Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Banks

Carney: UK is ‘investment banker for Europe’

The governor of the Bank of England has repeated his calls for a “smooth and orderly” UK exit from the EU, saying that a transition out of the bloc will happen, it was just a case of “when and how”. Responding to the BoE’s latest bank stress tests, where lenders overall emerged with more resilient […]

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Currencies

China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

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Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

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Banks

Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

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Categorized | Insurance

Possible Direct Line purchaser emerges


Posted on April 30, 2012

Edi Truell’s new bid vehicle has approached Royal Bank of Scotland about a possible multi-billion pound purchase of its Direct Line insurance arm.

Tungsten, co-founded by the founder of private equity group Duke Street Capital, has made an informal expression of interest in the business, which analysts estimate could sell for up to £4bn.

    The state-backed bank had received approaches from several other parties – mainly private equity groups – in recent months, people familiar with the matter said.

    However, RBS still plans to float Direct Line towards the end of this year, believing it can extract a better price by going down the initial public offering route than it could by selling the business to a private equity buyer.

    Analysts have questioned the ability of private equity buyers to raise the required funds and meet increasingly demanding capital requirements.

    RBS was ordered to dispose of its insurance arm as part of a far-reaching state aid agreement settled after the bank received £45bn of government support following its near collapse in 2008.

    Mr Truell set up Tungsten with his brother Danny, chief investment officer of The Wellcome Trust, one of the UK’s largest charities. Tungsten plans to list by the end of May.

    Michael Spencer, chief executive of the interdealer broker Icap, and Peter Kiernan, a former head of UK banking at Lazard, are among the individuals to agree to become board members.

    Lloyds Banking Group on Monday denied a report in the London Evening Standard that Tungsten made a takeover approach for Scottish Widows, its life assurance and pensions business.

    Meanwhile, people with knowledge of the process said Tungsten had not made a formal bid for Direct Line.

    Direct Line is Britain’s biggest personal motor insurer by number of policies. Its brands include Churchill and car breakdown service Green Flag.

    The home and motor insurer swung into profit in 2011, posting an annual operating profit of £454m after rising bodily injury claims pushed it to a £295m loss a year earlier.

    Ahead of the expected IPO the group has quit unprofitable businesses, reduced the number of sites from which it operates and cut its exposure to riskier areas.

    Direct Line raised £500m through a bond sale in April, the latest step in its plan to spin off from RBS.