801 

555 

4719 

Mrt 

■ 7MM 

9534 

1 MONTH! 

9632 

seufvnifl 

-003 

M (Uf-j-tj 

9884 
Ecu 1m pc 

8882 

lintsef 100 H 

31 

1 

041 


Open 

Sett price 

Change 

Htfi 

Low 

Eat vol 

Open M. 

Jun 

0437 

94.32 

+004 

0433 

9427 

943 

11641 

Sap 

9439 

04^*2 

+003 

84.43 

0439 

473 

11066 

Dae 

0436 

9437 

+04H 

0438 

0438 

283 

7035 

Mar 

84.19 

9431 

+0.01 

9422 

94.19 

221 

2634 


UK fearing bank base taxing nfe 5^ par cant from February 8. 1884 ■ 

Up tel 1-3 S-8 6f 9-12 

iimdh mumha nioMIte jwrfea 

Cate ti Ta* dap. (2100000) 1*2 4 3^ Sk ' 3*2 

Carts oflta dfe redar 2100900 la 1 >zpq. Depoata -thdrarei ta creh 3ipe. 

A—, tendw rase oT dbcemt 4W9Spa BOQD Bred fee Sdg. Erport Flnanca. M*a up fey Apr! 29, 
ISM AaremS raw fiar parted fife* 20. iBP*»Ju>2i 109*.SOmno* UaBUBpe. nu t no ot iwte kr 
period are 1. too* to Apr ifloe, Schamee IV 4 V &8Sepo Fkavue House Bale fbda Stipe bom 


|MQWmETgRJIOPimNW«qJFFqaS00900po»ntaari00M 


Open 

Sett price 

Change 

wait 

Law 

Eat art 

Open l«£. 

9431 

9439 

-003 

94.82 

9439 

6307 

63803 

9*34 

9430 

-008 

0434 

9439 

6785 

89556 

9 337 

9332 

-008 

B337 

83.60 

7882 

124409 

9339 

9337 

-038 

8333 

9325 

3253 

47901 


BM Uafcad Da raid i— 1 muc BTK 3 nnhs: B*j 6 net— S¥e. t year BtL $ UBOH Mmb 
raise era oftarad —a lor atom quoted to the n— by tow ro to r a nc a non)— — turn ere 
(toy. Ihe banks am 8—4— Than. Bonk of To+yo. Breiaya and Nedanal t fe a bito— r. 

Md ratea ret ehorei tor me don-aac Uwiey Rreea, US S COa and SDR LHttd Depaada { 

EURO CURRENCY INTEREST RATES 

Mays Short 7 days One Three Six 


notice (north norths months 


■ ti« 

m month naooomu* jmm) sim points of 100 % 




Open 

Latest 

Change 

«B*1 

Low 

EsL vri 

Open Ir*. 

JUn 

9824 

9523 

-aoi 

9534 

9631 

36325 

419.477 

Sfe 

04.00 

0436 

-002 

94.61 

9*37 

7438* 

391388 

□ac 

94.11 

04.10 

•aoi 

94.11 

04,07 

75336 

350035 


I an APT. Al Open H— ret fife ero tar praMoua day- 


■ SHOWT STERLOM OPnam (LB=FF) 2500900 1 


SfllgtaT Franc 
Danish Krone 
D-Mark 
Dutch GuMar 
French Franc 
Portuguora) Esc. 
Spantah Peseta 


Sure Franc 

Ctei. Dolar 

US Defer 

Itafen l>a 

Yon 

Aslan 4S4 xj 
S hort farm RBaa i 


Sft -s& 

W|-5^t 

5^-64 

6 - t@t 

12*i • 12 

7ft -7* 
4%-A 
3*-S*» 

Si. - 6*2 
3H-3H 
9 * 7b 
3A-2J, 

3k 

acM tar tea 


5ft -5* 5ft-« 

6*4-6* 8>g-« 

- 5 1 * 

AA 5&-S& 
51J-B32 S\ - 53. 
121. - 13*4 13^ - 12it 
7ft -71. 7ft - 7% 
5-4* 5A-6* 

4-33. 3ft - 3ft 

5ft * 5j* S\ -V, 

3% - 34, 4* - 3ft 

8 - 7lj 8 - Tk 
2* ■ 2 i 2& - th 
3k -2k 3k - 2k 
US Dolar and Yen, oBtsw 


5ft-« 54.-5% 5*-5% 

ft -5ft 6A-SR 6>a-Gll 
Sk-»n 6i-5i U-6A 
Sk-Sk Sk-Sk 
Sft - sft 5\ - 5% A-5<| 

12*4 - 11% lift - 104. 10% - 10*a 
7ft -74. 7tJ-7* 7H-7V 

W-5i 6%-34» 
4-3^ 4.3^ 4-3^ 

811 ■ 5!) 8A-6A f& -6ft 

44b - 44* 44.-4% si - 64 
B ■ 7\ 8-7% 81a - 74 

24 - 3k 24 -2H 2»s - 2ft 

4-3 4-8 4k - 3V 


24-a\» 24 
1-3 4. 


4-3 4 

twdtytr notice. 


! HOHTH MOM RRUm (MATE) Paris IhteriJar* offind rate 


■ UEIHEAaUHT MU. Virn«R»(IMM) simper 100% 

JUi 3595 95.66 -A02 9695 9693 2257 26,585 

Sap 9598 8599 -0,02 9698 95.07 308 10966 

Dec 94.66 9499 -091 »4.69 94.66 113 6,614 

Ml Open merest Bgs. ■« tor preetaa day 

M HBO—AWC QPTIo m (UFFQ DM1 m potets o( 10096 

SHw CALLS PUTS 

Pries Jim Sap Dec Jun Sep Dec 

9479 0.17 090 039 093 U06 0.17 

9600 095 020 025 018 015 028 

fleas 092 009 016 OS6 029 044 

Era. «oL tow, Cda 8969 Puts 3520. naetaus day's open tou Crta 22S7C1 Pm tazBO 

■ EURO SWmmAHCOPTlOMfl(LJfFDSFr Imports on OOM 


Strife 

Price 

Jun 

- CALLS - 
. Sep 

Dec 

Jun 

— PUTS - 
Sep 

Dec 

9450 

015 

016 

012 

006 

0136 

a 00 

0478 

004 

007 

007 

020 

053 

130 

9500 

001 

003 

003 

042 

074 

1.21 


Eat rel tfe* OOi 1BB0 Pwe 29*2. Pfetaue dayn open hit, Cate 171002 Pm 1980*7 


BASE LENDING RATES 


8869 Put* 3520. naetaus day* open tou CM* 228701 Pm 1BZS43 
niAHC onfOffi (LJFFE) SFr 1(11 potets onom 


Open 

Sett price 

Change 

Mgh 

Low 

. Era vol 

Open Ira 

smw 


— CALLS - 



— pins - 


9439 

9840 

+002 

04.46 

9438 

13,700 

67.148 

Price 

Jun 

Sep 

Dec 

Jun 

Sep 

Dec 

94.81 

94.00 

• 

9433 

9439 

11384 

46328 

9800 

013 

022 

026 

033 

0.11 

n*» 

9438 

9439 

+032 

9431 

9439 

6,846 

37368 

6025 

003 

036 

014 

019 

023 

035 

94.46 

84.47 

+0.02 

94.48 

94.43 

2,644 

32399 

9850 

0G1 

033 

007 

041 

042 

033 


I MONTH W BOBCUm (UFF^* Sim points of 10096 


1 0 Put* a Ptutaui day^i open Ira, CMb 348 Pife *05* 



Open 

Sett price 

Change 

High 

Low 

Eat vet 

Open ktL 

Jun 

9533 

9822 

-006 

9823 

9532 

69 

5304 

Sep 

9439 

9437 ’ 

■009 

S439 

9438 

47 

2192 

Dec 

94.10 

94.06’ 

4106 

9410 

94.09 

12 

1487 

Mar 


9081 

-006 



0 

906 


Afem&COrtpary 625 

/Wed Treat Bta &3S 

AIBBar* 525 

•Henry Arrtndw 025 

BafeofBsrefe 626 

Banco Bfeao Vizcaya-. 325 

Barker Cyprus 625 

Barit of Ireland 526 

Safe of mas eireataeai ,..025 

BarAofScoBand 526 

Batiks Bank 523 

MBIftf MdEaff.._ 525 
• Q Bwn O ^feyOCDUflOas 
CL Bv* Nederland... 625 

CMbrekNA — 925 

Qydesdtea Bank $2E 
The Ca up re niw D ark. 525 
Causa & Co ....625 

Cmaiytmta 623 

Cyprus Popular Bartc -525 


Dutereilareto — S23 

Bceaer Bank Limited _ 625 
RwkM S Qvt Btrtc - 6 
•R o bert Hat»g 60c -S2S 

Obohank 525 

■QuknaEi Mahan 526 

Habtt Bate AQZlsIcfl. 523 

•HartmeBan* B2S 

ftafettd A Oen tar Bk. SJS 

•W Samuel. 629 

C.Hon3CB 625 

Hcn^engAStartfaL 525 

Jdten Hodge Bank 528 

•Leopold Jaaaph ASona 525 

UoydeBartc ^026 

Maghrej Bank Lid 625 

MdendBer*..— — 523 

•MufBaAg 6 

WNRsBert— 625 

•HMBrthare 525 


* Hafeaghe G ua ra n tee 

Carpofetan Unfed 1* r» 
tatgariuihcriGsaaa 
abertfegfertABm. 6 
RoyteBkef SoaSand- 526 
•Smkn &Mhm Sacs . 625 
Standard Chartered — . 526 

TBS — 623 

•UhflatfSfcafMiwat-. 326 
Urty That Bank Pte- 625 

WMamThot 525 

WhtawwLMdbw — 52s 
Yoriart* aarft 525 

* Mambera M BrMati 

Marahont Banking A 
Securities Homes 

A R nrW o n 

* biefeMBdon 


area ' w «T 


Money Market 
Trust Funds 


M css hot 


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Bank Accounts 


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2 JB 1 392 are 

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MS 449 Mb 
1.13 1J1 Ml 

150 302 Ml 

ISB Z27 mt 
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OMredtea Btaftedta Setata tee 

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etauuo-czetaB -| xre ua | us re 

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n Bar 3B0. Sutasradfe U«o 

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Seta or Mbta ptato ta totaa tor todufei to 
fetaife tocaatofetea- ore tom rau n-reaeo ■ 
■tor aanurta w— a to area* -u rt— are 
—AWto. tin— ta tota «*»*. tot Cr rtaoaay 
at — an htonto to eadbd to Bw —to 


irifiirirfiriffirififuriiiiiifiiimiiiiiiiiiifiiifK 

Temple Court 
Mortgages (No. 1) PLC 

£175,000,000 

Mortgage Backed Floating Rate Notes 2029 

The rate of in certs* foe the period 25 th April, 1994 to 29 th July, 1594 
has been fixed at 5-SO per cent, per annum. Coupon No. 18 -will 
therefore be payable on 25*h jufy, 1954 ar £137.12 pax coupco. 

S.G. Warburg 6c Co. Ltd. 

Agent Bank 

iniiiimiimiHimiimiiiiiiiinmiiimiiiiiiii 


j When you 
l are trading 
l futures on 
j your own, 
j information 
l isawry 
j valuable 
l commodity. 


■ ttfanflben«riflgftitoK8Uates 

I since 1965-ao ne know tehat kind of 

fafandiosaay need. Aadtn taw ifiOfltatpjniiiittc 


— -- — f 

Tomectttaden'naada tenaihet | 

md trading strategy infcomtkm, _ 

we cresiied ocr IntraAccotmt tisifing I 

tit - free to all aw omoniers. Yoa _ 

getCooBDOiiajflta^peetheotaft^^ I 

mbaoiiitiaii to Futures msguine, and 
trsdtiggaUe&iea Hist can he^ytn I 

becomes non succesHthibnlaL " 

Yoo^obswcaS^m access to I 

ODreaEhvhBtglqibnB'taasn,* a 

with daflyrawfatanriyjH and I 

tratfingreoonnoidattaBfiaaa a 

taptedmzmtvaor. I 

feneettmtas’imedslorinfiKBBtaii . 

shoot the types a! arden aad bow g 

to ptace then, we wrote ■Order Place- m 

rami Matte Ba^,* a stap^y-atap | 

guide to tha process. And we nde _ 

nre the prafeastaslafn our Trade | 

Ccartze staff jatmte the odfasnatiaB 
and taJpttara right ibr jon -fern I 

‘waking Ton thnn^f taw to ptacon ' " 


I estoMhhrffteniJstconpreiwaK trading onyoar own- phis 80-7W « 

pm^aHtinttoiahutrytonata ctfeadsaKft ssrags. iant it hroeyou | 

■ snrattargttiL UwkactoMJockrtLtaHWdocH - - - 


0800-262472(m.) a 

Ooaldetfea&.caBtBUrehrWw.-R 

Baxter 9J8-1W4H .--re 

Ocnmny: 913M181B6 . | 


8041-7H5 


RansMqkM«ittteMhQBinfcaf KdwtaitaMaMte ■ 

tw / B ^ r ** °^ * 1 otf teaned«14f74»2,n«wehaqta I 

IVIQMlIBRAfMnWBflEfeferswytiB. Ffec 071-3474471 ^ 

aaitwireggtotareifereB raai . Mwwiwi. c««c -UMWt.fefiMt - y 'l 
Lg ^mLDOCK ae COWFATiY| 


> r 


A -v- 


}f -> ■»> . •• 

* * 

* ■. ■ Mr 




" ■ - 

■fo a 


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v * 'C. 

I ' 

1- V > ■ 









37 



r^< 


LM 


\£& 


FINANCIAL TIMES WEDNESDAY MAY 4 1994 


WORLD STOCK MARKETS 


»<- IW law TM Iff 




W Ht 




law W WE 


>/» IW 


I— *M HE 


.EUROPE ' 

AUSIHAfftof 3/Sdl) 


158 +UB WJQ13U0 — — IftllMI nWUMwS/ffcJ 
1,27® +614891,150 08 — GGSBr 

-«BJ0OM»O,7 — _* . wi 7370 61.60 4.7 _ SMHBr 

+-» a»2waj»= - {££2* goS +!iomaa»oJoM - »«j*» 

" JSSfl 4870 +.B 0 BM 04 M 0 -- - 


Poster 

QWbat 


UNO 

1«8 


W 

*"*■ *K?5 

BOO ~ 

248 -4J0 

Data 18080 +2J» 


11000 



618 54S25I 
274107.10 08 

wraiOM 


£ABon 

BIN 

Umra 

Otar 

PuShl 


3*708. 

U442 

m 

MS 

s 

S 

3590 


~ 5SK w» i j« ijw S 

" 3 Ii 5 .fi" = 3 SS* 


*1848003490 i. 

^41,mi408 18 
+« 15871,050 14 
+n IflTI BOO U 
*101480 U38 2.1 
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— 261 171 14 

*4 400 32B U 
-1 7H B16 24 
-1 000 480 14 
*54440 3408 OS 


•aflBwu«HB0DBfl(piiay3/nfc) 


ziguli = 


437 *40 578 403 4.1 

— P Mfl 490 +5 635 440 BS 

— Peony mio -mo zMmiois 

— Prrffc 390 -24020 373 8J 

— Past • A1B *7 M 7M1i 

~ 1J037 +221.M8 SOI _ 

— Promt! Ijoao -201. IN 1400 8.7 
S57 -IS 60**110 _ 
821 ♦eijIffiS Mill 

1B8 +140 1^7.40 «sa 13 

91? 670 9*5 MB 85 

IKS ^ ^^^ 83:1 

sifsus i j48 ^junoiszne 
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fiotatt 466 610 

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R 


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„ nm 18440 +140 IBS 

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346 —2 386 344 14 

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STMAMnAI- TIMES WEDNESDAY MAY 4 1994 


4 pm dose May 3 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


tSglMter Stack 
17% UlgMR* 


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6$ 5% AMP Grp 016 36 B ST 54 54 S% +4 

saisVAdwtaB aio 06120 Si is i?V >8 +% 

574 (Senegal MR 1.23 26 11 43 53 524 M4 +4 

654 4 AMI 175 52 9 24S 34 82% §3% +1% 

31$ 254 Aft* 048 1.5 13 1029 314 31 314 +4 

204 ift Ahmnsn (LBS 40 12 881 18% 18% Ills *4 

4 1 % Afleen he 1 18 24 24 24 +4 

40$ 424AKW OS 21 03121 43% 42$ irf -4 

33% 31%A»nelVt 030 03 21 677 364 364 9% *4 

26 13$ AtnaetK 33 4T4 224 274 224 +V 


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724 524 AM 301883 604 3*4 “4 

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134 nHucgMein a 6 12% iz% U% *4 

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124 104 MM Orth* 1.09100 4S5 114 J1 J* "4 

104 7%«IM»* 060 9.4 B ft A ft tl* 

104 ftMMMte 066 11.1 M ft ft ft 

4MKQR5SX fJOB 11-1 1078 94 94 ft -4 

kACMMtt* 168106 80 94 94 ft 

SMBUmalk 072 86 4T1 «4 84 84 +4 

ktaanCftx 044 3.1 17 793 144 13$ 144 -4 

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1B9ES 244 23$ 2<4 -H 


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30% 25% Aten 1 044 16 233972 284 274 27% ■% 

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49% *m 160 1.9 ISO 838 524 52% 524 ft 

30% a4AWBm«* ILGO 12 4 115 Z7% 27 26% -4 

22% 14% AMxAl 160 76 2B 1179 14% H14% 14% -4 

24$ 17Alt&lad a 48 15 17 1007 19% 18% 19 •% 

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4% 2% Anon B 53 24 24 24 ft 


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020 14 1814 14% 14% 14% 

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028 14 14 207 1ft 19 1ft 

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030 1.4 38 3512 22% 21% 2t% ft 
160 1.9 131B 838 524 52% 524 ft 


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184 13% Aim Cat 
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29% 34 AM CIS 088 36 IB 1776 36% 26% 28% +% 

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8% fttautiti 008 1.1 5 187 7 6% 7 

25% 2lAncastM 048 21 16 S 23% 234 23% 

51% UAlNttfc 080 16 20 2221 50% 40% 40% ft 

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31 20% Am &mk* Old OA 30 3710 22% 22% 22% ft 

35% 29V AmSmd ZOO 56 10 2688 34 334 33% 


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278 *£ 29 5538 91% ED 
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165 63 6 9 19% 19% 

080 29 11 758 20% 204 
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260 76 10 38 37% 38% 
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1.48 03 18 19 154 15% 

18 151 25% 2ft 
160 21 18 3795 564 55% 
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1.40 7.8 23 441 18% 17% 


5!4 -4 
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20% 17% An CW Bd 164 OB3T 55 (8% 18% 18 ft 

23% 19% Am Cap CV I.OB S3 0 23 20% 30% 20% -% 

50% 42% AnQrol 1.85 17 28 7871 49% 49 49% ft 

37% 30 AmBPw 240 7.4 16 5031 32% 32% 33% ft 

33% 2e%An&p- 160 14 1210235 30% 29% 29% -b 

29%24%An6ml 1.18 4 4 22 2546 26% 25% 26% ft 

9% TArntaltm* 077102 102 7% 7% 7% ft 
Z7% 2ft AfnHtilPrx 2.30 B.9 9 241 26% 254 25% ft 


20% 17% Afl Cap 0D 164 06 31 53 
23% 19% Am Cap CV i.OB S3 0 22 
50% 42% AnCren 1.85 17 28 7871 
37% 30AmBPw 240 7.4 16 5031 
33% 2e%An&si- 160 14 12)0235 
29% 24% An6oti 1.18 44 22 2546 
9% 7 Mil Gait m x 077 106 102 

Z7% 24l 2 AnWlPrx 230 B.9 9 241 


20% 17 An (MOB 066 IS 10 24 174 17% 17% 
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6ft STfOHOm 232 4.9 IZ 6600 M3% BO 59% 

2% Z% Am Hoots 0.7531.6 8 54 2% 2% 2% ft 

83% B1% Aidnti 040 05 14 3733 85% 84% 84% ft 


11% B% An Opp hex 1.00 116 
27% 23% Anftan 068 13 


216 9% 9 9% 
485 26% 26 26% 


34 ISMPlKdl 040 26 7 1244 20% 194 20 ft 

8% 7% AmRffllEa 044 17 5 32 74 74 74 

27% 21ABSW 048 10 71283 24% 244 25 ft 

22% 18 An vnr 96 x 1.25 03 noo 194 194 194 

32% 27% An UMr 1.08 18 12 117 23 284 !H4 ft 

43% 36% Amtdi 102 SO 13 5000 39% 384 384 ft 

43% 35% Ameren me i 128 14 S 16 37% 37% 37% 

14 11% Ames* 024 1.7142 608 U14% 13% 14% ft 

574 50% Ann 120 18 15 5838 56% *5 56 ft 

94 lAnvxm 010 10 fi 24 84 8% 8% ft 

4% 3% Ann Inc 0.12 12 17 198 3% 3% 34 ft 

324 29%Amouttl 1.40 40 10 483 31 304 31% ft 

4% 3%tamanp 15 984 4 3% 4% ft 

57% 42% Andvfca 030 05 78 3520 56 S 55% ft 

31% 23% Analog 27 250 28% Z7% 27% ft 

294 24% Anpflfca 094 17 a 52 Z5% 25% 25% 

54%47%AAKhx 1.44 17 24 2724 53% S3 53% ft 

264 25% ANRPpePT 267103 7100 26 28 2E 

3* 24% Artnam 17 154 25 24% 25% 

18% 144 Animy ki 044 20 15 Z100 IS 15 15 

52% 45 AO Dpi 102 40 10 402 45% 45% iS% ft 

29 22% ApKiaOp 028 1.1 371083 Z7 26% 26% ft 

10% 9% AnaxHuoF 073 70 172 10 10 10 ft 


4% 3% Ann Inc 

324 29% tevoutti 

4% 3% Anaaanp 
57% 42%tetevfca 
31% 23% Analog 
294 24%AWM 
54% 47%teBKhx 


'% 5 
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3i% *h 
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35% 28 ca 

3234 2B9C8S 
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25 204 CMS Eh 
82% 62% CNAFn 
50»2 45% CPC 
17% 14 CH Cop 

92% 76% CSX 
25% 19% CIS COp 
24% 18% CatBe&WIn 
ib% 9*4 CaMaoai 
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154 il%Csvn(bi 
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25% iftCdamCo 

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725 603C*0CB 


046 1.6 28 *77 30% 28% 30 ft 

2 X 07 14 34730ft 29B 300 -14 

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072 33 11 333 22% 22% 22% ft 

14 125 63% 63% 63% 

1.36 19 16 2332 46% 47% 47% ft 

058 39 IS 151 14% 14% 14% ft 

1.78 13 21 3356 7S4d74% 70 ft 

040 10 19 21 244 24% 24% 

029 1.5 18 938 20% 194 19% -4 

26 683106% 105 105 -l4 

1.0* 11 25 3282 51 050% 50% -1 

016 0.7226 641 S% 22% 22% ft 

718 907 14% 14% 14% 

II 3755 45 44 44% ft 

020100 S 36 2 02 2 

016 1J 26 SOI 13 12% 12% ft 

17 169 17% 17 17% 

01240 10% 10% 1ft 

0*0 10 57 7B 20% 20 20% ft 

1.12 18 16 1706 3ft 38% 3ft *1 

032 20226 2700 16% 15% is£ ft 


SIS 


38% 29% CepHti 
144 12% CpM 1-26 
37% 24% Capsid 10 
42% 254 Canatt Mge 
22% 15% earmark 
35% 30% CaiOo 
19% 16% CannOt CS 
if % Canto Pc 
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30 244CBPSL 


020 QO 25 394 d736 712 736+20% 


080 27 91859 2ft 029% 
126 OB 245 12% 124 


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1.60 6,4 19 254 25 25 

13211.9 7 338 2ft 274 27% ft 
17 5335 18% 174 1B%+1% 
072 12 18 35 33% 32% 33% +% 
12 82 10% 10% 18% 

0 19 % ft % ft 


020 10 11 264 114 11% 
1.70 65 12 2135 26% 25% 


6ft 56%QMlTx 
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18% 1ft CncdaRG 


7% 5 AppH Mag 

22% 16% ApdP» A 


18% 14% AM 3O210BU)8% 17$ 17% ft 

7% 5 AppH Mag 1 ISO 5% 5% 5% , 

22% 16%teDlP*A 012 00 33 B3 21 20% 20% ft 

27%22%AOOia O10 04 163481 22% 22% 22% ft 

50% 43% Aim Qwni x 250 S5 20 164 46% 45% 454 ft 

9 ftAMa 0 28 25 219* ft 8% 0% 

40 3SANIPI 300 8.4 flOD 354 354 354 ft 

51% 47A111004SP 400 02 4 49 48% 48 +% 

6% 4% Anan 11612 4% 44 4% +% 

29 23% Anns ZIP 110 8.7 5 24% 24% 24% 

57% 4ft AnaaWx 128 23 42 491 98% S% 55% ft 

45% 33% tew* Qm 15 376 37% 364 37 -% 

74 ftAAaGh) 2 15 ft 5% 5% ft 

334 2ftAntiM 076 20 14 333 264 U26 26% ft 

27% 21% Amen OW 10 75 7H5 24% 24% 24% ft 

31% 27 ASMS Coal 0.40 1.4 11 81 2B 27% 28+4 

44% 34AOAM 1.00 15 14 20B7 *0% 39% 39% +4 

25% IftAgtaPacP 027 1.4 31 18% 10% 184 

2% 1% Asset mw 020 07 1 1287 u3 2% 3 +% 


7% Cash Amer 
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140 40 14 85 5ft 58% 9ft +1% 

035 1.4 37 2255 24% 224 23 -4 

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005 00 17 250 8 8 84 +4 

060 05 16 3107 1124 110% 112% +1% 
38 475U144 14 14% +4 

200 50 12 110 34% 34% 33% ft 

080 70 1 124S T1% 11 11 

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206 7.1 10 66 2B% 2ft 2ft 

1.46 59 13 93 25% 3*% 24% ft 

090 7.4 7 404 124 12% 12% -4 

048 1.7 23 455 28% Z74 284 +4 

1.42 7.7 11 34 18% 1ft 18% +% 

1.70 7.0 15 4339 24% 24% 24% +70 

032 U 18 S54 25% 25% 25% +% 


i 10%GO*Bl 
26% Oentn 


0% lift +1 J 
4% 3§ ft 


334 2ft Anti hd 
27% 21% Amen 
314 27 Adda Coal 

44% 34 Add 

25% 16% AataPacP 
2% 1% Asset fenr 
3ft 31% AsaWtflas 
57% 40% AT&T 
263% 228% AO RWl 2 
38% 34 Attn Baa 

94 64 ABnaSoa 
21% 1ft A&HcQn 
112% 92%AMdi 
10 4% Adas 


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24% 24% 
27% 26 


55% ft 
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26% ft 
24% ft 
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454 2B40ertm 
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25% 21% CertLndx 
15 11% Cam Mati 
29 24%CartrN«np 
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30% 234 CadSWa 
27% 21% Camay 11 
24% 18% Carton 
38 280*14*1 

124 ftQaparadx 
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50% 49% OeseMPF 


29 2ft 

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102 16 16605 52% 524 52% 

280 10 zlOO 227 227 227 
208 SB 15 62 3ft 354 354 
are 40 7 2 7 7 7 

104 7.4 11 407 21% 20% 20% 
550 S7 58 3397 BB% 98 96% 
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394 -ft 
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36% 30% CWXM x 

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12% llOtenBkC 
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19% 114 0*» 

84 64 DuckRil 
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17% iftltapuaC 32 4290 15% 14$ 15% 

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29$ T7%IUaymF 002 (LI 1B3 23% 23% 23% 

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002 05 W 157 25! 
106 SI 12 2883 IT 
128 SB 10 TUI 22 
106 77 TO 10150 261 
118 60 «9 5912 31’ 
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134 1208 ft 5% 

100 23 323044 43% <2% 

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102 £4 11 1638 2B% 27$ 


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090 10 10 778 44$ 44% 

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107 80 11 1019 24% 24% 
300 62 12 065 48% 48 

100 02 12 710 a$ 2ft 
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10 183 4% dft - 4$ 

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8% 7%MamtePt 008 SB 35 
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17&TMVMteaMs 1.18 07100 2 

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020 00 21 820 25$ 25% 28 
108 £1 29117a sab B0% I 
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400 SO J20 64 d94 54 

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1.12 S0 31 4341 31% 31% 3t 
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032 10 21 5 23$ 23% 23% 

120 74 7 23% 23% 23% +% 

200 80 5 31% 31% 31% 

are 21 5 h *4% ift ift +% 

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1.40 10 12 827 118% 118$ lift -1% 


27$ 25% nonius 012 SI 4 2 

14$ lonoaaar A 013 10 5 481 11 


010 10 14 1278 6$ ft ' ft 
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008 07 9 18 8$ 8% 8% 

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015 10 5 481 10$ 10% 11% 


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13 ftnqtorB 11 22 8%®% c 

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§ 15% Ago RlXl 25 812 1ft 19 II 

29b PM 020 12 21 1010 32% » 

25$ FIcyMn 12 463 31% 30% 30 

42V 37% Niton OW 10 43 614 42% 41$ 41 


73S2%UctamH 202 162B2 1015 65 64b 

BB* 2 52*2 lacKasn 108 04 19 550 BA 

40% 39% MaariCp x 100 20 a 1480 4ft 42% 

20*2 17$ Mmsrax 044 04 30 554 18% 18% 

25% 2Z%MaRaata 8 235 2ft 23 

35% 31%tettuetx 201 70 16 294 34% 34% 

B7% 68% tone 008 00 19 978 76 73$ 

38% ZftMrtUaatap 05D 10a S27 25% 2ft 

28$ 2B$MtoiadtX06O 07 57 2B$ d2ft 

5ft 52% UcfeSkX 224 40 12 2041 56$ 56 

41% 35$ MeMax 30 13 2311 41 38$ 

10$ iftUueta 096 00 15 1ft 7ft 

41% SftHaca 102 07 16 916 37$ 36$ 

38 2B%Mate 1J2 37 1622205 3l§ 30% 


a ^ 

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SI St 


32%23%npa&Tttx 078 01 13 623 25 
14% 1ft Portae tac - 12 225 Bi 4 


1ft 14$ Mensy A 000 10 31 2528 16 
45% 38$ MnBi 072 1.7 25 a 43 


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4$ ZMBiyem OK 05 21073 2% 
ft 5% Mesa 2 729 ft 

3 $ 2$MBHUTatx owua 15 61 ft 


lift 9Maa*tK 
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17% 14% MOW 


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19$ 16% Ate 
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008 04 78 *3% 18% 

072 2B 20 1075 2S% 2ft 
MB SB 30 174 41 40$ 

106 01 11 307 Zft 23% 
OW 14 IB 7874 Tft 19% 
024 07 IS 94 32$ 32% 
1.12 1J 1* 398 7ft 75% 
040 10 20 2» 21% 21% 
26 83-14% U$ 


Z4% 24% 
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13% 13% 

sa 


40% 27$Pnta® ore 08 

14$ 7*3 MaH 026 32 


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104 02 74 4478 Sft 55$ 56% 
020 06 9 2009 31$ 31% 31$ 
026 32 11 700 6% 8% ' 

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300 04 2 S2 

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ft 2%Mektear 009 12275 05 2$ 
19% SVHMnltolOlB 03 30 487 8$ 


a* 


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27 lBMkagaAe 3S2Z7B 21 

22$T6%MUriBiA 048 04 24 W lab 
23% 17%MttMee 0S3 07 ZB IA 
7% 3IWCBP 142473 ft 

2B atOtadOA 008 08187 10 28% 

82V 72 UoW 340 40 15 8015 7ft 

20V iftttotacmr 13 « ft 

12% 9%MonMch 020 10 W 50 10% 
19%15%Mx*tai 018 1.111 9 18 

B3%72%Mrmte 252 11 20 2540 82 V 
10b ftMcrsato 079 82 2 407 9$ 
a$ 23%MB0tansA in 05 12 587 aft 
20% l7%MtaaSt 108 7.7 8 82 17$ 

20$ 17$ Mote Coni 004 £2 23 878 18% 


a** 


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i$ 40% toLf 104 05 11 16 42b 42% 42% 

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80 61% PtBmteM 4DB 70 1 81% K1% 31% 

Q2 92$nG«tr7W 7W 70 nm 94 - M 94 

BBOftPKanW 7.15 70 fl 0ri%dBft 91% 

OSS9$PDSart70 700 70 Z»0 100 100 100 

32 27%RAQ . 276 70 II 16SB 28$ 2ft Zft 

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$ 1%M83ar B 2 1% 1% 1% 

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%2*$Mta 02* dfl 8 633 27% Zft 26% 


102 B2VA6VV74I 
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103 00$ PDSart70 
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13% IIPtiSNaHM 
1$ 1% Mttakar 

2«$ 2ftPogatSx 
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3ft 24$ Ate - 


ZSV Zft 28% 
13$ 13% 13% 
1 % 1 % 1 % 
20(118% Tft 


11% 9%PteariBtt OJB 7.7 
10$ 0%PrtnHV«T 075 70 


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14% llVPlttntevflr OK 7.4 


H%PteB*N& OK 7.4 
ftPtdnemlfe a7B 70 
7%p«aixteate on SB 


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11$ S%4ttgaAw f.M1f4 17 1ft 
60 78%M"garf , Pf 500 02 10 81 

13% 12 Mvganl^pi 008 20 S 276 12% 
9 ftkbgmPr 68 31 6% 

80% Eftlhiptit 100 10 6 781 63% 
28$ 22% MenXrt on S4 2D « 2S$ 
111$ 7B% Itttnta 1.12 10 26 528 88 

E42%MlTBta 008 00 1224739 44$ 
% HMte&ta 0 17 % 

ft 7%MaMttx 083 SO 136 8 


28$ 22% Mantel 
111$ 7ft Kite 
55 42%M1rte 

% jSMV&ta 

ft 7%M*Ktex 
11 % ftMteMTi 
ft ftl krtteal 
13% IftMOBtartM* 
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1% 16% 1ft 
1$ 61% 61% 
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81 6ft 8ft 

saa 

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14% 12%QuatarS OW 09 
22 % 17Quapax 066 zr 
24% 21% QeattVMD 100 £2 
13% IZOaatfMP 100 90 
36% Zft Quaatar 1.10 04 

aft a*% uck my aw 10 


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075 70 79 9$ 9$ 

009 7.7 1508 7$ 7% 

OK 74 98 13% 13 

078 70 224 10% 10% 

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are ai in ft b% 

075 90 5Z7 7$ 7$ 

212 £3 14 731 84$ 64 

OW 09 27 144 13$ 13% 

066 07113 348 Zft 2ft 

100 50 164 23% 22$ 

100 B0 218 12% 12% 

1.10 04 ts ZOS 32$ 32% 

aw 10 7 IW 27 20$ 


10 10 % 
9$ 0$ 
7*2 7$ 
13 13 

’S ’?i 

8 % 8 % 


7$ 7$ 
64 84b 
13% 13% 


0J2 74 141 ft 8% ft 

005 7.1 130 ■ B ft 

0J7 7.1 41B 11 10$ 10$ 

100 80 2Z B23 44% 44 44 


are 10 is in m 2 


25% 15% MyttO toa 018 09 188588 19% 


44 WNBBBancpx 


a%S8%NCHCarp 
51% 45VWCCB 


32%taoCh 


42$ ftteMWl 

46%3ftHMAMtn 
28 24 Rlto 
23 16% ROBB 
7% 4$ MdEdUOt 
fi AHsErte 
3ft 58% PkriFirt 


17% 13% WHO 
17% l3%Wtttad 
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82 5ft HB San PI 
24$ 15$M9Htt 
23% 24$ taSar 
ft ftWltaa 
26 % ISVNgnB- 
54$ 5ftNtaMVS 
30$ 27% MBS SR 
18$ ISNttteaMv 
10 7%MMritEQ 
24% 20%mttt6lPwr 
B% 4%ttmAaM 
39 35% (fiogS 
13% ll%Nai>Btoq 
27% ZSbtaJvA 
24*9 2ft taPHBH 
3ft Sft reaeox 
43V 37% Nani 
17% I3 $NmS* 

50 37% NmdB 
48 37%RwnriM 
61 43 NfM Cttp 
100 SeNttHtoO 

g 42HttBKUx 
17%KIC*1* 
46% mm 


39 29%taB0tadx 
ft «$NLbd 
3ft 22*2 Hteertx 
7% 4$lM(hl 
74$ eVHWSx 
35$ 28%te*H)drx 
13% 7$Narttkkc 
1ft 12% Hi tag 


ire 18 13 111 48% 42$ 
in 10 14 41 60% 80% 
OK 10 41 305 53% 52 

an 20 16 2U1 34% 34 

072 20 7 6 Zft SB 

032 17 0 3657 12 11% 

104 30 11 3381 52% 62% 

255 05 16 138 3ft 88$ 

172 01 14 142 41$ 41$ 

f.lff 4.4 II HMS 28% 26b 

044 15 a 387 17$ 17% 

15 S22 6% 5 

6 noo % % 

154 50 13 78 X X 

IS 686 17% 16$ 
OW 17H2 9T78B17$ 17% 
in 44 17 16 43% 43% 
400 06 15 62% 8ft 

14 6522 28$ Wt 
106 4.1 17 221 2ft 3B% 

. 6 870 uft B% 

1 2291 19018*2 

90011-7 nOO 51% 81% 
TJZO 40 17 2X2 2S$ 2S% 
80S 10 27 99 18% 015 
21 110 ft 3% 
100 7.4 12 191 21$ 21% 
05411.1 52 4$ 4$ 

024 01 12 Z3B 37% 98$ 
012 00 910 13 12$ 

152 60 13 37 24% 24% 
102 SO 24 323 21$ 21% 
220 80 12 187 27 26$ 

072 10 19 1445 W 38% 
OW £7 42 69 18% 16% 
OW 01 38 395 4Q% Sft 
OW 10 38 18W 41% 4ft 

017 00 18 1052 . S4 Sft 
300 30 noo 98 re 

sre S4 noo w 43 
i.iz 80 10 an* 18 17 % 
on 10 12 109 94 50% 
144 40 13 446 31% 31*2 

are is 4 w ft 75 

018 08111 1942 SB 28$ 

9 IK filj $3m 
152 SM is tm 65% 83% 
046 10 941038 84 33% 

aio 1.1 10 35 8$ 8% 

ore 01 18 132 14% 14% 


11$ +*l 


B 8% RJRtti 
27$ SfSJCBp 
16 ftROCTetean 
4% 3%RPSRetox 
16% 13% Map 
48% K%RfeBte 

40$ 33%nqd» 

16$ 14$ AjtateF 
08$ 00b Rqtei 
47$ 3B$ naxm iO A 

18% 16%itoGMm- 


9229401 0*2 

006 05 9 81 32% 


35 Sft Repeat AH 
52V tftRnteNY 
23% 1ft FtazSr 
4$ 3 tame Co 

25 anyteW 
54% 40% RayoM 
21b 16$ Rtort’AOS 
sft 38$ ntotiPHar 


21% IBMIt 
36% 25b Hobart HH 
2ft 23%»cME 


018 *0-23 10 

002 80 61 35 ft 
2019 18% 
100 34 11 3188 35$ 
002 OBI 68 457 35b 
are 01 6 11 15$ 
1.40 03 12 10TB W$ 
140 80 18 1187 42 

m IS ft 
102 74 IS 24 17$ 
19 884 10% 
030 15 11 1073 30b 
14 2 ais 

are 80 62B05 ft 

073 02 IB 1103 UV 
102 20 9 608 48% 
re 84 1ft 

3 1606 qS*j 
004 10 B 254 n% 
in 03 11891 4ft 
103 110 10 18$ 

l.U 00 IT m 35$ 

an n nsssomb 


8% B% 

22% re 
ia 10 
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18 IS 
(CSV 35% 
36 36 

1ft 15% 


41% 41$ 
8 6 
17% 17$ 
(Bb 18% 


11*2 10% flOCtl TM 

ft BbAxteBOP 
44% 35% RettM 
7$ GbRadmUttm 
60 S3% MM 

11% ft Mg 
ft 4% BrittaBn 
30$ 28% Mm 

8 17 Atom. 

6$ to m 

10$ Mica W 
2ftFUxrad 
23 18% tank 

ift i£$ftneato 
St 24taCpx 
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27$ 35V AterS 
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13 

24% -% 


on ai is are mgb 
1 11 18% 
37 368 36$ 
V7B 70 12 223 2 

On 30 9 419022$ 
anil? 812K ft 
in 07 13 2878 17$ 
8 8 8 $ 
IW 04 33 BOB 58% 
11 2 8 $ 
aiO 12 38 2277 4% 

an 10 re iw 28 

020 1.1 16 77 17$ 
871830 7% 
.141 S3 87 2ft 

4.11 30 19 8270 107$ 
1.15 £1 21 12% 

048 1.7.191781 29% 
008 10 15 77 18$ 
080 44 22 44 13% 
OW 14 28 383 2ft 
17 27 1B$ 
OW 04 17 1849 M$ 

an &i 67 w re 


47$ 47$ 

« 

21% 21% 

ift ift 

a a 

15% 15% 

as 

22 % 22 % 


17% 17% 

aft aft 

107107% 

5§ § 


6S% -% 
34 +% 
8$ 

1«% 


28$ IftSAotaft ISA 7.1 13. 9 19% 19% 19% 

13 IftGGOHUBOp 009 3,1 6 11 11$ 11% 11% 

24% IftEFSig 108 £5 3 22 23 23 a 

14$ 13% SM» « 143104 9 5 13$ 13$ 13$ 

20$ TASotacad 000 1.1 16 1441 18 17$ 18 

34% Z2%8SN<rtiSe 16ai 085 34% 34% 


13$ 

18 +% 


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-jr - i^j^ANQAL TIME S WEDNESDAY MAY 4 1994 

NYSE COMPOSITE PRICES 


NASDAQ NATIONAL MARKET 


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MJ J5 o TO ?5 ^5 

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0.10 05 12 13« 22% a 21' 

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JW.M 12 7B *0% 40% 

8.1 10 8031 15% 11 



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29% 28% 

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30% 30% 

24% 2S +% 

26% 28% ft 
21 % 22 - 
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122 35 18 S37 31% 30% 31% 

122 45 8516 29% 29% 28% 

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050 24 17 88 22% 22% 22% 

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024 « 29 19 19% 19% W% 

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047 04120 95 55% 55% 

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050 28 S3 664 25%' » S 
180 88 10 13 1 r 
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40 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Wednesday May . 4 1994 



AMERICA 


EUROPE 


FT'SE Actuaries Share Indices 


US mixed on DSM up 3.3% as Amsterdam defies 
news of Kodak 
restructuring 



/ 


Wall Street 


US stocks were mixed yester- 
day morning, as news of 
Kodak's restructuring and a 
second big healthcare acquisi- 
tion provided a diversion from 
lingering concerns over inter- 
est rates, writes Frank 
McGurty in New York, 

By 1 pm. the Dow Jones 
Industrial Average was 4.16 
lower at 3,696.86, while the 
more broadly based Standard 
& Poor's 500 dipped 0.91 to 
452.11 In thin trading. 

In the secondary markets, 
the American SE composite 
was L24 better at 44L44, but 
the Nasdaq composite eased 
2.39 to 738.29. 

Stocks meandered in a nar- 
row range on either side of 
their opening levels during the 
morning. 

The day’s only fresh eco- 
nomic news - the leading indi- 
cators for March - came in a 
little higher than expected, but 
not enough to encourage any 
sustained buying and selling 
trend. 

The Commerce Department 
said the index, designed to pre- 
dict Euture economic trends, 
climbed 0.7 per cent against 
the Wall Street consensus fore- 
cast of 0.6 per cent The Febru- 
ary reading was revised to 
unchanged, from a 0.1 per cent 
decline. 

Developments in the bond 
market were not encouraging, 
as the 30-year benchmark gov- 
ernment issue slipped again. 
But trading was thin, with 
man y accounts remaining on 
the sidelines ahead Friday’s 
employment data for April, a 
keenly awaited barometer of 
economic strength and infla- 
tionary pressures. 

The overall mood in bonds 
and stocks was subdued, with 
the Federal Reserve’s next 
move to lift rates expected 
soon. 

Kodak, however, brought 


some cheer to what could have 
been a ratter dull market The 
stock climbed $2% to 846% 
after announcing that it would 
sell-off three non-core busi- 
nesses, including its Sterling 
Winthrop over-the-counter 
drug subsidiary. 

It was the second consecu- 
tive session driven by news of 
takeovers in the pharmaceuti- 
cals sector. On Monday, Roche 
Holding agreed to pay 85-3bn 
for struggling Syntax, sending 
the latter’s share price up 
sharply. 

Yesterday. United Health- 
care, one of the country’s big- 
gest health maintenance 
organisations, agreed to sell its 
drug-distribution business to 
Smi thKIin e Beecham fbr $2.3bn. 
in cash. The announcement 
pushed United Healthcare's 
stock $3 higher to $47’/*, while 
SmithKIine ADRs added 8% to 
$31'/.. 

Syntex led the NYSE's most 
active list, but it was trading 
just $'/« lower at $23%. 

Elsewhere, Value Health 
jumped $3% to S44‘/a after 
entering into an agreement 
with Pfizer to develop disease- 
management programmes and 
pursue other projects. Pfizer 
was unchanged at 861%. 

On the Nasdaq, technology 
stocks slipped Following the 
previous session's upturn. 
Wellfleet lost $3% to $74%. 
Microsoft shed $1% to 893% and 
Lotus Development dropped 
82% to $63%. 


Weakness in most senior 
bourses was offset by an intra- 
day peak in Brussels, and a 
further rise in Stockholm, 
writes Our Markets Staff. 

AMSTERDAM had some 
hopes of the general election, 
which was expected to result 
in a change of government but 
most investors concentrated on 
results from DSM which 
exceeded all expectations. The 
chemical group’s shares saw 
an all-time high of FI 148 dur- 
ing the session before dosing 
up F14.70, or 3.3 per cant at 
FI 145. 

The AEX index improved 
2.67 to 416.39. Attention turned 
to Philips, the electronics 
group, up 71 L60 to Fi 57.00 and 
due to announce its first quar- 
ter results today. Analysts 
were confidently expecting a 
strong rise in profits, helped by 
efforts to bring down the 
group’s debt level; Hoare 
Govett estimated a 52 per emit 
rise in earning s per share. 

FRANKFURT was unsettled 
by volatility in the bond mar- 
ket, and pulled back from Mon- 
day's highs by mounting con- 
cern about the impact of the 
weak dollar on exporters. 

The Dax index fell 16.36 to 


2,25129, and white it recovered 
more than 9 points in the post 
bourse, there were fears that 
currency worries could Weigh 
heavily again today. Turnover 
rose from DM7Jbn to DMSJ&n. 

On the session, exporters 
lost ground and sectors associ- 
ated with the domestic econ- 
omy, like utilities and con- 
struction, moved up instead. In 
chemicals, Hoechst led the way 
down with a fall of DM6 to 
DM354. Daimler dropped 
DMR5G to DMB97-50. 

Ms Hademarie HOppner, at 
B Metzler, said that worries 
about export pricing were rife. 
“Not many industrialists are 
thought to have hedged their 
dollar positions," she said, 
“and there could be some nasty 
surprises, especially if the situ- 
ation gets worse.” 

Meanwhile, Lufthansa rose 
DM5.80 to DM219.80; after 
hours the government called a 
news conference for today, on 
the long awaited privatisation 
of the flagship airline. 

PARIS concentrated most of 
the day's activity on Elf Sanofi, 
following news that it might 
acquire Rantman Kodak’s stake 
in Sterling Winthrop. as well 
as develop its pharmaceuticals 


May 3 
Huy ct wg a 


THE BJROPEAN SERIES 

open lojo luoo- 12m 1100 t*oo 1&00 ti«» 


Fr-SEEunbaeklOO 

FT-SEanlraek 2 l» 


148551 1463.77 146U6 146539 146180 K6S35 148659 14035 
147621 147XS7 1474.1* 147524 147538 1473J 1476.00 147107 


A* 2* 28 


Apr Z7 Apr » Apr 25 


FT-SE Embactc 100 
FT-SE Qmncft CM 
ftMUQogyiMOfc 


146X32 148838 . 147103 1464.12 1448.13 

t<7808 148435 143074 148081 148732 

no - Mom XO - ICUD iwM«; «6 - UBin » - VOZ2I 


strategy with flutter acquisi- 
tions. Sanofi lost FFr43 to 
FFr975, off a session low of 
FFr965 

The CAC40 index eased 7.24 
to 2,17839 in low turnover or 
FFiiam. 

By contrast Peugeot rose 
FFr7 to FFr915, helped by data 
which confirmed a rise in April 
car sales. 

Lafarge Copp6e, the building 
materials company, put on 
FFr6.00 to FFr465L50 as it con- 
firmed that it was selling Its 61 
per cent stake in Orsan, a bio- 
technology group, to 
T ate & Lyle of the UK. 

ZURICH came under 
renewed foreign selling pres- 
sure, the SMT fn flg g falling 9.3 
to 2.755.9. 

Roche certificates fell SFr30 
to SFr6,690 in response to its 


$5.3bn bid fbr Syntex, the US 
drugs group. Analysts, who 
noted that the bearers rose 
SFx230 to a year’s high of 
SFrl3,000, commented that 
much of the day’s buying of 
both issues was by one private 
Zurich 

Mr Mirko Sangtorgio at Bank 
Julius Baer said that the 
impact of the deal on Roche's 
future financial income was 
endear. He commented that in 
the short term, Roche appeared 
to have paid a high price in 
view of uncertainties about the 
value of Syntax’s new product 
range. But in the three- to five- 
year term, the impact of 
Roche’s distribution network 
and its management’s contri- 
bution to Syntax's business 
maria the deal look more posi- 
tive. 


Banks remained under pres- 
sure with UBS bearers down 
SFr24 at a -year’s low of 
SFrl,i56. The bank A »W« 
plamed to launch an ADR pro- 
gramme daring Ite summer in 

response to growing foreign 

ritwnand. x . 

MILAN was weak, the JfiDtei 
i wring falling 76 to 12,693. Gold- 
man Sachs, however, main- 
tained that a combination of 
typings momentum, strong 
retail inflows, further rate cuts 
and the possibility of equity- 
friendly policy surprises 
should boost the market over 
the next year. 

Fon diaria rose L1.031 or 6J8 

per cent to L1&24S on specula- 
tion that Mediobanca might 
use some of the cash from its 
forthcoming rights issue to 
raise its stake. Mediobanca fell 
LL072 to L17.697. 

Montedison foil L26 to LL545 
and Ferruoa lost L72 to L 2. 32 3 
in response to their announce- 
ments of heavier than expected 


MADRID read more threats 
of politically sensitive disclo- 
sures from the former civil 
guard chief, incorporated the 
losses racked up by the Ibex 
y pripy on other exchanges on 


Monday, and came bads from 
holiday with a fall “of 2 A per 
cent, the general index dosing 
7.87 lower at 3174& ’’ 

Once again, speculation. over- 
rode caution in thecas*’ of- 
Banesto, which hit PtaM35 
before closing at Ptal^SO, op- 
another Pta30 on the day. 

BRUSSELS, briefly; broke 
through its all .tinte high, .the 
Bel-20 Index touching - 1^44. w 
before it closed 17.40, aril per 
cent higher at 1,539.4k ; : - 

Interest ratesensitirostocks, 

w hich have lagged behind the 

market, were among the big- 
gest gainers. The utility, Eteo. 
trabel, climbed BFrl20 -to 
BFr6,320. 

STOCKHOLM recovered 
after -a shaky opening as debt 
market yields eased lafe-in the 
session and the market built 
expectations of strong corpo- 
rate earning s to coma. The 
AffarevSrlden index rose to 
ISA to L515-8. 

Astra A shares added SKis 
to SKrl65 while Electrolux, B 
rose SKrl5 to a year’s high of 
SKr423. 











Written and edited byWHHam 
Cochrane, John PHt and Mfchaul 
Morgan 


ASIA PACIFIC 


Bombay falls sharply as VSNL withdraws $lbn issue 


Canada 


Toronto was mixed in quiet 
midday trading which saw the 
TSE 300 index edge 0.52 higher 
to 4,282.85 in volume Of 32.24m 
shares. Seven of Toronto’s 14 
sub-indices were stronger, led 
by the pipelines group which 
rose 28.02 to 4,070.14. Weak 
groups included gold and sil- 
ver, down 68.16 to 9,301.28. and 
communications and media 
Which lost 13.32 to 9,223.51. 


Caracas recovers 6.8% 


Individual stories coloured 
trading in the region yester- 
day, white Tokyo was closed 
for the Golden Week holiday. It 
reopens on Friday. 

Following the sharp correc- 
tion in many of the region’s 
markets during the first quar- 
ter, Kleinwort Benson 
suggested that the worst 
appeared to be over. 

In their latest global strategy 
report the investment bankers 
argued that while the rest or 
the year would not be easy, 
valuations bad come down to 
“historically more acceptable 
levels”. 

They continued: “With a 
strengthening OECD recovery 
at their back, the Asian mar- 
kets can expect more upward 
earnings revisions over the 
next 12 to 34 months.” 

Klein worts selected Malaysia 
and Thailand as two of the 
region's markets worth buying, 
both being helped by export 
growth. 


BOMBAY fell sharply follow- 
ing the withdrawal of a 81bn 
Euroissue by VSNL, the conn- 
tty’s overseas telecommunica- 
tion group. 

The BSE index lost 47.21 to 
3,673.51, with VSNL down 
Rs220 at RsUOO. 

The Euroissue of GDRs was 
to have been priced yesterday, 
with indications of a range 
between Rsl,400 and Rsl.600 
per share. Brokers commented 
that the withdrawal would 
probably curtail similar issues 
which had been planned by a 
number of otter smaller Indian 

rampaniaa. 

HONG KONG fell 1.4 per 
cent, as a lack of riwnanri con- 
tinued to plague the market 
and any rebound was thou ght 
unlikely before the Japanese 
holiday was over. 

The H»ng Seng index fell 
120.57 to 8JS79.13, having been 
as much as 220 points lower in 
the afternoon before technical 
support emerged. 


Property stocks remained 
der pressure. SHE Properties 
fell 75 cents to HK84425, w hile 
Henderson Land was 50 cents 
down at HK837.25. 

AUSTRALIA lost a little 
ground but activity was 
described as fecWng direction 
in the absence of both the UK 
and Japanese markets. The AH 
Ordinaries index closed 3.7 
lower at 2,0444 in turnover of 
A8367HL 

In the media sector, News 
C-orp shed 9 cents to A89.49 
ahead of its release of earnings 
today. 

BHP lost 2 cents to AS16.90, 
although brokers commented 
that investors were generally 
unperturbed by reports that 
the group is to be sued for 
A84bn by villagers in Papua 
New Guinea who have alleged 
that the Ok Tedi river has been 
polluted by the company. 

KUALA LUMPUR was 
broadly lower, although shares 
of Golden Pharos were in 


riamanri aml ri rumours Of a 

takeover and asset injection. 
The composite index closed 
down 12.48 at 1JMSL02. 

Golden Pharos rose 70 cents 
to M89.65. A major shareholder 
sold its stake in the company 
last week, sparking speculation 
that a state government 
agency was the purchaser and 
planned to inject capital 

SEOUL edged lower hi spite 
of some institutional buying 
intere st in a number of blue 
chips. The composite index 
eased L71 to 917.55. 

Most Hyundai group shares 
went op on the news that the 
founder, Chong Ju-yung, had 
decided to leave the business 
for good. Many investors 
believed that this would help 
to ease relationships between 
the group and government, 
and that it could result in a 
resumption of financing. 

Both Hyundai Engineering 
and Construction and Hyundai 
Corp went limit up, gaining 


Wont, 600 and Won 1,000 to 
Won41,600 and Won25,900 
respectively. 

Samsung Electronics gained 
Won2,500 to Won85,500 and 
Goldstar Wonl.000 to 
Won28,70O after their financial 
statements detailed better than 
expected profits. 

MANILA saw heavy foreign 
buying which drove prices L8 
per cent higher. 

The composite index rose 
52 j 49 to 2^37.93, the first time 
since February that the index 
has peaked above 2£00. Vol- 
ume soared to 2.53bn shares 
from U2hn. 

PLOT led gainers, doting 80 
pesos higher at L850 pesos. 

San Miguel A shares gained 
another 2 pesos to 178 pesos as 
it nnnmmcnri that it had. Won 
permission to sell or redevelop 
its Hang Kong brewery. 

SINGAPORE was boosted by 
demand for a number of blue 
chips from institutional inves- 
tors, although overall senti- 


ment remained cautious. 


The Straits Times Industrials 
index advanced 14.37 to 

2^10.56. 


KARACHI was stronger on 
the last day of the account, 
with the KSE index adding 6.11 
to A38A96, supported by buy- 
ing of blue chips. 


NEW ZEALAND was slightly 
easier with only Fletcher Chal- 
lenge, among leading shares, 
reversing the trend with a gain 
of 4 cents to NZ$3.40. 


The NZSE-40 capital index 
Shed 2056 to 2,086.58. Turnover 
was NZ$31 .2m. 


COLOMBO sustained Its sec- 
ond successive record decline, 
bn political and economic 
uncertainty, the all share 
index losing 4&24 to 1,002.61 for 
a twoday loss of 8.7 per cent 


Venezuela 


Shares on the Caracas stock 
exchange climbed strongly 
after the central bank said that 
it was to hold an auction of 
dollars in an attempt to ease 
pressure on the bolivar. 

The Merinvest composite 
index rose 6.8 per cent to 
112.39, recovering all of Mon- 
day's losses. Electricidad de 
Caracas put on 34.50 bolivars 
to 310 bolivars. 

The currency has been under 
pressure since the resignation 
last week of the central bank 
president, Mrs Ruth de Krivoy, 
over a disagreement with the 
government regarding eco- 
nomic policy. 

Analysts have maintained 
that the country's financial 
markets will remain volatile 


until the central bank intro- 
duces measures designed to 
tackle inflation and the budget 
deficit. The government and 
central bank tried to calm the 
markets over the weekend 
with statements which ruled 
out immediate currency con- 
trols or devaluatiotL 


MARKETS IN P ERSP E CTIVE 


Mexico 


The stock market was easier in 
early trading after a rise in 
domestic interest rates at the 
weekly auction. The CPC index 
was off 20.54 or 1 per cent at 
2,210.19 in volume of 7.6m 
shares. Brokers now see 
short-term technical support at 
the 2,200 level. 

Interest rates on benchmark 
28-day treasury bills or Cetes 
were raised by 24 basis points 
to 16.® per cent. 


Profit-taking in S.Africa 


Equities were hit by a wave of 
profit-taking following impres- 
sive gains in the days leading 
up to last week's general elec- 
tion. The overall Index lost 71 
or L3 per cent to 5.291, indus- 
trials shed 31 to 6,384 and the 
gold index, lacking support 
from a fiat bullion price, fell 64 
or 3.2 per cent to 1,935. 

• The Johannesburg stock 
exchange yesterday announced 
proposals for an "evolution- 
ary”, rather than “Big Bang” 


approach towards deregula- 
tion, and also said that it 
wished to enhance its role for 
international investors. 

It added that foreign citizens 
should be allowed to become 
members provided certain cri- 
teria were met A foreign cor- 
poration which obtained mem- 
bership on the exchange would 
need to obtain local registra- 
tion as an external company so 
that it would be subject to 
local court jurisdiction. 


% donga In local uaim*, t 

wit" 

% donga 

hUMt 


1 VtMk 

4 RMta 

Tfar 

Stef of 
tm 

Stef W 
ISM 

tetri 

ISM 

Austria .. 

+0.16 

-2-06 

+32-86 

-7.48 

-534 

-2.88 

Belgium. . .. 

+1.45 

+3.61 

+22.11 

+063 

+4.07 

+6.68 

Denmark 

+258 

-0.42 

+31.92 

+2.94 

+4.98 

+7.59 

Finland 

+2,47 

+5.89 

+57.02 

+15.11 

+21.15 

+2410 

France 

+1.49 

+3.33 

+18.78 

-339 

-2.01 

+043 

Germany 

+1.01 

+4.69 

+33.49 

-1.49 

+0.73 

+324 

Ireland 

+0.99 

+3.70 

+23.96 

-025 

+1.76 

+439 

Italy 

+2.98 

+7.88 

+49.37 

+29.83 

+38j45 

+3933 

Netherlands 

-1.45 

+068 

+27.26 

-1.78 

+0.10 

+2.58 

Norway 

-0.47 

+038 

+28.83 

+4.48 

+066 

+831 

Spain _ 

+1.89 

+2J}0 

+28.65 

-1.75 

+1.501 

+4.02 

Sweden 

+1.30 

+096 

+35-84 

+330 

+10.47 

+1331 

Switzerland 

-1.65 

-1.59 

+31.04 

-559 

-2.80 

-038 

UK 

-0.24 

+1-27 

+1355 

-730 

-730 

-439 

EUROPE 

+038 

+2JBB 

+23.00 

-256 

-09? 

+135 

Australia 

+1.03 

+1.06 

+2043 

-4.73 

-239 

+0.14 

Hong Kong 

-2.07 

-2.18 

+32.18 

-25.11 

-2090 

-25.08 

Japan .... 

-0.79 

+2^2 

+0.66 

+1039 

+1834 

+21.29 

Malaysia 

-0.49 

+9.15 

+61.26 

-1757 

-1931 

-17.51 

New Zealand — 

+0.90 

+3.23 

+27.45 

-4-84 

-431 

-133 

Singapore 

+1.88 

+1Z92 

+37.81 

-8.74 

-7.86 

-5.57 

Canada 

+2.51 

-047 

+11.13 

-035 

-071 

-439 

USA . 

+0.74 

+1.17 

+2.58 

-334 

-539 

-334 

Mexico — 

+10.12 

-3.40 

+43.15 

-1036 

-1633 

-14.76 

South Africa 

+7.17 

+10.79 

+47.91 

+10.7B 

+034 

+2-73 

WORLD INDEX 

+030 

+1.95 

+081 

-019 

+136 

+058 


t Baaed on Apr! 29th Copyright, Tha FfemicU Tina LHM, Qattmn. Saete & Canard 


The euphoria surrounding 
South Africa's first all race 
elections propelled Johannes- 
burg higher last week, con- 
tinuing a rising trend seen 
this year as US funds have 
begun to flow into the market 
Analysts expect a measure 
of hesitancy in coming months 


as investors assess the new 
cabinet and the government's 
first budget 

In the medium term, good 
economic growth prospects 
and a view that the ANC will 
want to co-operate with busi- 
ness should prove positivefor 
the stock market 



FT -ACTUARIES WORLD INDICES 


Jointly compiled by The Financial Timas Lid. Goldman. Sachs 8 Co. and NatWesi Securities Lid in con j unction with the Institute of /fctuaries and the Faculty of Actuariea 
NATIONAL AND 


REGIONAL MARKETS 



M 

3NDAY H 

[AY 2 191 

14 




FTflDAY 

’ APRS. 2 

8 199* — 


DOI 

LLARINC 

1£X 

Hgves in parentheses 

US 

Day’s 

Pound 



Local 

Local 

Qrms 

US 

Pound 



Local 



Year 

show number of fines 

Oofar 

Change 

Sterfmo 

Yen 

DM 

Currency 

% chg 

On. 

Ocfiar 

Sterfng 

Yen 

OU Currency 52 week 52 weak 

ago 

of stock 

Index 

% 

Index 

fndex 

Index 

Index 

on day 

YMd 

Index 

Index 

index 

feidex 

Index 

HSh 

Low 

(approx) 

AustraSa (691 

165.32 

- 1.1 

161.41 

10836 

14133 

154.44 

-0.9 

055 

167.10 

163,39 

10720 

14325 

155.78 

189.15 

13018 

13730 

Austria (IT)..— — 

181.88 

13 

17737 

117.01 

156 03 

15507 

1.1 

1.00 

179.65 

17066 

116-25 

154.78 

164.11 

185.41 

13a S3 

142.10 

Belgium (42) 

174-02 

03 

169.90 

11105 

14938 

145-93 

OO 

075 

173.48 

1^-82 

11129 

14044 

14523 

17422 

14132 

148.52 

Canada (106) 

130.20 

03 

127.12 

83.76 

111.70 

13025 

OJ 

SR9 

129.83 

12094 

ffi 79 

11124 

12087 

14521 

121.46 

127.88 

Denmark f32J — 

266.49 

-02 

2S8 31 

17030 

227.75 

23300 

- 0,8 

1.02 

2^96 

280.05 

17082 

229.11 

235.17 

27X79 

20738 

21432 

Finland (221 . 

154.06 

0.7 

150.41 

99.11 

132.16 

172.32 

0.0 

007 

152-96 

149J36 

98.12 

131.77 

172.36 

156.72 

85.54 

3734 

France (98) 

179.01 

13 

174.77 

11S.16 

15356 

158.66 

oo 

2,m 

17072 

172.79 

113.37 

16224 

157.46 

10527 

14830 

181.81 

Germany ( 68 ) 

. — 147.07 

1.8 

143.99 

94.62 

126.17 

126.17 

1 3. 


144.78 

141^6 

to Wfl 

124.72 

12 4.72 

14737 

10739 

11021 

Honfl Kong (56). 

36020 

- 1.6 

351.68 

231.73 

309.01 

357.24 

-1.7 

238 

366.80 

358^5 

235.18 

31522 

36057 

60056 

271.42 

275.50 

Intel* i (14). 

134.07 

0-5 

189.48 

124.85 

166.49 

184.73 

00 

326 

190.15 

188.86 

12321 

16038 

184.73 

20923 

155.93 

16230 

Italy 160 ). 

99.03 

at 

93.70 

61.78 

8238 

113.65 

0.0 

1-52 

9SJ)1 

33.78 

61-53 

82.62 

11326 

96.03 

57.88 

67.12 

Japon (46®) 

156.41 

-00 

152.71 

10062 

134.18 

10062 

-as 

080 

15733 

154 32 

10125 

13007 

10125 

16521 

124.54 

145146 

Malaysia I9B) .. . 

48836 

0.1 

476.71 

314.11 

418.86 

503.46 

0.0 

1.35 

48756 

477.11 

31303 

42036 

503.46 

62123 

312 31 

321.79 

MeriCO(IB) 

— 2005 07 

-1.S 

1857.66 

128083 

1720.08 

7157^6 

-tjj 

070 

Z035J3 

1990.06 

1305.66 

176333 

727620 

264728 

1431.17 

148435 

Netherland (28) _ _ 

-204.11 

- 0.1 

19939 

13131 

176.11 

17146 

-OJS 

3^6 

204.25 

199.71 

131.03 

176.86 

17335 

207.43 

16330 

167.18 

New Zealand (14) 

88.16 

-07 

64,60 

4237 

56.76 

6085 

-00 

3.92 

66.60 

65.12 

42.72 

57.37 

0134 

7739 

48.43 

4833 

Norway (23) 

194.41 

- 1.0 

189.81 

13.07 

168.77 

188.70 

-1.5 

1.78 

198.36 

19159 

12526 

169.15 

19139 

206.42 

15061 

16171 

Singapore (44) — 

347.28 

Ol 

33935 

223.40 

29731 

24070 

aa 

1.62 

34706 

33954 

222.34 

2 SOS 8 

248.70 

37092 

23832 

24046 

Soutfi Africa (58? 

27539 

02 

Pt w ■to 

J7&97 

235.99 

277.18 

-Of 

ZZ 3 

274.45 

S6SJS 

176100 

236.43 

277.44 

28026 

17533 

T8EL31 

Span (42) 

144.02 

- 0.6 

140.61 

9235 

12355 

147.10 

-oo 

4J36 

1 44.95 

141.73 

02.96 

12427 

14024 

165.79 

11033 


Sweden (36) 

22633 

13 

22098 

145.61 

194.17 

25455 

1 J 

1^8 

222-32 

21738 

142-62 

19123 

251.76 

23022 

16335 

17137 

Swtooriand (48), 

18139 

15 

158-06 

104.16 

138.83 

140.75 

l.i 

1 ^ 

168-53 

155-BE 

102.34 

137.43 

13020 

17836 

12031 


United Kingdom (205) 

195.09 

0.1 

19047 

125.51 

16756 

19047 

OjO 

3.88 

194.81 

19047 

124.97 

167.82 

19047 

21436 

17032 

179.19 

USAS10).-. 

184.72 

03 

180.35 

118.84 

158.46 

184.72 

05 

2-88 

183.76 

179.67 

117^8 

158 DO 

183.76 

19004 

17835 

178.68 


17330 

00 

10930 

111^9 

14007 

I 01 J 8 

05 

206 

172L20 

16a37 

11047 

14034 

18084 

17838 

14138 

14049 

Nordic (113) 

21635 

13 

21133 

139.18 

185.60 

21034 

04 

1^5 

314.19 

20043 

137.40 

184D1 

212.43 

22020 

16532 

16164 

Pacific Basin (750) 

18435 

-09 

100-46 

105.73 

140.99 

11008 

-0.7 

1.09 

166.85 

182.17 

10040 

14228 

11131 

16080 

134.79 

14833 

Euro-Padfle (1473) 

18732 

-02 

16334 

106.03 

144.05 

130.32 

-02 

185 

16834 

164^8 

10729 

145.02 

130.03 

17078 

141.98 

14731 

North America (625) — „ 

,_181-33 

05 

17735 

11886 

15556 

180.95 

0.5 

2jB8 

18041 

17B.40 

115.73 

155.42 

100.03 

192.73 

175.67 

17146 

Eucpe Ex. UK (518).,,, 

157.47 

03 

153.74 

101.30 

135.08 

142.91 

as 

228 

156371 

152J4 

100.08 

134.40 

142.18 

157.47 

122.37 

126.33 

Pacific Ex. Japan OT1)._ 

242.77 

- 1.0 

237.03 

156.19 

20827 

221^85 

-0.3 

zm 

245-12 

239^7 

15724 

211.16 

22320 

28021 

181.46 

18137 

World 0 l US (165SI — 

169.02 

-02 

165.03 

106.74 

145.00 

13356 

-0 2 

1-86 

169.44 

1K.67 

10069 

14096 

13328 

17231 

142.84 


World Ex. UK f19<D) 

171.10 

an 

187.06 

11008 

146.78 

14058 

oo 

2.04 

171.09 

10728 

10075 

14736 

14533 

17538 

15022 


.World Ex. So. At (2116). 

172.00 

0.0 

168.62 

11134 

14007 

14063 

ao 


172-56 

lean 

11070 

14006 

14839 

17836 

16530 

157.76 

WUId Ex Japan (17UB) 184,17 

04 

17931 

118.48 

157-99 

17027 

03 

2.83 

183.40 

17032 

1172S 

157.99 

177.74 

195J0 

165.70 

16837 

The www w«x pi75).. 

17332 

% 

0.0 

169.13 

111.44 

148.60 

149.60 

0.0 

222 

173.18 

199.33 

111.10 

148.18 

148.58 

17087 

155.17 

15735 


Cnpyftfil. The Fktanctt Times Unfed Outturn facte and Co. and NuflVasl Securities Liritad. 1987 

Loans prime me unmofafafe for Ms nttfon- iteHMa cijiad Bdtfun. Miami. iMayaia. Stagapmo. Spam ptettg and fUXJ. tefcn price* m vMtt am to p a cte w a m Min i 


Our Sp 



ring 
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th 



For over a year now, Equity Focus has been presenting more information, from more 
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EQUITY FOCUS: THE COMPLETE PICTURE 






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FINANCIAL TIMES SURVEY 


S RESTRUCTURING OF EASTERN GERMANY 


Wednesday May 4 1994 


- . .7 

- ! aN n =7 
1 ' fiCt 


A s German ' nnffieation' 
approaches its fourth 
anniversary, the scope of 

ranges undergo* by the 

people of the former German 
democratic Bepublic is becom- 
ing increasingly apparent 
There are the changes appar- 
Mrtto west Germans and to 
. visitors as well as less notice- 
able but more deep-seated 
social, effects. The infrastruc- 
ture is improving before one's 
eyea, and. western-style retail- 
ing and services - department 
stores, pharmacies, petrol sta- 
tions and bakeries - have 
V spread across the land 

No less dramatic but less 
obvious is the social impact on 
: the 16m people, former citizens 
of the . German Democratic 
Republic, who now find them- 
. selves attached to the most 
, prosperous democracy in 
7 Europe.' Because of the swtft- 
' ness of the changes - ranging 
from the switch to the Deut- 
sche Mark and privatisation to 
. the arrival erf large scale imem- 
ployment - east Germans have 
had. little time to adjust and 
few opportunities to i*tflin>nre 
the changes. The fnftinf eupho- 
ria of unification has given 
way .to disorientation. 

The independent citizens* 
committees, which. grew up In 
Bast Germany during and in 
the wake of the peaceful revo- 
lution of autumn 1989. had 
hoped for greater consultation, 
particularly over the constitu- 
tional way in which, the unifi- 
cation would take place. 

.There were two options. 
There was Article 146 of the 
west German Basic Law .which 
provided that, in tha .case of 
unification, a new constitution 
would . be framed and . submit- 
ted to a popular vote. There 
was also Article 23, under 
which, the former German 
Democratic Republic would 
simply be slotted into the exist- 
ing constitution of the west 
German Federal Republic. . 
-The federal- government \ 
chose to-implement Article 23.- - 
rather than the more cumber- 
some ArtUSa 146. That meant 
imposing, on eastern Grnmany . ' 
the west German status , quo, , 
and the entire ■ complex of 
Bonn's laws. and regulations, 
instketions and proesdihns. . • 






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Positive signs - but still a long way to go 


stadt, a US .demographer, 
“eastern . Germany’s .adults 
have come as close to a tempo- 
rary -suspension of chSd-bear- 
ingas any large peculation in 
the buzsaiL- experience." In 
1892, for example, the birth 
rate had fallen by- 55 per cent 


There are indications that eastern Germany is slowly emerging from an economic 
trough, but for the 16m people of the region the initial euphoria of unification has 
given way to disorientation, reports Judy Dempsey 


. In tajoag-thm pafiv njgjortifc compared with 1989 when the 
]htles ^nebe%te^sd W^Krth^p- BertiTE. Wall was breached, 
ttqns <tf; <Samai^'-Sa -sresteb5U / pfflfed. tbs max^ 


the 

more diHegtftelhm.a^Bhera^ 
isation of the BCfflmmy' was 
interrupted. Bast Germans, 
already -familiar with mi all- 
present bureammacy, liad a : 
feehng of bring ‘'ookHtised" by 
the wgrtgnijerg. This parpetu- 
ated their- erase cf;-eiduriion. 
from: p riitical l daciston-maMMg 
and delayed fee establishment 
of it civiL sodriy. ; ’ ;. • • ;. . 

. Tfais^ sense of e x rJuaijon. cou- 
pled wath the. start of ono of 
the ■ most radical, privatisation 
‘programmes undertaken any- 
wh^e, trtforaatised east Ger- 
man. soriri; in two dramatic 
_vraystttp.bSith tateacse^ived 
and people turned fa cat them- 
srives. 

.According to Nhiolas Eber- 


had_ fallen, by 62. per 
caah And- compared with west 
.Gerimmyi^ : B»' hheihhood of an 
.east- German man aged 
/between 30 and 44 of dying 
from injuries or -suicide is ISO 
per cent '.higher fhan his west- 
rin Gennan counterpart 

These trends can be 
explained by the sudden pros- 
pect af wesnen hawing mo sta- 
tus but country where SO per 
/ cent of them had a job before 
unification; and equally the 
. prospect of a man having no 
perspective for the future. East 
- Germany’s unemployed, 
including people on govern- 
ment job creation, retraining 
' and_eariy retirement schemes, 
teprfcsent 37 -per cent of the 
worictog. population. 

These trends in turn have 


delayed the emergence of local 
political and social elites. Pro- 
fessor Jfirgen Kocka, who 
teaches modern history at Ber- 
lin’s PTOe University, says 
church membership is fa lling 
airi east Germans, imTTfrp west- 
erners, are not joining associa- 
tions or political parties. “They 
have completely withdrawn 
into themselves. Even the 
intellectual elite is not as 
active as it should be. There is 
a vacuum. I do not know how 
it is going to be filled/* 
Western Germany shares 
some responsibility tor this 
vacuum. Energetic officials, 
whose promotion prospects 
had slowed down or had been 
blocked in the west, seized the 
opportunity of moving east- 
wards to help transfer new 
political structures to the 
region. At the same time, thou- 
sands of east German academ- 
ics and fcar.her s, manager s g ri d 
scientists, had been sacked 


because of their alleged link s 
with the Stasi, or fanner east 
Gennan secret police, or 
because jobs no longer existed. 
This created an fmrmvtiate vac- 
uum on the local level The 
younger generation has not yet 
filled that vacuum, partly 
because the Stasi files remain 
open, making many people feel 
suspect; and partly because 
adapting to the economic 
upheaval is time consuming. 

I n spite of these traumatic 
effects of unification, the 
government lias bees able to 
maintain stability in eastern 
Germany largely through the 
massive transfers, which last 
year totalled DfiCL70bn. Over a 
third is spent on subsidising 
consumption in eastern Ger- 
many, whose collapsed econ- 
omy last year contributed no 
more than 9 per cent of the 
combined country’s total Gross 
Domestic Product 


Yet there are signs that east 
Germans are slowly recancil- 
ing themselves to the new sys- 
tem. The initial spending spree 
of 1990 and 1991 has given way 
to habits reminiscent of west 
German society of the 1960s 
and the early 1970s. 

In 1990, after monetary 
union, the level of east German 
households' financial assets 
was DM20.000 per household. 
After the consumer spending 
spree, private disposable per 
capita income in eastern Ger- 
many rose by 55.5 per cent 
between the second half of 1990 
and the first half of 1993. In 
real terms, this represented an 
increase of 17 per cent Boosted 
by west German transfers, the 
average income over the same 
period has reached 55 per cent 
of west Gennan levels. 

At the same time, the pro- 
pensity for east Gennan house- 
holds to save is similar to that 
of west Germans. According to 


the Bundesbank, savings last 
year took 13 per cent of their 
disposable income, compared 
with 14 per cent in western 
Germany, and the financial 
assets in eastern Germany 
totalled DMl90bn. or DM30,000 
per household. Ibis represents 
the average amount reached by 
west German households in 
the first half of ther 1970s. 

These developments suggest 
that east Germans, particularly 
those in work, are protecting 
themselves against future 
unemployment; adapting to the 
market, and west German hab- 
its; and are comparatively well 
off, taking into account the 
transfers which underpin these 
assets, and the conditions of 
former communist countries. 
These factors reinforce stabil- 
ity. 

But the zeal test facing the 
east Germans is at what point 
their economy will start produ- 
cing goods which can be com- 


petitive on the west German 
and international market. 

Much will depend on the 
level of west German and for- 
eign investment For the first 
time since nnWratinn, invest- 
ment per capita in the east 
exceeded the level in the west 
Economists argue that these 


a Poiftfca .ttio irirs confr* 
.dance l» grawtri&.tad aw* 
powor. a marketing 
' ntepfe- ■'■gag' ■ privatisation , 
benefits dfepiutod X.RAGIr8 

Cl GGrfttz, a<*vWedclty on 
thb Pafeh frontier; Invest- 
ment - ease study; 'Sail 
: juteatmteotraoics; the -ttner : 
tre.~'a dttSarant fife 
Sfgt Brother J>AGE9 

■ .* *f* jj 

Any sustained recovery, and 
a growth in competitiveness, 
will also depend on much 
higher levels of productivity. 
Productivity levels are on aver- 
age between 30 per cent and 40 
per cent of western levels, 
while wages are about 80 per 
cent of those in western Ger- 
many, and are set to match 
western Gennan levels by 1996. 
This niftanB tha t labour unit 
costs in the east are 70 per cent 
higher than in western Ger- 
many. 

To reach west German pro- 
ductivity levels, the govern- 
ment might have to tolerate 
even higher unemployment 
levels, (or even indirectly sub- 
sidise the newly privatised sec- 
tor through more tax breaks) 
while continuing to mamtem 
the current levels of transfers 
to support consumption and 
the unemployed. 

Over time, some of the 
unemployed slight be absorbed 
by the Bandwerk, or small 
crafts sector, the one area 
where east Germans are 


investment levels will have to^becoming economically 


be maintained for at least 
another five years to modern- 
ise the infrastructure and cre- 
ate a highly qualified labour 
force. They add that the more 
investments are targeted on 
the highest levels of technol- 
ogy, the greater the chance .of 
higher output and productiv- 
ity. 

The other positive trend is 
that production has finally 
risen faster than overall 
demand after stagnating out- 
put had been steadily outstrip- 
ped by a growth in demand 
fuelled by transfers from the 
west since 1990. Industrial 
orders also show signs of pick- 
ing up. But industrial produc- 
tion is still less than 40 per 
cent of its former level before 
unification. Recovery is com- 
ing from a very low base. 


engaged. Last year, more than 
lm people were employed in 
138,500 of these businesses, 20 
per cent more than the previ- 
ous year. 

But none of these trends 
indicate that eastern Germany 
is moving anywhere close to 
becoming a self-sustaining 
economy. What they do sug- 
gest is that the region is slowly 
coming out of the trough of the 
last three years; and that the 
small emerging entrepreneur- 
ial class may in time help fos- 
ter a new political class in east- 
ern Germany. Then, east 
Germans might be in a posi- 
tion to contribute to the long 
overdue political and economic 
debate in their country. But 
they will not be in a position to 
live without transfers for many 
years to come. 





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RESTRUCTURING OF EASTERN GERMANY 2 


The economy will need another five years of massive investment, writes Quentin Peel 

A slow climb from the abyss 


How the East German economy matches 
up to the West . 

fact fiwrtMfl levels an? shown as fl percentage of tfw westjgnnBMCTBfe 
19W 1992 1983 

T 24.7 21-6 - 21.1 


I n two crucial ways, 1933 
was a turning point for the 
east German economy. 

For the first time since Ger- 
man unification in October, 
1990, and indeed since eco- 
nomic and monetary union on 
July 1 that year, production 
rose faster than overall 
demand in the former Commu- 
nist territory. Up till then, 
stagnating output was steadily 
outstripped by a growth in 
demand fuelled by transfers 
from west Germany. 

Secondly, and possibly more 
significant still, investment per 
capita in the east for the first 
time exceeded the level in the 
west 

Both indicators suggest that 
at last, after a period of free 
fall, followed by prolonged 
stagnation, the east German 
economy is just beginning the 
process of catching up on the 
wealthy west 

The question is, can the pro- 
cess be sustained? And if it 
can, how long will It take? 

On the negative side, it is 
dear that east Germany is stm 
far from generating the profits 
it needs to finance its own 
indigenous investment process: 
the so-called wage quota - the 
amount of national income 
devoted to wages and salaries 
- is more than too per cent 
That means no profits are 
being generated, and all invest- 
ment is in effect financed by 
transfers from the west 
Those transfers held up 
remarkably well in 1933, but 
given the depth of the western 
recession, investment plans for 
1994/95 are in some doubt And 
just as east German industry is 
beaming to pick up. the reces- 
sion is also squeezing con- 
sumer spending in its most 
important market 
The divergence of the two 
German economies, east and 
west, was and is enormous. 
The collapse of the east Ger- 
man economy happened within 
weeks of monetary union. West 
German industry moved in 
rapidly to fill the vacuum. And 
the fear is that the former 
Communist state's entire 
industrial base has been wiped 
out in the process, leaving the 
so-called new federal states in 
danger of becoming an indus- 
trial and economic backwater, 
an eastern Mezzogiomo on the 
fringes of western Europe. 

The recovery of the eastern 
economy is still in the balance, 
but for the first time, positive 
signs of recovery are starting 
to multiply. 

Mr Udo Ludwig, chief econo- 
mist at the economic research 
institute in Halle - the first 
eastern institute to be set up 
since unification - sees the 
glass as half full. "We are in 
the middle of a recovery pro- 
cess borne by private and pub- 
lic investment,” he says. 

“They are installing modern 
productive capacity. It will 
amount to a real recovery 
when for the first time eastern 
products can supply most of 
eastern needs. And profits 
have to be big enough to pro- 
vide for refinancing. The pro- 
cess will take a generation." 

Mr Heiner F Lass beck, the 
chief economist at Berlin's eco- 
nomic research institute (DIW), 
tends to see the glass as half 
empty. "The catching up pro- 
cess has started in 1993, but it 
will be very difficult for east 
Germany to have a higher 
growth rate than west Ger- 
many over a prolonged 
period," he says. “At the best, 
they can expect to grow at the 
same rate, which means the 
chance of catching up is called 
into question. 

"It is much easier to make 
profits in the west than in the 
east 1 ” 

The hard-headed managers 
at Deutsche Bank have a rule 
of thumb for the survival pros- 
pects of new businesses: they 
call it the seven year rule. 

“Our investigations show 
that only after seven years can 
one say an enterprise is really 
established," says Mr Udo Vor- 


The City ofGoertitz 


The two faces of Germany; contrasts in 1988 


Population ........ 

Working population — — — — — 

Percentage n manufacturing 

Percentage In services 

Unemployment (mffions) - 

i abour 

Primary energy consumption per 

capita (tera-joiies} ^ _____ 

Motorway network, (kmsj - 

Registered private cars (mapons) „ 

Persons t r an sp orted by air fen 

bn passenger/kms ............ — _ 

Net income per household, per month 

hi Ostmark, DM 

Living space, sq.km per person 

Retafl sales in bn Ostmark, DM 

- foodstuff s , % 

- shoes, ctottring, % .... — - 

- other industrial goods, % . , 


l&fiam 

10.76m 

50% 

21 % 

0 

48% 


61.72m 

4090m 

40% 

38% 

2.19m 

100 % 


225$ 185$ 

lASSkms 8,61 8kms 
3.7m 2&9m 


2,083 4^68 

25 sqJon 35 sqJcm 
127 463 

28% 29% 

10% 14% 

35% 57% 


Souse: COW. Botin 


Financial transfers to East Germany (DM bn) 


A: Transfers to state and 
government .... 

-German Unity Fund .... 

- Aufechwung Ost programme — 

- Central govt spending 

- Redistribution of VAT receipts 

among federal states — 

- Transfers by federal states 

- Fiscal losses on tax 
allowances - 


Eh Transfers to social 
insurance tends: 

- Unemployment Insurance 

- Pension insurance 

- Total financial transfers — 


1991 

111.6 

1992 

124 A 

1993 

128X1 

35.0 

3&4 

352 

126 

12b 

- 

500 

S9£ 

743 

ia a 

71.5 

725 

2.0 

Z5 

3.0 

1:0 

25 

3 JO 


31 -B 

40 JO 

_ 

_ 

20 

132.1 

7502 

1706 


Manufacturing bdaz 


200 * ■•V m. * -wrtv **. 

• Production 


■ V ,v *»«• •«> « V eyvyrv 


125 - 


Orders 



50 1 .—V. • 

1990 91 92 93 94 
Sowcae flavL and private mShmm 


stius, a former manager in the 
western industrial heartland of 
the Ruhr, now transferred to 
run Deutsche Bank's 
operations in Halle, the east 
German equivalent. 

- XWe are nowhere near that 
point' here, especially as far as 
small businesses are con- 
cerned. It is clear that overall 
something is moving, but the 
nervous phase is far from 
over" 

The evidence of catching up 
comes in the latest report by 
three independent economic 
research institutes* for the 
Economics Ministry, on the 
overall process of adjustment 
in eastern Germany. 


T he index of manufactur- 
ing production slumped 
from a level of 100 in the 
second half of 1990 (already 
well below the level in the first 
half) to a low point of 61.8 by 
the second quarter of 1992. 
From the first quarter of 1991 
to the same quarter of 1993, it 
stayed around the same leveL 
Since then it has steadily 
recovered: to 67.7 in the second 
quarter of 1993, 72.7 by the 
third quarter, and 77.8 by the 
end of the year. 

In the same period, indus- 
trial orders have also picked 
up appreciably: by the last 
quarter of 1993 to 9L8 per cent 
of the level in the second half 
of 1990. The orders are coming 
overwhelmingly from the 
domestic economy, with much 
less buoyancy in export orders, 
where eastern enteiprises were 
overwhelmingly dependent on 


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Economically active popteation — 

Gross domestic product . — — — - 

Intern* demand .... — — 

Capital investment — - 

Capital in v e stmen t per capita— — 

Gross wages per employee 

Unit wage costs- : 

Disposable income per capita 


Source: Economics JUWsty 


The changing structure of production in 
the east German manufacturing sector 


1990 (2nd 
half), % 


1992 (2nd 

tm.% 


Manufacturing sector 


t'/i t J J 




m T ' 




Soucax Fedead Stst&tca omoa. OtW 


the east European and former 
Soviet markets. 

On tiie downside, industrial 
production is still less titan 49 
per cent of its former level 
before unification, so the 
recovery is coming from a very 
low base. Unemployment 
stands officially at 1.26m, or 
16.8 per cent of an already 
much reduced workforce, with- 
out taking into account several 
hundred thousand more on 
short-time working, job cre- 
ation srimmw and retraining. 
The overall number of econom- 
ically active people has 
dropped over the period from 
nearly 10m to under 6m. The 
rest, many of them women, 
have simply left the labour 
market in despair. 

The process of German unifi- 
cation has virtually turned the 
east German economy on its 
head. Not only has traditional 
industrial production col- 
lapsed. but the structure of 
east German industry and 
employment has been trans- 
formed as well. The process 
was one which many now 
believe was inevitable, yet 
which still took most observers 
in government and industry, as 
well as the professional econo- 
mists, by surprise whan it hap- 
pened. 

The initial collapse came 
immediately in the wake of 
monetary un ion: the exchange 
rate of one Ostmark for one 
D-Mark on July 1 meant an 
effective revaluation of more 
than 300 per cent for the cur- 
rency relevant for the eco- 
nomic area of the GDR. At the 
same time, the open border 
with west Germany meant that 
eastern producers were faced 
with free competition from 
cheaper, higher quality west- 
ern products. And eastern con- 
sumers showed an instant, and 
well-nigh blind preference for 
western products. 

At the same time, there was 
an end to measures supporting 
trade with the eastern bloc, in 
effect, a second revaluation 
shock. The net production 
index dropped by 40 per cent 
before November, and a fur- 
ther 30 per cent up to March, 
1991: from then until 1993, it 
stagnated at about one third of 
its pre-monetary union leveL 

liie effect was compounded 



OS refining .. 

Quanying i 

Iron and steel products 
Fonxfctes i — 

Structml metal products 

Mechanical engineering — 

Road vehicles 

Boctrical engineering 

Precteaon/ofXtteal testaments — 

Chemical products 

Office machinery — 

ft luti n g 

Leather p rocessing — 

Clotfling and textiles 

Food and beverages 


< 3 e jecte d sectors; dote source - Federal Statistics Office, DiW 


Citizens pause for reflection in the centre of Dresden 




by a wage explosion. In 1989, 
the average monthly salary of 
an employee in east Germany 
was just under DM1,200, or 
roughly one third of western 
salaries. Already, in the first 
half of 1990, unions and enter- 
prises agreed on wage 
increases of around 17 per 

ffpnt. 

The first round of collective 
wage negotiations in 1991 saw 
increases in negotiated wage 
contracts of around 60 per 
cent. The result was a dra- 
matic deterioration in east Ger- 
man unit wage costs in rela- 
tion to the west around 20 per 
cent higher than those in west 
Germany immediately after 
currency union, they rose in 
1991 to about 170 per cent of 


the western level because of 
the combined effects of the 
drop in production and the 
high wage increases. 


I f the west German govern- 
ment and its eastern agent, 
the Treuhand privatisation 
agency, had hoped to preserve 
and privatise much of the sup- 
posedly efficient east German 
economy, the uncompetitive- 
ness caused by those soaring 
unit wage costs put paid to it 
A more total collapse was 
only prevented by truly mas- 
sive transfers of cash from the 
west in the form of straight 
subsidies, instant infrastruc- 
ture spending programmes, 
and huge transfers of unem- 
ployment and social security 


benefits. Total flnanrial trans- 
fers rose from DMl32.Tbn Jm 
1991 to around DUffObn last 
year. 

The upheaval in east Ger- 
many has caused startling 
rfiHwgpg in its industrial struc- 
ture in a very short time. The 
capital goods manufacturing 
sector has shrunk from about 
half overall industrial produc- 
tion to no mare than two-fifths 
of the much lower outpnt lev- 
els. 

Mechanical engineering, 
which in 1990 provided 23.6 per 
emit of manufac turing output, 

was down to barely 11 per cent 
by the end of 1992. Electrical 
engineering was down from 
15.7 to 12.1 per cent, and other 
technologically leading sectors 


- such as precision and optical 
instruments, and data process- 
ing equipment - all saw their 
importance reduced sharply. 

In contrast, the growth sec- 
tors have been food and drinks 
(op bom 12.6 to 1 8 J pea- cent), 
anything to do with the con- 
struction industry, and ser- 
vices. Printing was the one 
industrial sector which was 
not affected by the initial col- 
lapse: the. demand for informa- 
tion remained constant ' 

“The competitive structure 
of east German industry h as 
still not crystallised," says Mr 
Ludwig. “It used to be domi- 
nated by cartel goods. Now it 
i$ a manufacturing sector dom- 
inated by the food Industry. 
That is' not the struct ure of a 
developed country. But nor is 
it the final point. There Is a lot 
of investment in vehicle manu- 
facturing and electrical engi- 
neering. There are small signs 
that ora- export industry Will 
recover.” 

There have also been huge 
changes in t he structure of 
enterprise size: today the domi- 
nant size of enterprise is 
between 100 and 500 employ- 
ees, in stark contrast to the 
huge kombmats which domi- 
nated communist industry. 

The greatest area of largely 


unknown and unmeasured 
activity is among the smallest 
enterprises, the Indigenous 
small businesses with fewer 
than 20 employees. “My guess 
is that they are already produc- 
ing 15 to 20 pa- cent of what is 
produced in the measured sec- 
tors of industry," says Mr Lud- 
wig. 

Neither Mr Ludwig nor Mr 
Flassbeck believes that the 
future for east Germany is as a 
service industry economy. 
“There are no special services 
east Germany can offer," Mr 
Flassbeck says. “Take banking, 
insurance and other financial 
services: they all depend on 
someone earning money from 
industry. 

“We don’t have the tourist 
attractions of a Switzerland. 
Our future depends on having 
a highly qualified labour force, 
and an outstanding infrastruc- 
ture. 

• “Recovery” depends on how 
long we will continue to be 
able to afford to pump in subsi- 
dies at tiie present rate. 1 think 
we need to keep up tins high 
Investment activity for another 
five or six years, at least But 
that means a huge amount of 
money, which many in the 
west do hot think they can 
afford." 


T he transition from com- 
mand economy to market 
economy in the east of 
Germany has been especially 
pronounced in the banking 
sector. Before unification 
there was no private sector 
banking industry at all - now 
the sector employs tens of 
thousands of people and pro- 
vides a level of service to the 
customer which Is more 
advanced than in the west 
“Before the wall came down 
customers came into their 
bank and got shouted at by the 
employees,” recalls Mr Peter 
Krakow, chairman of the Leip- 
zig Sparkasse, the biggest 
savings bank in the new fed- 
eral states. 

“There was no discretion 
whatsoever - and everybody 
else in the queue could listen 
in. People were profoundly 
suspicious of their hanks, see- 
ing them quite rightly as 
agents of the state. All this 
has changed.” 

As the bustling banking hall 
of the Leipzig Sparkasse 
shows, well turned-out 
employees now speak in 
respectful tones rather than 
harking out orders to terrified 
customers as If they were 
underlings. Those who do not 
want to stand in the queue can 
make use of an array of 
self-service machines in a sep- 
arate room. Here, as elsewhere 
in the new federal states, the 
level of technology on offer is 
more sophisticated than at 
hank branches in the banking 
metropolis of Frankfurt 
According to the Bonn-based 
Federation of German Banks, 
there are now just under 100 
private sector banks m the 
eastern states, with nearly 
1,300 branches as at the end of 
last year employing 21,000 
people. On top of that there 
are around 160 Sparkassen 
which employ 42,000 - twice 
as many people as before the 
waD eame down. Then there 
are tite T.frpdpghanbpn - public 
sector commercial banks - 
which save the new states in 
a series of complicated cross- 
shareholding and cooperation 
agreements with their western 
coun te rp a rts. 

This is a dramatic change 
from communist days when 
the banking sector was 
divided between the Staats- 
hank - the state-owned bank 
which was part of the machin- 
ery of the command economy 
- and the Sparkassen. While 




<-* _ -WgPV*^-- 








I I' A 1 

\ Rj. r" /. /.jr j * ^ 


era Germans who still domi- 
nate the top management posi- 
tions in the east-based banks. 
A poll conducted recently by 
the BDI Federal German 
industry association of 1000 
east German businesses 
yielded a multitude of com- 
plaints about the banks, who 
were accused of being too con- 
servative. 

On the . retail side, banks 
complain that they must pay 
higher deposit rates than in 
the west ami invest more time 
and effort in providing advice 
to customers. Part of this is 
due to the Sparkassen, which 
have adapted rapidly and vig- 
orously to capitalism with the 
help of partnership agree- 
ments with institutions in the 
west, with the result that they 
have managed to keep a mar- 
ket share of retail business 
higher than in the old federal 




Ptatw*: Toojr Andrew** 


Bank queues are shorter now. Above: shoppers hi QrhnrarieGlw Strassa, Leipzig rain- Tony, 

David Waller reports on the banking revolution 


Service with a smile 


Deutsche Bank and Dresdner 
Bank, the two biggest banks in 
the west, bought the old 
Staatsbank network, all other 
credit institutes have had to 
build up their branch net- 
works from scratch. 

By the ad of 1993, private 
sector banks had invested 
DM4.5bn in buildings and 
fixed assets alone, excluding 
further hundreds of millions 
spent on intangibles such as 
training. The Federation of 
German Banks says that 
banks plan to spend a further 
DMl.5-2bn expanding their 
branch networks over the 
course of this year and next 

The commitment of the pri- 
vate sector backs to the east 
has not been without prob- 
lems. unpopular In the west of 
Germany at the best of times, 
teaks are especially unpopu- 
lar in the east where economic 
recovery is taking far longer 
than politicians promised at 
the time of reunification. The 
resentment is that much 
greater as a result of the bank- 
ing sector’s record profitabil- 
ity last year and. more 
recently, the failure of big 


banks to foresee the collapse 
of the Jftrgen Schneider prop- 
erty empire which has put sev- 
eral thousand jobs to Leipzig 
at risk. 

Mr Eberhard Martini, chief 
executive of the Bavaria-based 
Hypo-Bank and outgoing 
chairman of the Federation of 
German Banks, complained in 
March that banks were por- 
trayed as “crisis-profiteers". 


Bank staff now speak 
in respectful tones rather 
than barking out orders 


He denied that the banks 
charged excessive fees in tbe 
east and, in an outspoken 
speech, he criticised Chancel- 
lor Helmut Kohl, Mrs Birgit 
Bread - chairman of tfceTren- 
band privatisation agency - as 
well as the press for the 
banks’ poor image in the east 
His outburst follows the 
long-running dispute over the 
scale and the form of banks’ 
commitment to the so-called 
Solidarity Pact While banks 
have agreed to commit hun- 


dreds of mllbona to east Ger- 
man Industry by means of 
direct participation in German 
Industry, Chancellor Kohl has 
complained that the “bank bil- 
lions" have not yet been forth- 
coming. As Martini said, the 
banks wU 1 only Invest ou nor- 
mal commercial criteria and in 
the east these criteria are diffi- 
cult to fnlBl. 

Therein lies the nob of 
banks’ problems in the east 
they are expected to fulfil a 
social role in the rebuilding of 
the new federal states while 
being obliged to shareholders 
to undertake only profitable 
business. Conditions in both 
commercial and retail hanking 
are difficult. As Mr Martin 
Eohlhaussen, chief executive 
of Commerzbank, explained 
recently, “the ride for commer- 
cial customer is higher in the 
east... we simply don’t have 
the credit information and the 
company history which nor- 
mally form the basis of a lend- 
ing decision." 

Not surprisingly, corporate 
customers complain about 
their treatment at the hands of 
the arrogant “wessts" or west- 


“The big western banks 
thought that they'd have it 
easy when they came here,” 
chuckles Krakow at the Leip- 
zig Sparkasse. “Of coarse we 
have lost customers and mar- 
ket share - but not on the 
scale that other h anks were 
expecting." 

The net result is that for 
many big commercial banks, 
the investment in the east has 
been substantial but as yet 
nnprofi table. 

Mr Hilmar Kopper, chief 
executive of the Deutsche 
Bank, said as the b ank 
announced record 1993 profits, 
the bank has invested DM4bn 
to date In the east and has yet 
to make a pfennig of profit. 
Mindful of the long-term 
opportunities, Mr Kopper said 
he was not comp laining about 
this_ 

_ Difficulties aside, institu- 
tions are using the east as a 
testing ground for new prod- 
ucts and services. 

The best example of this is 
the Hypo Service-Bank, a sub- 
sidiary of the Hypo-Bank 
which offers just nine basic 
retail hanking products com- 
pared with the 60 products on 
otter at a normal bank branch. 

As yet, this highly a atom- 
ised concept - designed to cat 
down on the costs of basic 
tanking services at the same 
time as increasing the speed 
and efficiency of cnc tn^ nur ser- 
vice - is only on offer in the 
east. It may be that this model 
will be copied throughout the 
western federal states. 




of 


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FINANCIAL Timitq WEDNESDAY MAY 4 1994 


III 


RESTRUCTURING OF EASTERN GERMANY 3 


Quentin Peel on the successes and failures of mass privatisation 

Sale of the century ends 




K ari-Hein? RUsberg looks 
U e a cross between a 
frantic foctory manager 
ana a slightly dotty professor, 
win a rumpled suit, laughing 
eyw, a shock of white hair 
# *" i " of a 

Probably the most suc- 
cessful single salesman in East 

Germany’s “sale of the cen- 

5*3^ » the wholesale disposal of 
the entire assets of the former 
communist state by the Treu- 
hand privatisation agency. 

Jt 3s a process which has 
artmsed furious passions both 
m favour and against it, and a 
truly extraordinary exercise 
which will leave the achieve- 
ments erf the Treuhand the sub- 
ject of agonised debate for 
years to come. 

• On the one hand, the agency 
has presided over the restruct- 
uring of a hopelessly uncom- 
petitive communist economy, 
involving the break-up and 
reorganisation of vast Indus- ' 
trial empires and agricultural 
estates. 

It has sold almost 13,500 sep- 
arate companies in rather less 
than four years, for net pro- 
ceeds of around DM30bn. By 
the end of 1994, when It is for- 
mally wound up, all but 100 
will be in private hands. It will 
have successfully raised «nmg 
DM23 Obn in loans on the 
national and inter national cap- 
ital markets to finanty the pro- 
cess, with another DM45bn 
needed to pay for its remaining 
obligations. 

On the other, the Treuhand 
has seen the numbers 
employed by its enterprises 



The okl mining town of JohamgeorBenstecft, south of Chemnitz 


picture: TtanyAnctawa Buildings old and new in central Chemndz 


slashed by hundreds of thou- 
sands, and the industrial struc- 
ture of east Germany trans- 
formed from the showpiece of 
the communist world to a 
rump of struggling enterprises, 
whose future in the cold capi- 
talist market is still not 
assured. 

Instead of realising a positive 
balance for the German exche- 
quer from the sale - once casu- 
ally estimated by Mr Detlef 
Karsten Rohwedder, the first 
Treuhand president, at 
“around DMfSOObn” - it wtil 
leave a debt burden to the fed- 
eral government of at least 
DM275bn. 


Mr RUsberg remains con- 
vinced that the exercise has 
been overwhelmingly positive 
and successful, in spite of inev- 
itable mistakes. He is a 
believer. 

“You cannot succeed in this 
job unless you work as a man 
possessed,'’ he says, as he 
rakes through his files for the 
prospectuses of the last few 
companies still on his books. 
“Perhaps there is a certain nos- 
talgia now, as our job is com- 
ing to an end. But we can be 
happy to have been involved in 
this unique work.” 

Then he reels off statistics of 
bis successes and failures, of 


the remarkable products which 
east German companies are 
still capable of producing, the 
quality of the workforce, and 
some of the mistakes which 
have been made along the way 
of seeking to transform a total- 
itarian s ocialist economy into a 
capitalist one. 

Mr RUsberg is regional man- 
ager for the Treuhand in Halle, 
an historic but grimy centra of 
east Germany’s chemical 
industry, and he is not there 
by chance. It is the last 
regional office still in opera- 
tion, and Mr ROsberg has been 
sent to clean up a disastrous, 
incompetent and c or r u p t priva- 


Industrial workshop profile: JenLaser 

Small engine for growth 


J enLaser is one of those 
tiny Handwerk busi- 
nesses, or - industrial 
workshops, which economists 
believe will slowly help to- 
drive the the east German 
economy towards recovery. - 
Already, more than lm peo- 
ple are employed, in eastern . 
Germany’s Handwerk sector. ' 
It consists of I88,500 bnsl- 
nesses which vary in sizelksin 
four (thenpmher who work at ~ 
JenLaser) to 200. Total tani- 
over for this sector in the east- . 
era states increased .last year! 
by 15 per cent to DM72.4bn 
last year compared with the 
previous year. The Central 
Association for Germany’s 
Crafts and Trades reckons.it 
already accounts for 10 per 
cent of grass domestic product 
JenLaser's small workshop 
is in the small village of 
Schldben situated in the for- 
ests of Thuringia. It was the 
brainchild of Mr Dieter Schu- 
mann and two former col- 
leagues from the Carl Zeiss 
optics enterprise in Jena. 

Mr Schumann, 42. had 
worked there as a physicist 
until 1991. But instead of 
waiting' with thousands of oth- 
ers for the inevitable -redun- 
dancy .pay-off, he left will- 
ingly, because, hesaid, “the 
longer I stayed, the more 


opportunities I would miss”. 

He and his colleagues, Mr 
Stephan Zenkar and Mr Volker 
Kane, raised DM50,000, the 
THiniiiipwi required to set up a 
limited' company. Mr Schu- 
mann, unlike many other east 
Germans, had decided not to 
spend, his savings on a new 
car. His loyal old Wartburg 
station wagon is . an integral 
part of the business. “It’s our 
delivery car,” said Mr Schu- 


. . The three then approached 
the banks with their plan - 
“we wanted to set up a laser 
cutting business which would 
provide Ugh quality cut steel 
to enterprises,” explained Mr 
Schumann. “We needed a loan 
of DM500,000 to buy new 
equipment,” he said, taking 
out a photo of Us large house 
which he had offered as secu- 
rity. 

H is subsequent dealings 
with the banks were Us 
foretaste of western 
capitalism. An official at the 
local Dresdner hank in Jena 
told tile trio that the project 
was a waste of time. An offi- 
cial at the Bayerische Verein- 
bank said they should invest 
in second band mac hi nery hut 
that a loan would take a few 
months. Finally, the Counuers- 


bank offered the loan in 14 
days. “We were on our way,” 
said Mr Schumann. 

They rented a couple of farm 
sheds from a west German 
who had bought part of a for- 
mer LPG, or state farm, and 
then set to work - “we were 
working 12-14 hours a day 
throughout 1992 and paying 
ourselves about DML500 per 
mouth. It was tough going. We 
had to find a niche.” 

At first they considered tap- 
ping into the machine building 
industry in Stuttgart - “but 
we soon realised that after 40 
years, these managers had 
built up very close contacts 
with suppliers and their cus- 
tomers.” 

Instead, they used old con- 
tacts built up with Carl Zeiss, 
combed the eastern states of 
Thuringia and Saxony, and 
secured nearly 100 customers. 

Then came the need for 
more capital and a fourth 
employee. 

“We needed another credit 
line of about DM750,00. This 
time, the local Sparkasse 
helped and, with cheaper 
interest rates ta c k e d by the 
European Union’s Regional 
Development Fund, they 
bought new laser catting 
equipment from a Japanese 
company. By the mid of last 


year, JenLaser had a turnover 
of DMlm, and had paid off 
nearly 75 per cent of the first 
loan. 

This year, Mr Schumann 
reckons turnover will be 
between DML2m and DMl.4m. 
"We are malting a profit,” he 
said (without saying how 
much) adding that JenLaser’s 
two-pronged strategy of rea- 
sonably close markets and 
competitive costs was paying 

off. 

“Onr markets are within 200 
km radius - and all in eastern 
Germany. Our advantage is 
that we have a fast turn- 
around - a matter of two days. 
We deliver the products our- 
selves.” They had also man- 
aged to keep costs and over- 
heads down. “Onr prices are 
between 60 per cent and 80 per 
emit of west German prices,” 
said Mr Sch umann . 

Now that the capital invest- 
ments have been made, the 
company of four people 
believes it has secured a niche 
in providing high quality laser 
cut steel products. “We are 
operating at nearly 100 per 
cent capacity,” said Mr Schu- 
mann. “The biggest challenge 
facing us is finding ways to 
keep costs down.” 

Judy Dempsey 



Treuhandanstalt 

Halle Branch Office 

le Treuhandanstalt, Halle Branch office tenders for sale and invites your bids and 
incepts at short notice: 

ihicle Manufacturing GmbH Aschersleben, 

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Sector: Service area tor the maintenance and Inspection of cold 
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earn Boiler Construction Hohenthurm GmbH, 

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54 Halle 


tisation process in the area. 

Two of the main purchasers 
of Treuhand enterprises - one 
who bought 29 businesses, and 
the other who took over 10 - 
are sitting in jail awaiting trial 
on various charges of falsifica- 
tion and fraud. The farmer pri- 
vatisation director has just 
been arrested in Texas (for 
speeding in a Rolls RoyceX and 
is now the subject of extradi- 
tion proceedings. 

As for the 800-odd enter- 
prises and properties sold off in 
the area, the entire lot tag tad 
to be reconsidered, and con- 
tracts renegotiated, to make 
sure the investors are sound 
and the legal details correct 

1 1 is a nightmare for all con- 
cerned - not least the workers 
in the privatised companies, 
whose jobs are once more in 
doubt - but it was probably an 
inevitable consequence of the 
sheer scale and speed of the 
privatisation process. 

“With the best will in the 
world, mistflkas ran be made,” 
says Mr Rflsberg, who came to 
the agency as an. entrepreneur 
who had run a joint venture in 
Romania for MAN-GHH. 

“The performance of the 
Treuhand in such a short time 
was fantastic. I simply would 
not have believed in 1990 that 
SO ranrh could be dnnp In such 
a short time.” 

The detractors of the Treu- 



Mrs Birgtt Breuot: *We always say 
we am not Jute sslfeig Arms' 

hand charge that. Hip agency 
has presided over the de-indus- 
trialisation of east Germany, 
leaving the region condemned 
to remain a backwater of the 
west They say that for more 
should have been done to 
restructure the enterprises 
before they were sold, rather 
than rush Into pri vatisatio n at 
all costs. ; 

Mrs Birgit Breuel, the 
no-nonsense former Christian 
Democrat economics minister 
from the state of Lower Saxony 
who has been president of the 
Treuhand since the 1991 assas- 
sination of Mr Rohwedder, qui- 
etly but firmly rejects such 
charges. 


“It has not been de-indus- 
trialisation,” she soys. “It has 
been a return to small (indus- 
trial) cores. I am convinced 
that is positive. 

“Every part we have sold 
will be fully modernised (by 
the year 2000). they will be 
lean - and striving for cost 
advantages, then 1 believe we 
will have extremely attractive 
investment locations here. 

“Of course, if everything was 
is a green field, we might have 
done things differently. But we 
were not beginning in a green 
field. We were dealing with 
hundreds of thousands of peo- 
ple.” 

To the charge that the Treu- 
hand put jobs second in the 
rush for privatisation, she 


“We always say we are not 
just selling firms, we are also 
buying something for them 
We are buying management, 
we are buying technology, we 
are bu yi ng capital, and proba- 
bly most important, we are 
buying a market share. 

“We had to take the legal 
framework, and try to give the 
enterprises a real chance 
within it We had to slim them 
down so they had a chance to 
be competitive- Of course that 
was gruelling work, and it 
meant a loss of jobs. But it was 
unavoidable.” 

There was no structural con- 


PUuk Tony Andrews 

cept when the Treuhand began 
work, not least because there 
was no time to develop one. 

“We were overwhelmed by 
the need to take decisions, 
immediately” she said. 

“With economic and mone- 
tary union (on July 1, 1990), 
most of the companies were in 
desperate straits. We had no 
structure, and only 150 work- 
ers at die start. 

“When I arrived In Septem- 
ber, I bad no office, no assis- 
tant, and no concept: just 
sacks full of letters." 

Bnt nor did the Treuhand's 
leadership believe there should 
be a “structural concept”, says 
Mr Wolf SchOde, the agency 

spokesman. 

“Our philosophy was to give 
every individual enterprise an 
individual chance to survive 
and develop Itself." he said. 

“It was a bottom-up strategy. 
Others wanted us to design a 
sectoral plan, industry by 
industry. But if we had done 
that, we would have been no 
better than a successor to the 
old east German planning com- 
mission. 

“We are the last centralised 
institution of the old central- 
ised DDR, and we are deliber- 
ately destroying ourselves - 
because in the pluralist, fed- 
eral system of the new Ger- 
many, you don’t need such a 
centralised structure. 1 ' 


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TIMES WEP™ ggr>AV MAY4 


RESTRUCTURING OF EASTERN GERMANY 4 


R arely. If ever, has a 
labour force experi- 
enced such a radical 
and swift transformation as 
that which swept eastern Ger- 
many. 

When the Berlin Wall was 
breached In November 1989, 
the 9.3m workers of eastern 
Germany were heavily concen- 
trated in manufacturing and 
agriculture. More than 920,000 
people worked on the land. 
That number has since 
dropped to 210,000, a 70 per 
cent reduction. 

More significantly, the 3.17m 
employed in manufacturing 
are now down by 60 per cent to 
L29 dl In mining and energy, 
production decreased by 39 per 
cent between 1989 and 1992. 

Overall, the number of avail- 
able jobs fell by at least 34 per 
cent from 9.3th in 1989 to &2m 
in 1993. Since that time, the 
total labour force has 
decreased to 8 . 2 m. largely as a 
result of migration. 

Several factors explain the 
steep fall in employment 
• Most of the products from 
east German manufacturing 
were aimed at markets in east- 
ern Europe and the former 
Soviet Union. 

• The competition caused by 
the merging of the GDR's Ost- 
Mark with the western D-Mark. 
• The collapse of the Com- 
econ socialist trading organisa- 
tion. and the inability of the 
eastern European countries 
and the former USSR to pay for 
east German goods. 

• The policies of the Treu- 
band privatisation agency, 
which sought to reduce over- 
manning, close or break up 
and restructure the large Kom- 
binate, or state-owned enter- 
prises, to prepare them for pri- 
vatisation. 


A steep fall in employment levels - 37 per cent of the eastern labour force is now idle 


The high price of national unity 



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Since unification, more than two-thirds of eastern Germany's total unemployed are women 


PWuw Tony Aretora 


• The breakup of the LPGs, or 
collective farms. 

• The wage levels, which 
imposed another brake on the 
demand side of the labour mar- 
ket. Since wages are set to 
equal west German levels by 
1996, despite productivity often 
60 per cent below west German 
levels, unit labour costs are 
around 170 per cent of west 
German levels. 

“In reality, we would require 


a reduction by a further third 
of the work force if we were to 
match productivity levels of 
western Germany," com- 
mented one economist. 

By March of this year, 16.8 
per cent of the labour force, or 
1.26m, were unemployed. That 
did not include those on short- 
time work (135,000), job re- 
training and job creation 
schemes (249,000, and 238,000 
respectively) and those who 







1 ;£>. • •» -V-. . S 

■ ->'rv ^ *.* > \ ~y& ^ ' / p/ 

, .. rry 


In consbuctkin; a imittMimcttonflf shopping, hotel and service complex In the city of Cottbus 


Surge in construction 
continues unabated 


G erman and foreign con- 
struction companies 
have moved quickly 
into a region starved of capital 
investment in housing, real 
estate and renovation in a bid 
to make up for lost time over 
the past 45 years. 

These companies are also 
playing a crucial role in pro- 
viding jobs. More than 383,000 
people are now employed in 
construction. 

The building boom, which 
shows no sign of slowing, is a 
welcome development for west 
German and foreign compa- 
nies. They have ofTset poor 
returns at home because of the 
recession by capitalising on 
the expanding construction 
market in eastern Germany. 

In west Germany . total 
investment in the building 
industry last year totalled 
DM347.8bn, a sharp decline on 
the previous year. 

In eastern Germany, in con- 
trast, total investment 
amounted to DM87.5bn, 
accounting tor 7.1 per cent of 
GDP in real tonus. 

“Immediately after unifica- 
tion, there was a massive surge 
in public investment, but from 
very low levels of (previous I 
investment as web as a low 
GDP base." said Mr Heiko Stie- 
pelmann. a spokesman for Ger- 
many's association for the 
building industry. 

“We can now see a pattern 
emerging in east Germany," he 
continued. “At first, there was 
a rapid and large public invest- 
ment programme.” This was 
mainly in tbe non-resddentiaJ 
state sector, including roads, 
bridges, public buildings, hos- 
pitals and schools. “Then toe 
private sector began building 
or modernising enterprises and 
offices and now, over the next 
few years, we will see activity 
on the housing front - not only 
renovating old stock, but par- 
ticularly building new homes 
as well." he added. 


Construction index 


340 


120 J-vi-v ..... . 


Production 


60 - 

1990 91 92 93 94 

Source: Govt and private estimates 


In 1993 alone, the federal 
government invested more 
than DMl88bn in upgrading 
the infrastructure, a rise of 15 
per cent on the previous year. 
It was followed by private com- 
panies which invested 
DM35.3bn in non-residential 
property, an increase of 22 per 
cent on 1992, and private hous- 
ing. where over DM33 -9bn was 
invested, a rise of 422 per cent 
(all based on 1993 price levels). 


M r Frank SQEfner, a 
bousing expert at toe 
Munich-based Ifo insti- 
tute. believes that investment 
throughout the construction 
industry in eastern Germany 
mil continue to rise by 16 per 
cent each year. 

On 1991 prices, it could reach 
DM2,400bn by the year 2005. 
However, he says this level of 
investment would need to be 
maint a in e d, if not increased, if 
tbe German east was to reach 
toe west's standards by that 
time. 

So far, there are few indica- 
tions to suggest that invest- 
ment in the construction 
industry will slow. The govern- 
ments of the five eastern states 
continue to offer generous 
financial incentives and tax 


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holidays for investors, and as 
more outstanding property 
claims are resolved, more resi- 
dential housing will require 
renovation. The federal govern- 
ment is also planning to privat- 
ise 15 per cent of eastern Ger- 
man housing stock over the 
next 10 years. 

In reports issued by Ifo, the 
Basle-based Prognos, the num- 
ber of dwellings will increase 
even as the birth rate declines. 
In eastern Germany today, an 
average 2.4 persons live in one 
home. This number will fall to 
2.2 by 2000 and 2.1 by 2010, 
creating the need for more 
dwellings. 

In addition, experts reckon 
that of the 6.9m dwellings reg- 
istered in eastern Germany, 
about 500.000 are no longer 
suitable for occupancy. 

By 2000, they believe that 
between 7m and 7.3m dwell- 
ings will be required. In short, 
one-family and two-family 
homes will account for a very 
large share of construction 
activity for the rest of the 
1990s, rising from 34 per cent 
in 1989 to more than 38 per 
cent in 2000. As a result, east 
German housing will soon 
match the occupancy - and 
quality levels - of its west Ger- 
man counterparts. 

Yet, the boom in the east 
German construction industry 
has had some negative side-ef- 
fects for west German compa- 
nies. Wages in eastern Ger- 
many’s construction industry 
are approaching 90 per cent of 
west German levels, although, 
according to Mr Stiepeksann, 
productivity levels are between 
70 per cent and 80 per cent of 
west German levels. 

At the same time, as more 
and more non-German compa- 
nies enter the east German 
building industry, often bring- 
ing their own crews, and in 
some cases hiring workers 
from the neighbouring coun- 
tries of eastern Europe, west 
German companies are faced 
with competition - "some local 
authorities are contracting out 
to foreign companies because 
they can do things more 
cheaply." said Mr Stiepelmann. 

“The German industry’s high 
wage levels and competition 
mean that west German com- 
panies have not reaped all the 
benefits of the construction 
boom in eastern Germany" - 
but it may bring savings for 
city authorities. 


Judy Dempsey 


had taken early retirement 
(205.000). All told, 37 per cent of 
the total eastern labour force is 
idle. Last year, the federal 
labour office paid ont 
DM54.7bn In unemployment 
benefit. 

The question is whether 
these very high unemployment 
levels have become permanent 
features of eastern Germany, 
and whether toe federal gov- 
ernment can continue to allo- 


A US developer who is 
investing more than 
DM8 00m in eastern Ger- 
many recently paid out more 
than DMlm as compensation 
to a former owner of a prop- 
erty who had, tried to repos- 
sess it. Had he not paid out, 
his ambitions redevelopment 
of the property would have 
been delayed, and another 
costly design might have been 
required. 

An Anglo-American consor- 
tium. which had invested 
heavily to the states of Saxony 
and Saxony- Anhalt, is still try- 
ing to resolve a property 
rights dispute after signing 
the contract with the Treu- 
hand privatisation agency. 

A Jewish family, forced to 
leave Nazi Germany to 1938. is 
still trying to reclaim its prop- 
erty after four years of lengthy 
and bureaucratic negotiations 
with the regional office for 
property questions. 

The cases are typical of the 
claims being made by former 
owners (or their heirs) for 
property in eastern Germany 
confiscated either during the 
Nazi Third Reich or under the 
post war communist regime. 
Their claims often collide with 
the efforts of commercial 
developers to take advantage 
of eastern Germany’s integra- 
tion into the capitalist west. 

In spite of such cases, Ger- 
man bankers, the Treuhand 
privatisation agency and the 
teams of consultants and 
advisers insist that investment 
in the five eastern Under is 
not being held up by any out- 
standing property disputes. 

Under the unification treaty, 
all owners who had their prop- 
erty confiscated between 1933 
asd 1945 Jare entitled to resti- 
tution of their rights or to 
compensation. 

All o where whose property 
was confiscated between 1949 
and 1990 are entitled to simi- 
lar rights. But those who had 
property expropriated between 
1945 and 1949, when east Ger- 
many was under Soviet admin- 
istration, are not entitled to 
restitution, and only recently, 
won tiie right to a more lim- 


M onika Singer knows all 
about agriculture In the 
eastern state of Meck- 
lenburg-Vorpommern. 

Before She became mayor of 
the small village of Gross-WQs- 
tenfelde in 1990, she had 
worked for eight years on the 
nearby State Collective farm, 
or LPG. Now. she spends hours 
in her small office dealing with 
queries and farmers' com- 
plaints, leaving her with little 
time for her five children. 

“Its tough. The enormous 
pace at which agriculture has 
been restructured has left peo- 
ple disorientated largely 
because so many have lost 
their jobs," she said. 

“Maybe it has been too fast 
because at the same time we 
also had to integrate our agri- 
cultural sector not only into 
the west German system but 
into the European Union as 

welL" 

Thera is hardly a village in 
Mecklenburg-Vorpommern 
which has not been affected by 
these changes. United Ger- 
many inherited a complex farm 
sector In eastern Germany. 

After the second world war, 
the large estates of the former 
German aristocratic families 
had been expropriated by the 
Soviet authorities which 
administered eastern Germany 
between 1945 and 1949. These 
estates were broken up and 
distributed among ethnic Ger- 
mans forced out of eastern 


cate nearly DM55bn each year 
as the price for maintaining 
social stability and for sub- 
sidising c pngpmpr spending in 
tbe east. 

A recent report by the Ber- 
lin-based DIW Institute for Eco- 
nomic Research concluded that 
if the labour market in Ger- 
many did not radically rftangw 
there would be around 5m peo- 
ple without regular employ- 
ment in the unified Germany 
by the end of the decade. It 
added that the economy would 
be burdened by higher taxes 
which would reduce enter- 
prises' profits and could 
dampen the willingness to 
invest 

Against this background, few 
economists believe that - with 
the exclusion of wo me n — the 
size of the Labour market in 
eastern Germany will ever cor- 
respond to west German or 
western European levels. 

Mr Wolfgang Scheremet, a 
labour expert at the DIW Insti- 
tute, said that even whan the 
recession ended in Germany, 
“there will simply be not 
enough new jobs in eastern 
Germany to absorb the high 
levels of unemployment" 

The manufacturing base, 
overmanned before unification, 
and now in a state of collapse, 
could no longer be considered 
as a viable instrument for 
reb uilding mass employment. 

Instead, Mr Scheremet 
believes that some positive and 
negative trends within the 
labour force are likely to 


emerge in the. following sec- 
tors: 

• Construction- This sector 
wffl continue 'to play an Impor- 
tant role as toe housing stock 
is modernised, the infrastruc- 
ture Is upgraded, and hotels 
and offices are erected. Mr 
Scheremet reckons that the 
construction industry already 
accounts for about 12 per cent 
of toe labour market - 

4 r Innovative technology. A 
lot of money is being spent cm 
introducing innovative and 
high levels of technology 
which wQi quickly become 
cn ni p e trf j vq g pd find a niche to 
international market. For 
instance, Siemens is investing 
DM&fim in a new microchip 
plant in Dresden which "will, 
create more than 1,290 jobs. 
Tbe success of such, enterprises 
are underpinned by investment 

grants. ' 

• Services and the Handwork, 
(the small trades and crafts- 
men sector)- These sectors are 
already capitalising on the can- 


i4oo y '**‘7*^ 

.1 |» 










f >-3 


Wages are set to equal 
west German levels by 
1996, despite lower 
productivity 


struct! on boom. The DIW and 
other economic institutes see 
the Handwerk, embracing 
700,000 people, as one of the 
engines of economic revival. 
“The number of people in the 
Handwerk are increasing: as 


tbe manufacturing continues 
to decrease,” says Mr Schem- 
eret 

But these trends alone' are 
not enough to absorb the high 
levels of unemployed. By 1993, 
western Germany was still sup- 
plying 90 per cent of tbe goods 
and services bought in eastern 
Germany. 

Meanwhile, tbe cheap labour 
in neighbouring eastern 
Europe could help to keep high 
unemployment figures in east- 
ern Germany. 

Hie German economic insti- 
tutes argue that if any small 
increase in the demand for 
labour emerges, especially for 
intensive labour, western Ger- 
man enterprises are more 
likely to shift production to the 
neighbouring countries of east- 
ern Europe. Hie DIW study 





■i;v/ 


■"T 7 >■ t ’ 


5 to 

.i 



w; . r y/.A\ 
^ • W/f 


Cfesring Ihe ground: demoHfbn wort on a crumbSng factory In Wittenberg 


nAn TonrAxtMi 


Search for stolen rights 


Property owners struggle with the legacies of Hitler and Stalin. 
Disputes will take a long time to resolve, reports Judy Dempsey 


tied form of compensation. 

The deadline for registering 
claims was December 31, 1992. 
A year later, the Federal office 
for the Regulation of Property 
Questions still faced l.08m 
outstanding claims on 2.6m 
titles. By that time, Berlin had 
resolved 16.3 per cent of 
claims. Saxony, 51.95- All told, 
30 per cent have been 
resolved According to officials 
at the Property Questions 
Office, it will take another 
decade to dose the books. 

The federal government 
chose restitution of property 
rather than compensation 
partly for financial reasons. 
Boon simply did not have the 
funds to allow only compensa- 
tion. Yet no sooner had these 
rights been granted than toe 
Treuhand and bankers real- 
ised that investment in east- 
ern Germany would be held 
back unless new investors bad 
precedence over claimants for 


restitution. Following some 
amendments, it is possible to 
buy commercial property to 
eastern Germany if one under- 
takes to invest (and create 
jobs). In these cases, former 
owners of the property genei^ 
ally have to settle for compen- 
sation at market value. 


T here are still outstanding 
questions over the level of 
compensation to to indi- 
viduals who cannot reclaim 
their property, other because 
it had been legally bought by 
east Germans after 1949, or 
because municipal buildings, 
such as a hospital, has been 
built on tiie original rite. 

The federal finance ministry 
has drafted several bzQs, sug- 
gesting that compensation be 
valued on tbe 1935 value of 
land, hut multiplied by several 
factors depending on the 
nature of the property; that a 
ceiling be imposed on compen- 


sation payouts; and payments 
be gradually paid out through 
same bond system. ■ 

How do these delays in com- 
pensation legislation affect 
investment decisions? Mr 
Hansjfirgen Schfifer, head of 
toe Berlin-based federal office 
for Property Questions, says 
that with about 70 per emit of 
the real estate titles “there are 
no problems”. But the other 30 
per cent were “really critical”. 

(toe problem is deciding tiie 
actual purchase price as a 
basis for paying compensation. 
From the legal point of view it 
was also sometimes difficult to 
establish whether property 
was acquired legally after 
1949. For instance, Mr Wolf- 
gang Bergbofer, the former 
mayor of Dresden, gave apart- 
ments and booses to his com- 
munist party friends and other 
political (nodes. 

“How do we assess the sta- 
tus of that property? Did these 


Agriculture sector still 
a collective mess 


Many (and disputes have yet to be resolved, but private 
farming is slowly being reborn, writes Judy Dempsey 


Europe. Many received plots of 
land of about six hectares. 

Not long after, tiie east Ger- 
man communist regime placed 
about 75 per cent of tbe private 
farms under co-operatives, nor- 
mally about 4,500 hectares to 
size. 

The remainder of east Ger- 
many’s 6.2m hectares were 
turned into giant LPG state 
farms. Coping with that legacy 
has proved one of the other 
difficult aspects of restructur- 
ing the east German economy. 

After unification, the federal 
government embarked on a 
two-pronged strategy; the right 
to restitution and compensa- 
tion was granted to former 
owners of land under 100 hect- 
ares. 

This right did not extend to 
those owners of the large 
estates which had been expro- 
priated by toe Soviet authori- 
ties between 1945 and 1949; and 
the Treuhand privatisation 
agency set about privatising or 
leasing lJ3m hectares of land, a 
third of the total arable land to 


eastern Germany. 

By the middle of this year, 
the Treuhand wfli have leased 
out 700,000 hectares, many mi 
12-year contracts. 

Mr Otto Bammell. a senior 
official at the federal ministry 
of agriculture, admits the re- 
privatisation of land has 
thrown up many unforeseen 
problems. 

“Many people now have their 
land back. But to toe process, 
they soon discovered they had 
a giant silo stuck in the middle 
of their property, or found 
huge barns which once 
belonged to tbe coDective farm. 

There are now disputes 
about who owns these band- 
ings and who should remove 
them. It's a mess,” he said. 
Then there was the unresolved 
question about how much for- 
mer small landowners would 
receive is compensation 
instead of restitution. 

Apart from property dis- 
putes, the government Is also 
faced with very high levels of 
unemployment in states such 


as Mecklenburg-Vorpommern, 
and Brandenburg where entire 
communities depended for 
their livelihood on the state, or 
collective farms. 

“Under the old system, there 
were 850,000 people working on 
the land, or about 14 people per 
100 hectares. That’s at least 
three times the number com- 
pared with western Germany,” 
said Mr Bammell. Since 1990 
this figure had fallen to about 
200.000 people as a result of 
restructuring, he said. 

The reforms have been suc- 
cessful to toe extent that form- 
ing is now more efficient. But 
in some villages, about 60 per 
cent of the population have no 
work. There is no industry to 
Mecklenburg-Vorpraomem into 
which people can move. Politi- 
cally, and socially, it is 
extremely dangerous,” he 
added. 

Restructuring also co-indded 
with integrating east Ge rman 
agriculture into the European 
Union system. 

“When we started the reform 


ax^es.toatinthesborttOTi, 

will deter investment both 
in west and east Germany. 

In the medium and long 
term, it would benefit Ger- 
many as a whole becau^ rt 

would create a tonterland wito 
very favourable cost conditions 
for supplier. However^t con- 

dudeT The P° sitiv ^f fe il 
this will, however, not be felt 
rmtii the begiinpHg ***** 116x1 
decade at the earliest 

Women are tiie only sector of 
the labour market that a PP^ 
to be matching western Ger- 
man levels. Eastern Gennsny s 
a im women represent jaalT the 
population- Before unification, 
more than 90 per cent of 
women, or 49 per cent of the 
total labour force to eastern 
Germany, were employed. 

In contrast, of the 33.4m 
women in western Germany, 

more than 20m are classified as 

housewives while 13m are ro- 
istered on the labour market 

Yet since unification, 
women, who are now more 
than two-thirds of eastern Ger- 
many’s total unemployed, are 
being economically and 
socially forced back to the 
home as the labour market 
shrinks and radically different 
patterns of work take hold. 

By late 1992. more than 4.2m 
east German women were reg- 
istered as housewives, and 
3.9m were registered on the 
labour market 

Yet even on the labour mar- 
ket, more than 905,000 are 
unemployed - not including 
those women on short-time 
work, job creation and job 
retraining schemes and early 
retirement. In western Ger- 
many, the number of unem- 
ployed women is 858,000. 


Judy Dempsey 


people receive the property 
legally or not? Was it legal 
under the former German 
Democratic Republic or not?" 
asked one official from tbe 
Property Questions Office. 
Then there are cases fre- 
quently experienced by mem- 
bers of toe Jewish community. 
When they fled from Hitler, 
the Nazis, or those who had 
taken over their property, 
went to the Land Registry. 
There, they either tore out the 
pages containing toe Jewish 
tide to that property, wrote to 
their own, or simply crossed 
out the original owners’ 
names with black ink and 
wrote their own names below. 

The central land registry at 
Barby, near Magdeburg in 
Saxony-Anhalt, has many such 
examples. These cases became 
even more complicated when 
toe new “owners* destroyed 
these documents or were 
stripped of tiie property by the 
east German communist 
authorities. • 

In an bizarre twist of his- 
tory, former Nazis have taken 
advantage of unification to 
claim back these former Jew- 
ish properties, while their 
original Jewish owners franti- 
cally search for their title 
deeds, or, with the help of 
infra-red equipment at the 
Property Questions office to 
Barby, try to read theta- names 
through the black ink. 

There is one other problem. 
It is quite easy to buy agricul- 
tural land in eastern Ger- 
many. But forma- owners of 
land expropriated between 
1945 and 1949 "are still insist- 
ing on equality of property 
rights before the law. Since 
they wOZ not have toe right tit 
restitution, they are seeking 
fair compensation. 

Mr Hans Marcus, a London- 
based lawyer at Pannone A 
Partners, says toe situation in 
eastern Germany is “a mess - 
no matter what the establish- 
ment says, there are big prob- 
lems with property rights. 
These disputes have hindered 
investment decisions . . . such 
problems will take a long time 
to resolve.” 


of agriculture we also had to 
reconcile levels of production 
with EU regulations, which 
entailed putting aside 15 per 
cent of arable land.” explained 
Mr Bammell. 

“This meant limiting crop 
production here to eastern Ger- 
many to 3.6m hectares. This is 
the base area which would 
make us eligible for EC price 
support," he added. 

In the process, German offi- 
cials had discovered that the 
state of Mecklenburg-Vorpom- 
mern had planted 17 per cent 
above permitted levels, and the 
states of Saxony and Thuringia 
had overshot by 10 per cent, to 
total, eastern Germany has 
exceeded the base area by 
350,000 hectares. 

As a residt, fanners in Meck- 
lenburg-Vorpommern may be 
asked to set aside a total of one 
third of its land, without com- 
pensation, to order to pay the 
penalty for over-prodoctioiL 
Agricultural officiate say it will 
be same time before east Ger- 
man agriculture stabilises. 

“The people have had to cope 
with so much change on toe 
land. A complete breakdown of 
toe former system took place 
after unification. We now have 
to restructure the entire sector 
stage-by-stage both socially 
and economically,*’ said Mr 
Bammel l 

For Ms Singer, the comple- 
tion of that process cannot 
come soon enough. 




4 




Musi 


c. - • i 


°y\ ins V-^2£> ’ 




* ay 4 






FINANCIAL TIMES WEDNFtftAV may 4 


OM gntin Peel describes the replacement of an archaic phone system 

Forward from the 1 920s 


RESTRUCTURING OF EASTERN GERMANY 5 


diicti Gn „ 
Ss Cio r 


4.1 


a,: - ~ . ' They used ; to say in the old 

^2®»*mlstEastGennanyth2rt 
ftwa snat the Americans who 
V- the real enemy; it was the 

is 292 ZL 

feV ■ ■ “Every time it rained, the 

£ ' • would get into the tele- 
cables. and knock out 

- Kemm- MteneL sitting in the 
< ■ massive old post Ministry 

v > headQuarters in Berlin's 

v ; . . . . Sfcrasse/ 

?» '■ - ‘ I ; j.- _“The concrete cfanwipfe 
v so , r( ^ eri > you conldn’fieep it 

* ■ - ■ . ont We tried to dry them ont 
"S. -- with compressed air, bat it 

I;., . - on^ woriced np to ibo znetzes 

r ■ ;• °“ eilher side of the telephone 

■S ' . .. exchanges. So the rain simply 

V. , oot off onr conversations." 
s Not that the phone system 

hi-. was that efficient when the 
.j. V '-‘.sun shone. Only one person in 
10 had a telephone, and some 
I' the switchgear dated back to 

■ -the I920s^ Of the L8m tele- 
■‘KS* . phone connections, around 
s ■ i ““ ; hvo-thirds were in private 
■ ■ homes, and of those, so per 

r. cent used shared party-lines. 

„ You couldn’t use the phone if 

j your neighbour was talking. 

: The other tdiosyncracy of the 

v! system was that each of the 

l! ' main arms Of the to talitarian 

: - : Z state had its . own separate 
phone network: the army, the 
state security, service, and the 
communist party, for a stmt 
Any senior functionary had to 
have a battery of telephones on 
bis desk to be linked up with 
all the separate services. No 
one trusted anyone else. 

That was the extraordinary 
...system which greeted Deut- 
; ache Telekom, the west Ger- 
~ i ;_ man state monopoly, when.it • 

• took (HI the task af myten rl- 
■ sing the east German network 
" at tmJficatian. 

The result was the biggest 
single . investment programme 
undertaken by any one enter- 
prise in east Germany, ached- . 
v., ufed to cost DM60bn by 1397. In 
that time, some 72m new tele-'.' 




lb* bold dm is to install 7Jhn new phone tales by 1987 ncMMOmr 


;*.v: ' — ‘ 

v # 


phone connections will be 
installed, as well as 360,000 fax 
connections, 50,000 packet- 
switched data links, 5m TV 
cable connections, a complete 
digitalised switching system, 
optical .fibre networks for both 
long-distanc e and local calls, 
and a whole series of mobile 
communications networks cov- 
ering the entire territory. 

"We will simply leapfrog sev- 
eral generations of telecommu- 
nications technology," says Mr 
Menzel/wbo is today responsi- 
ble for customer services and 
public relations. From baring 
had one of the most antiquated 
phone systems in Europe, the 
east Germans will have one of 
the most modem. 

: The telephone exchange in 
Halle, capital of east Ger- 
many's once-thriving chemical 
industry, provides a graphic 
illustration. The Old erritang w 
was ba3t in 192?. Standing sur- 
rounded by lO&ofc-high banks 


of electro-mechanical switches 
is a bit Hfa being in the rnirtiflp 
of a weird mechanical jungly, 
hill Of the marnr ntipfrg and rat- 

ties of thousands of crazy 
crickets. At the end of every 
row is a red light, which 
switches on if there is a fault 
At least 25 per cent are blink- 
ing. 

Next door, still surrounded 
by bundles of new cable, stand 
the slim new di gital switches 
which will replace them: a few 
rows of neat grey cupboards, 
totally silent, and intended to 
be virtually matntimani-p. f rfrp 
Homan beings are noticeable 
only by their absence. 

In the Waifo suburb of Silber- 
hfihe, on the top of a grim 19- 
storey block of workers’ apart- 
ments, past graffiti tfennimring 
racist skinheads and celebrat- 
ing tekkno-nmsic, a forest of 
aerials has sprung up to cope 
with the explosion of mobile 
telephone calls expected from 


the revival of the east German 
economy. There are 10,000 
users already in the Halle 
region, and the newly-installed 
capacity is BO per cent 
exhausted at peak times. 

In spite of the frantic pace of 
investment Deutsche Telekom 
is only just keeping pace with 
the growth in damawri 
In 1993, 1.02m new connec- 
tions were installed, and 
another 249,000 old lines trans- 
ferred, which reduced the 
waiting list by just 90,000 - 
because there were 1.18m 
applications for new lines. 

Mr Wilhelm Pullman. Tele- 
kom director responsible for 
the Aufbau Ost investment 
programme, says: "Telephones 
are still selling like hot 
cakes. -Beside a television set, 
refrigerator and car, the cfti- 
xens of the new federal states 
clearly regard the fcftlgpfr r me as 
one of the basic nefysyiti pg of 
Me.” 

He admit s that one of the 
biggest problems at the 
moment is the number of 
cables being cut in the course 
of all the construction activity 
under way across the territory. 
"Many cables have fallen vic- 
tim to this positive activity," 
he says. "Of course it only 
causes quite short-term inter- 1 
ruptions, bat it also causes oat- 1 
ural irritation, it proves that 
telephoning has become a per- 
fectly normal activity." 

The inves tment programme 
has concentrated on supplying 
the business sector first, and 
the turnover per telephone - at 
DM1,200 - reflects that It is 
around 10 per cent higher than 
the similar figure in the west 
From a density of one tele- 
phone to 10 people at unifica- 
tion, the level has risen to 24J 
per 100 inhabitants to date, 
compared with 49.9 In west 
Germany. By 1997, the target is 
to reach 46.8 per 100 inhabit- 
ants In the east, compared 
with 52.7 in the west 


Supermarkets spring ■tip on virgin territory, says Judy Dempsey 

Music of the cash tills 


Any one . . . driving through 
eastern Germany tor the first 
time cannot fail to mitice the 
imbib e r jot risst shopping cesv • 
tresjsfoich. have beentmflt out- 
side the region's mam towhs^ 
amTcfties. 

These centres^ built :<Hi 
greenfield sites since unifica- 
tion, undoubtedly fulfil' a 
demand. Before 1989, eastern 
Germany’s retailing sector, 
such as it was, was monopol- 
ised by the Kbnsumgenossea- 
schafl cooperatives, consisting 
of department stores, super- 
markets and small outlets; and 
the Handelsorganisatuxn, the 
state-run retail sector. Com- 
pared with western German 
levels, which has . 1-L2 sq 
metres per capita of retail out- 
lets, there were 0.3 sq m per 
capita in. eastern Germany 
before 1990. 

Following unification, the 
large retailers from western 
Germany rushed in, encour- 
aged by a consumer spending 
spree by east Germans. In most 
cases, the big chains decided 
Immedia tely to acquire prop- 
erty outside the city ce ntre. 
They bought cheap land from 
the local councils, often for 
only DM3 a square metre. More 
importantly, they could 
acquire the land easily 
because. ««»Hha the centre of 
the cities, there were few prop- 
erty rights claims. In addition, 
they could take advantage of 
investment grants allocated by 
the states of eastern Germany. 

But there was another rea- 
son why the west German 
retailing sector decided to 
locate outside the cities. Not 
only was the land relatively 
cheap, but retailers could 


□ 0 ram piiUUUUG r 

quickly, unlike western Ger- 
many where planning pennis- 


skm is-strict, and because the 
local eas t e r n councils realised 
they amid reap some of the 
benefits by rtatmtng turnover 
tax from the retailers; 

Above west , German 
retailers arrived in eastern 
Germany at a time when the 
city authorities themselves bad 
not yet decided what kind of 
long-term planning they 
wanted for the inner cities, to 
short, 210 lobbies had yet 
emerged in the city councils to 
protect the small shop-keepers 
and retail sector in the inner 
cities from the competition 
emerging outside the city 
perimeters.. : 


over tax from the retail sector. 

Mr Krausch believes that 
Leipzig Is losing taxes on an 
annual DM900m turnover in 
the retail sector. In contrast, 
the small local council of 
Gflnthersdort west of Leipzig, 
which has a population of ESQ, 
can expect to thrive from the 
giant 100,000 sq m Saale Park 
shopping complex which is 
expected to reach a turnover of 
DM85Gm by 1995. 

The cities in eastern Ger- 
many are now an the offensive, 
tightening up planning permis- 
sion with the aim of curbing 
the continuing expansion of 
foe shopping centres. 


New shopping centres are chiseffing away at the 
smaHer retailers and taking away employment 
in the Inner cities, say critics 


. Eastern Germany's city 
authorities are now question- 
ing the benefits of these shop- 
ping centres.. 

Mr Ralph Kauscb, a retailing 
expert at Leipzig's Chamber of 
Commerce, says the cities are 
the main losers. "A struggle is 
taking place between the city 
government and local councils. 
That struggle is about how to 
win back consumers to the 
inner cities. The shopping cen- 
tres are chiselling away at the 
small retailers in the city and 
taking away employment in 
the inner cities." 

By 1993, only 20 per cent of 
retail outlets, including depart- 
ment stores, zn eastern Ger- 
many had been based in the 
cities compared with about 80 
per cent in western German 
cities. The absence of the large 


anO fkof 


cities, already strapped for rev- 
enue are deprived cl the torn- 


Ms Irene Krause, an 
at Leipzig's planning office, 
said tiie city had already 

gpafrtari planning jyjrjpjfisfm t tn 
develop 455.000 square metres 
of retailing outside the city bet 
in future the city authorities 
intended to impose limits. 

It may be too late. Mr Bemdt 
Bfrckeri; president of the Asso- 
ciation of German retailers, 
said recently that the cities 
provided few incentives for 
retailers after German unifica- 
tion. "Property in the inner 
cities was too expensive and 
properly rights were undear,” 
he said. In Berlin’s Mitfce, the 
heart of east Berlin, retailers 
would have had to pay 
between DM20,000 and 
DM30,000 a sq min the boom of 
1992. 

Yet there is a positive side to 

+Tu» TOtaflirnr i^mnJ nu m o nh nf 


the past three years. If the 
infrastructure outside the 


cities continues to improve, it 
Is likely the consumers and 
retailers will both win: con- 
sumers will be given more 
choice at more competitive 
prices, and retailers, boosted 
by the availability of more 
capacity, unthinkable in west- 
ern Germany, can now rethink 
their long-term strategy for 
retailing throughout Germany. 

Mr Cy Schluter, a Frankfort- 
based retailing expert, said 
that retailers will be able to 
build large warehouses, which 
will cut costs, shorten delivery 
times, and pass on some of the 
benefits to the consumer. “If 
you have a large warehousing 
network, the transport and 
delivery costs can be kept 
down, and ultimately prices 
can be kept down as well,” he 
said. Mr Schluter added that as 
the road network improved, 
retailers would increasingly 
use eastern Germany as a base 
for moving goods across Ger- 
many. 

But it remains to be semi zf 
the economy of eastern Ger- 
many can support these large 
retailing outlets as the fear of 
unemployment forces people to 


There are few worries on the 
home-improvement front, as 
east Germans continue to reno- 
vate their homes. Homhach, 
the large home improvement 
department stores, expects its 
four outlets In eastern Ger- 
many to account for a quarter 
<rf its total turnover, which last 
year exceeded DM750m. 

But Mr Schluter believes the 
food sector could come under 
pressure. “The outlets are not 
near the centre. People tend to 
buy food every day. I am not so 

nrrp thm> nro nnsnaiwl tn rtrn» 


some distance for the most 
basic food items." 


The East German Investment Trust PLC 

Manager 

ERMGASSEN 8c Co 

24 Lombard Street 
London EC3V 9 AD 


The cost has undoubtedly 
been astronomical, with 
DM28bn spent so [ar. It is one 
key lector driving Deutsche 
Telekom towards privatisation, 
which will provide the option 
of financing its capital spend- 
ing through the stock market 

The federal court of auditors 
has expressed the fear that the 
programme has been con- 
ducted regardless of expense, 
and many outsiders believe it 
might have been cheaper to 
allow the major international 
telecoms giants to compete in 
the market 

Deutsche Telekom retorts 
that it is only thanks to its 
monopoly that it was able to 
mobilise such vast resources so 
quickly. 1 

"Perhaps we have sometimes 
paid twice for the same line. 
And we threw cables over 
autobahns, and hung them 
from the trees, knowing they 
would only be used for six 
months. We used every possi- 
ble contingency. But the need 
was urgent. The politicians 
demanded it,” says Mr MenzeL 

“The lack of telecommunica- 
tions was the biggest single 
disadvantage cited by potential 
investors. Today it isn’t seen 
as a serious disadvantage any 
more." 


Unification of post codes 


The stamp of unity 


I t was July 1, 1993. The 
postman arrived at the usual 
time. 

"I thought you might be a 
bit late because of the new 
postcodes." 

"Oh no - the system is 
working fine. The Gomans 
have had enough time to tell 
their Mends and contacts 
about the changes,” said the 
postman. 

Not even the post code 
could escape the affects of 
German unification. “After all, 
we could not have Bonn and 
Weimar sharing the same post 
code of 5300. Could we?" said 
Mr Norbert Sch&fer, of the 
federal post office. 

The west German postal 
code system was introduced 
in 1961, the year the Berlin 
Wall divided this great city. 

The east German system, 
considered more rational 
because it had more post 
codes covering much smaller 
areas, was introduced in 1965. 
But with unification came the 


re-writing of toe past code. 

The new post code, Inspired 
by the French and Swedish 
models after two years of 
research and trials, Involved 
scrapping the existing 5.400 
codes and replacing them by 
26.400 new ones. 

Gone is the old “W*, (for 
West Germany) followed by 
a number, the cfty, then 
another number. 

Gone too « the “O" for east 
Germany. Instead, the post 
code has been simplified with 
just a set of numbers 
preceding the city, town or 
village. The first two numbers 
denote the region, the last 
three the local post office. 

The German post office 
spent DM400m on introducing 
the new system, which 
included QM200m on Its 
development, such as installing 
new computers, DM80m on 
advertising, and DM120m for 
distributing to the country’s 
34m households the hefty 1.3 
kg new postcode book - 


which even merited a book 
review in toe conservative 
Frankfurter AJigemeine Zeitung 
on April 30, 1993. 

Everything was ready by July 
1, 1993, when the two 
separate postcodes of eastern 
and western Germany were 
unified. 

And hie success rata? After 
a few initial complaints from 
the large retail and 
mail-ordering services, the 
poet office authorities fed they 
can take a bow. 

“The acceptance rale has 
been very fast and high,” said 
Ms Franzi Koski, an official 
at the post office. 

"Several weeks after 
introducing it, we had a 90 

per cent acceptance. Now, 

we have about 96 per cent 
rate. We expect 99 percent 
soon* 

And toe postman will 
continue to turn up at the 
usual time. 


Judy Dempsey goes on the trail of the disappearing Trabi 3 

A plastic body has its uses 


Mr Peter Mattaach reckons his small 
business which he set op last year has a 
good chance of surviving. 

Jtaram, employing 30 people, specialises 
in breaking up and recycling cars. Not 
only western models, but the famous Tra- 
bant - affectionately known as *the 
TrabL* The bodywork, with its spluttering 
two-stroke engine, is made of plastic 
rather than steeL It was one of the sym- 
bols of the former German Democratic 
Republic. But like so many other prodr 
nets, it was in permanent short supply. 
People had to wait nearly a decade for 
one. Bjr the time the Berlin Wall fell in 
November 1989, there more 1.9m Trahf 
drivers on the roads. 

As soon as unification came, many east 
Germans swapped their Trabi for a west- 
ern car. But not ever y one did. Today, 
more than 920,000 Trabies still chug 
along the roads of east Germany - “it’s 
surprising bow many of these cars stM 
exist," says Hr Mattanch, whose company 
is based in Bohr in the eastern state of 
Hmringifl- T suppose it’s because the old 
Trabi is still cheap.” 

But there’s another reason: the Trabi 
has become a bit of a cult symbol in 
eastern Germany, and not least, part of 





Sta chugging along: so old TraW car In tfta centre of Leipzig 


Picture Tony Andrew*. 


the nostalgia for things east German. Mr 
Mattaueh is already breaking up 3,000 


But don’t for a moment think that there 
Is no life after death for a TrabL Because 


cars a year, including 1,000 Trabies. He is it is not steeL it can he shw>drf gd, melted 
delighted that the east Germans have not down, and then made into a form of plas- 
yet deposited their Trabi es at waste ter for the building Industry - which 


recycling centres - “Til be in business for 
a long time - I hope." 


shows it has qualities hitherto unknown 
to its critics. 


Thinking global... actin^focal. 



MT? 

riTi* 







V*t*/X* • • 


H elaba Frankfurt is a public-sector universal 
bank ranking alongside Germany's most 
prominent financial institutions with total assets of 
more than DM 100 billion. From its German base, 
it provides global presence to meet customers’ 
growing banking needs. Helaba Frankfurt offers 
a broad range of commercial and investment 
banking facilities: Wholesale banking for large 
corporations, central banks, and government 
entities. Brokerage and investment advisory 
services. Issuing own notes and bonds. Dealing on 
foreign exchange markets and of course on tbe 
DM bond market. Helaba Frankfurt is at home 
in tbe key international markets, operating fully 
functional branches in London and New York 
and a subsidiary in Luxembourg specialized in 
Euromarket transactions and private banking. 


Head Offices: 

Frankfurt / Germany 

Junghofstr. 18-26, D -60297 Frankfurt am Main 
Phone: (69) 1 32-01, Telefex: (69) 29 15 17 

Erfurt/ Germany 

Bahnhofstrasse 3, D-99084 Erfurt 
Phone: (3 61) 66 57-0, Telefax: (3 61) 2 62 84 

Branches: 

London 

8, Moorgate, London EC2R 6DD, UK 
Phone: (0 71) 3 34 45 00, Telefax: (0 71 ) 6 06 74 30 

New York 

499, Park Avenue, New York, N. Y. 10022, USA 
Phone: (2 12) 3 71 25 00, Telefax: (2 12) 8 38-92 18 

And offices in Amsterdam, Berlin, Budapest. 
Darmstadt, Dublin, Duesseldorf, Kassel, 
Luxembourg, Prague, Stuttgart and Warsaw. 


p; • . JX 


holds participations in 17 companies in East Germany 


Traded on the London Stock Exchange 


Reuters International Code: EGI.L 


Helaba Frankfurt Helaba FimitnMyolt 

The bank with all the right connections. LANDESB ANK HESSEN-THORINGEN 








ssr-ss s .B SB 


Germany’s new states are mov- 
ing in the right direction. Powered 
by the collective and individual 
efforts of the region’s residents, 
eastern Germany’s economic struc- 
tures are being transformed. One 
major part of this transformation 
has been effected by the Treuhand- 
anstalt, which has privatized thou- 
sands of centrally-controlled eco- 
nomic units since summer, 1990, 
when the agency launched its main 
operative phase.Before the ultimate 
goal of creating a functional free 
market economy in Germany’s new 
states has been achieved, many 
obstacles have to be overcome. The 
region’s companies are still con- 
tending with slumps in their tradi- 
tional markets in both eastern and 
western Europe. The companies 
themselves are undergoing the 
rigors of top to bottom revampings 
of their production facilities and 
operating technologies. Carrying 
this out has involved the highest 
degree of toil and personal sacrifice. 
Many persons have been con- 
fronted with the loss of their jobs 
and with corresponding periods of 
unemployment, others with the 
challenge of learning a new profes- 
sion. Despite this, one fact remains 
of central pertinence: the transfor- 
mation has gotten off to a solid start. 
The region’s newly-recreated eco- 
nomy is generating products and 
services well capable of competing 
successfully on international mar- 
kets. This fact is documented by the 
figures for sales made by the 
region’s individual economic sec- 
tors. The worst is over for eastern 
Germany’s economy, a time of 
growth is at hand. 


Focus on: 

TLG and property 


The Treuhandanstalt has the 
world’s largest portfolio of real 
estate. This portfolio is managed 
by the TLG, a Treuhandanstalt 
subsidiary, and comprises every- 
thing from downtown la sites to 
exurban business properties with 
quick access to divided highways 
and rail lines. The TLG’s portfolio 
also includes palaces, lakeside 
plots and properties on the Baltic 
Sea. For die innovative investor, 
the TLG has something special 
to offer: “Amerika”, 28 acres of 
riverfront property featuring an 
historic textile mill and related 
facilities and grounds. 

A full-service provider, the TLG 
is headquartered in Berlin and 
maintains offices in all five of 
Germany’s new states. These offices 
are staffed by professionals with 
an in-depth knowledge of local 
real-estate markets. 


Compensation packages were 
provided to those experiencing - a 
sadly unavoidable - loss of their jobs. 
Both these packages and job-crea- 
tion programs were often made 
possible by large expenditures of 
Treuhandanstalt funds. Despite all 
the changes taking place in the 
region’s companies, they have never 
stopped investing in the future and 
in tomorrow’s human capital. Some 
6.8% of all persons working at the 
region’s companies are trainees - an 


average exceeding those in western 
Germany. 

The industrial sector in Ger- 
many’s new states has registered a 
further rise in output. Companies 
privatized by the Treuhandanstalt 
over the past three years have 
played a major role in causing this 
“marked increase in the level of 
industrial activity in the new states* 
as it is being termed by leading 
German economic institutes. This 
industrial sector is not only growing 
in both size, but also in sophisti- 
cation. One prominent example: 
plans are being finalized to produce 
ultra-high performance chips in 
Saxony. Siemens intends to capi- 
talize on the Dresden region’s years 
of experience in manufacturing 
advanced electronic components 
when undertaking these production 
activities. The Treuhandanstalt has 
helped sustain the area’s manufac- 
turers during their time of transi- 
tion. 

Other prominent example of the 
region’s companies taking on highly 
competitive world markets is in 
Thuringia, where Carl Zeiss Jena 
and its associates have developed 
new ranges of optical and micro- 
electronic products and sensoric 
ins truments. Underpinning this 
new start is a new operational pro- 
ductivity in the companies involved. 

Another example is in Mecklen- 
burg-Western Pomerania’s ship- 
building sector, long a traditional 
activity on the Baltic coast. New- 
comers to r anks of the state’s ship- 
builders (but by no means to the 
international shipbuilding market) 
are Kvaemer, the Norwegian com- 
pany, and Hanse Holding, part of 
the Bremer Vulkan group. 

EKO is a steel-manufacturing 
company located in Eisenhiitten- 
stadt, Brandenburg. Its future has 
just been resolved. Italy’s Riva 
group will acquire a majority stake 
in EKO and will manage its oper- 
ations. 

The new states’ industrial trans- 
formation has been especially 
pronounced in Saxony-Anhalt’s 
“Chemical Triangle”, which is lo- 
cated between the cities of Halle 
and Merseburg. One of the facilities 
issuing from this sweeping change 
is a new refinery located in Leuna 
and belonging to France’s Elf- 
Aquitaine. 

These are just a few of the 47,000 
privatizations already facilitated by 
the Treuhandanstalt. 

As of January, 1994, the Treu- 
handanstalt’s portfolio contained 
less than 250 companies still seek- 
ing private-sector ownership. This 
relatively small number does not, 
however, by any means indicate that 
the agency is running out of thing s 
to do. 

Quite the opposite. The Treuhand- 
Liegenschaftsgesellschaft mbH 
(TLG) is the agency’s highly-active 
real estate arm. One of the factors 
boosting the growth of a broad- 
based corporate sector in Ger- 
many’s new states has been the 
corresponding rapid development 
of its real estate market. The TLG 
and its partner companies have 
played - and are playing - a major 
role in creating and farther develop- 
ing this market. 



Ge 




ai 


(ea 


w. 


The Treuhaians 


set thcours 


Privatization: the path to a private sector 




14,000 


number of 
privatizations 


companies 
created by , 
deconcentration 


10,000 


\» v. * 

i ***»'.^' 

O 
\ V 

' > - 




companies yet to 
be privatized 


In 1990, the Treuhandanstalt assumed the responsibility for more than 8,000 economic 
units, which had formed part of East Germany’s centrally planned economy. Through 
deconcentration and split-offs, some 13,000 independently-run companies were created. 
As of the beginning of 1994, some 250 companies were still awaiting privatization. 


The Treuhandanstalts balance sheets 
in 1990/91 and in 1992 


DM corrected balance 

opening balance opening balance as of 
sheet 1.7. 90 sheet 1.7. 90 31. 12. 91 


balance 
as of 
31.12.92 


ASSETS 


A. Property transferred to tbeTreuhand under the Trusteeship | 
Act (“Treahandgesett”) and the German- German | 

Agreement on Unification (“ESmgnngsvertrag”) j 

f. Equity held { 

11. Mining property 

HI. Agricultural tend and forestry properties 

IV. Other non-finanrial assets 

V. riahns against Treuhand companies 

cl aim s arising from liabilities for equalization 
accruing in accordance with § 25 DM BilG 
(Germany’s law on balance sheets) 
loans to partners 


in DM 
million 


in DM 
million 


in DM 
million 


in DM 

milli on 


78,909 

U87 

16,063 

5,772 


77,836 

1,388 

15,959 

6,053 


45,568 

982 

15.310 

5331 


B. Other assets held by the Treohand 

I. Fixed assets 
Intangible assets 
Tangible fixed assets 
Financial assets 

II. Current assets 
Goods on hand 
Receivables and other assets 

a. Due from privatization agreements 

b. Due from Treuhand companies 

c. Due from affiliated companies 

d. Other assets 
Securities 

checks, cash on hand and at banking institutions 


-a., ■- 


' ■' ‘V- ’""’l C .. _ 


C Accruals and deferrals 


D. Deficit 


209,291 


235,015 


246,585 250,318 


Stun totals 


323,522 


350301 


331324 321351 


o*.. 

\ ■*._ 1 













f 







dor 


production 


rt* s : 


1990 *=100% 


1990 


pal 

1 — 

construction 

r 


basic and 

— producers’ goods 


tXZ^: 


Z 




iooi 

1992 

1993 


This is a graphical presen^nol neim^ Member, 1990. As the chart indicates, 
states. The point ° f referent 000) ^ flt paths of development. The con- 

the individual sectors have ^wjvelrtte Sion’s rapital goods producers are still 


DM 

I opening balance 
sheet L7. 90 


corrected balance 

i opening balance as of 
sheet 1.7.90 31. 12-91 


LIABILITIES 


in DM 
. milli on 


f eSC ^^r¥es constituted to 

of ptoperti« held ^ ^ ^^tainaiion 

liquidation avd^rmot ^ rtgiona] 

for °q^nal owners (roprivatonon) 

and compe ngtfian t ^ n , mltroOT K ta composate 

‘ ' , mgke interest 


for loss - 

GermWs^P^^entto^ 

IV. Res erres settlement fond 

-gvwnents to tbe ..^Mhonl# 


in DM 
milli on 


in DM 
milli on 


balance 
as of 
31.12.92 


in DM 
milli on 


Htf 99 I 9,646 


• V. 

VI. other resenes 
B-UABBJnES 

!• ***“ ^jH-iispettsing insttw*" 0 ”® 

1 SS*:S^r 

SSSTm3« G “* rf! ”“ 

.. ■JSSSt-**--' 

VIL Other liabilities 


39,893 


14,546 

1,817 


323,522 


44,440 


17,029 

1,404 


350,301 


The Bodenverwertungs- und Ver- 
waltungsgesellschaft^ (BVVG) is 
charged with administering the 
agency’s portfolio of 3.7 m i ll ion 
acres of agricultural land and ^ 2 
million acres of woods. In financial 
year 1992/93, the BVVG concluded 
9,412 lease agreements; for 1993/94, 

more than 6,700. 

The Treuhandanstalt’s contract 
management department is also 
quite busy managing its nearly 
30,000 “charges”. The departments 
job is to ensure that the agency’s 
contractual partners adhere to these 
agreements. On a contract by con- 
tract basis, the department super- 
vises compliance with such items 
as number of jobs guaranteed and 
investment commitments. All told, 
the Treuhandanstalt’s contracts 
now involve DM 45 billion in pro- 
ceeds from privatization, guaran- 
tees of 1.5 million jobs and commit- 
ments to invest DM 180 billion. 

Another of the Treuhandanstalt’s 
major, ongoing responsibilities is 
returning property expropriated by 
the East German government to the 
region’s districts and large-sized 
cities. To date, local governments 
have placed 76,978 applications for 
the return of such items as airports, 
street car lines, daycare centers and 
sports facilities. Of those applica- 
tions, more than 31,000 have already 
been processed and resolved. 

. An onerous responsibility 
remains the administration of the 
“special property” formerly in the 
possession of the “Commercial 
Coordination” department of the 
East German security forces and oi 
that previously owned by the coun- 
try’s Communist party and related 
organizations. This responsibility 
has an especially vexing dimension. 
These assets, presumably worth bil- 
lions of marks, must be first tracked 

down. . , , 

Three thousand companies nap 
reached the point where their 
reorganization and recapitalization 
was no longer possible. These com- 
panies had to be closed down- 
However, by selling mdividual 
operations or assets, liquidators 
employed by the Treuhand have 
been successful in securing more 
than one third of all jobs at these 
companies. The majority of these 
liquidations won’t be concluded 
within the immediate future. 

When its companies have been 
privatized, the story of the “Treu- 
handanstalt” - in its present form - 
will come to an end. Its objective 
was and remains to put itself out of 
business. The Treuhandanstalt has 
submitted proposals to Germany s 
law-makers on ways to restructure 
the agency’s operations in the post- 
privatization phase. Now it s up 
the law-makers to decide. 

This transition of operations has 
been scheduled for the end of 1994. 
The Treuhandanstalt will bequeath 
a sound financial situation to its suc- 
cessors. Balance sheets have been 
compiled and audited, reserves 
have been formed for future even- 

tualities.Money spent by the agency 

went to secure jobs and the future ot 
the Treuhandanstalt’s companies. 

In doing this, the Treuhand- 
anstalt could not avoid making 
mistakes. District attorneys are 


currently prosecuting a number o 
cases. These will then be brought 
for resolution in courts of law. ine 
Treuhandanstalt is actively support- 
ing the prosecuting authorities in 
their efforts to combat this form oi 
white-collar crime. 


The TLG in facts 
and figures 


- The TLG currently has some 

70,000 properties in its port- 
folio. , . ... 

- 980 persons are employed at its 
headquarters and at its fifteen 
offices. 


The track record 1991 to 1993 
Some 25,400 properties have 
been privatized, resulting in 
proceeds of DM 14 billion, invest- 
ment commitments of DM 39 
billion and the guaranteeing of 
240,000 jobs. 


A broadly-based private and pub- 
lic sector coalition is currently pro- 
moting purchases of products and 
services from Germany’s new states. 
Participating in this program is one 
way to assist the persons m Ger- 
many’s new states in their efforts 
to transform their economic system. 


Your questions for the 
Treuhandanstalt. 


Fax your queries fo. 

(+49-30) 31 54 1031: 




I would like more information on 


□ the Treuhandanstalt’s entire 

range of activities 


□ the Treuhandanstalt’s 
finances 


| 1 companies still awaiting 
privatization 


□ the sales campaign on behalf 
of companies in Germany’s 
new states 


□ TLG and property 


17,038 
96,838 
56,682 
111 


90 


| I business opportunities 

provided by the region’s small 
and medium-sized companies 


Our address: 
Treuhandanstalt 
Public Relations 
Detiev-Rohwedder-Haus 
Leipriger Strasse 5-7 
D-10100 Berlin 


& Treuhandanstalt 


4 


Sum totals 




- • * 




n.T' :-7.5W' 





RESTRUCTURING OF EASTERN GERMANY 8 



The left’s confidence is growing 


T he east German economy 
is only 9 per cent of Ger- 
many's total Gross Domes- 
tic Product, but its population 
represents a fifth of the coun- 
try. The question in the federal 
elections to be held next Octo- 
ber is whether east Germany 
will bold the national balance 
of power. 

The most recent poll by Ipos, 
tiie Mannheim-based Institute 
for Social Research, suggests 
that the Christian Democratic 
Union (CDCJ) coalition will not 
win if it fails to improve its 
standing in eastern Germany. 
However it is slowly clawing 
back some of its lost support 
An Ipos poll last December 
showed the CDU with 32 per 
cent of the vote in the west 
and 22 per cent In the east; the 
SPD with 45 per cent and 38 
respectively; and the FDP, 5 
per cent and 6 per cent. 

But by April 22, the CDtTs 
standing improved both in 
western and eastern Germany. 
In the west it Increased to 39 
per cent, in the east, to 24 per 
cent; the SPD lost ground, fell- 
ing to 41 per cent in the west 
but increasing in the east to 40 
per cent. The FDP, the Junior 
coalition, had fallen to 4 per 
cent in the west and 3 per cent 
the east 

The PDS, the reformed suc- 
cessor party of the former rul- 
ing east German Socialist 
Unity or communist party, 
which is based in the east, con- 
tinues to make ground, rising 
by 2 percentage points between 


Political puzzle: despite recent polls, many east Germans admit that 
they wilf cast their votes differently in the ten local government and 
state elections, culminating in the federal elections in ... 
October, says Judy Dempsey 


December and April to Iff per 
cent; the Bfindnis 90/Greens 
have ll per cent in the. west 
and 9 per cent in the east 

“The CDU will have to make 
a big push and really Improve 
in the east if it wants to be 
returned to office,” Said Mr 
Matthias Jong, head of Ipos. - 

dearly, the economy, partic- 
ularly unemployment, will be 
the T flsd" issue upon, which the * 
election mil be fought In the 
east unemployment accounts 
for 1G .8 per cent, or L2m of the 
labour force. But it as econo- 
mists forecast west Germany 
is emerging from the recession, 
it could have a positive spin-off 
for investments in eastern Ger- 
many, besides improving the 
general level of confidence, and 
boosting Chancellor Kohl’s 
chances. 

On a different level, other 
polls indicate that east Ger- 
mans seem less angry and dis- 
appointed than they were a 
year ago with the conse- 
quences of unification. But 
would this benefit the present 
coalition? 

Officials from the five east- 
ern states believe that the east- 
erners will register an anti- 
Kohl vote, but perhaps not on 
the federal level - “I may be 
wrong,” said one senior official 


from the state of Saxony,, 
winch Is CDU, “bat I think that 
the incumbents wQI suffer on. 
the state level in order to regis-. 
ter an anfrKahl vote. After all, 
four of the five states have ; 
CDU prime ministers.'* 

However, he and other offi- 
cials said that on the federal, 
level, the CDU might scrape In 
because “although the eastern- 
ers may not like Kohl, they ; 
know him and they link him 


government and state elec- 
tions, c ulminating in the fed- 
eral elections m October. 

‘ They say the local govern- 
ment el ections will be based on. 
lnryi issues; personalities will 

play an important part on the 
-state level; end how they vote 
on the federal election will 
depend cm how urgently they 
want a change of government 
in. Bonn. 

- They also make two other 


■ THE FIRST ALL-GERMAN ELECTIONS 


to v£a& 



p '^nripi ^h j falinyar iLl psTQBDt 

|i -O. outers, todw&rfPDS: —-rr 


with achieving unification. 
Rudolf Scharpiog [the head, of 
the SPD] is still an unknown 
quantity.*' 

Many east Germans admit 
that they win cast their votes 
differently In the nine local 


points, first, they increasingly 
realise that there are now no 
quick answers to unemploy- 
ment or restructuring. And 
since the massive transfers 
from the 'west cushion the 


sumer spending, ttfey ■*» 
slowly coming to accept the 
JSidW«h.c« social 
political and economic. 

changes. . ___ 

Second, they are sffiT unsure 
about what the SPD stands for, 
unlike the CDU, or for -that 
matter the PDS, which accord- 
ing to opinion poBscoald win 
at feast 16 par cent aa^even 
pass the 6 per cent: threshold 
nP «»tad to enter the Bu ndestag 

or parliament through . ^ttfog 
three candidates directly 
elected. Yet none of the estab- 
lished parties, with the excep- 
tion of the PDS, can rdy on 

membership in the east to help 

in the campaign. By the tod of 
last year, the CDU had a total 
of 83,794 members in eastern 
Germany, 10,000 fewer than the 
previous yea r, the SFD’s'25.000 
members rose by 200”, the FDP 
is hovering at around 35,000, 
after falling from 100,000. in 
1990; the PDS has 131.000 mem- 
bers, a drop of 16,000 over the 
same period. 

"The low party membership 
is worrying;’ said the Saxon 
official. “But what concerns ns 
most is that the east could 
matter, if, in the west, both 
political parties are neck and 
seek at the opinion polls by 
next October but the CPU h as 
not moved from its current 24 
per emit level in the east 1 

“Everyone will then start 
counting the numbers in the 
east They would be very 

..mini t/i nwrlerf tho nvlffl) 


Fuel and power are a marketing nightmare, says Judy Dempsey 

Smoke gets in their eyes 


T he restructuring and pri- 
vatisation of eastern Ger- 
many's electricity and 
brown coal sector was argu- 
ably one of the greatest chal- 
lenges facing the Treuhand 
and the federal government 
Brown coaL or lignite, exists 
in large quantities in Germany 
and is reclaimed by open cast 
mining mainly for use In 
power stations. 

Faced with the agonising 
choice of opening the sector to 
the market or protecting jobs, 
the compromise agreed in 
August 1990, between the for- 
mer east German government 
the Treuhand privatisation 
agency, and west Germany’s 
utility companies ensured that 
eastern Germany's energy sec- 
tor would not be exposed to the - 
full rigours of real competition. - 
The Treuhand had inherited 
two huge and notoriously inef- ■ 
ficlent fields - Laubag in the 
states of Brandenburg and 
Saxony-Anhalt, and Mibrag, in 
Saxony-Anhalt and Saxony. 

Employing more than 110,000 
people before unification, pro- 
ductivity at the two fields was 
at least 50 per cent below west 
German levels, even though 
east Germany’s per capita 
energy consumption was 
among the highest in the 
world, exceeding west Ger- 
many’s by more than 25 per 
cent The potential for waste 
was enormous. 


Furthermore, the former east 
German communists had made 
brown coal minin g a top prior- 
ity. but failed to allow for the 
effects on the environment by 
working out a coherent strip 
mining plan. By 1989, brown 
coal accounted for 70 per cent 
of the region’s primary energy 
consumption. A third of east 
German railway capacity was 
engaged in serving th fe single 
industry. 

The Treuhand also inherited 
the chain of filthy, pointing 
power stations which ran on 
brown coal. The plants, run by 

The Treuhand inherited 
two huge and notoriously 
-inefficient coalfields, 
employing over 110,000 
people 

Veag, east Germany’s main 
electricity company, is due to 
be privatised later this year. 

The Treuhand’s scope for pri- 
vatising the electricity sector 
was restricted from the begin- 
ning by the Stromvertrag, or 
Electricity Contract between 
the former west and east Ger- 
man governments. Signed in 
August 1990, it authorised west 
German utilities to own 51 per 
cent of east Germany's 15 utili- 
ties groups (all under Veag), 
with the remaining 49 per cent 
held by east Germany’s munic- 


ipalities. In return, the west 
German utilities, which 
include RWE, PreussenElektra 
and Bayemwerk, would under- 
take a large investment pro- 
gramme for Veag. 

To underwrite investments 
of about DM46bn in east Ger- 
many's electricity network, the 
Stromvertrag stipulated that 
east Germany’s regional utili- 
ties must, over the next 20 
years, buy 70 per cent of their 
energy from Veag. 

Meanwhile. Rheinbraun. 
RWE’s brown coal subsidiary, 
began assembling a west Ger- 
man consortium to buy east 
Germany’s Laubag brown coal 
fields as the fuel source for 
Veag. Laubag will fttel Veag. 
As for the Mibrag fields, it had 
been sold last December to an 
Anglo-American consortium 
comprising Britain's Power- 
Gen. NRG of Minneapolis, and 
Morrison-Knudsen of Idaho. 

Dozens of east Germany's 
local councils bad challenged 
the Stromvertrag at Germany’s 
Constitutional Court on the 
grounds that they had the 
right to 100 per cent of the 
assets, and not just the 49 per 
cent stake bequeathed to them 
in the Stromvertrag. They 
were overruled. Veag's owner- 
ship structure remains intact 

In the restructuring of the 
electricity and brown coal sec- 
tor, the Treuhand had to estab- 
lish one criterion: that the 



31 MAY 1994: 

24 OCTOBER 1994: 


GERMAN BANKING & FINANCE 

GERMANY 


For an editorial synopsis, advertisement 
rates or for a full survey programme 
contact: 

Neville Woodcock in Frankfurt 
Tel: (+49) 69 15685 - 120 
Fax: (+49) 69 596 4478 

or your usual Financial Times 
representative. 

Financial Times. Europe's Business Newspaper. 


value of Laubag and Veag - 
both interdependent in the 
sense that Veag relies on Leu- 
bag’s coal, and both have the 
same buyers - could not be 
played off against e a ch other. 
Since electricity prices in Ger- 
many are among the highest in 
the European Union, there 
were fears that the bidders for 
Laubag would beat down the 
Treuhand with the aim of con- 
centrating on extracting large 
profits from Veag’s electricity 
sales once the privatisation 
deal had been closed. 

After endless negotiations, 
the settlement for the sale of 
Laubag and Veag is nearly 
complete. Last February, RWE, 
and the other utilities agreed 
in principle to buy Veag for 
DM8bn, while Rheinbraun will 
make a down payment of 
DM2.lbn for Laubag, with a 
commitment of a further 
investment of DM6bn over the 
next 20 years. 

In alL Laubag’s current work 
force, down from more than 
60,000 to just under 12,000, will 
be farther reduced to 7,000 by 
the year 2000. Veag, which 
before unification had a work 
force of around 29,000, now 
employs 14500, and the num- 
bers will continue to felL 

Treuhand officials argue 
that, given the constraints of 
the Stromvertrag, they 
attained their twin goal of sec- 
uring jobs and privatising the 
industry, i 

Nevertheless, once Veag and 
Laubag is finally privatised, it 
will give west Germany’s utili- 
ties a virtuhl monopoly over 
the generation and distribution 
of electricity throughout east 
Germany. 

Mr Jfirgen Stotz, a member 
of Veag's board, staunchly 
defends the Stromvertrag and 
says that even if he could start 


The former east German 
communists made brown 
coal mining a priority, 
with scant attention to 
the environment 


again to restructure Laubag 
and Veag, he would not radi- 
cally change what had already 
been done. 

“We were faced, with a politi- 
cal and social problem,'* he 
explains. “We had to find a 
way of securing a future for 
brown coal, a DM40bn invest- 
ment programme to upgrade, 
or build a total of 12,300 mega- 
watt capacity (most of it reli- 
ant on brown coal) and at the 
same time have a programme 
to introduce a massive reculti- 
vation policy.” 

Mr Stotz added that when 
file restructuring is complete, 
the east's energy sector, 
including the brown coal 
fields, wfil not be subsidised, 
unlike west Germany's hard 
coal, each tonne of which is 
subsidised by about DM180 to 
keep coal imports down - 
“what we have done in eastern 
Germany will have been worth 
it," he said. 

Nevertheless, some energy 
experts still ask whether it 
would have been possible for 
Bonn to revise the Stromver- 
trag in a way which would 
open Veag and Laubag to inter- 
national competition, thus giv- 
ing the east German consumer 
cheaper electricity as well as 
making eastern Germany tile 
catalyst for opening up the 
country's energy sector to com- 
petition. 


Gas privatisation benefits are disputed 

High pressure policies 


T he Treuhand privatisa- 
tion agency and the gov- 
ernment in Bonn have 
succeeded in modernising east 
Germany's gas network. But if 
they also aimed at a truly com- 
petitive industry they have 
some way to go. 

In the opinion of the London- 
based Royal Institute for Inter- 
national Affairs, “domination 
by west German companies (in 
eastern Germany] meant a 
missed opportunity to strongly 
boast competition. As yet, no 
clear benefits for small con- 
sumers have emerged."* 

This missed opportunity 
occurred in the summer of 1990 
when Verb undnezt gas, or 
VNG, east Germany’s gas 
transmission company, was 
placed under the Treuhand. 
The agency allocated 35 per 
cent of tiie shares to Ruhrgas, 
Germany’s largest gas com- 
pany. and 10 per cent to Bri- 
gitta Erdgas-und Erdfll (BEB) 
In Hanover. (Ruhrgas also has 
a share in the latter.) 

Under pressure to open up 
the remaining shares to non- 
German gas producers and 
transmission companies, the 
Treuhand finally distributed 
its own 55 per cent share to Elf 
Acqoitaine, Statoil, Gazprom, 
Gommern and British Gas, 
each with 5 per cent stakes. 
The rest were distributed to 
eastern municipalities which 
obtained 15 per cent plus one 
share, and to Wintershall, the 
gas arm of BASF, Germany's 
largest che m ic al s group- which 
aiSo received 15 per cent plus 
one share. 

However, given Rnhrgas's 
close connections with the 
municipalities, VNG is effec- 
tively dominated by the Essen- 
based company - "Ruhrgas 
controls 60 per cent of VNG. 
You could have had competi- 
tion had Wintershall received 
equal shares to Ruhrgas,* says 
Mr Herbert Detharding, chair- 
man of WlntersfaalL 
After bitter wrangiings with 
the Federal Cartel Office, at 
which Wintershall in particu- 
lar tried to increase its stake as 
a means of breaking down the 
monopoly structure, and end- 
less disputes over the price to 
be paid for Russian gas sales to 
VNG, the ownership structure 
for VNG remains unchanged 
and stable and guaranteed gas 
supplies are now finally in 
place for eastern Germany. 

Eastern Germany's gas sec- 
tor has enormous potential, 
largely because growth is com- 
ing from a very low base. This 
is because the former east Ger- 
man communist regime relied 
heavily on brown coal, or lig- 
nite, to fuel the manufacturing 
sector and industrial sector. 
Until unification, lignite 
accounted for over 70 per cent 
of the primary energy market, 
and natural gas a mere 10 per 
cent; for domestic consumers 
the ratio was about the same. 
Several studies, including 
reports drawn up by the Ifb 
economics Institute in Munich, 
Prognos in Basle and Esso in 
Hamburg, reckon that gas con- 
sumption in eastern Germany 
is set to increase from 56bn 
kilowatt-hours, to between 
200bn and 225bn kwh by 2010. 

To meet this extraordinary 
growth potential, VNG has 
embarked on an ambitious 
modernisation programme. It 
entails converting town gas 
production plants - currently 
fed from a low quality gas - to 
natural gas; the construction 
or conversion of long-distance 


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gas pipelines and regional and 
local pipeline systems; the con- 
version of underground town 
gas storages; and the conver- 
sion of gas beaters, cookers, 
and other gas-fired installa- 
tions. 

Mr Wolfgang Eschment, a 
member of VNG’s board, says 
820,000 households, the equiva- 
lent of a third of east Ger- 
many's 245m users of town gas, 
had already been converted to 
natural gas by 1992 and a far- 
ther 1.2m by the end of 1993 - 
"by 1996, 1 reckon we will have 
converted about 80 per cent of 
all these customers." 

VNG, backed by Ruhrgas. 
did not waste time in finding 
new customers. The fact that 
VNG had dose links with the 
municipalities - who are repre- 
sented on VNG’s board - 
meant that they could win con- 
tracts without undue competi- 
tion in the towns and cities. In 
addition, to ensure almost 
blanket control over the gas 
sector in many municipalities. 
VNG has obtained sizeable 
stakes in energy companies, 
particularly in Leipzig, one of 
the fastest growing economies 
in eastern Germany. It has also 


secured contracts allowing it to 
supply 100 per cent of natural 
gas needs, apart from Lelpizg, 
to other cities, including Halle 
and Freiberg. 

Since 1991, the integrated gas 
pipeline system operated by 
VNG. and Erdgasversoigungs- 
geseSschaft, or EVG, the Leip- 
zig-based gas transmission 
company in the states of Thu- 
ringia, Saxony and Saxony- 
Anhalt in which VNG has a 50 
per cent stake, exceeded 
4,495km. The two companies 
operate an integrated gas pipe- 
line network of more than 8,800 
km. A report by VNG esti- 
mates that with these pipelines 
in place, by 2000 its new cus- 
tomers will Include a third of 
all dwellings in eastern Ger- 
many. 

VNG's two underground 
facilities of Retain and Kir- 
chheilingen have also been 
converted and others have 
been expanded providing total 
storage capacity for VNG of 
about LgZbn cubic metres for 
1992, while the first pipe tine 
connection with Poland was 
constructed in late 1992. 

Despite the conversion, pro- 
gramme, sales of gas have yet 


Demand for natural gas in Eastpm. Germany , 

■ SBVxvtcWb. ’ ‘ . ’ ■ 4 ! ■ \> v..r \ . ’■ ' :== 

Sob. 


Production of 
+ tewr 02$ 
Pow plants 
Reduction of 



* ' .tttt . 

Sovt&Ywtxndn*] Cte» Atj 


■ , / ' •- < y.- . -- 

. p a odd- '• ... j 2005. a tut 


to stabilise. VNG’s total sales 
in 1992 amounted to 85.8bn 
kwh, some 8 per cent less than 
in the previous year. Of this 
amount, sales of town gas fell 
by 31 per cent to 13.4bn kwh, 
as households started to switch 
to natural gas. 

VNG admits that neither 
new nof existing customers 
can help compensate for the 
sharp fall hi sales of industry, 
caused largely by the collapse 
of eastern Germany’s manufac- 
turing base. “But there is no 
doubt about the growth poten- 
tial of the region's gas indus- 
try,” says Mr Eschment “Our 
customers know we give them 
an excellent back-up service 
and a good price.” 

But are the consumers befog 
given choice? 

Despite limited entry into 
the tightly-controlled market 
by British Gas and Winter- 
3 hail, VNG, and its patron, 
Ruhrgas. do not face any seri- 
ous competition. Moreover, the 
way in which gas is distributed 
in eastern Germany means 
that the consumer pays a 
heavy price tor gas. 

As in western Germany, 
Ruhrgas sells its gas to distrib- 
utors, which, as is the case in 
the east. The distributors in 
turn sell the gas to the munici- 
palities, which are responsible 
for distributing and selling gas 
and electricity to the consum- 
ers. and where the eventual 
price of gas is set Essentially, 
the consumer ends up paying 
for two sets of middleman 
What Wintershall wanted 
was to sell gas directly to the 
eastern consumer, thus mak- 
ing it cheaper. But given 
VNG’s close relations with the 
municipal! tes, and since the 
dties themselves have the con- 
cessions, rights enabling them 
to issue permits for anyone 
entering the transmission 
grids, the chance for the east 
German consumer to exercise 
choice in price and supplier 
has been severely limited. 

For his part, VNG’s Mr Esch- 
ment argues that since the 
restructuring of the gas sector 
eastern Germans have gained 
an efficient and modem net- 
work backed by investments 
totalling DM346m in 1992. This 
includes DMlSOrn targeted on 
the construction or extension 
of natural gas pipelines, and 
DM56m on engineering and 
telecoms equipment 
* German unification and EC 
integration: German and Brit- 
ish perspectives. Editors, Bar- 
bara Uppert and Rosaline Ste- 
vens-StrOmann. RITA I Pin ter 
Publishers. 1993. ■ 



fc3Sj . jo. ry 






-FINANCIAX. TIMES WEDNESDAY MAY 4 1994 


RESTRUCTURING OF EASTERN GERMANY 9 




Sigr 

L995" 


168 1 - “fo Dempsey tours Gorlitz, a divided city on the Polish frontier 

| ; Iniie barbed wire remains 


■*9.5 S* 

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ea.i V 

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3 sector 


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'/• \ u m w«. i’-: 


T ie rusty, barbed, wire 
separating 7 Poland from 
___ , Germany had not yet 
bwntafcan down-The-roari an A 
'■ftsfl®* crossing si gns' needed a 
-coat, of paint But the Polish 
-/ borde r guards. were ao longer 
. surly.. 

-\Tbeyi- (Usually inspected my 
Passport, Perhaps .they were 
more, interested in the traders 
close ±o the bridge which con- 
nects the German and Polish 
sectors of. Gfirflfe (the Polish 
.part is ; called Zgorcekc). finer- 

-'getic young Polish men were 
trying ttt sell cartons af-dga- 
rettes-to visitors. 

. &s~ th& thick- co&L'fbg gave 
way to heavy rain, I crossed 
the bridge over the river 
Nefsse from Poland to the Ger- 
" man side . of -. GOrlitz, an . old 
' merchant ■ city once granted 
. - trading, privileges . from, the 
• jKgof Bohemia. 

- liOcpted in the south-eastern 
comer of eastern Germany, the 
c fty 1 had bean divided after the 
second world war, when the 
-- and : Neisse .- [{which flows 
through Gbriitz) became part 
; oT-Poland's hew -western bor- 
der- With the collapse of the 
friar. Gnrtahv the German half 
ofrthe city is[ trying: to find its 
" place in the neurtmited Ger- 
many. At .the. sawn tim e, the 
gap; between G&fitz and Zgor- 
“zfec Is: widening, particularly 

: yte want investors to 
: U5e<3orfteasa stepping 
off point for Potand’ - 

in infrastructure, thanks to 
assfetancefrom Bonn and- the . 
'.'stale of ‘Saxtmy. • r . 

’ . ’TVe-want to put GOrfitz on 
file inl and attract irrvestors ;• 
here,? .. said Str JSrg-Peter T 
Thoms, an official responsible ” 
- for construction; and economic 
issues at the cJty's local cdmv- 
cfl. ’ .. ■ • 

Before German unification 
■ many of Gtfriitz’s 69,00(1 people; 
were, dependent ah Deutsche- 
Wagganbaa, the large rail car- 
..riage manufacturer which t 
employed -3*800 but today has 
fewer than L65Q on ife books, _ 
the textOe/industry, and the. . 
electricity, convex at Hagen- ; 
warder, vhtefe wiH be dosed 
down by 1997; . 

“There areinvestment oppor- 
tunities 'an d ,tjte '.-.sfatfi:.-qf 

for 8nyone>settfiSg upTrasSheas . 
here,” saklMr ThHps.Tbe city 
had I^te-lSm iagrants' for - 
the centre itself, but invest-; 
meat had been sluggish. “We- 
have to improve the routes- 
into GdrHtz,” he explained, 
adding that once the A4 motor/ 
way was complete, and,the...- 
train services improved/ this-: 
extraordinarily beautiful city, 
me of the few in eastern Ger- 
many whose centre has not . 


been spoiled by crass commu- 
nist pre-fabricated architec- 
ture, would prosper. Hie is also 
waiting' for an end to the reces- 
sion in western Germany. 

Recession apart, investment 
in Gfirlitz is also linked to. 
resolving the outstanding prop- 
erty questions. Although inves- 
tors have priority over restitu- 
tion, compensation riahng by 
former owners continue to act 

as a brake on investment. 

Ms Annette Kreisch, 25, is 


Rights office In GOrlitz. The 
office has had no department 
head since last October, when 
the last ope, a west German 
lawyer, left, the third to do so 
since late 1996. 

. . Since that time,, the inade- 
quate staff of 22 people - all 
east Germans - and all con- 
fronted with complex legisla- 
tion an property rights - have 
had to deal with more than 
6,400 claxms. By early 1994, the 
office had resolved 2JMJ0 of 
them. It is estimated that the 
remaining 4,100 cases will 
require at least another four 
-years. 

“We are faster than some 
other offices in eastern Ger- 
many,” said Ms KreisciL But 
some claimants, fnrfnrffng Mr 
. .Frederick RaiTftnarm, who had 
to leave Gdriitz In 1988, have 
been frying nearly four years 
to get thpir property hack. . 

' The local Chamber of Com- 
merce, or IHK, says the prop 1 
erty rights issue is not holding 
- up investment. “Investment, in 
the foam of Services, and even. 

.. manufacturing — Stamens, for 
instance, has bought the Turfei- 
nenwerk here - will pick up 
once 'the infrastructure 
improves and the recession 
ends," said Mr Bernd Flammin- 
ger.'nieTHK’S members have 
invested DM158m since 1991 
V “Yousee^wewant investors 
to use G&iitz as a stepping off 
point for Poland, as well as to 
countries in the former Soviet 
Union,. It -makes sense. By 
losing bur city as a base, com- 
panies. can do business with 
eas tern Europe.” Officials at 
the lSK are all too aware that 
Gfirlrte.has to compete with 
Leipzig, -one. of 6»»- fastest 
growing tdtieir in eastern Ger- 
many, and Dresden, the state 
capital of Saxony. 

; “Look, it's the unemploy- 
ment that gets people down,” 
saideMr Klaus. Ulrich, Ksen- 
hammer. ~Mr 'Elsenhammer 
Wdiks at frie local WDaptoymeait 
a modem bright build- 
ing -which was: home to the 
Bentacon camera factory. But 
it was forced into liquidation 
and closed, after unification 
: with the loss of 1^500 jobs. 

< !Tdcm't want to sound pessi- 
mlaijv but there’s not much - 
left of the old Gdriitz in trams 
of local Industry. The textile 
enterprises, which once 





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Tlw Nstnrtc merchant city of QCdth: ottara now incantives tor Investors 


we have an additional 7,000 
people. That's a lot of people,” 
said Mr Elsenhaznmer, who 
admitted that the really secure 
jobs were at the employment 
office. 

He was hopeful about one 
thing - “we have to rely an the 
gmaTl cr aftsmen and traders to 
soak up some of the unem- 
ployed- That’s a real plus, espe- 
cially as more and more peo- 
ple, and former owners 
renovate their houses and 
investors modernise offices. 
But you know because of bor- 
der zone regulations, contrac- 
tors here can legally hire Pol- 
ish workers from just across 
the border and pay them far 
less.” 

Across town, Mr Roman 
MtlDer, managing director of 
Deutsche Wagomhan. or DWA, 
knows how mach the people of 
Gfirlitz depends on the 145- 
year-cdd railway carriage man- 
ufacturer. Unlike other Treu- 
hand enterprises, DWA makes 
money. Consolidated profits for 
the group weres DM2&3m in 
1992 on a turnover of DM3.6bn, 
with the GOrlitz branch 
accounting for DMlfim. Despite 
selling only to the east German 
and Russian market before uni- 
fication, DWA Gfirlitz has man- 


BuHdng confidence: Matthias 
Leduier, Ihe enwpatfc mayor 

employed 2,000 have dosed. 
Women have borne the brunt 
Two out of every three people 
unemployed are women,” he 
said. 

The employment office, 
which . also serves nearby 
Bautzen, last year spent more 
than DM3bn supporting the 
unemployed and those on gov- 
emmentrenpported job creation 
and retraining schemes and 
those who had taken early 
retirement “There were 6.196 
unemployed. If we add the 
other class of unemployed, 
those on the government 
schemes and short-time work. 


aged to earn half its last year’s 
turnover of DM42Qm from the 
German market Retaining the 
current levels of employment 
just under 1,700, wiE depend on 
how the Treuhand privatises 
DWA - as a whole or in parts 
- as well as orders from Rus- 
sia. The shortage of hard cur- 
rency in Russia has meant that 
the ma n ag emen t in Gfirlitz has 
placed more than 490 of its 
employees on short-time work. 

Gfirlitz needs someone like 
Mr Matthias Lechner, its ener- 
getic mayor, to instil hope and 
a sen^e of perspective. But the 
42-year-old aspiring politician, 
is no idealist Before unifica- 
tion he belonged to no party 
and now belongs to Chancellor 
Helmut Kohl’s governing 
Christian Democrats. He has 
tew illusions about the time it 
win take to restructure indus- 
try, as well as build a new 
political infrastructure. 

Since May 1990, he had spent 
at least 12 hours a day trying 
to rebuild confidence among a 
community suffering from 35 
per cent ^employment, if one 
takes into acc o u nt, all the peo- 
ple on retraining and job-cre- 

ation srhemes 

What surprises him was 
“how quickly people forget the 
past It's only four years since 
unification, yet people some- 
times think the bid days were 
better, ft's a strange phenome- 
non." 

One of the greatest difficul- 
ties feeing Mr Ledmer is per- 
suading people to become polit- 1 
ically engaged - “you need a ; 
lot of time for politics now. I i 
don't think people want to 
spend that much time, particu- 
larly since politics means 
accountability. When the coun- 
cil, for example, wants to raise 
the price an the public trans- 
port in order to pay for infra- 
structure costs, we were faced 
with a lot of complaints and 
natu rally we have tO ex plain 
all our decisions. Money is pre- 
cious. We have to be careful 
how we spend it” 

According to Mr Lechner. 
the debts of Gfirlitz amount to 
DML240 per capita of the local 
population, a level typical of 
other eastern German, towns 
and cities. “We have a credit 
line of DM1 00m from the franks 
and a separate budget of 
DM250m. But our tax revenue 
income is only about DM30m. 
Reaping results from local gov- 
ernment politics is a slow pro- 
cess. 

“You have to remember that 
people were so politicised in 
the old sense, that after unifi- 
cation they simply withdrew 
and tried to cope with unifica- 
tion and the traumas thrown 
up by ft.” 

Mr Lechner, who is standing 
again as mayor in next June’s 
local government elections, 
believes be can muster enough 
support to win, although he - 
and his deputy, Ms Renate 
Schwarze who represents the 
opposition Social Democratic 
Party - have few party activ- 
ists upon whom to rely. The 
CDU in Gdriitz has 250 paid up 
members; the SPD, 80. 


Investment case study: SMI Microelectronics 

Long way from Santa Clara 


Y ou only have to stand in 
the small “clean” room at 
SMI to grasp what is tak- 
ing place in this US-backed 
microelectronics enterprise at 
Markendorf, near Frankfort an 
der Oder on the Polish border. 

Through the windows on one 
side of the room one sees the 
remnants of eastern Germany's 
old microelectronics industry. 
It is a big workshop, decked 

with large computers, some 

covered with plastic sheets. 

On the other side of this 
insulated room is a small, mod- 
em testing station Installed 
last year and poised to supply 
its products to the European 
market 

The east German engineers, 
dressed like surgeons, quietly 
pass from one old world of 

increasingly out-dated technol- 
ogy to the new laboratory. 
They are symbols of transition 
taking place in the east Ger- 
man economy. 

But it has been a hard slog 
for Mr George Brown, the 
director of System Microelec- 
tronic Innovation, or SMI and 
a ter cry from Synergy Semi- 
conductor Corporation, bis par- 
ent company in Santa Clara, 
California 

“It has been slower than we 
expected, but we are getting 
there,” said Mr Brown, whose 
offices overlook what was once 

eastern n** rmnT>y *w main inirm . 

electronic enterprise. 

In a search for more capac- 
ity, the US company bought a 
49 per cent stake in the old 
VLB Halbleitwerk from the 
Treuhand privatisation agency 
in March 1993. The Kombinate, 
or enterprise, used to employ 
8,000 people and was one of the 
main enterprises supplying the 
circuits for the east G erman 
consumer market - mostly for 
television sets. 

But following German unifi- 
cation, the collapse of the east 
European and Russian mar- 
kets, and the exposure of the 
Kombinate to competition, the 
Treuhand pared down the 
work force to 1,200 and set 
about preparing it for privati- 
sation. 

Mr Brown, whose US com- 
pany was also seeking a foot- 
hold in Europe, eventually 
acquired the stake and a 
reduced workforce of little 
more than 600. Boosted by 
investment grants from the 
eastern state of Brandenburg 
and from the federal govern- 
ment, and a commitment by 
the Treuhand to pick up losses 
and redundancy payments, he 
agreed to initially invest 
DM45m for new equipment to 
produce ECL logic devices and 
ECL RAMS, used mostly in 
radio equipment 
Initially it had been hoped 
that SMI could continue to 
hold on to some of its east 
European, Russian and east 


German customers, which 
before unification accounted 
for almost 100 per emit of the 
company's turnover. But the 
shortage of hard currency and 
the need to find a m'cfre to the 
European market meant that 
Mr Brown had to reverse the 
company’s strategy towards 
the west 

The first year was spent on 
completely modernising the 
plant, and introducing new 
product lines. This meant 
training the engineers, either 
in Santa Clara, or bringing 
over US engineers to SML 

During this time, the compa- 
ny’s turnover to the eastern 
European and local east Ger- 
man market virtually col- 
lapsed, felling from DMTUm in 
1991/92 to nil by the end of last 
year. 

“We now have only one 
Option. We must continue to 
invest, and heavily. What we 
are bringing here is technol- 
ogy. knowhow and a new prod- 
uct idea. But it w31 take time 
to turn the company around,” 


wants SMI to evolve into a 
business anchored on subcon- 
tracting- Hie raison d’etre of 
the enterprise is to develop and 
market its own products, par- 
ticularly analog designs - cir- 
cuits for radio-controlled 
clocks, power switches and 
high frequency integrated cir- 
cuits for telecommunications, 

“Foundry business is very 
competitive. But It is a feirly 
low margin business,” said Mr 
LfiseL “You can't build a bust 
ness on it alone. We need high 
value-added products and Inno- 
vative products which can ulti- 
mately create high technology 
jobs.” 

Through their investment 
programme. Mr Brown and Mr 
Lfisel want to enter the high 
end of the market In short, 
they want to adopt the ‘'leap- 
frog” approach, whereby they 
can skip the intermediate tech- 
nology by introducing the 
highest levels of innovation. 

But the sprawling l sq km 
large site which they have 
inherited does not lend itself 



High technology environment: SMPs ‘clean room’ at Mark e ndorf 


said Mr Brown. 

like the “clean room”, the 
company finds itself in a finely 
balanced period of transition. 
As testing takes time, and 
money - it has already 
received quality certification 
for one of Its locally produced 
Integrated circuit lines - it 
must utilise its capacity to 
gain turnover before new lines 
are ready for foil production. 
Currently, the plant is operat- 
ing at 20 per cent capacity. 

Bat increasingly, as invest- 
ments lead to production, SMI 
is subcontracting as an interim 
measure - “we have five 
foundry customers, some for 
Europe, others for the US,” 
said Mr Brown, adding that 
SMI is trying to attract compa- 
nies which have nsither 
enough or no capacity for pro- 
duction. Already SMI Is supply- 
ing Grundig, Blaupunkt and 
automobile manufacturers 
with its products. Sub-contrtttf? 
ing now accounts for nearly 
two-thirds, or DMLBm, of SMTa- 
turnover and capacity is expec-< 
ted to reach 50 per cent by tbie . 
end of this year. Turnover for< 
this year could reach DM46m: 

But neither Mr Brown nor 
Mr Max-Eberhard Lfisel, the 
manager of the enterprise. 


easily to the leap-frog theory 
largely because SMI, unlike 
some other west German elec- 
tronic companies, was not in a 
position to acquire a greenfield 
site and build a completely 
new company. This means that 
the first two years will be 
spent modernising, updating 
mid equipping SMI with new 
technology. 

“What we want to do here 
requires a different know-how. 
We need to work much more 
efficiently to cover costs. We 
are even occupying more space 
than we need,” said Mr Brown. 
Thai was why SMTs manage- 
ment was interested in acquir- 
ing partners. 

It has been a slow process, 
but Mr Brown and his col- 
leagues reckon that by the end 
of 1994, its own new products 
will be on line. “It has taken 
time. Maybe we didn't expect 
the complete collapse of the 
east European and Russian 
markets. Maybe we did not 
anticipate the recession in Ger- 
many." said Mr Brown. “But 
we have extra capacity here 
and we have Europe as our 
market and that's where we 
are heading.” 

Judy Dempsey 


B efore the collapse of East Germany,: 
actors at the Deutsches Tbeaterin 
Berlin led a life which, their col- 
leagues in the west could only dream 
about. Every, night the auditorium of the 
Impressive netxdassical building near foe 
Triedrichstrasse station was pack e d. 

Even better than the thrill of performing 
to a full house was the feet th at the audi- 
ences took a keen interest m every word 
and movement in a studied search for any 
deeper meaning- Celebrated on. stage, the 
actors and their directors also enjoyed a 
life' outside the theatre as bohemian, types. 

■ who were not expected to conform to.the. 
rigours of state soc i a l i sm . 

Today, like evay other sector of east 
German society, the members of the Deufr 
sches Theater are having to adapt to the 
' rigours of capitalism. Lively artistic types 
they may stfll be, but their theatre i s often 
just over half foIL The days when drama 
was everything, and finance jurt a series 
of figures are over - “the mam thing- that 
everyone talks and thi nk s about now is 
money," says Maik Hamburger, the thea- 
tre’s literary adviser. ■ - . 

Money is something everyone Evolved 
with culture in eastern Germany has.hafl . 


A different life without Big Brother 

Frederick Studemann on how capitalist realism came to the theatre 


to seriously think about in the last four 
years. 

During that time the relatively generous, 
hand of an omnipotent central govern- 
ment has been swapped for that qf the 
cash-strapped local authorities. In line 
With the country's federal Systran, cultural 
funding in^ ^Germany is today carried at the 
regional, or state level 

In the case , of the Deutsches Theater, it 
is the city of Berlin that provides the lien’s 
share of the theatre’s budget Subsidies to 
the theatre this year are DM32j67m. Last 
year, they were DM29. 76m. But box office 
receipts in' 1993 only amounted to DM2.4m 
and this year they expect DM5 i.m, with an 
audience capacity of 72 per emit 

Although the city of Berlin has ear- 
marked the Deutsches, as- it Is known, as 
, its showcase for classical drama, and 


it Is stiR on a much shorter leash than in 


the past Thermo one really bothered with 
costs as it was always assumed that the 
state would provide extra funds if neces- 
sary. 

Now, for the first time, the Deutsches 
hna tatem the step of takfag a production 
off for financial reasons. Ironically, the 
play in question, Eugene OUefll’s The Ice- _ 
man Cometh, was reasonably successful It 
was taken out of the theatre’s repertoire 
programme because there was no money 
to pay for the storage of sets between 
performances. 

Mr Hamburger now worries that finan- 
cial pressures will cut the quality of the 
theatre’s work, and lead to a situation 
where once again artistic policy is cur- 
tailed by outside amskterations. The dan- 
ger is, Mr Hamburger believes, that the 
overt political censorship of the commu- 
nists is being replaced by the dictates of 
the box office. “There have been internal 


conflicts over whether we should make 
more artistic concessions or not. The man- 
agement wants plays with a large popular 
appeal but the artistic side is keen to do 
more eyrfting stuff” he explains. 

This internal tussle is of course about 
more than just the filling of seats. To 
many of the members of the 170-strong 
staff of the Deutsches' company, it is also 
about the perceived threat of westernisa- 
tion of the theatre in the east 

A s far as the audience is concerned 
this chang e has already taken place. 
Since the Berlin wall fell the audi- 
ences at the Deutsches have been increas- 
ingly made up of people from west Berlin, 
attracted by the theatre's reputation and 
Its grand appearance. On an average night 
the audience make-up mirrors that of Ber- 
lin as a whole - two-thirds western, one 
third eastern. 


What they get to see is a culture in 
transition. Under the communists, theatre 
performed a unique role as an unofficial 
form of the media. Flays which were seem- 
ingly devoid of all political or social con- 
tent would be reworked to give them a 
topical edge. 

Audiences were trained to see an elabo- 
rate critique of totalitarianism in a few 
lines of Goethe, to see Hamlet turned into 
a symbol of the painful indecision and 
self-obsession of the opposition dissidents 
groups. 

Now such tactics are redundant - “the 
actors say that today the audiences are 
reacting on a more direct level to the texts 
and not locking for hidden meaning,” says 
Mr Hamburger. This means that the Deut- 
sches Is now looking for new forms of 
subtlety. This is a process that can be 
quite exciting to watch. Recently, for 
instance, the Deutsches put on a play by 


Botho Strauss, a western playwright noted 
for his mastery of subtlety. Getting to 
grips with this very western work was 
tough. “We found it quite hard because we 
do not have this taste for deep inward 
searching and most of us do not find it 
important," says Mr Hamburger. 

Other attempts to combine east and 
west have produced surprisingly topical 
results as shown by the production of 
Tankred Dorst's play Herr Paul which is 
currently in the repertoire programme. 
Dorst, a west German, originally began 
working on the play in the 1960s. 

Set in 1950s west Germany the play is 
the story of an old man who lives in a soap 
factory who is faced with eviction by the 
building’s youthful owner who is keen to 
redevelop the site. 

When Dorst began writing the play it 
was intended to show the fundamen t al 
changes taking place in post-war west Ger- 
man society, the conflict between the old 
and the new. 

NOw on stage at the Deutsches it has 
acquired a totally different quality as any- 
one who has followed the complicated 
issue of property rights in eastern Ger- 
many can testify. 


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FINANCIAL TIMES SURVEY 


GREATER PHILADELPHIA 


Wednesday May 4 1994 


Th* pictures tNs aurvoy mo tiy Tarty Andwws 
alloying Ha owmm ua i — anco 


"Philadelphia", a Hollywood 
movie about a lawyer with 
Aids who sues his firm for 
unfair iWmnt»al. was released 
last year to rave reviews. Tom 
Hanks won the best-actor 
Oscar for his performance as 
the lawyer. 

The hi™ was matte almost 
entirely on location in Phila- 
delphia, and the city has a 
story to tell of its own. Phila- 
delphia’s story has earned rave 
reviews, too, and its leading 
man Mayor Edward Rendell, 
would win an Oscar for best 
mayor if awards were given for 
municipal governance. 

The Philadelphia story is 
about a city that comes back 
from the brink of disaster to 
emerge as a bright spot on the 
sometimes bleak landscape of 
urban America. Three years 
ago, the city faced financial 
r uin Today, it has recovered to 
a point where the city will 
soon report a budget surplus 
for the second consecutive 
year. Jobs growth in the metro- 
politan region is picking up 
after a prolonged slump, and a 
huge new convention centre is 
attracting thousands of visitors 
to the downtown area. Phila- 
delphians, notoriously difficult 
to please, are now proud of 
their city. 

The contrast between the 
current bright outlook, and the 
dark days of the early 1990s, 
could not be greater. At the 
start of the decade, years of 
faffirig local payrolls, a shrink- 
ing tax base, declining federal 
assistance, local political grid- 
lock, an ever more costly city 
bureaucracy, and swelling 
social problems had reduced 
Philadelphia’s finances, and its 
self-esteem, to tatters. 

By early 1992. the situation 
had deteriorated so far that the 
city faced a deficit of $230m, 
out of a budget of $2.4bn. Phila- 
delphia could not meet its bills, 
and the rating on its bonds bad 

been reduced to the level of 
junk by Wall Street 

In January 1992, Mr Rendell, 
Philadelphia’s newly elected 
democratic mayor, understood 
that the situation, was desper- 
ate. “In USA Today [a national 
newspaper] on the day I was 
inaugurated, there was a little 
blurb on the front pag e that 
said I would inherit the worst 
municipal financial horror 


Rescued from the 
brink of disaster 


The municipal budget has been restored to health, 
writes Patrick Harverson. Now the city hopes that 
the continuing loss of jobs can be halted 

omy is its diversity. Once dam- 


ions. 

fiden 


pnriiF 

. T. 1 l I i- - 



story In America. When I read 
that 1 almost told the fellow 
who was driving me to the 
inauguration to take me down 
to Atlantic City so I could blow 
off the day and play the black- 
jack tables." 

Mr Rendell resisted the 
temptation, not least because 
he had campaign pledges to 
keep. He won the mayoral elec- 
tion after promising to do what 
previous administrations had 
never done: cut spending to 
balance the budget, reform 
municipal government, and do 
everything possible to promote 
economic development in the 
region. 

At the heart of the citys 
immediat e problems in 1992 
was the escalating cost of local 
government With the crucial 
support of John Street, the 
powerful president of the city 
council, and after facing down 
a brief municipal workers 
strike, the new mayor eventu- 
ally won a series of money-spr- 
ing concessions from city 
liwimiH- They included a two- 
year pay freeze; a reduction in 
paid public holidays; big 
changes in work rules and 
practices; agreement on the 
privatisation of some city ser- 
vices; and cuts In nninn health 
plans. , 

The concessions cut almost 
jiQOm from the city’s annual 
budget Along with $84m in 
savings achieved from manage- 
ment streamlining, Mr Rendell 
was on his way to balanc in g 
the budget As he now proudly 
recalls: “By June 30, 1993, 18 
months after we started, we 
had a $3m surplus. And we did 
it without raising one nickel of 
taxes." 

Solving the budget crisis was 
important not just in purely 
finan cial terms. After years of 
mismanage ment the image of 


a competent municipal govern- 
ment at City HaH helped repair 
Philadelphia's tarnished image, 
in the eyes of locals and those 
from outside. 

After balancing the budget 
the Rendell administration 
wasted little time in bu ildin g 
on its success. The savings 
from the union concessions 
were part of a five-year fiscal 
plan intended to ensure the 
city’s finances were stabilised 
over the long term. The plan 
was praised on Wall Street 
which has sinc e raised the 
city's bond ratings to Just 


IN THIS SURVEY 


□ Municipal superman 

□ Rival ports merge 


□ The financial sector 

□ Currency options 

□ Biotechnology abounds 


□ Corporate profiles 


□ Why tourists matter 

□ Key facta for the visitor 5 


below the level of junk, and 
wan the approval of the Penn- 
sylvania Intergovernmental 
Co-operation Authority, the 
state agency which - in return 
for budgetary oversight - has 
helped raise funds for the city 
during its crisis. 

That the five-year plan is 
still on course has a lot to do 
with the revival in the fortunes 

of the local economy. After lag- 
ging slightly behind the rest of 
the nation, employment in the 
metropolitan region is now ris- 
ing for the first time in three 
years. 

Local economists hope that 
jobs growth will prove sustain- 
able. The greatest strength of 
the Philadelphia region’s econ- 


inated by heavy man u factur- 
ing the metropolitan area is 
now home to a broad spectrum 
of businesses, including a pan 
ticularly heavy concentration 
of healthcare, pharmaceutical 
and bio-technology com pani es. 
Industries also represented in 
the region include oil and 
chemicals (Son Corporation, 
Rohm & Haas), tdeconununica- 
tions (Bell Atlantic), computer 
technology (Unisys), food man- 
ufacturing (Campbell Soup, in 
nearby Camden, New Jersey) 
and finance (Cigna, CoreS- 
tates). 

While many of these are 
located outside the city centre, 
downtown. Philadelphia is 
enjoying its own renaissance. 
The new $523m convention 
centre is providing a boost to 
locfli businesses. Tourism is on 
the rise, and $28tan will soon 
be spent on developing an 
“Avenue of the Arts" in the 
heart of the city. Also, there 
are hopes that by late 1995, riv- 
erboat gambling will arrive on 
the Delaware River. 

Yet the Philadelphia story 
has its dark side. The city has 
its fair share of urban ills - 
high rates of poverty, unem- 
ployment, crime, homelessness 
and drug abuse, and poor qual- 
ity public education. The scars 
of neglect in many of its neigh- 
bourhoods are as bad. as any in 
urban America. 

Mayor Rendell, often critic- 
ised for paying too little atten- 
tion to the problems of 
deprived areas, knows the 
hardest task is ahead. In the 
ppst he has wraned the prob- 
lem to a man suffering from 
eancer and a gunshot wound. 
As Stephen Muffin, the city’s 
director of commerce, explains: 
“The first thing you have to do 

is deal with the gunshot 


wound. And we’ve done that 
We’ve basically righted our- 
selves. We’re not Beveriy Hills, 
or some fat-cat city, but we 
have significant control 

over our costs. Now, the ques- 
tion is: what's the story with 
the economic base of the city?” 

The story with the econ o m i c 
base of the city - as opposed to 
the suburbs, where business 
generally flourishes - is that 
jobs are still bong lost at too 
rapid a rate. Philadelphia’s 
employment base has suffered 
the loss of 263,000 jobs since 
1970, 110.000 in the last seven 
years alone. That is too many 
jobs gone in a city with a total 
population of only l~6m (out of 
5.7m who live in the entire 
metropolitan region). 

NBXt year, Philadelphia will 
lose about 7,000 more jobs 
when the Pentagon closes the 
naval yard. As Mr Rendell 
says: "We need to generate the 
type of economic development 
vhn t will employ local people. If 
we don’t do that, with all the 
successes that we have 
achieved in Philadelphia, we’re 
not going to make it.” 

Today, Mr Rendell hopes 
that a combination of local and 
■national efforts will break the 
25-year trend of declining 
employment. On the local 
level, the administration has 
launched an economic stimu- 
lus programme which will 
spend $lJ5bn over the next 
three years to generate eco- 
nomic development At some 
stage, that programme must 
include lowering the city's 
wage tax, which is so unpopu- 
lar with local businesses. On a 
nntinnai level. Mayor Rendell 
hopes that the federal govern- 
ment will adopt a new urban 
agenda that provides not finan- 
cial aid, but a range of incen- 
tives to lure private sector 
businesses back into the cities. 

For all of its triumphs so far, 
building a lasting revival in 
the city’s economy is the Ren- 
dell administration's tough BSt 
challenge yet. As Mr Peter 
Hearn, a farmer political oppo- 
nent of the mayor and a lead- 
ing Philadelphia lawyer, puts 
it “The mayor has hit a grand- 
slam hone run in each of his 
first two years. But to really 
have an impact on Philadel- 
phia in the long-term, he has to 

do that every year.” 


PHUDBJUA 


SMARTER 

• Fortune ranks Philadelphia in the top ten “Best Cities for Knowledge Workers.”* 

• Greater Philadelphia has more than 80 colleges and universities with 60,000 
graduates a yean 

• Philadelphia’s seven schools of medicine, 24 teaching ho^itals, and nunniii 
advanced research institutions support the growth m the region of many of the 
world’s leading pharmaceutical and biotechnology companies. 

Unisys, are headquartered in Greater Philadelphia. 

SAFER 

• The most recent FBI Crime Index ranks Greater Philadelphia as the safest of the 
12 largest U.S. metropolitan areas.® 

HAPPIER 

• Greater Philadelphia ranks third in overall livability out of 343 metropolitan areas 
in North America surveyed by Places Bated Afrnam g- 8 


. ^ Almanac is the “Guide to Finding the Best Places to live mNorth ^en<a, 
an^o^^areas for living costs, job outlook, housing, transportation, education, 

health care, crime, the arts, recreation, and climate. 


FIND OUT MORE ABOUT WHY PHILADELPHIA IS 
A GREAT PLACE TO LIVE, WORK AND PROSPER. 

r * 

“ n-ll ■ 


Call or Write: 

GREATER PHnADELPHIA FIRST 

1818 Market Street, Suite 3610 
Philadelphia, Bh 19103 USA 
Phone:(216)676-2200 
H1X: (216) 676-2222 



Title 



City 

State Zfo 


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Patrick Harverson traces the impact of a mayor who is admired throughout the US 


Municipal superman rescues budget 


He is riding high in the 
opinion polls, and is the sub- 
ject of almost universally posi- 
tive coverage in the media. 
Everywhere he goes there are 
warm greetings and words of 
encouragement. He is now so 
well-known nationwide that he 
has been dubbed “America's 
Mayor". 

Barring disaster, he will win 
re-election by a landslide nest 
year. He has even appeared in 
a Hollywood movie starring 
Oscar-wumer Tom Hanks. 

Meet Mr Edward Rendell, 
mayor of Philadelphia, proba- 
bly the most popular politician 
in the US today. 

In his 37 months in office, Mr 
ReodeD has earned a reputa- 
tion as one or the the most 
effective mayors in the US. 
During his term, Philadelphia's 
finances, so desperate in 1992, 
have been restored to good 
health. The city is now poised 
to announce its second consec- 
utive budget surplus, and the 
pace of local economic growth 
is finally beginning to pick up. 

The flight of jobs from the 
city and region has not been 
stopped, but it is slowing. Phil- 
adelphia's relations with the 
Pennsylvania state capital of 
Harrisburg, and with its neigh- 
bours across the Delaware 


A 'new Democrat*, he's 
a conservative on fiscal 
policy, but a liberal on 
social policy 


River in New Jersey have 
improved greatly. And with 
the help of its pro-business 
mayor, the city has won the 
support of a once-hostUe local 
business community and the 
respect of Wall Street, where 
Philadelphia's bonds may soon 
lose their “junk” rating. 

Perhaps as important as any- 
thing else. Mayor Rendell has 
restored Philadelphians' faith 
in their local government Mr 
Peter Hearn, partner at the law 
firm of Pepper. Hamilton and 
Scheetz, and Mr Rendell 's prin- 
cipal opponent in the race for 
the Democratic nomination 
prior to the 1991 mayoral elec- 
tion, says that the mayor is 
extremely popular because he 
has proved that local govern- 
ment can work. “This has been 
a wonderful demonstration of 


good government being good 
politics." 

Admirers also riarm that Mr 
Rendell's growing national 
stature - he enjoys a close per- 
sonal relationship with Presi- 
dent Clinton - is helping the 
city. Mr Bob Hall, publisher of 
the Philadelphia Inquirer arid 
Philadelphia Daily News, says: 
“His popularity outside the 
region, and the demand for 
him as a speaker to mayors' 
groups, or other political 
groups, or urban developers, is 
such a plus for the cdty. 1 don't 
recall another mayor of Phila- 
delphia ever enjoying that 
national recognition." 

So who is this municipal 
superman? 

A native New Yorker, the 48- 
year old Mr Rendell is a lawyer 
who has spent all Of his politi- 
cal life in Philadelphia. First 
elected to public office as the 
city's district attorney in 1977, 
he ran for governor of Pennsyl- 
vania In 1986 and mayor of 
Philadelphia in 1987. Although 
he lost both campaigns, he 
came back strongly to win the 
November 2991 mayoral elec- 
tion by a landslide on a cam- 
paign of fiscal reform. 

Although a registered Demo- 
crat, his appeal crossed tradi- 
tional party lines. lo»» many 
other so-called “new Demo- 
crats", he is a conservative on 
fiscal policy but a liberal on 
social policy. He believes that 
many city services can be 
improved through privatisa- 
tion. and that government has 
to be pro-business if it is to 
attract and keep jobs in the 
cities. 

Nationally, Mr Rendell may 
be lauded for engineering the 
city's financial recovery, yet he 
is quick to praise his partners 
in government In particular, 
he relies heavily on his main 
political ally, Mr John Street, 
the president of the city coun- 
cil. “I do not deserve, by any 
means, the lion’s share of the 
credit," says Mr Rendell. 
“We've received wonderful 
support from the city council, 
and from it’s president John 
Street" 

The mayor’s championing of 
Mr Street is not just political 
rhetoric. In Philadelphia, the 
offices of mayor and city coun- 
cil president have traditionally 
been occupied by politicians 
pursuing separate agendas and 



Edward Rendell has restored PhHadelpIdanti’ faith fri their local government 


serving different constituen- 
cies. For most of the time, tt 
was a recipe for political grid- 
lock. 

When Mr Rendell arrived in 
office, however, he found in Mr 
Street someone equally deter- 
mined to end decades of politi- 
cal and financial irresponsibil- 
ity. Some say that Mr Street 
has proved the more fiscally 
conservative of the two. Since 
the first day of Mr RendeU's 
term, they have worked in har- 
mony to rebuild the city's 
finances, constructing a five- 
year fiscal plan that has been 
greeted with universal praise. 

Mr Fred Voigt, executive 
director of the Committee of 
70, a local non-partisan politi- 
cal watchdog, says the impor- 
tance of the alliance between 
the mayor and council presi- 
dent cannot be understated. 
“Together, recognising the fis- 
cal plight, they took steps that 
were absolutely necessary. 
They had to balance the bud- 
get, which meant hurting peo- 
ple, saying no to people. Yet, 
that [first] budget was passed 
17 to zero. This last budget had 
only one vote negative. That’s 
extraordinary." 

A welcome by-product of the 
close working relationship 
between Mr RendelL who L$ 
white, and Mr Street, who is 
black, is that it has helped the 
city avoid much of the racially- 


inspired political acrimony 
that has dogged so many US 
cities. 

If all this sounds too good to 
be true, Mr Rendell does have 
his critics. The cuts in munici- 
pal expenditure that have 
helped him balance the budget 
since 1992 have come at a cost 
to some local services. Rubbish 
collection is now said to be less 
reliable, aid to museums and 
libraries has been cut, and the 
wait for non-emergency treat- 
ment in the public healthc are 
system h as lengthened. 

He is also criticised for focus- 
ing too much on Philadelphia’s 
finances and not enough cm its 
social problems, particularly in 
the deprived neighbourhoods 
just outside the city centre 
where living conditions are as 
bad as anywhere in urban 
America. 

Mr Rendell counters that the 
longer-term problems could not 
have been addressed until the 
immediate fiscal crisis was 
first resolved. He knows that, 
having tackled Philadelphia's 
financial woes, he now needs 
to turn his attention to the 
more serious Issues faring the 
city - too few jobs, too many 
poorly runs schools, and too 
much poverty, homelessness, 
and crime. 

Yet, typical among the new 
breed of big-city mayor, Mr 
Rendell does not believe urban 


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hard to imagine the world of forex 
trading without this essential instrument 
Of course, in a marketplace where time 
is measured in mere seconds, eleven 
years is a rather long time. 

Time enough for the global economy 
to take some turns that were not only 
unexpected, but unprecedented. 

Time for those with currency exposure 
to learn that the only thing they can take 
for granted is that they can take ab- 
solutely nothing for granted. 

Our currency products exist to make 
the forex market, if not more predictable, 
at least more manageable. That's why, 
since we introduced them, the world has 


been coming to our door — making us 
the largest marketplace anywhere for 
exchange-traded currency options. 

Remaining the largest requires us to 
adapt the fastest. That’s why we’ve 
introduced innovations such as 
cross rate options, long- and 
short-term expirations 
and Virtual Currencies, 
including our new 
3-D Deutsche marks. 

And every day, we’re 
making our marketplace 
more useful — and more 
customizable — for our customers. 

Weal! know that the world wifl never be 
as simple as it once was. That’s why we 
want you to know that we're planning to 
change right along with it. 


Philadelphia Stock Exchange 


1900 Market Street - Philadelphia, PA 19103 • 219-490-5019 
12th Floor, Moor House • 119 London Wall • London EC2Y 5ET England • (44-71] 000-2349 



blight can be addressed by 
throwing more federal, state or 
city money at the problem. He 
sees economic growth and job 
creation, nurtured by govern- 
ment incentives aimed at 
attracting the private sector 
into the cities, as the long-term 
answer to urban social tils. He 
says; “If 1 could create 100,000 
jobs paying the inflation-ad- 
justed equivalent of $£2,000 a 
year. 2 could do more to reduce 
drug use and crime in the city 
of Philadelphia than if f had a 
thousand new policeman.” 



Old rivalries will be buried when, two ports merge, reports Frank McGuriy 


New authority spans the river 


The Delaware River is the axis 
which defines thn Philadelphia 
region. The city and its neigh- 
bouring communities grew up 
around the wharves and ware- 
houses that have thrived along 
its h anks since the days of Wil- 
liam Penn. 

At the same Hmp the Dela- 
ware is a natural barrier, split- 
ting the region in two. The 
states of Pennsylvania and 
New Jersey have traditionally 
viewed the river as the demar- 
cation line in a struggle over 
the spoils of the. maritime 
trade. 

It Is an age-old rivalry which 
is finally coming to an end. 
After decades of political wran- 
gling, a preliminary agreement 
to form a bi-state port author- 
ity was reached last December. 
The agency, which will co-ordi- 
nate tiie activities of publicly 
owned marine facilities on 
both sides of the river, is 
expected to hold its first board 
meeting in May- It is the first 
step in an merger process 
which will take two years to 
complete. 

Proponents of unification 
believe the move will hone the 
region’s competitive edge as a 
shipping centre. “The ports 
will put less effort into 
competing with one another 
and more into competing with 
other North Atlantic ports," 
says Joseph Menta. a 
spokesman for the 


• .. S.'T: 




v-'.-wv. 



The ports of ttw I 


i Vaflay already rank among the busiest along die 


The new authority must 
decide which activities 
might be turned over to 
the private sector 


Philadelphia Regional Port 
Authority (PRPA), which owns 
piers and freight terminals on 
the Pennsylvania side. 

“The entire port community 
supports the move,” says Mr 
Tam Kelly, head of the power- 
fill Philadelphia Marine Trade 
Association, which represents 
about 40 private steamship and 
stevedore companies along the 
river. “It is something that bad 
to happen if we were to remain 
competitive” 

The ports of the Delaware 
Valley already rank among the 
busiest along the eastern sea- 
board. Taken together, their 
facilities handle some 70m met- 
ric tons of international cargo 
a year, more than any other 
port on the east coast. Includ- 
ing New York, Baltimore and 
Norfolk. 

More winter fruit passes 
through Philadelphia and Cam- 
den. than any other port in the 
US, and they lead the eastern 
seaboard in imports of meat, 
paper products and steel Last 
year, when ports around the 
country were experiencing a 
slowdown, Philadelphia and 
Camden managed to increase 
tonnage. 

Still, the two sides have 
expended too much effort in 
fighting over the same cargo, 
port officials say. By underbid- 
ding one another, the rivalry 
effectively forced the states to 
take up more of the tab, in the 
form of higher port operating 
subsidies. 

Under a plan approved in 
December, the PRPA will com- 
bine Its resources with those of 
its counterparts across the 
river, the South Jersey Port 
Corporation! The merged 
entity, known as the Ports of 


Philadelphia and Hamden, will 
become a subsidiary of yet 
another agency, the Delaware 
River Port Authority (DRPA), 
which operates a regional 
mass-transit system an d four 
suspension bridges over the 
river. 

The DRPA is already 
Involved in promoting the 
regional ports through a net- 
work of international offices 
organised under its world trade 
division. But its role as trade 
ambassador created some con- 
fusion among overseas ship- 
pers. At some point in negotia- 
ting a contract, the agency had 
to defier to the relevant state 
authority, which would com- 
plete the deaL 

The fresh approach is 
intended to bring more coher- 
ence to the task, says the Rev 
Nicholas Rashford, president of 
St Joseph’s University in Phila- 
delphia and chairman of the 
DRPA. “What is going to 
change is that the people on 
the operating level will be 
doing the marketing,” he says, 
“1 think that will make us 
much more effective.” 

Even critics of the merger 
agree that the ports, with the 
DRPA's assistance, have done 
a good job of selling them- 
selves, but some question 
whether the unified agency 
will do any better. 

Leo Donovan, a consultant 
with Booz, Allen and Hamil- 
ton, recommended against the 
merger after conducting an 
early study on unification. 
“Both ports are thriving by 
competing in their own mar- 
kets," he argues. 

Philadelphia moves large 
volumes of Chilean fruit, Aus- 
tralian meat Finnish paper 
and steel through its termi- 
nals. Camden, which lacks 
facilities to handle container- 
ised cargoes, is strong in lum- 
ber, scrap metal and other bulk 
industrial commodities. 

The merger, Mr Donovan 
says, would not necessarily 
make the ports more competi- 
tive against other regions and 
would not create the econo- 
mies of scale necessary to 
make their operations more 
efficient. 

“The danger is that it would 
lead to a monopoly which 
would encourage ‘feather-bed- 
ding’ and patronage" in the 
staffing of the bi-state agency, 
says Mr Donovan. Competition 
between the two had kept 
workforce levels and labour 
costs in check, he says. 

Mr Rashford says Mr Dono- 
van's criticisms do not take 
into account the principal ben- 
efit of unification - enabling 
the ports to consolidate their 
capital Investment pro- 


grammes. 

Paul Drayton, . executive 
director of DRPA, said the 
agency would make available 
$30Qm over the next three to 
five years for port investment 
and other economic develop- 
ment projects. The money wfll 
come from the huge cash sur- 
plus which, the DRPA gener- 
ates by collecting bridge tolls. 

The agency has already 
made a big port-related invest- 
ment with tiie construction of 
Amerport, an “intennodal" rail 
transfer facility opened on the 
Philadelphia waterfront two 
years ago. 

Amerport gives shippers of 
intennodal containers - suit- 
able for transport by rail, truck 
or ship - immediate access to 
three full-service railways link- 
ing the port with most of the 
US and Canada. The only ter- 
minal on the east coast offer- 
ing such extensive rail connec- 
tions, it has proved so 
successful that an expansion is 
already being considered. 

“The idea is to have one 
agency looking at the big pic- 
ture, not two looking after 
their own narrow interests," 
says Mr Drayton. Instead of 
duplicating projects, the uni- 
fied port authority would have 
the power to develop the two 
sides in a complementary fash- 
ion, he says. 

But the DRPA has already 
raised controversy in its devel- 


opment efforts. Some $50m in 
financing was approved in the 
waning days of last year, with 
most of the money earmarked 
for projects unrelated to the 
port, such as a Philadelphia 
skating rink and improve- 
ments to an aquarium in Cam- 
den. 

Mr Drayton, declines to com- 
ment on last year’s spending 
decisions, which were made 
before his appointment But he 
says the DRPA would make 
funds available for both types 
of development, although it 
was not holding out “an open 
checkbook". 

“Infrastructural investment 
has to made in the port,” he 
says, but these are not the 
kind of investments in which 
you are going to see a direct 
return." Where the private 
Investors were unwilling to 
step in, the DRPA would con- 
sider the broad economic 
impact of its spending deci- 
sions, he says. 

But one of the tasks facing 
the new authority, in its role 
as regional development coor- 
dinator, is determining which 
of its activities; if any,- should 
be tortied over to the private 
sector. 

“For the region to prosper, it 
isn't important which operator 
gets the cargo, as long as some- 
one in the area gets the cargo,” 
say a Joesph Diemer, a spokes- 
man for the DRPA. ' 


lil I ll Sllllll MIUI \ 'Ml u 


Reed Smith Shaw 8k McClay is pleased 
to serve as legal counsel to an 
ever-expanding number of European 
companies doing business in 
Pennsylvania arid Pennsylvania-based 
companies actively engaged in 
. worldwide trade and commerce. 

2500 One Liberty Place 
Philadelphia, PA 19 103 
(215) 851-8100 FAX: (215) 851-1420 



Attorneys ai Law 


Philadelphia PA, Princeton Nj, Harrisburg PA, 
Pittsburgh PA, Washington DC, McLean VA 




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GREATER PHILADELPHIA 3 


jn the financial sector, the region has a bit of everything, writes Patrick Harverson 


like, two offiar historic port cities oaths 
of the m, PhiladdriWa isa 
outoe financial centre; BuT White New 

^ >Cus °f thfl >MTiWng arr ^ ! && }- 

rftlesh uaiBra ges, and Boston is the home 
oi ute mutual ftmd industry, Philadel- 
phia slinanclai industry is less dearly 
oetmea. . 


CoreStates becomes a target 


rnu fl aeg m ia does, however. have a hit of 
everything. 

region has lama 
banfcK- CoreStates is headquartered there: 
® nd . se '^, other lag “suser-regtonab’’, 
and Mellon of Pittsburgh and 
Krat Mdfility af New Jersey, hare astrong 
presence to. the city - - 


* «**uii*ace compamfis: Cigna IS OHS 
QTtfaenatkmV largest it has brokerage 


• --W Tr — * ■■■■ waeo 90 * JWMU » s yill 

;wery major WaH Btreethouse operates to 
the city. It has money management firms: 
toe Vanguard (hnoiqt, cue of toe largest 
mutual fund; groups, has $l27bn under 
management And it has the MadaM Ma 
Sock Exchange, best known for its thriv- 


” Not Surprisingly, the financial services 
sector is a big employer to the Philadel- 
phia area: ^CoreStates employs MOO; Cigna 
_6#)Q; toe stock exchange upwards of 8,00ft 
and Vanguard 3^00, at its headquarters in 
Valley Forge Just outside toe city. 


. Banking, the largest single sector to 
Philadelphia's financial services industry, 
has an interesting story to tell As to other 
regions, banks in the “tri-state" area 
- around Philadelphia (Pennsylvania, New 
Jersey and Delaware) have been part of an 
industrywide consolidation process that 
has trimmed toe number of banks through 
mergers, acquisitions ami felltrres. 

In toe Philadelphia region, many of toe 
mergers were completed to the first wave 
of consolidation at the start of toe 1990s. 
That was when larger regional banks 
began to expand by aggressively acquiring 
smaller ones to their area. The result was 
' the creation of “Super-regionals” such as 
PNC and Mellon, both based in Pittsburgh, 
and First Fidelity, based to in New Jersey. 

CoreStates, Philadelphia's biggest bank 
with net income last year of $327.Bm and 
assets of almost $28hn, joined to this trend 
during that period with its acquisition of 
First Pennsylvania. Yet the bank did not 
hit Us stride to the acq uisitions business 
until the past year, by which time the 
other super-regionals from the area had 
exhausted their appetite for expansion. 

In the past eight months, CoreStates has 
spent gi.ifibn purchasing three banks 
(Constellation of New Jersey, and Indepen- 
dence Bancorp and Germantown Savings 
Bank of Pennsylvania) and one asset man- 
agement company (Rittenhouss Financial 



Terrence Larsen: *no shade repeffants' 


Services of Pennsylvania) from within the 
tri-state area. 

Two of the bank acquisitions - Indepen- 
dence and Germantown - were widely 
viewed as astute moves. Richard Law- 
rence, banking analyst at Janney Mont- 
gomery, described the two banks as 
“gems”, and both will strengthen CoreS- 
tates’ presence to Pennsylvania. 

The Constellation deal, however, was 
another matter. Analysts were quick to 


point out that toe bank had its fair share 
of problem loans, and many believed the 
$320m price tag was too steep. Terrence 
Larsen, chairman of CoreStates, says some 
of the Constellation deal criticism is vahd. 
"It was seen as being pricey and difficult, 
and I tiifrik that's a fair asawamant We 
paid full price for it, and well lave to 
work very hard to mak e it work.” 

For CoreStates, however, Constellation 
"finishes what we need to do In northern 
Jersey,'’ says Mr Larsen. The bank will be 
quickly merged into CoreStates’ New Jer- 
sey National Bank affiliate. As for the 
problem loans: they will either be sold off 
or taken as a change against earnings. 

Although the acquisitions wore primar- 
ily about building CoreStates’ retail fran- 
chise, the bank also has a nourishing 
wholesale and electronic banking busi- 
ness. On toe commercial side, the hank 
focuses on servicing mid-sized companies 
to the region, with annual sales of any- 
thing between $15m and $20m, while hi 
electronic banking it has long been an 
industry leader In providing cash manage- 
ment and transaction processing services 
to clients. 

The bank also has a sizeable presence 
overseas, having stuck with its Interna- 
tional business during the 1980s when 
other US hanks pulled out. Funds transfer 
and trade finance are trademark busi- 



Mellon Bank has a strong presence 


nesses, and Asia is where CoreStates is 
enjoying the most growth. 

The one big question hovering over 
CoreStates is whether it can retain its 
independence for much longer. It is the 
right size, and is sufficiently profitable to 
make it a tempting target for bigger 
banks, such as PNC, which has often been 
mentioned as a potential s u itor . 

Mr Larsen takes a sanguine approach to 
the issue. “I would like to think we’re on 


some people’s list, sure. We’re a very 
attractive franchise. But we're not inter 
ested to being acquired. At the same tone, 
we have not put in place any shark repel- 
lents, and I’ve never refused to talk to 
anyone." 

While CoreStates stands out among 
hanks in Philadelphia, the region's insur- 
ance industry is dominated by Cigna, one 
of the largest insurers in tile US. The com- 
pany is involved to a wide range of busi- 
nesses, incl uding property/casualty and 
lift Insurance, reinsurance, pension man- 
agement, and financial services. Cigna is 
also heavily Involved to the healthcare 
business, bang one of the largest, and 
most profitable, providers of managed care 
services in the US as the operator of 48 
HMOs (health maintenance organisations). 

It is Cigna's property/casualty business, 
however, that has attracted most of the 
attention recently, and for all the wrong 
reasons. Since 1989, the company has lost 
$lbn on its p/c business, primarily because 
of high asbe stasis and environmental 
insurance Hqirna pnd the generally “soft" 
pricing environment 

In an attempt to turn the business 
aro und, last year Cigna hired Gerald Tsnm, 
head of Transamerica Insurance, to clean 
up the p/c operation. Mr Isom quickly 
restructured the business, cut back the 
underwriting book, and reduced the pay- 
roll 

With the help of a more favourable pric- 
ing dimate, Cigna is expecting to see the 
first improvement in the p/c operation’s 
bottom line this year. Given, the “long-tail" 
nature of the Insurance business, however, 
it is not likely to return to profitability for 
several more years. 


city’s stock exchange is the largest currency options market in the world 


No anxiety over competition from Paris 


I 


It may he -toe oldest equities 
trading forum in tile US, dating 
all toe way. hack to 1790, but 
the Philadelphia Stock 
Exchange today is . better 
known Cor its- thriving car- 
rency options business than it 
Is for toe trading of stocks, a 
business now’ thoroughly domt 
Baled to the US by. the New 
York Stock Exrbange and tite 
Nasdaqscreeskbased naket 

That is not to. say that. the. 
PHIS Inw abandoned equities 
trading. ftcuntaftiy fists 2000 

stocks,- andyohnnelastyear 
' - tetalled XSlm khiires* averag- 
ing about' 5m sham a day. . 

Tbese total8, however, are' 
dwarfed by 4he big exchanges. 
TheNT8K4re&d4ft9bn shares 
last yeary .at -an- -average of 

204m a day. Tbe PHLX’s share 
ofd SQiWesiredhtototoeJB - 
hovers around S per mit, 
behind aot^ust toeNYffimid 

ger share of the realties 
options market, whete-tt cones 
to behind toe Ctateagp Board 
Options Exchange arid toe 
American Stock Exchange Tri. ' 
New York. The FOLK b noted 
for Us today options. Its next 
product , will be an optimum a 
Big Cap index, a basket of 60 
buge-capjtaHsatton ~ US stocks, 
nicknamed the ^nifly. fifty", 
which the PHLX hopes will 


rival, the Chicago Mercantile 
Exchange. In 1982, the PHLX 
handled the world's largest sin- 
gle currency options trade, 
which consisted of 180,800 
, French: franc- options with an 
: underlying value id $8.lbn. 

The PHLX opened- its cur- 
rency opti ons- business to 1982 
. with a ***4% opthm contract 
Since- then, ' it- has -added 
'options on the Deutsche . Mark, 

. the yen, the French and Swiss 
francs, the' Canadian and Aus- 
tralian doOais, end European 
nrireneyiniffs (Sens). K also 
trades, options on three caross- 

raies; U-Sfaik/yen, steriin g/D- 

' Mark, -and' sbwMmMm. 

The PHLX has become pdpn- 
lar .became it’s products appear 
. to -M toe needs of eo rporate 
risk, managers ,who wish to 
hedgs.tfidir loratou exchange 
risks, because its market is lto- 
idd, and beonKe the. floor is 
n^en Jtornwet of the day. So 
toct^Jh^FSLXifrade^cunenGy 
«ptiBaa#r-.aB hot toreeatid a 
sudf honrs of each working 


PHLX Ctfiwsicy options 


Milfort contracts 
’14.~ — 



well. We refine our products as 
they need refining. We respond 
to onr customers. We provide 
liquidity, and we continue to 
educate. And the customers 
appreciate that, so I see no rea- 
son why anything will 


€962 84 86 88 90 9283 
Soinw.PMM4Maaiml(eioci<>«* 


Yet, if -yon mention the 
exchange's name to .anyone in 
flp flwmdfll lyarirriM In toe US 

and overseas, they will almost 
always «dnh first of currency 
options. Having pioneered the 
product in the early 1980s, toe 
PHLX is now toe largest 
exchange-traded currency 
options market In toe worid. 
Last year,, a record 1 3.1m 
currency option contracts were, 
traded ah the exchange, keep- 
ing ft well ahead of its mato 


Currency 'options contracts 
are .most useftal during periods 
of volatility. on the foreign 
exchange markets, and so the 
turmoil among European cur-, 
rendes jdnee 1992. has been a 
godsend far the IHLX Crnnpa- 
iries and tas ti tutto na, 

seeking to hedge their currency 
risk to tim tocreasm^y unpre- 
dktabte forex markets, espe- 
cially those bring exposure to 
the French franc, have been 
using . toe ■ PHLX’s ' currency 
options, contract Its business 
from European customers has 
grown so much that last year 
the 'exchange moved, its *™™i 
September symposium from 
Philadelphia to Paris. 

» Is from Paris, however, 
tint the PHLX faces a potential 
threat to its dominance of the 
currency options market Later 
this month, the Paris, futures 
market (Matif), will launch two 
dollar options contracts on the 



Mchqtas Giordano b not wonted 
that Ba firm zone wfl heaths Motif 


French franc and the D-Maric. 
The Matif hopes the contracts 
will win European, and partic- 
ularly French, business back 
from Philadelphia. If tire first 
two contracts are popular, the 
Paris exchange will consider 
launching 20 others. 

The PHLX, however, is 
untroubled by tire prospect of 
another exchange trying to 
break into one of its biggest 
markets. Nicholas Giordano, 
PHLX chairman, says: “No, 
we’re not worried. We have 
. been able to 'maintain a leader- 
ship position because we 
understand this market very 


But surely when tire Matifs 

Currency options start trading, 

European institutions will 
choose to use the exchange on 
their doorstep, rather than one 
in tire US? “First of all. Pm not 
sure what it is that is going to 
be on their doorstep,” replies 
Mr ttordano. “There needs to 
be liquidity, there needs to be 
service, and an understanding 
by toe people providing the ser- 
vice. Customers know they can 
get it hem* 

H0 is not even worried that 
the time difference between 
Paris and Philadelphia will 
giro tire Matif a trig natural 
advantage. "We're open in 
their time zone, at UJOam. And 
it gets very active here at 
&30am. which is %30um Paris 
time. We’ve done that to facili- 
tate our customers in Europe, 
and I think they appreciate 
that I see no reason at all why 
[the business] should shift. I 
don’t know what added value 
is being brought to tire table. I 
haven’t seen it” 

Industry experts agree that it 
will diffimdt for Paris to wrest 
business away from Phfladeb 
phia, because the PHLX has 
sue* a head start over the 
Matif in tire currency options 
badness. 

Hal Hanseu, president of Cai^ 
gjll Investor Services In Chi- 
cago, says: “The Philadelphia 
Stock Exchange has for years 
developed and created a viable 
product and a very popular 
contract I can understand why 
the Matif is aiming to compete 
for that business, but experi- 
ence shows that it’s very diffi- 
cult to unseat an exchange, and 
taken product away, when IPs 
been vmy weD established over 


Frank McGurty explains why the region is a magnet for biotechnology 


ready resources 


Greater Philadelphia- Is to biotechnology . 
what the San Francisco Bay area is town* 
putex science. 'Wfifr its rich stockoftiamed 
Tfontwg plentiful sources of ventare capt 
tal and a deep base, of medical schools an d 
research Wboratefes, toe - area m hothouse 


have clustered along. “Medical Mfle”. Dozens 
more are scattered around the area. 

- But a stalwart base of multinatianal phar- 
tuaceutical companies has powered the 
industry's growth engine as wdL Merck, 
DuPont, Wyeth Labs, McNeil, SnrftfaKHns 
Beecfaamand RhonePoutenc RoreralLhave 


Over, fire past 


; decade, more than 100 
companies have .sprouted 
iJreregian.. 


CepoaJon, wean** *n 

for, is typical Set up in 19B7 by a rraearen 
teamtoDuPoni, 

- -jfc mjfflBng new drags to treat nano®- 

SSTSal iteds ^ ^ 


With so wndt activity, hmtechnology and 
pharmaceuticals are tire fastest growing seo- 
tor of the regional economy. Their strength 
hap Helped offiret a painful contraction in a 
nBriafiwtartog base which, has lost «y»0 
jobs since 1968. _ ■ 

The story is not entirabr posftfve. The 


<Mana9erialpool,-scienc«, venture 
capital. .. We have ail the 
ingredients for entrepreneurrfrfp’ 


DOflBDS Of 


fared to the 
resources, ih 


enterprises - Mg 
n^tks - have been, 
a rmcentratiba df 


wave oLiestrdcturihg swet^ tng US burir 
nesses has not’ spared the drag sector, winch 


Last year. 


er, a tiny 
set up shop 


In phiiaddphifl . however, toe two^rtfrno- 
fare of tire industry bas softened the Wow. 


oology fatter , w hich gdinbustets tire pro 
gramme- to the area. 

One of tire ways it does this is by helping 
fiedgflng companies stay on aloft wbfle they 
are in the early stages of developing viable 
commercial products. 

. Often tfae lead time is lengthy. Symphony 
gharnmcentteals. located in Malyan, P am* 
sylvania, needed five years to devdop^an 
inuo v a tive drug to protect tire brain after 
injuries. The partnership has provided 
585JXJ0 over two years to help the company 
over tire bump. 

The centre is also involved in assisting 
scientists to bring their research from tire 
laboratory to the marketplace. Together 
wito British Technology Group USA, a lead- 


east fg pbfladriphia. ft 

that BoarofrBMnflman^a ™ j- 

smrfier trf Immeopattacrodiciiies, .had 


sors a consortium of nni versifies, research 


d of SR 

JShKHne Be* 

One, 9B mvaan»K. i*n»stvear 


people are very good managers , and 
researchers. Many of them have been 
snapped vq by tire small companies, .says 

Mr Sears. - ' ' 

Indeed, tire two sides e*W a spmretre 
rekrtionship. The big companies offer a rich 

. . __ i - j. ai fl i tim c Mn nrflw. 


vjQfii rjH umue w 1 * w 

Se small biotechs, meanwhile, repr^ 
momiffing soarees of use products for drug 
giants wilting to eater into jomt : ventures- 




da US Route 20^. 


wbas some 30 snail 


S S^Omlar, pro 

pantos wife ready access to clinical testing 


as tire Start Tedmotogy Partnership. 

Start's mfaann begins ftmhfir upstream, 
hrkfcritiftd^airoimstogtied^ 
the i miy ersi ty which invented it Kgra up 
with a corporate sgaosor. The idea is to add 
value to the innovation beforehand, through 
farther refinements or by seeking wider 
applications. That allows tire institution to 
reetlxse a better return on its work- 

"We try to posh, as modi back to tire 
technology source as possible, and build off 
the resources of the member organisation,” 
says Andrew Neighbor, the director. “We are 
very much tire hub of a Mg wfaeeL” 


time. There are loyalties, and 
confidence in market mecha- 
nisms, and established levels of 
liquidity, that customers are 
comfortable with, and have 
come to depend on. That is not 
to say that toe Matif can't 
develop toe same product, but 
it won’t be an easy task, and at 
toe very least it will take lot of 
time. Ultimately, of course, tire 
customer will decide, based cm 
where they’re getting the best 
pricing and the best quality of 
liquidity” 

The Matif is not the only 
ckmd in the PHLX’s sky. As a 
Small, PVUV ff frl, vmhang e, the 
PHLX is regularly discussed as 
a candidate for a merger with 
any one of its many rivals. TMs 
is based on the assumption 
that there are too many options 
exchanges in the US, and that 
consolidation is required if the 
industry is to prosper into the 
20th century. 




mm. 



‘Now far the nifty fifty: the exchange's next product is expected to grab investors’ attention 


Since the late 1980s, the 
PHLX has received several 
merger offers, and rejected 
them all, most recently in 
December when it tuned down 
a proposed $68m merger with 
the Chicago Board Options 
Exchange. 

Mr Giordano believes the 
PHLX is better off independent, 
and many of the exchange’s 
members - who know that a 
merger would leave a large 


number of them out of a job - 
agree. The PHLX chairman 
says: “It has proven to be very 
difficult to merge two 
exchanges. If yon look around, 
yenll be hard-pressed to find 
that two viable exchanges have 
ever merged.” 

The latest offer from toe 
CBOE was declined, says Mi* 
Giordano, “because the mem- 
bership wanted to stay inde- 
pendent, and they felt that 


price offered was nowhere near 
valne of the exchange. But Tm 
not sure there is a right price." 

Ultimately, he hefieves that 
it is in the best interests of the 
indnstxy’s customers that the 
US exchanges remain indepen- 
dent, because competition 
between them has led to a bet- 
ter quality product and better 
service. 


Patrick Harverson 


We, 


too, are known for 


sparking the development of 


technology in Philadelphia. 


Apparently, lightning can 
strike the same place twice. 




Its here in Philadelphia- 
where Benjamin Franklin first 




Despite its wealth of resources, Philadel- 
phia would be less fertile ground Hat bio- 
techs without some carefol nurturing by 
groups such as The Ben Frankhn Partner- 
ship. a private, non-profit organisation 
funded by toe state mid federal govern- 
ments. “The miasinn of our organisation Is 
to MM economic competitiveness through 
technology and innovations,” says Philip 


brought electricity to the attention of 
the eighteenth century— that Unisys 
brought the first computer to the busi- 


ness of the twentieth. 


Tbday, with 60,000 customers 
in 100 countries, Unisys is a leader at 
generating information solutions for 
business and government around the 


world-and a leader at generating 


-V 1 ~ 



high-tech assets for the Delaware people of Unisys-help create the 


advanced information systems and 


As one of tire largest enter- open information networks now top- 


prises in greater Philadelphia* we not 
only make our corporate home in tire 
area, we also operate a flKijor center for 
development and technology. 

Your neighbors-the dedicated 


ping customer satisfaction surveys of 


the most demanding markets in the 
world. And we're committed to help- 
ing Philadelphia build on a heritage 
of technological leadership and 


innovation. 


UNISYS 


Somehow, we believe Mr. 


Franklin would not be shocked 


We make it happen. 


far these high-powered developments. 


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GREATER PHILADELPHIA 4 


The region is home to some of the most famous corporate names in American business. FT writers discuss the progress of four of them 


I Bell Atlantic eyes multimedia 


The 53-storey, four-year-old BeD 
A tlanti c Tower is a dominant 
feature of the Philadelphia sky- 
hoe and a permanent r emin der 
of the importance to the city of 
this innovative local telephone 
giant 

Beil Atlantic is one of the 
seven “Baby Bells" - the 
regional phone companies spun 
off from American Telephone & 
Telegraph in 1984 under an anti- 
trust court settlement. 

It is the dominant telephone 
company in New Jersey, Penn- 
sylvania, Delaware, Maryland, 
West Virginia, Virginia and 
Washington DC. Not only is its 
headquarters, the Bell Atlantic 
Tower, in Philadelphia, but so 
too is the headquarters of its 
local telecommunications oper- 
ating company for the state, 
called Bell Atlantic. Pennsylva- 
nia. 

The company has gained a 
reputation under Raymond 
Smith, its chief executive since 
1939. of being the most entre- 
preneurial of the Baby Bells. 

But radical change is sweep- 
ing through the US telecommu- 
nications industry as the bound- 
aries which divide it from the 
cable television and computer 
industries blur. This is eroding 
the local monopolies as new 
rivals, such as cable companies; 
start providing telephone ser- 
vices. 

The change is also opening up 
huge new opportunities for the 
Baby Bells, winch can play a 
leading role in the provision of 
inter-active multimedia - com- 
bining traditional telecommuni- 
cations and television-based ser- 
vices - to the home and office. 
In addition, they should eventu- 
ally be allowed to enter the 
long-distance telecommunica- 


tions market, an area from 
which they are barred under the 
AT&T hreak-up agreemsrt. 

BeQ Atlantic is at the fore- 
front of this revolution - 
though it suffered an embarrass- 
ing setback this year when it 
had to call off a merger with 
Tele-Communications Inc, the 
largest cable service provider in 
the US. 

The deal collapsed in Febru- 
ary, ostensibly berausp the Fed- 
eral Communications Commis- 
sion ordered the cable industry 
to rrmfrp big cuts in the basic 
rates it charges consumers, 
which in turn upset the terms 
on which merger had been 
agreed. 

However, other factors may 
have been involved, including a 
clash of culture between the 
racy, entrepreneurial TCI and 
Bell Atlantic, which, for all Mr 
Smith's changes, retains a some- 
what conservative culture deep 
down. 

The chief executive is a native 
of western. Pennsylvania who 
joined the local AT&T operating 
company, then called Bell of 
Pennsylvania, in 1961. He 
became president of the com- 
pany in 1983. When he became 
chief executive of Bell Atlantic 
six years later he moved quickly 
to cut costs, and the group is 
now the slimmest of the Baby 
Bells, ranked by number of 
employees relative to phone 
lines. 

Despite the collapse of the 
TCI deal, Bell Atlantic wifl still 
be a major force in multimedia; 
but, as Mr Smith said recently, 
it will now pursue a more flexi- 
ble strategy on a “market by 
market, partner by partner 
basis”. This suggests that it will 
take the company substantially 



BeQ Atlantic Tower is a dominant featue of the PhRadelptiia skyfine 


longer to buikl up a significant 
presence outside its own operat- 
ing area. 

Within its operating area, it is 
pressing ahead with several 
important inter-active initia- 
tives. In August it wen a land- 
mark court victory which has 
heed it to provide its own Inter- 
active video service down its 
phone hnes, an area from which 
it was barred under 1984 cable 
television te gidatiem 

It has been testing such a ser- 
vice in Northern Vir ginia, and 
in July w31 open a new digital 
production centre in Reston, 


Virginia, where its interactive 
services will be created and 
packaged for delivery to con- 
sumers. 

Its other initiatives in tteg 
area include: joining with a 
small New Jersey co m pa n y to 
blanket the New York area with 
an interactive wireless televi- 
sion service to compete with 
Cable TV; and teaming up with 
companies in two areas of New 
Jersey to deliver cable television 
programmes over modernised 
phone lines. 

Although the company hag no 
large-scale multimedia experi- 


ments under way in Pennsylva- 
nia, the state expects to get its 
lair share in future. Bell Atlan- 
tic expects to will spend $80m 
on new plant in the region 
around P hiladelphia this year, 
a pd hrtwnte to make ISDN - an 
intermediate technology which. 
Increases the capacity of an 
ordinary phone Hue - available 
throughout the area this year. 

As for community activism, 
Tony diGioia, executive director 
for external affairs, BeQ Atlan- 
tic, Pennsylvania, says the com- 
pany’s mam thrust is in the 
areas of economic: development 
and education. 

Some $S^m of the subsid- 
iary’s 85.7m state-wide contribu- 
tions budget is committed to the 

P hiladelphia area, with about 
SL5m of the total going cm edct- 
catfonal projects. The compa- 
ny's activities include a pro- 
gramme to help reduce the 
school dropout rate, by sending 
employees into schools to talk 
about career choices; and men- 
toring, under which staff mem- 
bers adopt a school child and 
give him or har guidance. Bell 
Atlantic has also adopted two 
schools in the troubled inner- 
city area, and tries to give them 
extra help. 

As for economic development, 
it is a partner in a scheme 
which helps small businesses 
across Pennsylvania identify 

problems arid mrpanri , and ft fois 

also been involved in the cre- 
ation of a computer model 
which will identify what busi- 
nesses can best be recruited for 
particular areas of the state. 

Within Philadelphia itself, the 
company is one of 22 organisa- 
tions involved to. Strategy 21, a 
partnership working to im prove 
the industrial competitiveness 
of tiie city in the 21st century. 


Martin Dickson 


Sun emerges from the clouds 


Philadelphia loves a comeback 
story. It Is a spirit epitomised 
to tiie movies by Rocky Bal- 
boa, the washed-up palooka 
who made the most of his last 
big shot to he somebody. 

In real life, there is no finer 
example than the impressive 
turnround by Sun Company, 
one of the stalwarts ctf Phila- 
delphia’s old industrial base. 

to 1991, the 108-year-old 
energy group - toe fourth big- 
gest company in the region. - 
was a flabby under-achiever 
weighed down by a bloated 
portfolio of peripheral busi- 
nesses. Overall, its operations 
were producing a meagre 2 per 
cent return an equity. 

Just two years later, the 
company is showing a return 
on equity of 10 per cent, having 
transformed itself into a lean 
contender with good prospects 


of sustained growth. 

“They have identified where 
they have the best chance to 
be profitable," says Mr George 
Baker, an analyst at Merrill 
lynch to New York. “In doing 
so, they have gone a long way 
towards making the company a 
more focused enterprise.” 

Son has gone a long way in 
setting itself apart from its 
rivals, too. More than any 
other big energy group, it has 
pmphariyd a commitment to 
safe and sustainable 
environmental practices. It 
was the first Fortune 500 
company to endorse the 
principles of the Coalition of 
Environmentally Responsible 
Economies, a non-profit 
organisation set up after the 
Exxon Valdez oil-spill to 
promote green business 
policies. 

On a smaller scale. Sun has 


A pleasant bnt innocuous 
office complex. 20 miles 


/ mnortb-west of Philadel- 
phia, has become a focal point 
in tbe great debate over tbe 
totare of toe American health- 
care system. 

The headquarters of US 
Healthcare, located in the leafy 
suburb of Blue BeQ, has been 
the incubator for many of the 
ideas which are likely to form 
toe basis for healthcare reform, 
the hottest issne on the 
national political agenda. 

As one of tire country’s first 
health maintenance organisa- 
tions, set up in the late 1970s 
with a small government grant, 
the company has developed 
many of tbe practices which 
have come to be known as 
“managed care". 

Building on early success, toe 
company has become the one of 
Philadelphia area’s biggest 
businesses, with annual reve- 
nues of S2.65bn. It operates in 
eight states in tire north-east, 
but Pennsylvania remains its 
largest market by far. 

What is managed care? Under 
its system, explains Mr Costas 
Nicolaides, chief financial offi- 
cer. "the financing and delivery 
of care is integrated"; as 
opposed to the traditional 
indemnity systems. In which 
the insurer “simply pays bills". 

A plethora of proposals to 
reform the inefficient US 
healthcare system is now under 
consideration by Congress. 
President Clinton, to presenting 
bis benchmark plan, made 
reform his administration's top 
priority. 


US Healthcare cuts costs, retains quality 


The final form of the legisla- 
tive package is for from certain. 
But it is becoming apparent to 
Washington that many aspects 
of the model championed by OS 
Healthcare wfn fe ature promi- 
nently to the bin that finally 
emerges this autnmn. 

“Most federal healthcare 
reform proposals emphasise 
going more toward managed 
care, in order to buOd savings 
into the system more constitu- 
tionally than at present," says 
Mr David Simon, senior 
vice-president 

As tire largest and most inno- 
vative company to its field, US 
Healthcare has convinced many 
sceptics that soaring US medi- 
cal costs can be effectively con- 
tained without undermining 
the quality and availability of 
services. 


I n fact it has shown that tew 
costs and high-quality care 
are mutually-supporting 
goals when the traditional 
hands-off relationship between 
insurers and medical providers 
is abandoned. “Quality care in 
the end costs less for ns and tbe 
customer," says Mr Simon. 

Prevention, it appears, is 
worth mnch more than an 
ounce of cure. By placing 
emphasis on primary and pre- 
emptive care, US Healthcare 
has found ways of cutting hos- 
pital stays and expensive medi- 
cal procedures. It has pioneered 
programmes aimed at promo- 


ting “wellness" - bow to help 
people stay healthy - as well as 
schemes for the early detection 
of Illness. 

Its high-risk maternity pro- 
gramme is a good example. By 
offering pregnant women to 
certain categories early access 
to specialists, US Healthcare 
achieved a SO per cent reduc- 
tion in the nse of neo-natal 
intensive-care services. 

By contrast, most traditional 
health plans neither pay for 
preventive care, even in high- 
risk cases, nor control access to 
specialists. Patients are left to 
their own devices. The result is 
often unnecessary visits, which 
drive up premiums, or more 
expensive treatment after seri- 
ous s ymptom s develop. That’s 
bad medicine as well as bad 
business. 

By making preventive and 
medical-management pro- 
grammes its hallmark, US 
Healthcare held growth in its 
costs per member to 4 per cent 
last year, a foil point lower 
than the rate at which the med- 
ical consumer price index 
Increased. 

The company’s operating 
economies are reflected to its 
mice tag: A recent independent 
analysis showed that the com- 
pany's coverage costs a family 
about half tbe amount; charged 
by typical indemnity plans, 
when differences in benefits 
and total out-of pocket expendi- 
tures are taken into account. 


Even when such factors are not 
considered, US Healthcare says 
its premiums are 20 to 30 per 
cent less. 

As with most HMDs, a fixed 
monthly payment entitles sub- 
scribers to nwnmitpri treatment 
by a network of providers, with 
only nmnhwi charges for 
office visit General practitio- 
ners are the gatekeepers to a 
team of specialists, all of whom 
work under contract with the 
company. 

By contrast most traditional 
indemnity plans require cos- 
tumes to pay “deductibles", or 
excess payments. Premiums are 
assessed on the basis of the 
individual's risk of foiling ID, 
and sometimes coverage is 
denied. Tins practice is known 
as “experience rating". 


Instead, HMDs nse “commu- 
nity" rating, which combines 
the risk of all subscribers and 
divides it equally among them. 
“It’s a much more egalitarian 
system. But most importantly it 
prevents situations in which 
people who are sicker, or who 
get sick, have to pay more." Mr 
Sirota says. 

But low premiums are only 
part of the equation. Hie com- 
pany's medical costs as a per- 
centage of income dropped to 68 
per cart last year, from 75.1 per 
cent in 1992. Membership, 
meanwhile, jumped nearly 12 
per cent to 1.67m, continuing a 
long string of double-digit 
increases from internal growth, 
rather than acquvitioDs. Total 
premium revenue was up 21 per 
cent 


Not surprisingly, higher gross 
income and lower cost added up 
to a 50 per cent surge in 1993 
net earnings to $3Q0m last year, 
“(toe of the reasons US Health- 
care has been so profitable Is 
they have such good control 
over toe product and pricing," 
says Mr David Lothson, an ana- 
lyst at Paine Webber in New 
York. 

Sailor US Healthcare execu- 
tives are dearly feeling a quiet 
satisfaction ova* toe gr ow in g 
appeal of their a pp roach. 

Since tbe national debate 
over healthcare started to ear- 
nest last year, “there has been a 
greater awareness of the kind 
of things tfurf. count quality, 
cost-containment and account- 
ability- These are wrings that 
US Healthcare began to recog- 
nise long ago," says Mr Nico- 
laides. 


Frank McGurty 


How Unisys recovered 



Philadelphia International Airport: proud gateway to America 's most historic new city. 


Olde Philadelphia was the transportation hub of colonial America, by land and by sea. 
Contemporary Philadelphia is a crossroads of a different sort by air : At Philadelphia 
International Airport, the operative words are test and friendly. Conveniently located 
Information and Hospitality Booths are staffed with smiling bilingual customer service 
representatives. A sparkling new International Terminal is stylishly appointed with multi- 
media artworks, comfortable amenities and handsome airline clubs. The Customs 
processing area is so accommodating that queuing up is a pleasure. 


High speed twenty-minute rail service to Philadelphia’s business district departs on the 
half -hour from each of the Airport's five terminal buildings. A network of modem highways 
connects you in minutes to the fifth largest population center in the United States. 


Outstanding cargo facilities professionally handle nearly 400,000 tons of mail and cargo 
each year. 


International air connections are growing with two daily non-stops to London and one each 
to Paris and Mexico City. Rights to Zurich, Montreal, and the Caribbean are also 
flourishing. 


With direct service to over 1 00 U.S. cities, Philadelphia Internationa! Airport is the 
logical port ot entry for your next transatlantic venture. 


I took forward to seeing you in the States 1 




Mary Hose Loney 
Director of Aviation 


They are smiling again at the 
Jolly Road, Blue Bell, head- 
quarters of Unisys, the largest 
high-technology company in 
the Philadelphia region. After 
years of heavy losses that 
brought the computer manu- 
facturer to the brink of disas- 
ter. the company is making a 
strong comeback. 

Unisys w^s created in 1986 
when Michael Blumenthal, 
then c hairman of Burroughs, 
masterminded an audacious 
plan to form a giant computer 
company by acquiring rival 
Sperry for $4.8bn. combining 
two of the oldest companies in 
the computer industry under a 
new name. 

At the tune. Mr Blumenthal 
boasted that within a few years 
Unisys would 
achieve annual 
revenues of 
$20bn and chal- 
lenge Interna- 
tional Business 
Machines * dom- 
inant role in 
the computer 
industry. 

Instead. Uni- 
sys became the first of the 
large US computer companies 
to suffer the effects of a market 
shift away from proprietary 
mainframe computers to net- 
works of standard desktop 
machines. 

Burdened with heavy debts 
from the Sperry acquisition 

and the high COStS Of maintain . 

tog two incompatible product 
lines, Unisys plunged into 
heavy losses in 1909. To make 
matters worse, the company’s 
defence business became 
embroiled in a Pentagon brib- 
ery scandal 

Over the three years 
1989-1991. the company 
recorded total losses of almost 
$2£bn as it drastically restruc- 
tured its operations, t akin g 
charges totaling $i.6bn to cut 
its workforce and consolidate 
operations. Analysts were pre- 
dicting the company’s demise. 

Defiring the prophets of 
doom, however, Unisys, under 
the leadership of James Unruh, 
appointed to replace Mr Blu- 


to adverse market trends. 

The turnround began at the 
end of 1991, when Unisys 
recorded a modest fourth-quar- 
ter profit. The company has 
not looked back since. Over 
two years, its profits doubled 
to 2565.4m in 1993. Net debts 
had been reduced from a peak 
of almost $4bn to $Llbn at the 
end of 1993. 

The return to profitability 
has not come without human, 
costs. The workforce, which 
numbered about 120,000 at the 
time of the merger, has been 
reduced to 49,000. Retirement 
benefits have been slashed and 
the company has closed sev- 
eral plants. Unisys now 
appears, however, to be ahead 
of competitors to streamlining 


The turnround at Unisys ($) 

Years 

Sates 

Net income 

*EPS 

1993 

7,742^00,000 

565,400,000 

2.69 

1992 

8,421 ,900,000 

261 .200,000 

1.46 

1991 

8,696,100,000 

-1,393.300,000 

-9.37 

1990 

10,111,300,000 

-436,700,000 

-3.45 

1989 

10,096^00,000 

-639,300,000 

-4.71 



“Earning* 

pv *nr» 


wienthfll as phajpnan and chief 


executive in 1990, has staged a 
recovery all the more remark- 
able because it comes as two of 
the company’s largest competi- 
tors, IBM and Digital Equip- 
ment, are struggling to adjust 


its cost structure and rational- 
ising capacity, say analysts. 

"The turnaround is real... 
No management In the com- 
puter business has executed 
better over the past two 
years,” said Curt Rbhrman, of 
First Boston, in a recent report 
on the company. 

Revenues, however, are stiff 
declining. For 1993, the com- 
pany reported sales of $7.7bn, 
down 23 per cent from a 1990 
peak of ilO.lbn. Only about 10 
to 15 per cent of Unisys’ sates 
are to new customers. 

To offset declining sales, Uni- 
sys is focusing increasingly 
upon the services side of the 
computer business, providing 
systems integration and con- 
sulting services to its custom- 
ers. Analysts expect the com- 
pany’s service and consulting 
revenues to grow by 20 to 25 
per cent over the next few 
years from $L6bn in 1993. 

"We are not going to become 
a compoterless computer com- 
pany,” Mr Unruh says, “but we 
are in the information manage- 
ment business, rather than the 
computer business. Our ser- 
vices and systems integration 
revenues grew by 19 per cent 
world wide last year." 

The company has targeted 


the airline, health care, insur- 
ance. banking and phone com- 
panies as areas where it can 
offer specialised software and 
services. 

It plans to offer similar soft- 
ware to banks, car rental agen- 
cies, hotels and insurance com- 
panies, enabling them to 
provide better service and to 
research their customers’ bay- 
ing habits. Hie new software 
could generate sales for Unisys 
of as much as $2bn over five 
years, industry analysts pre- 
dict 

In a bid to boost flagging 
sales of mainframe computers, 
Unisys has moved ahead of 
competitors in a transition to 
more cost-efficient semi-con- 
ductor chips built using the 
same chip tech- 
nology widely 
used to desktop 
computers. 
Ironically, 
these chips will 
be manufac- 
tured, to Uni- 
sys’ specifica- 
tions, by its 
long-time rival 

IBM 

Unlike traditional main- 
frames, Unisys new computer 
systems will not require elabo- 
rate water cooling systems. 
This will make them better 
suited to today’s networked 
computer systems, in which 
computers are typically spread 
throughout the offices of a 
company or organisation. 

As confidence in Unisys’ 
future rises, the company has 
won several prominent orders. 
These include a $Ibn contract 
for an Amazon-region environ- 
mental surveillance system; a 
$l27m contract to computerise 
the largest savings bank in 
Russia; and other banking-au- 
tomation contracts in eastern 
Europe totaling $400m. 

“We see 1994 as a year of 
visible progress to differentiat- 
ing Unisys in the market- 
place," says Mr Unruh. 

In Philadelphia, this raises 
toe hope of new jobs. Unisys is 
one of the largest employers in 
the region, despite the cut- 
backs of the past few years. 
The company currently 
employs about 4.300 in and 
around the city, down from 
5,600 at the end of 1990. 


Louise Kehoe 


put a human face on its 
corporate image with several 
innovative programmes, 
TnrTrwfrng an offer to buy and 
j rmlv- worn-out cars which are 
heavy polluters. 

In a small step which may 
symbolise tbe fresh approach, 
its headquarters was brought 
hack to downtown Market 
Street after 23 years’ exile in 
the suburb of Radnor . 
Nostalgia, however, had less to 
do with the relocation than did 
a desire to cut costs. 

The move was part of a 
comprehensive str e a mlini ng 
im plemented soon after Mr 
Robert Campbell took o ver as 
rhairman and chief e xecutiv e 
in 1992. Under the new regime, 
the company has shifted its 
focus hack to its traditional 
strengths - refining and 
marketing in the northeast 

In its core operating region. 
Sun commands 14 per cent of 
the retail petrol trade, the 
second largest share behind 
Motel. Branded petrol accounts 
for 37 percent of total sales, by 
far the company’s most 
important revenue generator. 
Sun hopes to build on these 
strengths. 

Concurrently, the group has 
withdrawn from the areas 
where it was taking a beating. 
It finally threw in toe towel on 
most of its international 
exploration operations, after 
spinning off its US exploration 
and production in 1988. 

“In drilling for oil and gas. 
we had a horrible record," 
admits Mr Robert Aiken, chief 
financial officer. The company 
is still involved in 
international crude production, 
which remains profitable. Coal 
mining and real estate were 
deemed losing propositions, 
too. 

fn Son’s continuing 
operations, expenses were 
slashed and the workforce 
reduced by 20 per cent to 
14,000. 

So far, the results have 
exceeded Mr Campbell’s goals. 
Sun posted operating profit of 
gl93m last year, against $3tim 
ayear earlier. The figure is well 
ahead of his target of achieving 
a 5150m improvement The 
company was again able to tap 
operating Income in paying its 
dividend, another of the 
chairman’s ambitions. 

Analysts are divided about 
same of the company's specific 
moves, and point out that its 
recovery is part of cyclical 
upturn by the industry as a 
whole. But most agree that the 
overall strategy is sound. 

Sun wins plaudits for 
securing long-term leases to 
operate filling stations along 
the Pennsylvania turnpike. 
The company also gained 
exclusive rights to sell petrol 
along the New Jersey turnpike, 
perhaps the most travelled 
highway to America. The high 
visibility of operating along 
such motorways carries 
benefits that exceed the 
revenues they directly 
generate, analysts say. 

Meanwhile, filling stations in 
the mid-west have been sold; 
underperforming outlets in the 


Sun 1 ? return on 



j—u. 


• 1983' 85 ’.; 87- «9 ; St 



Branded pettte earns most 


north-east have been pared 
from its 3,000-strong network. 
A move to integrate its 
branded petrol offerings under 
a single banner - Sunoco - is 
also expected to pay off in 
higher margins, a critical 
factor in petrol retailing, where 
demand at best grows a scant 1 
per cent a year. 

The group also put a feather 
in its cap by agreeing to buy a 
Chevron refining plant located 
on property adjacent to its 
mate Philadelphia facility. The 
bargain-basement price of 
$170m made the deal an easy 
sell, even though the potential 
environmental remediation 
costs which Sun may face have 
yet to be quantified, says Mr 
John Hilton, an analyst at 
Argus Research to New York. 

“Such investments are 
usually just shots in the dark," 
says Mr James Murchie, who 
follows the industry for 
Sanford C .Berstein in New 
York. He argues that future 
demand and margins on 
refined products are nearly 
impossible to gauge. Refining, 
a costly necessity for a 
marketer of petroleum 
products, continues to be a 
drag on Sun's bottom line, 
accounting for J80m in 
operating losses last year. 

Still, toe Chevron acquisition 
was a safe bet, says Mr 
Murchie. Indeed, if the deal 
had been completed before this 
winter’s deep freeze, which 
brought a sharp increase in 
demand for heating oil, the 
investment would have already 
paid for itself. 


Frank McGurty 


PEPPER 
HAMILTON & 
SCHEETZ 


ATTORNEYS At LAW 


■ PEPPER. HAMILTON 
& SCHEEIZ was founded 
in Philadelphia in 1890 
and has grown to 275 
lawyers, practicing in 
eight cities in the 
United Stales and 


abroad in London and Moscow. The Firm represents many 
foreign-owned businesses in toe United Stales and has a 
foil service practice, including domestic and internatio nal 
corporate, intellectual property, litigation, trade, and 
immigration matters. 


PEPPER, HAMILTON & SCHEETZ 
3000 TWO LOGAN SQUARE • EIGHTEENTH AND ARCH STREETS 
PHILADELPHIA. PA 19103-2799 
(215) V8 1-4000 > FAX (215)901-0750 


PHILADELPHIA • WASHINGTON. D.C. • DETROIT . NEW YORK 
WILMINGTON. DE . HARRISBURG. PA > BERWYN, PA . WESTMONT. NJ 
LONDON • MOSCOW 


Chance? 

Whether you are downsizing, 
re-engineering, expanding, 
relocating, or refocusing 
your strategies — 
we wili heip you and your 
employees manage the human 
side of organisational change. 


Ruhr w 

Associates 


a 


1 15 Offices Worldwide 


1-3 Strand 
Trafalgar Square 
London, WC2N 5EJ 
071-839-1001 


2 Penn Center Plaza 
Suite 610 
Philadelphia, PA 19102 
(215)972-7277 




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'O' 







Tourism is the centre-piece of a programme to stimulate the economy £ 


Best hope for replacing lost jobs 



For . many tourists, Philadelphia is Just a 
ifeaon the motorway, a place to drive >7 
m iheir way_-to- New York, W ash ington oar 

- B eMfe w e . 

V Evm jmore than JOm people from 

outside the area visited fee city last year, 
gjaiding neariy ?500m, local offirials have 
recognised that Philadelphia is faffingwell 
start -of Sts' potential as a holiday and bnah 
ben destination. 

The issue Is sot Just a matter ot dvtc 
pride. Mayor Edward Rendell wants to 
khty'm more 'visitors, because the travel 
>nd leisure industry represents PhfladeV 
phia’s best hope of replacing some of an 
.esttthated HJKjftjobsIost every year as 
com p anies re st m ctare or move dsewhere. 
Snee 1970, file city's employment base has 
contracted by 240,000- 

To steam the tide, Mr BradeU has made 
jonrism toe centre-piece of an ambitions 
economic stimulus progr am me unveiled 
earlier this year. In bis 1994 budget pro- 
posal, he earmarked some |420m for pm> 
jects io' lore, more visitors to. the .city. He 
says be Is commuted to hrfpfrig pidiadd- 
phfa take -"to 7 plaice as one of America's 

jg wnipr u i^pgHnfltiim rfH pq” . 

“By necessity, tourism has to be one of 
the pillars of the city's economy," says 
■ Thomas Mokkxm, head of the Philadelphia 
. flmvmtfon ft Visitors Bureau. “We have to 
figure out bow to make people stay loiter 
and spendmore.” 


There is nothing wrong with the haste 
product. Unlike Cleveland or Pittsburgh, it 
is not perceived as a grimy imhtsfri&I town 
on the wane, its downtown streets 

are lined with graceftd 18th century town- 
booses and arresting post-modern office 
lowers, forming a sprawling showcase of 
American architecture. 

' Unlike Detroit or Miami, the city of 
brotherly love does not suffer from a image 
• as a crime c apita l. Bather, it is perceived as 

a of dv Utty and. charm, a modem 

urban centre still tightly bound to its 
Quaker traditions. 

' Yet its sports Cans are notorious for their 
irasdbfltty. Whenever its four professional 

The city is confident that it will 
eventually attract half a million 
convention visitors a year 

sports teff i rw to measure up, the borne 
crowd is sure to boo mercilessly. In base- 
ball, the Phillies exemplified the city's 
scrappy sporting tradition, going from 
worst to first in their league last season. 

As a centre of history, the c ity ha s 
always stood top of the table. It is bursting 
at the seams with landmar ks. The Liberty 
Bell, the symbol of America’s fledgling 
democracy, and hd>pnitoin<w Hall, where 
the Declaration of Independence was 


adopted and the OS constitution written, 
form the core of “America’s most historic 
square mile". 

Philadelphia is also home of the coun- 
try's third largest art museum, the world’s 
lea ding symphony orchestra in terms of 
record sales and seven out of 50 of t he best 
restaurants in the US, according to a recent 
survey of Cond£ Naste Traveler’s readers. 

to short, Philadelphia is one of the most 
interesting places on the east coast _ So 
where has it gone wrong? “Phlladelplna’s 
hurt i» problem is that it suffers from a lack 
of image," says Mr BLCXStaab, a sector 
tourism official- “People don't necessarily 
know why they should come here.” 

Mr Braden intends to get the word out 
Hie “capstone” of his strategy to already in 
jiff?* , wtth the opening last summer of the 
$500m Philadelphia Convention Center, 
build with public and private fund ing. The 
second phase of the complex, the res tored 
Reading Terminal Train Shed, was com- 
pleted this spring. The huge, hangarlike 
structure, which stands alongside the main 
convention hall, houses a grand ballroom 
and a bustling farmers’ market. 

The centre itself, the second largest con- 
vention baR on the east coast, to designed 
to save two functions. 

First, the city to confident it wfD become 
a magnet for conventioneers, eventually 

attracting some 500,000 visitors a year. The 
economic impact of this “critical mass" of 



the capstone of the mayor's strategy Is the S500m Convention Center, opened last suwnw 


visitors win spill over into the entire lei- 
sure Industry, says Mr Staab. "Historically, 
an tpcr pflff* in meetings and conventions in 
a rity leads to an increase in tourism.” 

Bookings are already running well ahead 
of projections. Mr Muldoon says the cen- 
tre’s early success in part reflects In its 
prime location two Modes from the elabo- 
rate Victorian dty hall, the geographic and 
commercial centre of Philadelphia. 

Therein lies the complex's second func- 
tion. “What this convention center becomes 
is a focal point for the dty,” Mr Muldoon 
says. “The key was to put it in the middle 
of the dty," In contrast to New York’s 
Jacob Javits Crater, which is situated at 
the western fringe of Manhattan. 

Blending warmly with the weathered 
brick and granite facades of central Phila- 
delphia, toe complex stands at the cross- 
roads ifoking all the city’s leading tourist 
sites, a “loop” of attractions which the 
mayor hopes to bind together in a package. 

To the ?«»<»*, lies the downtown historical 


district A few blocks west is a parade of 
museums along the Benjamin F ranklin 


have rumen Teamere as wen, 

of finanrmg the construction otai 
least 800 new hotel rooms. Ibey are consid- 
ered essential for the long-taro snd^of 
the convention crater, and ultimately the 
Mure of the city's tourism industry. 

Mr Rffndi4l Iim pledged $90m in pubhc 
foods for new hotels over the next five 
years, with the aim of attracting another 
SlOOxo in private financing. The extra spat* 
would complement the 1 .200-room Philadel- 
phia Marriott, the third phase of the con- 
vention complex, due to open next year. 

The problem is that the mayor Intends to 
pay for the hotels in part wtth money gra- 
erated by riverboat gambling, which the 
state leghdahzre to expected to approve this 


To complete the Philadelphia story 


k McG® 

1 ~ n 

rive 



KEY FACTS: A GUIDE 
■ . FOR THE VISITOR 

Airport Phiadelphia 
Irtemalior^ Airi^tef ^^ ' 
337-6800 8 mites south-west 
of dowrifcwwr . . > . - 

A Septa (Sou th ea s t e rn 
PennsylvarHa Transport • . 
Authority) ra9 Brie connects the 
airport with thrao Center City 
stations. The' trip takes ; 
appraxknate/y25 mtoutss and 
costs $5. Airport shuffles rad 
Bmousines taka 20-40 minutes 
. to downtown, and fares start 
at $ 8 . CaH ahead to mate 
reservations. . . ‘ ' 

Airport UpefightUntousIne^ 

£ 7 $ 342-6557, -QbIuxb 
T raraportaBoh Company (27$ 

\ 463-8784 PH&ddphia Airport . 
Shuttle {27$.S6£787& A tod 
ridetodcWrtt^.v^ cod 
rf3oot$20®^udngyatijffies.. 

Akfinne: Those serving 
ptilad^phte Include: American , 
AMries <80$ 443-7300, British . 


Continental Airlines (215) 
592-8005, Delta Airlines (27$ 
928-1700 and United Alrflnes 
(800)241-6522. . - - • 

Car Hires Alamo (27$ 

492^3980,' A>/fs &5) 365-3600, 
Budget (27$ 492-9442, Dollar 
. j27$ 365-2700 and Hertz (27$ 
482-7200.;; ; * ..... 

Taod Sendees: Cabs ai 
Philadelphia tend to be more 
expensive than in many US 
dtiee-They pan be found at 
designated taxi stops or hafled 
on the street The mrin cab 

companies are Quaker Ctty Cab 

(27$ 728-fiOOO, United Cab 
(215)238-9500, and YeBpw Cab. 

. AJIAA 1 ‘ . 


‘ RalU PMadstoWa (3 served by 
. Amtrakait^W.StreM'stafion 
(at MafketSfn^Suburban . 
station at lBSh street and JFK 
■ ' Bouldvad and Market East 
.-statioaat^lth and-Maiket . . 

streets ^ 824-TBOO. Septa’s 
regional fines provide service 
; ta 0 ie ptfwfying areas df toe . 


city and the subut» from the 
sevne three center dty stations. 

Banks: Corestates/PNB, Broad 
and Locust streets tel (27$ 
973-3512. First FkleCty, Broad 
and Walnut streets (27$ 
885-6000. PNC Bank, 100 
South Broad Street (27$ 
585-5000. 

Hotels: Four Seasons, 1 Logan 
Square, 19103 fa/ (27$ 
963-1500, fox ( 27$ 963-8506. 
hfflton and Towers, Broad Street 
at Locust, 19107 fa/ (27$ 
893-7600, fax (27$ 893-1663. 
Hotel Atop "The Bellevue. 1415 
Chancellor Court. 19102 tef 
(27$ 893-1776, lax (215) 
893-9868. Omni Hotel at 
Independence Park. 4th and 
. chestnut s treets, 19106 te/ (21$) 
925-0000,fax (215) 925-1263. 
The PSttenhouse, 210 West 
RjHenhouse Square, 19103 tef 
£ 7 $ 546-9000, fox (27$ 
732-3364- lhe Rttz-Carfton, 

ITthand Chestnut Streets, 
19103 te/ (27$ 563-1600 , fox 
(21S) 567r2822- Wydham ,. 


' irtlwr infomotiem onbmBtG can belpymr business through 

commercializing your orn innortms, please 


roiivivaj 1 * 

A short walk to the south is the "Avenue 
of foe Arts”, where toe city has e mbarked 
ra a $300m programme to create a perform- 
ing-arts complex along a mflefong stretch 
of Sonto Broad street The idea i s to bu fld 
on an existing base of cultural institutions 
R lffl ng the corridor, including the celebrated 
Philadelphia orchestra and the Pennsylva- 
nia ballet 

The scheme, to be financed by public and 
private money, involves the construction of 
new concert hulk and theatres, and the 
renovation of others. Mr Bendell esti mates 
toe avenue, when completed, will doable 
the number of vfcitars along ftvad street 
to L6n a year and create 1,600 jobs. 

But the plan has raised some contro- 
versy. Two of the city’s leading philanthro- 
pists are opposing Mr RendeH’s proposal to 
move the orchestra into a new 8140m con- 
cert hail, its cu r re nt home, the 137-year-old 


Critics say the floating casinos would 
lead to more crime along toe wate rfron t 
and, more import a nt, besmirch toe city’s 
image as “the cradle of democracy". 

But city officials are st ead fa st in their 
defence of the proposal. With gaming 
restricted to riverboats, they argue, toe 
problems associated with Las Vegas- 
style <*astiins would not develop. With a 
motorway separating the waterfront from 
the historic old dty, toe presence of Boat- 
ing casinos would not overwhelm the 
neighbouring districts. 

“We don't think it will detract from toe 
character of the area," says Stephen Mullin, 
Philadelphia’s director erf commerce. “As a 
matter of feet, we think it will add a new 
Hhnpnginn bringing another exciting activ- 
ity to the dty." 

Frank McGurty 


Franklin Plaza, 2 FrankSn Plaza, 1 
191 03 te/ (215) 448-2000, fox 
(215) 448-2864. 

Restmrants: According to 
Condd Nast Traveler's 1994 
Readers’ Pot Restaurant 
Awards, seven of America’s 
Top 50 restaurants, Including 
the Number 1 restaurant in the 
country, me located in 
Philadelphia. Ranked first Is Lb 

Beo-Fln, offering classic French 
cuisine, located at 1523 Walnut 
Street tel (215) 567-1000. 

Also included on Condd Nasfs 
Bst are: The Fountain, located 
in the Four Seasons Hotel and 
featuring American food 
(2 15)963-1500 . La Truffe 
(French), 10 South Front Street 
(27$ 8256062. Deux 
Chemfnees (French), 1221 
Locust Street (21$ 790-0200. 
Swann Lounge & Cate 
(American), 1 Logan Square 
(27$ 963-7500. Postdate 
(French), 1415 Chancellor Court 
(27$ 790-2814. GriB Room at 
the Ritz Carfton (American), 17th 
and Chestnut Streets £27$ 
563-1600. 

Other notable restaurants are 
Mep-En (Japanese), Pier 19. 


'-w&M ' . 


■ ' - w. 1 1 * * 

a >2-~ 



PhBadeiphie to homo to the country"* third largest art museum 


North Delaware Avenue (27$ 
592-7100. Di Luflo Centro 
(Italian), 1407 Locust Street tel 
( 215) 546-2000. Tequfla's 
(Mexican), 1511 Locust Street 
(27$ 546-0181. Bookbinders 
Seafood House, 215 South 15th 
Street te/ (215) 546-1137. 

Russia House (Russian, 

Georgian & Ukranian), 614 
South 2 nd Street (27$ 
629-4888. 

Shops: John wanamaker 
(department store), 13th and 
Market Streets tel (21$) 


422-2000. Strawbridge and 
ClotWer (department store), 8 th 
and Market Streets (215) 
629-6000. The Gallery 
(collection of shops). Market 
Street, between North 8 th and 
North 11th Streets. 

E ntsita h itfient Academy of 
Muste (cdrfcerts). South Broad 
and Locust Streets te/ (27$ 

893-1930. Annenberg Center 
(drama,. music, dance), 3680 
Walnut Street (between South 
36th and South 37th Streets 
Walkways) (27$ 898-6791 . 


Marriam Theatre (plays, dance, 
concerts), 250 South Broad 
Street (27$ 732-599 7. Veteran’s 
Stadium (sports), South Broad 
Street and Pattison Avenue 
1 27$ 463-7000, 463-5500. 
Spedrum (sports). South Broad 
Street and Pattison Avemie 
(21$ 338-3600. 

Museums: Academy of Natural 
Sciences, North 19th and Race 
Streets te/ (27$ 299-1020. 
Frankfin Institute, North 20th 
Street and the Parkway (215) 
448-1200. Philadetphia Museum 
of Art, North 20 th Street and 
the Parkway (27$ 763-8100. 
Rodft Museum, North 22nd 
Street and the Parkway (27$ 
787-5431. 

Also of interest: JFK Plaza 
Visitors Center, North 16th 
Street and JFK Boulevard te/ 
(215) 636-1666. Independence 
National Park, bounded by 
Walnut and Arch Streets and 
2nd and 6 th Streets {indudes 
Independence Had, Old City 
Had, Congress Had, 
Phtosophfcal Had and the 
Liberty BeH). United States Mint, 
5th and Arch Streets. Society 


HiV, bounded by Walnut and 
Lombard Streets and south 2nd 
and south 5th Streets. Historical 
Society of Pennsylvania, 1300 
Locust Street 

Newspapers: Philadelphia 
Inquirer (morning daily). 
Philadelphia Daily News 
(afternoon daily, except 
Sunday). 

Useful infor ma tion: American 
Express, 2 Perm Center Plaza 
te/ (215) 587-2300. Philadelphia 
Chamber of Commerce (215) 
332-3400. Philadelphia Stock 
Exchange, 1900 Market Street 
(27$ 567-8925. Septa 
Information (27$ 574-7800. 
Time (27$ 846-1212. Weather 
(27$ 936-1212. 

Emergency services: AAA 
Keystone Automobile Club te/ 
(27$ 5694321. Alcoholics 
Anonymous (215) 574-6900. 
Dental Emergency (27$ 
925-6050. Mecfical Emergency 
(27$ 563-5343. Poison Control 
Center (215) 386-2700. Suicide 
Hotline (80$ 827-7571. 


Rhrica Nachoma 



In The Face Of Global Competition, 
The Right Teammate Makes All The 
Difference In The Wirld. 




v The people at CoreStates 
know all about competing on a 
global scale. After all, we’re the 
ones who sponsor fee CoreStates 
US PRO Cycling Championship, 
one of fee toughest one-day 
races in international cyding.^ 
Year after year, thisferiDing 
team event inspires us to perform 
better for our clients and custo- 
mers. From Fniladelphia to Hong 
Kong, from New Yoik to Tokyo, 
we’re reminded to support one 


another, to reach a little higher 
and do all the little things that 
make a winning difference. 

We bring this inspiration to 
our relationships wife over 1,200 


office overseas and thousands of 
international companies with 
whom we do business every day. 

. . The analogy between our 
international bike race and the 
way we approach global banking 
is an easy one to draw. But there 


is one difference feat spurs us on 
to greater determination in every- 
thing we do. And thafs the under- 
standing that in international busi- 
ness there is never a finish line. 
Which is why we strive for .nothing 
less than a long-term relationship 
with every client and customer. 



ybu KriowlkWfe KnowYni. 


McnfcrFDIC 









ag-SB'S & . Ri3 ES S -8 SSSS Sff&a -I f 6