FSA concerns delay Pru rights issue
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Prudential has been forced to delay the launch of its £21bn rights issue, planned for today, due to FSA concerns about Pru’s capital position.
According to a statement published by Pru this morning, it is in continuing discussion with the FSA over its buyout of AIG’s Asian life insurance arm AIA.
The FSA is particularly concerned about the capital position of the enlarged group under the Insurance Groups Directive.
As a result, Prudential says it has decided to delay the pricing and launch of the rights issue while it concludes its discussions with the FSA.
Prudential says it does not expect this to affect the overall timing for the completion of the transaction, expected during the third quarter of 2010.
Prudential chairman Harvey McGrath says: “We are entirely committed to the transaction and remain on track to complete within the timing set out on March 1.
“The work completed since March 1 with the AIA and Prudential teams has convinced me more than ever that the enlarged group will be in a position to capture sustainable and highly profitable growth and will deliver substantial long term value for our shareholders.”
Yesterday reports emerged that Resolution founder Clive Cowdery has secured finance from the Royal Bank of Scotland and the Royal Bank of Canada to fund a bid for Prudential’s UK assets.
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Readers' comments (7)
M J Winfield | 5 May 2010 10:06 am
The question must be should the FSA, have the authority to delay such transactions? For the FSA record indicates it to be more Toc H than bright light.
But then the White Knights of the FSA are charged with eliminating risk. A guaranteed failure if ever there was one.
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Jack Spack | 5 May 2010 10:51 am
As usual the FSA comes blundering in late in the day with they size 12's putting pru on back foot from possible vultures (resolution). Well done FSA breaking your own prinicple of creating market confidence, good bye after tomorrow!
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Exasperated me | 5 May 2010 11:41 am
More amusing IFA opinions based on male bovine excrement.
Do any of you know how bad things are out there?
Have you noticed that "long term value for shareholders" is infinitely more important than "long term value for policyholders"? Without the latter the former wouldn't have much to share.
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David McMeekin | 5 May 2010 11:42 am
The Pru are doing what has to be done if they want new distribution,ie:- looking for it in another country where a life assurance sales person has not been made a social piriah.
They will of course maintain their funds under management in the UK just as all the big IFA practices are doing.
That is move funds already accumulated onto some form of wrap or platform and charge yet another AMC (this being possible because the life companies let everyone down).and forgetting about distribution to new customers unless it walks in the door and is big enough.
With regard to new business Dan Waters tells us that when people understand how much they pay for financial advice they will flock to the nearest adviser.
Waken up Dan, 95% of people contacted to reveiw their life and pension arrangements will not give you an appointment let alone agree to paying for advice that has been driven to current levels mainly by the demands of your organization.
You need to start by understanding people, the things that move people are need or greed.
No one wants a mortgage or a loan, it is the house or car they want.They will then look for what will meet that need.
Similarly the person with money will want his money to make him more and will pay someone who appears to offer a chance of a bigger return.
If we as a nation only address the business resuling from these two sources then the savings and protection gap will simply continue to get worse.
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Jill terr | 5 May 2010 1:11 pm
So exasperated me, you think that breaking up a UK operation that has been cut down and cut down and cut down and selling it off to resolution is going to provide long term share holder value, then it is you who are spouting "billy right".
It's the major shareholder who is trying to block this deal which is essentially going to bring the pru massive global growth in the largest growth market in the world, if thats not short sighted then i don't know what is, it is like buying man U for £1000 quid, once you have cleared the debt the rewards will be substantial and the long term outlook will be great.
So wake up, smell the coffee and not your own male bovine excrament
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PruDunce | 5 May 2010 1:24 pm
Though a bear of little brain in this area, it does appear that Pru want to play with lots of shiny new toys in Asia, using the UK insurance (specifically group pension funds) to underwrite things if the shiny new toys blow up in their face. More cash in the bank is not a bad idea.
IFAs, retail distribution and retail insurance products have very little to do with their foray into Asia or the FSA putting the kibosh on it.
It’s good for the industry that a financial behemoth has been slapped down. Firms shouldn’t be able to rail road regulators into approving what they want to do, just because they’ve publically said they are going to do it. Firms like Pru use shareholder anger and the effect on the markets as a blackmail tool. Firms should not publish intentions until they are sure they can do it.
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Exasperated me | 5 May 2010 1:45 pm
More amusing IFA opinions based on male bovine excrement.
Do any of you know how bad things are out there?
Have you noticed that "long term value for shareholders" is infinitely more important than "long term value for policyholders"? Without the latter the former wouldn't have much to share.
Unsuitable or offensive? Report this comment