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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

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Categorized | Financial, Insurance

Half of Saga shares could go to public

Posted on April 30, 2014

Pensioners on a foreign holiday©Dreamstime

UK’s over-65 population is expected to soar by 2030

Saga is preparing to offer up to half the shares in its planned London listing to retail investors in what is shaping up to be one of the biggest ever allocations to the public in a UK stock market launch.

About 700,000 of Saga’s customers have registered interest in taking part in the flotation of the insurance-to-travel group, which fired the starting gun on its offering on Wednesday.

    Bankers handling the transaction are considering earmarking between 30 and 50 per cent of the equity to individuals subject to demand, people familiar with the matter said. No decision has yet been taken.

    A retail allocation of that scale would dwarf the 20 per cent allocated to the public in the flotation of Royal Mail last year.

    “I’m determined that we should give customers a good share of this,” said Andrew Goodsell, executive chairman of Saga, which sells a range of products to the over-50s.

    The offer has yet to be priced, but the people said Saga’s private equity backers Permira, CVC Capital and Charterhouse hoped investors would value its equity at as much as 20 times earnings.

    The shares are expected to offer a dividend yield of between 2.5 per cent to 3 per cent as Saga eyes paying out between two-fifths and half of earnings. This would translate into a market capitalisation of between £2.5bn and £3bn.

    The company said on Wednesday it planned to raise net proceeds of £550m from the float, helping reduce net debt to £700m.

    The lower debt burden would help the group expand, said Mr Goodsell. “We’ve operated with very substantial leverage for a long time. That has inevitably been a constraining factor in things we’ve wanted to do.”

    Saga is planning to expand its wealth management platform to capitalise on the Chancellor’s pensions overhaul.

    Fund managers have raised concerns Saga is trying to boost its rating by avoiding the insurance sector, from which it generates most of its profits. Premiums in personal insurance have come under pressure in recent months.

    But Saga, which also offers a wide range of products from legal services to domiciliary care, said the London Stock Exchange had already decided it should be part of the consumer services sector. Most sales come from non-insurance.

    Backers will try to woo investors with the promise of predictable earnings and a business model that targets the UK’s most affluent demographic.

    Individuals will be required to invest at least £1,000 in the listing. The group has launched a television advertising campaign fronted by Larry Lamb, the former Gavin and Stacey star.

    Saga is expected to publish a prospectus for the offer with financial details in the coming days.