Biggest shake-up since 2000 in FTSE snakes and ladders

It was the week, stock market historians tell us, that the financial world formally went mad. In the early days of March 2000 a tenth of the FTSE 100, that bastion of sober constancy and a globallyrespected index of blue-chip companies listed in London, was ejected.

In were rushed the stormtroopers of the new millennium, the businesses that would shape the start of the 21st century.

Glorious hindsight suggests it was not the FTSE's proudest moment. Among those promoted were companies that never went on to make a proper profit - the likes of Thus, the alternative telecoms company, and internet security group Baltimore Technologies, which was later disbanded and de-listed.

Another promoted was Kingston Communications, effectively the Hull telephone exchange which now enjoys small- cap anonymity as KCom. Another, Psion, is now barely a footnote to the tech revolution as its palm-top device lost the war to the likes of the BlackBerry and the iPhone.

Freeserve has disappeared, into the Wanadoo internet brand of France Telecom. Cable & Wireless was another telco that flew higher for longer but was ultimately dashed on the rocks of its own expansionist hubris.

Yet another that has fallen on hard times after missed dot-com opportunities was Emap promoted into the FTSE 100 then on what can now be seen as the misguided hopes its magazine and media content would be digitised in the online age.

Two more, Nycomed Amersham and Celltech, were f lag-bearers of the British pharma boom and were both ultimately snapped up by foreign raiders in that industry's consolidation splurge.

The sole remaining Footsie constituent of the 10 that stormed the index back then is Capita, the company correctly identified by the smarter investor as the harbinger of the outsourcing trend.

What was as remarkable was the companies that were demoted, representing as they did the warp and weft of British commercial life: Thames Water, Powergen, Hanson and Allied Domecq which all subsequently fell to foreign raiders, while NatWest was expunged after Royal Bank of Scotland's takeover.

Other guardians of the so-called Old Economy that were ejected but have since been shown to have stood the test of time and regained their blue-chip status were Wolseley the builders merchants, Imperial Tobacco, Scottish & Newcastle, Whitbread, and Associated British Foods.

However, nearly eight years on, the FTSE 100 is set to go through what could be its biggest shake-up since.

There is no rampaging renaissance of the technology, media and telecoms sector, however. Rather, it is the chill winds of the credit crunch hitting the smaller banks and the first signs that it is consumer-facing industries such as housebuilders, pubs and retailers that may be hurting.

THE FTSE rules for the upcoming quarterly shakeup say promotion candidates have to be within the top 90 largest companies by market capitalisation to get the legup. The London Stock Exchange, the perennial takeover target whose merger with Borsa Italiana took its value up to £5 billion, double the £2.5 billion likely to be the effective cut-off, was promoted last night after Invesco dropped its London listing. The LSE move takes effect next Tuesday.

Other candidates also transformed by merger include Tui Travel, the Thomson holidays group which took over First Choice, and arch-rival Thomas Cook which nabbed MyTravel; FirstGroup, the transport group which has doubled in size after buying Laidlaw in the US; G4S, the product of the Group 4 and Securicor marriage and Kelda, the Yorkshire Water group which has risen in value because of its upcoming takeover by US funds that will see it delisted in any case in the coming weeks.