EGG, THE INTERNET bank owned by Prudential, would be put up for sale if Aviva succeeds in its £17bn all-share bid for its smaller rival, reports The Daily Telegraph.
According to the paper, the plan emerged as Aviva made a formal offer for Prudential, saying it would create a global giant with a market capitalisation of £36bn and £40bn of premium income.
While Aviva has yet to draw up detailed plans to sell Egg, sources said it would make the move a priority if its offer for Prudential succeeds because it would not fit with the insurer's strategy.
Egg's sale could be helped by the fact that Aviva's mergers and acquisitions director Clifford Abrahams is already well acquainted with Egg's business. Until last year he worked at Morgan Stanley, where he advised Prudential on its failed auction of the business.
Aviva yesterday said it had not made a decision about Egg. Aviva, which has characterised the deal as a merger and said it was only interested in doing the deal on a friendly basis, said a combination with Prudential would create £320m in annual cost savings. Aviva believes half that figure would come from integrating the two companies' UK life insurance businesses.
INSIGHT, THE FUND management division of HBOS, is planning to float the UK’s biggest buy-to-let property fund, The Times has learnt.
The company run by Duncan Owen is considering injecting a £300m residential portfolio it acquired from British Land, with a further £200m of assets that it owns or is in the process of buying, into a new listed vehicle.
The fund, worth at least £500m, would be listed on the London Stock Exchange. The company will await details on Wednesday of new legislation to introduce tax-efficient Real Estate Investment Trusts (REIT) to the UK, before deciding whether to set up a REIT or incorporate the fund in Guernsey but list in London.
It is thought that Insight is in the early stages of putting together an advisory team for the possible float, which could come as soon as this year. The new vehicle would allow both retail and institutional investors to get access to a diversified highly quality residential portfolio run by a regulated fund manager.
COMPANIES ARE BRACING themselves for a fresh onslaught on tax avoidance in tomorrow's Budget, reports The Financial Times.
Gordon Brown expects to raise more than £4bn in 2006-07 from the clampdown on tax loopholes and fraud launched when he pledged "vigilance against tax avoidance" in his 2002 Budget.
Among the schemes under threat is the tax relief allowing value added tax-free imports of goods worth less than £18. Jersey and Guernsey have already made clear they do not welcome British retailers attempting to exploit the relief. Brown could reduce the threshold, or apply to the European Commission to abolish the relief entirely.
The Treasury is also believed to be poised to clamp down on perceived tax avoidance in property. One area it has looked at is property dealers who exploit a loophole in stamp duty legislation that allows them to escape the 4% land tax levy by transferring buildings into new offshore property unit trusts.
"Seeding relief" - stamp duty relief on transferring assets into new property unit trusts - was brought in, in 2003 to make it easier for pension and insurance funds to repackage their assets into different trusts. But some property dealers have used the rule to transfer individual buildings into a new offshore trust and then sell shares in the vehicle free of stamp duty.
The tax take from stamp duty land tax on commercial property fell from £1.28bn in 2003-04 to £760m in 2004-05, and the Treasury is likely to have been looking hard for signs of avoidance.
GORDON BROWN’S budget preparations received a last-minute setback yesterday when a jump in government spending and slower growth in tax receipts led to the biggest deficit in the public finances for a February since Labour came to power, reports The Guardian.
Following the record surplus piled up by the Treasury in January, the size of last month's £2.3bn shortfall surprised the City, with most analysts predicting that the chancellor would now struggle to keep the annual deficit to the £37bn predicted in the pre-budget report last December.
The Treasury hinted yesterday there might be a modest overshoot, stressing the government was broadly on track to meet its full-year forecast. Brown will insist in tomorrow's speech the government will meet its two rules for the public finances and that tax receipts will pick up this year and next as the economy recovers from its recent slowdown.
Data from National Statistics showed in the first 11 months of the 2005-06 financial year, the government was £31.7bn in the red - little different from the £31.2bn in the same period of 2004-05. Officials said the deficit in March - normally a high-spending month as government departments use up cash before the end of the year - would have to show a sharp reduction on the £8.5bn recorded in the same month a year ago for Brown to meet his £37bn deficit forecast.
The chancellor will point out tomorrow the current budget - day-to-day costs such as public sector salaries - has been improving this year. In the first 11 months of 2005-06, the deficit was £6.2bn, against £13.2bn from April 2004 to February 2005.
Brown's "golden rule" is that the current budget should balance over a complete economic cycle, the length of which has been extended twice in the past 18 months and is now estimated to last from 1997 to 2008. Borrowing is allowed for public investment, which was more than £7bn higher at £25.5bn in the first 11 months of the year.
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Speaking at PA360 North
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