Exclusive: MetLife To Sell UK Annuities Arm

By Mark Kleinman, City Editor

The US financial services giant MetLife is preparing a sale of its UK bulk annuities business in a deal that would generate hundreds of millions of pounds and pave the way for a further shake-up of the market.

I understand that MetLife, whose headquarters above Grand Central Station is one of New York City's most recognisable landmarks, has appointed investment bankers from Citi to run an auction of its UK Assurance division.

Insiders said today that a sale process had been launched in recent weeks and that a large number of prospective buyers were being sounded out about their interest in the business.

MetLife is understood to have identified the operation as a disposal candidate having spent the last five years building it into a major player in the UK market, which offers bulk annuity and pension risk management solutions for pension schemes.

In December, the financial services company warned that profits this year were likely to be lower-than-expected because of the protracted period of historically-low interest rates in the US.

MetLife has a market value of just over $40bn (£26.1bn), making it the largest life insurance group in the US by that measurement.

It was unclear today how much MetLife was seeking to sell the UK Assurance business for, although people close to the situation said it would be "significantly below" a £1bn figure suggested by some analysts.

MetLife is a leading life insurance group in North America

The division employs 55 people in London, according to the company.

People close to MetLife said that the auction would not involve the sale of MetLife's other UK operations, which include wealth management, employee benefits and the provision of life, accident, sickness and other general insurance products. The insurance products are distributed through major banks in the UK and elsewhere in Europe.

Last year, MetLife sold its banking deposits arm to General Electric, allowing it to shed its regulatory status as a bank holding company, which followed a decision by the Federal Reserve to prevent it returning capital to shareholders.

The company incurred a loss running to tens of millions of pounds from Superstorm Sandy, which caused enormous damage to parts of the US last October. MetLife still expects to make profits of around $5.5bn in 2013, the company told investors in December.

A spokesman for MetLife's UK business said:

"MetLife continually evaluates its businesses to ensure that we are best positioned to achieve our objectives, deliver superior customer service, support long-term business growth and operate effectively and efficiently. We do not comment on market rumours or speculation."

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Pound Plunges As King Loses QE Vote

The pound has plunged against key economies after it was revealed that the Bank of England boss lost a vote for an increase in monetary stimulus.

Sterling fell to fresh multi-month lows against the euro and the dollar after minutes from the BoE showed governor Sir Mervyn King wanted an increase of quantitative easing (QE) to £400bn.

The notes showed that unexpectedly three out of the nine BoE policymakers voted for an increase in asset purchases under the bank's QE programme, which currently sits at £375bn.

However, they were outvoted by the six others who preferred to keep policy unchanged.

The minutes also show that the Monetary Policy Committee (MPC) considered cutting interest rates below the current historic low of 0.5%.

The pound has weakened by almost 10 cents against the dollar this year

The pound slid to at least an 8-1/2-month low against the dollar, dropping 1.1 cents in a day and reaching $1.549.

Meanwhile the slide with the euro continued, with the pound dropping to 1.145 euros, down 1.15 cents in the day.

The FTSE 100 index peaked above 6409 after news of the MPC minutes was released and finished at 6395 - a five-year closing high as investors anticipated benefits from extra QE stimulus.

James Knightley, economist at ING bank, said it was "significant" that Sir Mervyn voted for more QE.

"Clearly, if the data disappoints, more QE will be on its way," Mr Knightley said.

Governor Sir Mervyn King is to leave the Bank of England soon

The MPC meeting was held on February 6 and 7, with the governor being supported by BoE economist Paul Fisher and Professor David Miles.

The British economy has been stagnant for the past two years, and the central bank only sees sluggish future growth.

But concerns about inflation and how effective more buying of bonds or other assets would be have stayed the bank's hand.

However, the swing in the governor's views provided the sharpest divergence in views since June last year, when a split vote was followed the next month by a majority in favour of an extra £50bn of purchases.

"A case could ... be made for undertaking additional asset purchases at this meeting," the minutes said.

"The degree of slack in the economy, and the likely positive response of supply capacity to increased demand, meant that higher output growth would not necessarily lead to any material additional inflationary pressure."

More broadly, the MPC said it was willing to allow longer for inflation to fall to its target, and to consider measures to boost lending from sources other than banks.

Most economists have seen it as unlikely that the BoE would opt to try and pump yet more cash into the economy, due to persistently high inflation and doubts from King among others about further asset purchases.

The meeting was only the fourth time that the governor has been outvoted since he took office in 2003.

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Record Numbers Employed But Incomes Suffer

The latest official unemployment statistics show that while the jobless total is still falling wage growth is too, intensifying the squeeze on living standards.

The Office for National Statistics (ONS) found that the number of people in work hit a new record high in the three months to December, at 29.73 million.

The figure represented an increase of 154,000 on the quarter to September, making it the highest total since records began in 1971.

But it also reported a continued cut in the real value of pay, with average earnings increasing by 1.4% in the year to December, down by 0.1% on the previous month.

The Work & Pensions Secretary Iain Duncan Smith told Sky News the wider figures showed that the Government was making progress in bringing down long term unemployment.

Inflation stood at 2.7% and salary rises averaged just 1.3%

"It's difficult economic times but if you were in Spain or France or Italy or even Greece you would look at these figures and say I wish we were there rather than here."

The number without a job fell by 14,000 to 2.501 million in the final quarter, the ONS said, although there was a slight increase on a month-on-month basis which pushed the unempoyment rate to 7.8%.

There was a surprise 12,500 drop in those claiming jobless benefit but youth unemployment increased by 11,000, the highest rise for a year, and the number of people with more than one job increased by 41,000 to 1.1 million.

But regular pay, excluding bonuses, rose by just 1.3%, the lowest figure since the end of 2009.

The ONS noted that CPI inflation was running at 2.7% last year, with the annual growth in weekly wages staying below inflation since the middle of 2008.

Critics said there were still too many people who had suffered because of the lack of economic growth.

TUC General Secretary Frances O'Grady said: "It's encouraging to see another fall in unemployment, but not everyone is benefiting from the recent jobs growth.

"The number of young people out of work is edging back up towards a million, so the Chancellor must put tackling our youth jobs crisis at the top of his Budget priority list. He can start by introducing a guarantee of paid work for any young person out of work for six months or longer.

"The further squeeze on people's wages is also concerning. This is looking less like a temporary blip, and more like a longer-term problem for the economy."

There have recently been indications about how difficult it can still be to get a job, despite Government pointing to 500,000 vacancies in the economy.

It emerged on Tuesday that 1,700 people had applied for a total of eight jobs at a new Costa coffee shop in Nottingham.

The Department for Work and Pensions told Sky News that while it did not underestimate the challenge still facing the Government to get more people into work, there were 15,000 more people in work in the East Midlands over the past year.

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Royal Mail Staff 'Will Have To Keep Shares'

By Mark Kleinman, City Editor

Tens of thousands of Royal Mail staff could be forced to hold onto shares in the company for months after a potential stock market listing as Government ministers attempt to avoid an instant mass share sale.

I have learnt that the scheme is being drawn up by the Government to try to avoid the process of 'stagging', which blighted the huge privatisations of the 1980s under Margaret Thatcher. Stagging is the term given to those who buy or receive shares at the offer price of a flotation and then sell them immediately into the market.

Under plans enshrined in legislation passed last year, the Government is to hand Royal Mail staff a 10 per cent stake in the company as part of a project to inject private capital. That could take the form of a sale to a single buyer or, more likely, a stock market listing that would place Royal Mail on the cusp of the FTSE-100.

A team of officials from the Department for Business, Innovation and Skills (BIS) and the Shareholder Executive, which oversees the management of state-owned companies, is working on the employee share offering.

The plans are not yet finalised but senior Government sources confirmed that an 'anti-stagging' clause was likely to be included in the scheme to avoid the prospect of millions of pounds-worth of additional shares being dumped in the market as soon as the listing takes place. It is unclear exactly how long staff would be asked to hold onto their share awards.

The process to privatise Royal Mail, which has eluded previous secretaries of state including Lord Mandelson, is being overseen by Michael Fallon, the business minister.

Mr Fallon told the Financial Times earlier this week that the conditions were ripening for an injection of external capital into the company.

"You have got a business that is profitable, doesn't have a pension deficit, will be operating in a clear regulatory environment and would no longer be competing with schools and hospitals for scarce capital," he told the newspaper.

Under Moya Greene, its Canadian chief executive, Royal Mail's management team has been discussing the company's prospects with potential investors in the UK, Canada and the US as it tries to familiarise fund managers with its financial performance.

Ms Greene, who joined about two years ago, has been cutting tens of thousands of jobs as part of a plan to automate many of Royal Mail's processes and modernise the company. Her actions have caused some tensions with trade unions, but their hostility to a privatisation process appears to have eased in the context of previous efforts.

The company's efforts have begun to pay off, with operating profit increasing from £12m to £144m in the six months to September 2012, on the back of a surge in demand for sending parcels as consumers switch their buying habits to online retailers.

A BIS spokesman declined to comment.

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HMV To Close 37 More Stores With 464 Jobs Cut

Is Your Local HMV Being Axed?

Updated: 12:15pm UK, Wednesday 20 February 2013

The latest 37 HMV stores identified for closure are:

Ashford, Basildon, Bolton, Cheltenham, East Kilbride, Enfield, Folkestone, Glasgow Argyle, Gloucester, Grimsby, Hatfield Galleria, Heathrow T5 Departure Level, Heathrow Terminal 1, Heathrow Terminal 3, Heathrow Terminal 4, Hemel Hempstead, High Wycombe, Isle of Wight, Lancaster, Leadenhall, Mansfield, Middlesbrough, Newbury, Newcastle Silverlink, Newport, Nuneaton, Redditch, Salisbury, Scarborough, Southport, Stafford, Staines, Stockport, Swindon, Taunton, Torquay, Woking.

The 66 stores already earmarked for closure were:

Ashton-under-Lyne, Ballymena, Barnsley, Bayswater, Belfast Boucher Road, Belfast Forestside, Bexleyheath, Birkenhead, Birmingham Fort, Blackburn, Boston, Bournemouth Castlepoint, Bracknell, Burton-upon-Trent, Camberley, Chesterfield, Coleraine, Craigavon, Croydon Centrale, Derry, Dumfries, Durham, Edinburgh Fort, Edinburgh Gyle Centre, Edinburgh Ocean, Edinburgh Princes Street, Edinburgh St James, Falkirk, Fulham, Glasgow – Fort, Glasgow – Silverburn, Glasgow Braehead, Huddersfield, Kirkcaldy, Leamington Spa, Leeds White Rose, Lisburn, Loughborough, Luton, Manchester 90, Moorgate, Newry, Newtonabbey, Orpington, Rochdale, Scunthorpe, South Shields, Speke Park, St Albans, St Helens, Stockton-on-Tees, Tamworth, Teesside, Telford, Trocadero, Wakefield, Walsall, Walton-on-Thames, Wandsworth, Warrington, Watford, Wellingborough, Wigan, Wood Green, Workington, Wrexham.

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New 4G Phone Operators Announced By Ofcom

4G Auction Is New Blow To Osborne

Updated: 3:49pm UK, Wednesday 20 February 2013

By Ed Conway, Economics Editor

If you cast your mind back to the Autumn Statement last December, there was one moment in the Commons debate that stood out: when the Shadow Chancellor tripped over his words in his response.

Ed Balls was thrown by George Osborne's announcement that, even after a whole load of accounting changes were ignored, the Government would borrow less this year than the year before.

To be precise, it was £1.1bn less, should it hit its £120.3bn borrowing target in 2012/13.

Mr Balls had expected the Chancellor to acknowledge that due to worsening economic conditions, he would have to borrow more than last year's £121.4bn.

He had not reckoned on the fact that the Office for Budget Responsibility would include the proceeds of the 4G spectrum auction in this year's public finance figures.

It was thanks to that extra money, estimated at £3.5bn, that the Chancellor would be able to claim borrowing was still falling rather than rising this fiscal year.

All of which is why the final tally of the proceeds from the 4G auction will come as a real fiscal, not to mention political, blow for the Chancellor.

All else being equal, he will end up borrowing more this year than last because the 4G auction is only generating £2.34bn rather than that expected £3.5bn.

Now, this does not mean he will break any of his fiscal rules - or to be precise the one he's still got left to break - but it is nonetheless a political disappointment.

It is particularly so, given that some within the Treasury had been quietly hoping for a far bigger figure.

After all, back in 2000 the Treasury's internal forecasts were for the 3G auction to raise not much more than £1bn, and it ended up generating £22.5bn.

The recent Irish 4G auction also outperformed expectations.

But now this news more or less eliminates the possibility that there will be a fiscal white knight riding to Mr Osborne's rescue.

Having said that, it is wrong simply to treat these auctions as a way of extracting money from business.

Back in 2000 there was a feeling within the telecom sector that companies had overpaid for their 3G licenses, and that, in turn, may have fed into higher mobile tariffs and undermined investment in phone masts and infrastructure.

This is why Ofcom believes that it is more sensible to consider the long-term economic benefits for the UK, rather than the one-off fiscal impact.

Whether Mr Osborne agrees is another matter.

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Heinz Insider Trades Claims: FBI Investigates

The FBI is examining possible insider trading in Heinz shares ahead of last week's $28bn (£18bn) takeover announcement.

A spokeswoman confirmed the move, days after US regulators said they had identified suspicious trades from a Swiss account.

Kelly Langmesser said: "We're aware of the trading anomalies the day before the announcement ... and we're consulting with the Securities and Exchange Commission (SEC) to see if a crime was committed."

The SEC said last Friday it had identified highly suspicious trades in H.J Heinz before billionaire investor Warren Buffett's Berkshire Hathaway and 3G Capital announced they were acquiring the baked bean and ketchup maker.

It also announced it had obtained an emergency order to freeze a Goldman Sachs bank account in Switzerland suspected of use in the trades.

Unknown traders earned $1.7m (£1.1m) in profits through "irregular and highly suspicious" trades and added that it believed the traders had knowledge of the takeover ahead of the announcement early last Thursday morning in New York, according to the SEC.

Swiss authorities have already said they have not been asked to help with the US investigation.

The SEC enforcement action marked the second time in six months that regulators had taken aim at alleged insider trading in a deal involving 3G.

The first instance, last September, involved a stockbroker trading on inside information related to 3G's 2010 purchase of Burger King.

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Axminster Carpets To Appoint Administrators

Axminster Carpets is the latest household name that is close to collapse by confirming its intention to appoint administrators.

The 250-year old company - based in Axminster in Devon with more than 400 people at its headquarters - blamed difficult trading and resulting financial problems.

Its statement said: "Axminster Carpets Limited ("the Company") continues to trade while the Company explore all potential rescue / restructuring options.

The Company's board of director confirm that a notice of intention to appoint administrators has been filed with respect to the Company.  The notice was filed in order to provide the Company and its creditors with a moratorium period during which the various rescue options being explored can continue."

It continued: "The notice of intention to appoint administrators nominates Benjamin Wiles, Geoff Bouchier and David Whitehouse of Duff & Phelps as Joint Administrators."

The Company's Director, Joshua Dutfield, commented: "Trading has been difficult and the management has been working with key suppliers, creditors and the lenders in an attempt to resolve the Company's financial difficulties. We continue to be committed to working to achieve the best possible outcome for all concerned and most importantly the staff and suppliers."

Axminster, which produces several styles of carpet and rugs, uses 90% of British wool in its trademark Axminster carpet which is woven using traditional loom production methods.

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France's Goodyear Workers 'Too Lazy To Save'

An American tycoon has ruled out the rescue of the Goodyear tyre factory in France because he thinks its workers are "too lazy" to make the business viable.

French minister Arnaud Montebourg had hoped Maurice M Taylor Jr, the president of the American Titan group, would step in to keep the plant in the north of the country going.

But in a letter sent earlier this month to Mr Montebourg, the American said a very emphatic "non".

"I and Titan have a 40-year history of buying closed factories and companies, losing millions of dollars and turning them around to create a good business paying good wages," he wrote.

"Goodyear tried for more than four years to save part of the Amiens jobs that are some of the highest paid around but the French unions and French government did nothing but talk.

Police in Paris are hit with paint at a protest at the closure of Goodyear

"I have visited that factory a couple of times. The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three. I told this to the French union workers to their faces. They told me that's the French way!

"You are a politician so you don't want to rock the boat. The Chinese are shipping tyres into France - really all over Europe - and yet you do nothing. The Chinese government subsidises all the tyre companies. In five years, Michelin won't be able to produce tyres in France.

"Sir, your letter states that you want Titan to start a dialogue. How stupid do you think we are? Titan is the one with the money and the talent to produce tyres. What does the crazy union have? It has the French government.

"The French farmer wants cheap tyres. He does not care if the tyres are from China or India and these governments are subsidising them. Your government doesn't care either: "We're French!"

Goodyear announced last month it is to close its main French plant and cut its workforce in the country by almost 40%, as car demand falls and labour disputes increase.

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4G Auction Is Yet Another Blow For Osborne

If you cast your mind back to the Autumn Statement last December, there was one moment in the Commons debate that stood out: when the Shadow Chancellor tripped over his words in his response.

Ed Balls was thrown by George Osborne's announcement that, even after a whole load of accounting changes were ignored, the Government would borrow less this year than the year before.

To be precise, it was £1.1bn less, should it hit its £120.3bn borrowing target in 2012/13.

Mr Balls had expected the Chancellor to acknowledge that due to worsening economic conditions, he would have to borrow more than last year's £121.4bn.

He had not reckoned on the fact that the Office for Budget Responsibility would include the proceeds of the 4G spectrum auction in this year's public finance figures.

It was thanks to that extra money, estimated at £3.5bn, that the Chancellor would be able to claim borrowing was still falling rather than rising this fiscal year.

All of which is why the final tally of the proceeds from the 4G auction will come as a real fiscal, not to mention political, blow for the Chancellor.

All else being equal, he will end up borrowing more this year than last because the 4G auction is only generating £2.34bn rather than that expected £3.5bn.

Now, this does not mean he will break any of his fiscal rules - or to be precise the one he's still got left to break - but it is nonetheless a political disappointment.

It is particularly so, given that some within the Treasury had been quietly hoping for a far bigger figure.

After all, back in 2000 the Treasury's internal forecasts were for the 3G auction to raise not much more than £1bn, and it ended up generating £22.5bn.

The recent Irish 4G auction also outperformed expectations.

But now this news more or less eliminates the possibility that there will be a fiscal white knight riding to Mr Osborne's rescue.

Having said that, it is wrong simply to treat these auctions as a way of extracting money from business.

Back in 2000 there was a feeling within the telecom sector that companies had overpaid for their 3G licenses, and that, in turn, may have fed into higher mobile tariffs and undermined investment in phone masts and infrastructure.

This is why Ofcom believes that it is more sensible to consider the long-term economic benefits for the UK, rather than the one-off fiscal impact.

Whether Mr Osborne agrees is another matter.

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