BUSINESS WITH PERSONALITY x D-DAY FORLONDONERS BORIS AND KEN NECK AND NECK AS POLLING STATIONS OPEN See Pages 2, 11, 19, 23 ISSUE 1,625 THURSDAY 3 MAY 2012 www.cityam.com FREE BSkyB says it is still fit KING DEFIES to broadcast BY MARION DAKERS BSKYB yesterday defended itself against mounting political pressure over its biggest shareholder News Corp, insisting that it remains a “fit and proper” British broadcaster. News Corp also leapt into defence mode yesterday following a bruising parliamentary report on phone hacking at its subsidiaries. CITYCRITICS Its directors stated their “full confidence in Rupert Murdoch’s fitness and support for his continuing to lead News Corp into BY TIM WALLACE pass on a legacy of economic stability. the future.” King defended his record in office, But left-wing politicians piled in MERVYN King hit out at his increasing arguing that he was successful in the to criticise the media tycoon. number of critics in the City and role he was given, and that inflation Deputy prime minister Nick Clegg Westminster last night, saying “vested was under control before the crisis. said yesterday that “there are very interests” who wanted to defend their The new structure of the Bank seeks serious question marks about the bonuses and profits were no match for to focus on the big picture, recognis- basic accountability and corporate a central bank with “over three cen- ing and acting on risks preemptively – governance” at the News Corp turies of history”. which he says should always have been stable in light of the culture In an extraordinary attempt to in the Bank’s power. King said: committee’s report. defend his record in power, he said he “Already we see vested interests rise up And Labour leader Ed Miliband had seen the crisis coming but had to defend their bonuses and profits. told the BBC that “Ofcom needs to been powerless to stop it because the But, as an independent central bank add urgency to its investigation” Bank’s wings had been clipped in 1997. with over three centuries of history, into Murdoch’s fitness to own a His comments at the BBC’s Today we can resist those short-term pres- media group following “very very Programme lecture will raise eyebrows sures and take the longer view needed serious wrongdoing at News in the City, where a growing number to prevent another crisis.” International”. of players privately argue that he But critics believe that the Bank is But BSkyB chief Jeremy Darroch failed to hike interest rates during the being unrealistic in believing that pay grabbed the opportunity of his bubble years and refused to provide and dividends can be slashed. They company’s record results to say: enough liquidity to the financial sys- also argue that his desire to hike capi- “We believe that Sky’s track record tem during the early months of the tal requirements – discussed again yes- as a broadcaster is the most financial crisis, making matters worse. terday – have gone too far and are the important factor in determining But King said he did try to warn reg- main reason for the scarcity of credit. our fitness to hold a licence.” ulators and banks and that nobody lis- Recent Bank critics include Treasury He also set out the results of a tened to him. He said he wished he Select Committee chairman Andrew review at Sky News to emphasise its had shouted louder. Tyrie, who warned new banking rules distance from under-fire peer News Striking a defiant note, King defend- could worsen the squeeze, ex-MPC International. It said law firm ed the wide-ranging powers he is member Andrew Sentance who thinks Herbert Smith had found “no poised to grab and claimed his reforms King is risking inflation; Peter Sands of evidence of impropriety or cause to the banking system will have a long- Standard Chartered; and David for concern” in Sky News’ emails term impact on the UK. He said that he Cumming of Standard Life. and payment records. ▲ ▲ ▲ is seizing this “historic opportunity” to ▲ ALLISTER HEATH: Page 2 Mervyn King believes that his reforms are the only way forward for the City of London BSKYB RESULTS: Page 6 ▼ ▼ ▲ ▲ Certified Distribution FTSE 100 5,758.11 -54.12 DOW 13,268.65 -10.67 NASDAQ 3,059.85 +9.41 £/$ 1.62 unc £/€ 1.23 +0.01 €/$ 1.32 unc 27.02.2012 till 01.04.2012 is 99,462 THURSDAY 3 MAY 2012 2 NEWS To contact the newsdesk email [email protected] Mervyn King should have hiked rates to deflate the bubble IR Mervyn King, the governor of strained him excessively – higher tal requirements have now gone too But King is wrong to dismiss the the Bank of England, is not one rates could have been justified to pre- far: they are making a whole range of applicability of such resolution proce- S for mea culpas. His speech last EDITOR’S vent a bubble turning into a crash loans unviably costly and reducing dures for the largest, universal banks. night was an extraordinary and hence disrupting the price level. the supply of credit beyond what is He remains excessively attached to defence of his record in office – and a LETTER Increasing UK base rates would not prudent. Normally, in a downturn, the Vickers report, a mixed bag of a largely unfair attack on his have been a panacea: this was a global banks should reduce their reserves; document which doesn’t represent detractors, ignoring their intellectual bubble, fuelled by lower long-term and they should increase them in an the best way forward. All in all, not arguments and questioning their ALLISTER HEATH borrowing costs set in the bond mar- upturn. We are doing the opposite, King’s most enlightening speech. motives. He did admit that he should kets and heavily influenced by global which is madness. have done more but his main East-West imbalances, the actions of Bailouts are immoral. The fact that BACK BORIS argument was that he didn’t have the was a bust with no boom was espe- the Fed and China’s currency manip- we had a system that actually encour- TODAY is election day for Londoners. right tools to act. His concession was cially unconvincing. ulation. But the Bank could have aged them was unforgivable. As I explained at length in this space that he didn’t “shout” loudly enough The Bank could (and should) have done far more even with the tools it Astonishingly, the authorities didn’t yesterday, City A.M. believes that Boris about the rise in risk. jacked up interest rates at the height had (and did King really oppose have a Plan B in case a bank failed – it Johnson is the best man for the Those who believe that the crisis was of the bubble; it didn’t need extra Labour’s decision to strip the Bank of was simply assumed it would be Mayor’s job and that he deserves a sec- a case of pure, unprompted animal powers to deflate the housing boom its regulatory powers in 1997?). bailed out. This created enormous ond term. The race will be much clos- spirits in the City will have seen all of and thus rein in the insane expansion King is also wrong to emphasise, at moral hazard. We need – and King is er than many believe – so make sure their prejudices reinforced; but those of Northern Rock and others. Higher this stage in the cycle, the need for right about this – special bankruptcy you have your say. If you haven’t voted who believe that blunders from cen- UK base rates would also have made it increased capital requirements. He is procedures for banks that allow them yet, there is still time: the polling sta- tral banks were one of the key factors harder for HBOS’s crazed commercial right that Banks need to hold enough to be wound down in a controlled tions close at 10pm tonight. encouraging lenders and borrowers to property lending. The need to target a equity against their loans to make manner, wiping out shareholders as act stupidly were left disappointed by faulty consumer price index measure sure they are cushioned against loss- well as bondholders while protecting [email protected] King’s analysis. His claim that this of inflation need not have con- es. But the new, ever increasing capi- innocent bystanders and taxpayers. Follow me on Twitter: @allisterheath CBI: slump will IN BRIEF BP settlement gets initial nod Heathrow’s border staff n make Osborne A US federal judge has given preliminary approval to a proposed class-action settlement that would miss debt goal resolve billions of dollars in claims against BP over the 2010 Gulf of BY TIM WALLACE set to walk out on strike Mexico oil spill. US District judge Carl Barbier's ruling yesterday allows the settlement process to proceed, but he THE GOVERNMENT’S budget BY MARION DAKERS will hold a “fairness hearing” later this deficit will go up, not down as year before deciding whether to give planned, this year because of the THE MAMMOTH queues at final approval. The deal between BP new recession, the Confederation Heathrow passport control could and a team of plaintiffs’ attorneys is of British Industry (CBI) warned get even longer next week, when UK designed to resolve more than yesterday. Border Force staff walk out on strike. Borrowing will rise to £128.2bn The government confirmed last 100,000 claims by people and in 2012-13, the respected business night that more than 4,000 mem- businesses who blame the spill for group said, £8bn higher than the bers of the Immigration Services economic losses.