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FSA investigates Pru’s failed $35bn AIA bid

The FSA is investigating Prudential’s failed $35bn bid for Asian life assurer AIA.

According to a Financial Times report, Prudential has been ordered by the regulator to commission law firm Clifford Chance to conduct an inquiry amid concerns over the management of the AIA deal.

An external skilled persons report is focusing on Pru’s investment advisers, Credit Suisse, JPMorgan and HSBC to find out if they discharged their duties properly.

Pru’s bid for AIA was plagued by communication problems from its launch in March last year. It took over two months before investors could see full details at the launch of a $20bn rights issue.

The deal failed after Pru shareholders forced the firm to renegotiate the price.

A Prudential spokesman says: “As a large financial services group we have a constant dialogue with our principal regulator on a wide range of issues. As a matter of policy we do not comment publicly on any such discussions.”

The FSA refused to comment.

In August last year, Prudential revealed the failed AIA bid cost the company £377m. Group chief executive Tidjane Thiam then ruled out a further bid saying the insurer would not be looking at further large-scale acquisitions.


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. The only winners in this exercise will be Clifford Chance!

  2. I wonder which senior individuals at Clifford Chance and the FSA are related?

  3. Perhaps our glorious regulator would like to investigate themselves,while they are at it for allowing Prudential to plunder the inherited estates to the tune of 1.6 Billion pounds at its policyholders expense.This money was to pay for mis-selling costs,to pay shareholders tax bills and to subsidise new business.It is no wonder that my bonuses and my fellow policyholders have been stationery for many a year.I would never have taken out a pension product with this provider had I known I was to be treated so shabbily by not only Prudential but also that sorry excuse for a regulator.

  4. There would be no point in the FSA investigating itself. Vast sums of money be spent merely to arrive at a predetermined set of conclusions with no finger of culpability being pointed at any individual. There might be some waffle about how the organisation as a whole might have done one or two things better, some vague suggestions that things might have been a bit better coordinated, that internal systems of communication might have been more effective, blah, blah, blah. But, at the end of the day, it’d be just the usual whitewash concluding in nothing more than some sort of collective failure. That surely means a management failure. But no names will ever be named.

    At his last appearance before the TSC in March, Hector Sants was asked repeatedly just WHO was responsible for certain failures on the part of the FSA. He repeatedly skated away from giving any sort of clear answer. The failures were just “collective” so, as usual, nobody will be held to account. About the only good thing to be said for that is that the industry will be spared the huge cost of a golden parachute for somebody else like Clive Briault.

    And as for accountability, the FSA still refuses to publish for all to see and to debate any of the feedback submitted in response to its “consultation” on its RDR. The party line now is simply that the consultation period is over and that the FSA is now into the implementation stage. So, with no publication or discussion of the consultation feedback, what was the point? We (the FSA) are tired of this stage of the game, so it’s time for everyone to move on, regardless of whether or not the rest of you think your opinions have been properly aired and considered. It’s a rigged deck and we hold all the cards, so just shut up and get on with it. Implementation of the RDR was a foregone conclusion from the word go. The consultation process was just another hollow, token sham, just going through the obligatory motions with no intention of taking the slightest bit of notice of anything that anyone else had to say on the matter. And that pretty well sums up the FSA’s idea of being the open and accountable regulator that it claims on its website to be. It isn’t.

    Not even the increase in estimated implementation costs from £600m to £1.7Bn has prompted the FSA to reconsider its Cost:Benefit Analysis. Its stance is simply “To hell with the costs, the RDR is going ahead whether you lot (who’ll have to pay for it) like it or not”. Can there be a worse example than that of unaccountable tyranny?

    And I’d still like to know on exactly what, according to Hector Sants, the FSA anticipates blowing £50m just to change its name and stationery to the FCA. £50m!! Of our money! £5m would hardly be a modest sum, but TEN TIMES that? It beggars belief. It also points to the desperate need for an Independent Regulatory Oversight Committee, the core remit of which will be to force the FSA to adhere to both the spirit and to the letter of the Statutory Code of Practice For Regulators.

    So, for the FSA to have commissioned an investigation (and how much is this one going to cost?) into whether or not the likes of Credit Suisse, JPMorgan and HSBC discharged their duties properly is just a bit like the pot suggesting that the kettle may be black.

    Let us hope that when AIFA finally launches its new strategic policy manifesto (which is rumoured to be in the works), creation of an Independent Regulatory Oversight Committee will be very near, if not at the very top of its agenda.

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