Prudential needs to get itself a plan according to comments following yesteday's surprise announcement of a £1bn rights issue.
The FT says the news is being received as another change in strategy by a company that in February this year was still pushing a gloomy outlook on the UK market.
“They've got a huge job to do to sell this to us. They were very negative on the UK market only recently,” the paper quotes one top-10 investor in the company.
And, while talk is of earmarking certain amounts of the new money for expansion in Asia, especially India, there is also concern among equities analysts about just how the money may be spent in the UK, with plans seen as lacking “clarity”.
The Daily Telegraph notes the failure to sell internet bank Egg sparked the rights issue, but this after previous promises that a failure to find a buyer for the bank would not lead to such a move.
The paper does state, however, that the City’s reaction is mixed, with some supporting the move as putting the company on a firmer financial footing.
Things do not look so rosy for Jonathan Bloomer, though, as the rights issue surprise comes on top of the failure to sell Egg, last year’s dividend cut – the first since the First World War – and the American General issue, the paper adds.
The Times says the mention rights issue money may be partly used to meet tough new European capital adequacy rules has been scoffed at by Pru rivals.
”Norwich Union, Legal & General and Royal & SunAlliance said that they would not follow Prudential’s move to meet the new directive, which requires insurers to reserve for their global subsidiaries as if they operated in Britain,” The Times writes.
IN A SIMILAR MOVE, Standard Life is set to go to the bond market to raise up to £400m necessary to fund more new business and claw back lost market share, The Scotsman says.
The sum could have been as high as £750m, but was reduced after severe cost-cutting by the mutual, including further job cuts, the paper says.
The bond issue has attracted a rating of ‘A-‘ from ratings agency Standard & Poor’s against an overall rating for Standard Life of ‘A+’, because of the fact bondholders stand after policyholders and creditors in a worst-case scenario, the paper adds.
PENSIONS ARE A TRICKY bag for work and pensions secretary Alan Johnson, as he found out after telling a CBI conference yesterday that UK pensions “are not in crisis”, the Telegraph reports.
That comment was based on a reading of the Pensions Commission report, and emphasis on a possible crisis in 15 to 20 years time if nothing is done today.
Unfortunately for Johnson, Adair Turner, Commission chairman, also speaking at the same conference told delegates that the UK’s pension system was indeed in a current crisis.
SAINSBURY’S PAIN has been shared by two Merrill Lynch equities analysts who have been suspended pending an investigation into a note they wrote on the company ahead of its poor results published yesterday, writes the FT
The two wrote in their recent note that the supermarket retailer had been “helpful” in pointing out their estimated pre-tax profit numbers were too high, following a briefing with the company’s investor relations team.
Other retail analysts meanwhile say the complaints by Sainsbury’s about how that conversation “was reported” by the two analysts look set to shut down routes of communication between themselves and the supermarket too.
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