PRESS DIGEST – British business – May 5

Wednesday May 5 2010

The Times

WHAT PRICE THE PRU – INSURER’S RIGHTS ISSUE?

Bankers working for insurer Prudential (PRU.L: ) were expected
to wait until the early hours of Wednesday morning before
finalising the terms of a record $21 million rights issue.
Market analysts anticipate Prudential will price the cash call
at a near-40 percent discount to the expected share price after
the rights issue. Existing investors are expected to receive
four new shares worth around 135 pence for every one share they
currently hold, and analysts predict that the new shares will be
worth around 200 pence following the completion of the rights
issue.

IT HAS THE FLAG AND THE NAME – BUT IS BA BRITISH ENOUGH?

British Airways (BAY.L: ) is understood to have met three
times with FTSE International in order to prove that it is
sufficiently British to maintain its place on the FTSE 100 index
following a merger with Spanish airline Iberia. International
Airlines, the new holding company for BA and Iberia, will be
incorporated in Spain and listed in Madrid, meaning that BA
would usually be classed as Spanish according to FTSE’s rules.
However, International Airlines will be headquartered in the UK
and the BA brand will be retained. A BA spokesman said that
shares in International Airlines “will be traded on the main
market of the London Stock Exchange (LSE.L: ) and it is envisaged
that they will be included in the FTSE’s UK Index Series”.

TEMPUS

G4S (GFS.L: ) (Hold)

Avocet Mining (AVM.L: ) (Hold)

Vitec (VTC.L: ) (Buy)

The Daily Telegraph

STANDARD CHARTERED PROFITS BEAT Q1 RECORD

Standard Chartered (STAN.L: ) announced record first-quarter
profits, as its wholesale banking division increased its profits
by 20 percent compared with the first quarter of 2009 due to an
excellent performance in client income. A rise in consumer
banking revenue helped the bank to a strong start to 2010.
However, analysts raised concerns about Standard’s reliance on
revenues from the wholesale banking division.

EU RULES DELAYED AMIDST INSURER CONCERN

The introduction of the European Union’s Solvency II
programme of new regulations for the insurance industry has been
put back by two months to December 31 2012, for fear that the
original date would be harmful to the sector. Insurers have
campaigned against the new laws, claiming that the requirement
for them to align their capital with the risk on their balance
sheets will force many into holding rights issues. Legal &
General (LGEN.L: ) has even claimed that the new rules will reduce
the value of pension savings by 20 percent.

LLOYDS DEBT FINDS STRONG DEMAND

Lloyds Banking Group (LLOY.L: ) has sold a package of
residential mortgage-backed securities for 3.4 billion pounds,
the largest deal involving this type of security since summer
2007. The original value of the package was 1.8 billion pounds,
but unexpectedly strong demand from investors due to the deal’s
generous terms resulted in a drastic increase on this figure.
The sale means that the bank has now achieved 15 billion pounds
of the 20-to-25 billion pounds of term funding it needs to
complete during 2010.

SUPPLIER OF GAMING SOFTWARE GOES PRIVATE

Inspired Gaming (INGG.L: ), the Aim-listed supplier of
slot-machine software to betting shops, has been taken over by
the mid-market private equity house Vitruvian Partners for 74.4
million pounds, or 60 pence per share. The chairman Russell
Hoyle, who brokered the deal, stated that it would inject new
capital into Inspired and enable it to expand in a way that it
could not do at Aim. Shares in the business rose by 9.25 pence
to 58.75 pence.

QUESTOR

Standard Chartered (STAN.L: ) (Hold)

Pearson (PSON.L: ) (Hold)

Stock Market Report

PRESS DIGEST – British business – May 5