BREAKFAST DEALS: Banking on Blighty
Will Suncorp's new CEO axe the company's banking division? And will ANZ choose five Asian countries in its selection of RBS assets?
Lunch isn't just for wimps. Be sure to check out LUNCH DEALS for more wheels and deals later today.
Suncorp's new British chief executive is unlikely to have a problem axing the banking division, while ANZ is seen to choose five Asian countries in its selection of RBS assets. Meanwhile, developments in the UK show the way for Australia's supermarket banks, an update on the sale of Royal Mail, news from the resources sector and private equity firms drink to India. All this plus lots more in today's breakfast briefing.
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Suncorp-Metway
The appointment of a non-banker as chief executive of Suncorp-Metway has increased speculation that the bancassurer is readying to sell its struggling lending division. Although the new chief, Lt Col Patrick Snowball, has directly said Suncorp has no plans for such a sale, and that it has strong confidence in the group's future, his background in the insurance industry suggests differently. Furthermore, his background as an officer in the British Army suggests that he will have no problem making tough decisions. Indeed, when a senior executive at Aviva, he took the insurer's customer service operations to India and was in the process of cutting 4,000 jobs before leaving the firm for rival Towergate. Selling off a division that many shareholders want to see dismembered should be relatively easy.
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Australian and New Zealand Banking Corporation
Another chief executive in the mould of English gentleman-banker, Mike Smith, is meanwhile believed to be wiping his hands of aspirations to expand ANZ into India. Bloomberg reports that the Melbourne-based bank is only looking to bid for the Royal Bank of Scotland's assets in Hong Kong, Singapore, Indonesia, Vietnam and Taiwan. An inability to obtain a banking licence from New Delhi (ANZ previously owned the venerable Grindlay's Bank but lost the licence when this was sold to Standard Chartered) is thought to have killed the deal. A similar story in China has meant the bank has no immediate aspirations to expand there, while buying RBS's assets in Pakistan and Kazakhstan, among others, was never really on the cards. StanChart, meanwhile, is said to be in the market for the Chinese and Indian assets, an unnamed source has told Reuters. StanChart is also said to be interested in RBS Malaysia. It is not known which assets the other bidder, HSBC (Smith's former employer) is after. Indonesia, where RBS has 20 branches – the biggest foreign-owned bank network – is seen as a key market for ANZ. In January, the bank paid $US114 million to up its share of PT Bank Panin, in which it has a minority stake. Jakarta was even the place where ANZ launched its new logo: a curious blue lotus design that looks more like a person. It is said the lotus represents the three divisions of ANZ: Australia, New Zealand and Asia. It has also been said it is a sign of new age orientalist mysticism.
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Supermarket banks
Australian banks are also looking at another development from the old dart: a report in The Times that supermarket chain Tesco is in the bidding for Northern Rock. Richard Branson's Virgin Group has also expressed renewed interest in the nationalised home lender, the newspaper said. It's not the first time a supermarket has expressed an interest in owning a bank and indeed Tesco already runs a smaller operation in 30 of its 2,200 stores across Britain called Tesco Personal Finance, which can even insure your pet as well as issue you a credit card. Here in Australia, Woolworths used to run the EzyBanking credit card joint venture with the Commonwealth Bank of Australia, but has since partnered with HSBC, with EverydayMoney. Wesfarmers-owned Coles Group also has a branded credit card, called Source, in conjunction with GE Money. Several years ago when it was part of Coles Myer, the bank was rumoured to be in talks with Westpac about establishing in-store bank branches. In 2006 Coles signed a deal with the National Australia Bank to install ATMs across its supermarkets as well as Coles Express and Kmart stores.
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Post privatisations
And while we're on the subject of British finance, senior cabinet member Peter Mandelson has halted plans to sell up to 30 per cent of Royal Mail, the UK's state-owned postal service. Lord Mandelson gave no indication of when the sale process could resume, but it is unlikely to happen under the current government. Private equiteers CVC Partners had offered the government £2 billion for the stake, the Financial Times earlier reported, and Dutch logistics firm TNT has also expressed interest. Over the years the Australian government has denied plans to privatise Australia Post, despite moves by other governments. In 2007 a spokesman for the then communications minister, Helen Coonan said there were no plans to sell the service despite a note by CommSec chief economist Craig James saying it would bring in up to $7 billion. In September of that year Japan spun off its state-owned postal service into a private holding company, which the government still owns but (ostensibly) operates according to market principles. Japan Post was otherwise the world's biggest savings bank as well as the country's largest employer. It ran 24,700 post offices and managed $US2.1 trillion in savings accounts, $US1.2 trillion in life insurance and one fifth of the government's sovereign debt. By contrast, Australia Post is a relatively straight forward story.
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Mining movements
In the mining and energy sector, the China Iron & Steel Association has apparently relented in its battle to secure a 40 per cent reduction in iron ore prices. The association of steel mills has allegedly settled on a 33 per cent price-cut, roughly what has been accepted by South Korean and Japanese steelmakers, sources say. Rio Tinto, which sits opposite the negotiating table along with BHP Billiton, was making ominous noises of a drop-dead clause. The problem for China's negotiators were that a lot of mills were going behind the team's back and buying iron ore at spot prices anyway. The problem for Rio and BHP however is that China still is the world's biggest iron ore producer (as well as consumer) and that recent discoveries may make it an even bigger one. Elsewhere in the sector, Pilbara explorer Dynasty Metals has canned a $5 million share deal with the curiously-named Henan Rebecca Holdings, which has to take a 33.3 per cent share in the group. Dynasty says that Henan Rebecca attempted to alter the terms. Over in the world of phosphate meanwhile, Minemakers is closing in on 85 per cent of Bonaparte Diamond Mines, extending its takeover offer by a week to sweep up the remaining shares. Rival bidder Union Resources, which runs a joint venture with Bonaparte in Namibia, has dropped its bid for Bonaparte. Finally, privately held Gull Petroleum has announced it seeks to "aggressively pursue opportunities" to expand and is well positioned to make acquisitions. The family-owned fuel seller has appointed Ernst & Young Transaction Advisory Services as its lead corporate advisor.
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Wrapping up
News Corporation is in talks to merge its Fox film studio with Viacom's Paramount Pictures, according to the Financial Times. Paramount is also said to be in talks with Sony Pictures, a division of the Japanese conglomerate. Private equiteers continue to exhibit their love of fine beverages, with talk that Blackstone, KKR and Capital International are all eyeing India's United Spirits. The Economic Times in Mumbai reports that the world's third biggest spirits maker has received term sheets for a stake worth between $US200 million and $US300 million. Private equity groups are largely believed to have lost interest in Foster's Group, which is more likely to see its next deal with soft-drink group Coca Cola Amatil or Japan's Asahi. Asahi is a rival to Japanese brewer Kirin, which is currently buying-out the remaining 50 per cent of Lion Nathan it does not already own. It may be a little premature, but US Treasury official Harry Wilson has said the "New General Motors" could be ready to make an IPO next year, if the ailing car maker gets federal approval for asset sales this week. The White House is backing a plan to sell GM's best assets into a new holding company, which will then be financed by $US60 billion from Washington. The US Treasury proposes to take a 60 per cent stake in the GM NewCo. Finishing today's big stories, rumours abound that Babcock & Brown Infrastructure could follow Asciano down the capital raising path as the latter separately announces the $32 million sale of Pacific National Tasmania to the apple isle's government, and the Financial Review puts Adelaide Brighton as chief contender for the assets of HeidelbergCement's Hanson Australia.
Suncorp's new British chief executive is unlikely to have a problem axing the banking division, while ANZ is seen to choose five Asian countries in its selection of RBS assets. Meanwhile, developments in the UK show the way for Australia's supermarket banks, an update on the sale of Royal Mail, news from the resources sector and private equity firms drink to India. All this plus lots more in today's breakfast briefing.
.
.
Suncorp-Metway
The appointment of a non-banker as chief executive of Suncorp-Metway has increased speculation that the bancassurer is readying to sell its struggling lending division. Although the new chief, Lt Col Patrick Snowball, has directly said Suncorp has no plans for such a sale, and that it has strong confidence in the group's future, his background in the insurance industry suggests differently. Furthermore, his background as an officer in the British Army suggests that he will have no problem making tough decisions. Indeed, when a senior executive at Aviva, he took the insurer's customer service operations to India and was in the process of cutting 4,000 jobs before leaving the firm for rival Towergate. Selling off a division that many shareholders want to see dismembered should be relatively easy.
.
.
Australian and New Zealand Banking Corporation
Another chief executive in the mould of English gentleman-banker, Mike Smith, is meanwhile believed to be wiping his hands of aspirations to expand ANZ into India. Bloomberg reports that the Melbourne-based bank is only looking to bid for the Royal Bank of Scotland's assets in Hong Kong, Singapore, Indonesia, Vietnam and Taiwan. An inability to obtain a banking licence from New Delhi (ANZ previously owned the venerable Grindlay's Bank but lost the licence when this was sold to Standard Chartered) is thought to have killed the deal. A similar story in China has meant the bank has no immediate aspirations to expand there, while buying RBS's assets in Pakistan and Kazakhstan, among others, was never really on the cards. StanChart, meanwhile, is said to be in the market for the Chinese and Indian assets, an unnamed source has told Reuters. StanChart is also said to be interested in RBS Malaysia. It is not known which assets the other bidder, HSBC (Smith's former employer) is after. Indonesia, where RBS has 20 branches – the biggest foreign-owned bank network – is seen as a key market for ANZ. In January, the bank paid $US114 million to up its share of PT Bank Panin, in which it has a minority stake. Jakarta was even the place where ANZ launched its new logo: a curious blue lotus design that looks more like a person. It is said the lotus represents the three divisions of ANZ: Australia, New Zealand and Asia. It has also been said it is a sign of new age orientalist mysticism.
.
.
Supermarket banks
Australian banks are also looking at another development from the old dart: a report in The Times that supermarket chain Tesco is in the bidding for Northern Rock. Richard Branson's Virgin Group has also expressed renewed interest in the nationalised home lender, the newspaper said. It's not the first time a supermarket has expressed an interest in owning a bank and indeed Tesco already runs a smaller operation in 30 of its 2,200 stores across Britain called Tesco Personal Finance, which can even insure your pet as well as issue you a credit card. Here in Australia, Woolworths used to run the EzyBanking credit card joint venture with the Commonwealth Bank of Australia, but has since partnered with HSBC, with EverydayMoney. Wesfarmers-owned Coles Group also has a branded credit card, called Source, in conjunction with GE Money. Several years ago when it was part of Coles Myer, the bank was rumoured to be in talks with Westpac about establishing in-store bank branches. In 2006 Coles signed a deal with the National Australia Bank to install ATMs across its supermarkets as well as Coles Express and Kmart stores.
.
.
Post privatisations
And while we're on the subject of British finance, senior cabinet member Peter Mandelson has halted plans to sell up to 30 per cent of Royal Mail, the UK's state-owned postal service. Lord Mandelson gave no indication of when the sale process could resume, but it is unlikely to happen under the current government. Private equiteers CVC Partners had offered the government £2 billion for the stake, the Financial Times earlier reported, and Dutch logistics firm TNT has also expressed interest. Over the years the Australian government has denied plans to privatise Australia Post, despite moves by other governments. In 2007 a spokesman for the then communications minister, Helen Coonan said there were no plans to sell the service despite a note by CommSec chief economist Craig James saying it would bring in up to $7 billion. In September of that year Japan spun off its state-owned postal service into a private holding company, which the government still owns but (ostensibly) operates according to market principles. Japan Post was otherwise the world's biggest savings bank as well as the country's largest employer. It ran 24,700 post offices and managed $US2.1 trillion in savings accounts, $US1.2 trillion in life insurance and one fifth of the government's sovereign debt. By contrast, Australia Post is a relatively straight forward story.
.
.
Mining movements
In the mining and energy sector, the China Iron & Steel Association has apparently relented in its battle to secure a 40 per cent reduction in iron ore prices. The association of steel mills has allegedly settled on a 33 per cent price-cut, roughly what has been accepted by South Korean and Japanese steelmakers, sources say. Rio Tinto, which sits opposite the negotiating table along with BHP Billiton, was making ominous noises of a drop-dead clause. The problem for China's negotiators were that a lot of mills were going behind the team's back and buying iron ore at spot prices anyway. The problem for Rio and BHP however is that China still is the world's biggest iron ore producer (as well as consumer) and that recent discoveries may make it an even bigger one. Elsewhere in the sector, Pilbara explorer Dynasty Metals has canned a $5 million share deal with the curiously-named Henan Rebecca Holdings, which has to take a 33.3 per cent share in the group. Dynasty says that Henan Rebecca attempted to alter the terms. Over in the world of phosphate meanwhile, Minemakers is closing in on 85 per cent of Bonaparte Diamond Mines, extending its takeover offer by a week to sweep up the remaining shares. Rival bidder Union Resources, which runs a joint venture with Bonaparte in Namibia, has dropped its bid for Bonaparte. Finally, privately held Gull Petroleum has announced it seeks to "aggressively pursue opportunities" to expand and is well positioned to make acquisitions. The family-owned fuel seller has appointed Ernst & Young Transaction Advisory Services as its lead corporate advisor.
.
.
Wrapping up
News Corporation is in talks to merge its Fox film studio with Viacom's Paramount Pictures, according to the Financial Times. Paramount is also said to be in talks with Sony Pictures, a division of the Japanese conglomerate. Private equiteers continue to exhibit their love of fine beverages, with talk that Blackstone, KKR and Capital International are all eyeing India's United Spirits. The Economic Times in Mumbai reports that the world's third biggest spirits maker has received term sheets for a stake worth between $US200 million and $US300 million. Private equity groups are largely believed to have lost interest in Foster's Group, which is more likely to see its next deal with soft-drink group Coca Cola Amatil or Japan's Asahi. Asahi is a rival to Japanese brewer Kirin, which is currently buying-out the remaining 50 per cent of Lion Nathan it does not already own. It may be a little premature, but US Treasury official Harry Wilson has said the "New General Motors" could be ready to make an IPO next year, if the ailing car maker gets federal approval for asset sales this week. The White House is backing a plan to sell GM's best assets into a new holding company, which will then be financed by $US60 billion from Washington. The US Treasury proposes to take a 60 per cent stake in the GM NewCo. Finishing today's big stories, rumours abound that Babcock & Brown Infrastructure could follow Asciano down the capital raising path as the latter separately announces the $32 million sale of Pacific National Tasmania to the apple isle's government, and the Financial Review puts Adelaide Brighton as chief contender for the assets of HeidelbergCement's Hanson Australia.
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