AIG to halve Fed debt with Asia sale

American International Group (AIG) will more than halve its debt to the
Federal Reserve with the $35.5 billion sale of American International
Assurance (AIA) to Prudential.

The troubled insurer, which survived the 2008 credit crunch with a $182.3
billion bailout from taxpayers, said that it would use the $25 billion cash
component of the purchase price to immediately pay off a large chunk of its
$48 billion borrowing from the Federal Reserve Bank of New York (FRBNY).

AIG plans to sell the $10.5 billion in Pru equity, equity-linked securities
and preference shares it will get from the deal as soon as the lock-up
period ended, and use the money raised to make further repayments to the
Fed. It did not specify the terms of the lock-up.

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AIG agrees to sell $35.5bn Asian assets to Prudential

By Graham Ruddick

Published: 12:11AM GMT 01 Mar 2010

Barring any last-minute hitches, an announcement is expected this morning from
the British company that will make it by far the largest pan-Asian insurance
group. Last night, the boards of both companies and US officials were
understood to have agreed a deal in principle.

US government support is vital as the state will have the final say, having
bailed out the insurer with $182bn of taxpayer funds to keep it alive
following the financial crisis.

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Qatar sells down Volkswagen stake

By Josephine Moulds

Published: 10:23PM GMT 10 Nov 2009

The sale of 25m shares sent the stock price tumbling 8pc to €102.

It is thought that the shares, which do not give the bearer voting rights,
were sold at €60 each, providing the sovereign wealth fund with around
€1.5bn (£1.3bn) for possible future deals.

Qatar Holding (QH) said it was selling the shares “to enhance the
liquidity” of the preference stock. However, the fund said it remains
committed to the motor maker. “Volkswagen remains a key investment
asset for QH and we have been pleased with our investment in Volkswagen so
far,” it said.

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Lloyds sounds out investors on support for a rights issue

Lloyds is canvassing shareholders about a multi-billion pound rights issue as it steps up its attempts to avoid participating in the Government’s Asset Protection Scheme (APS).
Eric Daniels, Lloyds’ chief executive, is pushing hard to persuade the tripartite, made up of the Treasury, Financial Services Authority and Bank of England, to allow the bank to avoid the APS altogether.
Mr Daniels opposes the scheme on the grounds that its £15.6 billion fee is punitive and because it would raise the taxpayer stake to 60 per cent.
Mr Daniels is confident Lloyds, which is 43 per cent taxpayer owned, can instead persuade shareholders to support a rights issue of about £15 billion — which would be the UK’s largest ever rights issue. Sir Win Bischoff, Lloyds’ chairman, is in the middle of shareholder meetings to put the bank’s case and to gauge interest.

The FSA and the Treasury have not yet made a decision on whether to allow Lloyds to go ahead.
Work is accelerating on the APS and Treasury officials hope to announce a decision imminently. There is still a good chance the bank will have to partly use the scheme.
The regulator has been very cautious about the possibility of allowing Lloyds to completely avoid the APS, and most people close to the situation think the bank will have to partly use the scheme. But there is a rising view in the City that Mr Daniels’ argument that the bank does not need the scheme at all has gained ground with the watchdog and the Treasury.
A key issue is whether the Government will take part in a rights issue. If the Treasury subscribes to it, Lloyds would have to raise far less from institutional investors.
Lloyds is also hoping to convert its preference shares into ordinary equity to raise capital. It may also throw asset sales into the mix, although it may find it difficult to persuade the tripartite that potential disposals can be counted towards a capital raising.
Lloyds is understood to be upbeat about the European Commission’s remedies for the £17 billion of state aid it has received. That may be because it has persuaded Brussels that it has radically cut its use of state aid by walking away from the APS.
The Government is also negotiating with Royal Bank of Scotland, which wants to launch a far smaller fundraising to partly pay its APS fee from private means. RBS, which is 70 per cent taxpayer owned, cannot escape the APS, but one of the issues the Government is struggling with is that it has to treat RBS and Lloyds the same.
A Lloyds spokesman said: “We continue to review all of our options.”
The APS was announced in February as a giant insurance scheme for the toxic assets of Lloyds and RBS. Lloyds is due to put £260 billion into the scheme in return for a £15.6 billion fee while RBS is paying £20 billion to insure £325 billion of assets.

Lloyds unveils new plans to raise £25bn

By Philip Aldrick

Published: 10:49PM BST 07 Oct 2009

The part-nationalised bank is proposing to raise around £25bn in capital
through a combination of debt-to-equity conversions and a rights issue. An
earlier plan fell short of the FSA’s estimated £25bn requirement to withdraw
from the asset protection scheme (APS).

Lloyds has agreed to insure £260bn of loans with the APS and pay the
Government a £15.6bn fee in special “B” shares. The stake will increase the
state’s economic interest in Lloyds from 43pc to 62pc. However, it wants to
reduce or withdraw completely from the APS to limit European state-aid
competition remedies.

Lloyds has proposed raising the funds through a rights issue of up to £10bn
and a rearrangement of its capital base. It has £7bn of preference shares
and £11bn of other hybrid tier one and tier two debt instruments. By
converting those into core tier one capital, the new regulatory benchmark,
the bank could strengthen its finances by as much as £18bn.

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SocGen raises €4.8bn to repay government

Société Générale, the French bank, today announced a €4.8 billion (£4.4
billion) cash call to shareholders to allow it to buy back the stake bought
by the French Government at the height of the credit crunch.

The bank said that the deal would also allow it to reinforce the quality of
its solvency ratios and “seize potential external growth opportunities”.

Its move comes a week after BNP Paribas, its larger rival, announced a €4.3
billion share issue to pay back its government rescue.

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Songbird unveils £1.03bn rescue fundraising

Published: 8:30AM BST 24 Sep 2009

The company announced a £620m placing and open offer of shares on Thursday and
confirmed plans to sell £275 of preference shares.

Songbird will use the proceeds from the share sale to purchase and repay the
loan from Citigroup at a 5pc discount. The company had faced breaching
covenants on the loan because of the slump on property values over the past
year.

The preference shares have been placed with Qatar Holding and Fullbloom
Investment Corporation, a wholly owned subsidiary of China Investment
Corporation.

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Lloyds Banking Group’s new chairman Sir Win Bischoff to cut reliance on government

By Philip Aldrick, Banking Editor

Published: 7:00AM BST 15 Sep 2009

The former Citigroup chairman, who replaces from Sir Victor Blank, inherits a
bitter fight with the Treasury over the bank‘s plans to reduce its participation
in the asset protection scheme (APS), a state insurance policy for
its toxic debt.

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Fair share

Money Talk
By Gavin Oldham
The Share Centre

The Lloyds Banking Group entitlement offer draws to a close at the end of this week, aiming to raise £4bn from current shareholders to redeem the government’s preference shares.

This should enable Lloyds to start paying dividends to shareholders again, and redemption of the preference shares will also reduce Lloyd’s annual interest bill by £480m.

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French banks finalise merger deal

Two loss-making French banks, Banque Populaire and Caisse d’Epargne, have finalised details of their merger deal, which was announced last October.

The merged group will be France’s second biggest retail bank after Credit Agricole, with 34 million customers. Read more

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