British banking giant HSBC continues asset disposals

British banking group HSBC Holdings Plc (LON:HSBA) said today it is selling its entire Hungarian unit, HSBC Credit Zrt, to local venture capital firm Central-Fund Kockazati Tokealap without disclosing the purchase price.

The transaction will be carried out by the group’s wholly-owned subsidiary HSBC Europe (Netherlands) BV. It has already received the needed regulatory green light and HSBC expects to close the divestment on 6 August 2012.

On 10 October 2011, the British group announced it had agreed to sell about 94% of its Hungarian consumer finance portfolio to Cofidis Magyarorszagi Fioktelepe. As part of that deal, Cofidis also took on the employees that were managing the portfolio at the time.

As at the end of June 2012, HSBC’s Hungarian unit had gross assets of USD5.28m (EUR4.3m).

London-based HSBC has some 6,900 offices in more than 80 countries and territories in Europe, North and Latin America, the Middle East and North Africa as well as in the Asia-Pacific region. The group had assets of about USD2.65trn at 30 June 2012.

Last week, the group said it had reached a USD242m deal to dispose of its 44% interest in a card processing joint venture in the Asia-Pacific region to partner Global Payments Inc (NYSE:GPN), as part of its strategy to divest non-core operations.

For more on HSBC’s asset disposals, click here.

Online travel agents and hotel group broke competition law, OFT claims

Two online travel firms and a hotel group have been accused of infringing competition law by limiting hotel room discounts.

The UK’s Office of Fair Trading (OFT) issued a Statement of Objections today, alleging that Expedia and Booking.com entered into separate arrangements with Intercontinental Hotels Group which restricted the online travel agents’ ability to discount the price of room-only hotel accommodation.

An investigation was first launched by the OFT in September 2010, after a small online travel agent lodged a complaint alleging that it was being prevented by various hotel chains from offering discounted sale prices for room-only hotel accommodation.

In order to achieve a swift and effective outcome the competition watchdog limited the scope of its investigation to a small number of major companies. However, it says that the investigation is likely to have wider implications because the alleged practices are potentially widespread in the industry.

The OFT believes that the alleged infringements are anti-competitive because they could limit price competition between online travel agents.

“We want people to benefit fully from being able to shop around online and get a better deal from discounters that are prepared to share their commission with customers,” said OFT chief executive Clive Maxwell.

Booking.com, Expedia and InterContinental Hotels Group will now have the opportunity to respond to the OFT’s Statement of Objections before the regulator makes a final decision on whether competition law has been infringed.

The UK’s online travel agency sector is the largest in Europe. UK hotel accommodation bookings made through online travel agents totalled approximately GBP849m in 2010.

UK genetics firm Genesis in JV with Chinese pork producer BeSun

British animal genetics company Genus Plc (LON:GNS) said today that its porcine genetics division PIC had signed a deal to set up a joint venture in China with domestic pork producer Shaanxi Yangling BeSun Agricultural Group Co to operate a nucleus farm.

Genus will invest about GBP8.7m (USD13.7m/EUR11.1m) in cash and will take a 49% stake in the JV, which is being established for the purpose of operating a recently completed 4,250 sow nucleus farm in the Shaanxi province.

Over the next nine months, Genus will supply the farm with pure line porcine stock from PIC’s global high health pyramid. The British company will manage the JV in order to protect its intellectual property.

The joint entity will produce grandparent sows and the farm’s output will be shared by the partners on a 50/50 basis. BeSun will use its portion in its multiplication programme, while Genus’ share will provide the UK firm with important additional volume to support its increasing sales of breeding animals in China.

The creation of this venture will help expand Genus’ own Chinese porcine operations. The move aligns with the company’s new corporate strategy that concentrates on growing important markets like the integrated pork producer segment in the Asian country. Genus noted it is continuing to look for JV opportunities in China so that it could further develop its porcine activities.

France’s Accor to exit Australian fund, sell two Beijing hotels

French hotel operator Accor SA (EPA:AC) said today it will sell its interest in an Australian fund plus two hotels in Beijing to a newly-created hotel investment trust, called A-Htrust, for a combined EUR110m (USD135.1m).

Accor will divest its 21.9% stake in Ascendas Australia Hospitality Fund, previously known as Mirvac Wholesale Fund, for the sum of EUR56m. This fund holds seven properties of which six are operated by Accor in Australia and New Zealand.

In addition, the company will dispose of the 305-room Novotel and 401-room Ibis hotels in Beijing under a sale and management back contract for EUR54m. The seller noted that the Ibis divestment is subject to administrative authorisations applying in China.

Meanwhile, Accor will acquire a 6.9% interest in A-Htrust for EUR32m, while Ascendas will take up to 35% in the newly-formed and publicly-listed hotel investment trust. The French party will also have the right of first offer to manage future purchases, when the hotels are not managed under a pre-existing contract. A-Htrust will, in turn, have the right of first offer to buy hotels in the Asia-Pacific region, excluding Australia and India, that are put on sale by Accor.

The new partnership will help Accor accelerate its expansion as well as its asset-management policy in the Asia-Pacific region, it said.

HSBC reports profit growth for first half, makes $2bn provision for compensation and US matters

HSBC Holdings plc (LSE:HSBA), the bank’s parent company, said that it had generated pre-tax profit of USD12.7bn in the six months to the end of June, up from USD11.5bn a year earlier.

Profit was boosted by USD4.3bn of gains from business disposals, including the sale of HSBC’s Card and Retail Services business and 138 branches in the US. The results also included USD2.2bn of adverse movements in the fair value of the bank’s own debt attributable to credit spreads, compared with an adverse movement of USD143m in the first half of 2011.

Underlying profit declined 3% to USD10.6bn. HSBC revealed that it had set aside USD1.3bn for compensation regarding the mis-selling of PPI and interest rate hedging products in the UK and USD700m to cover “certain law enforcement and regulatory matters” in the United States.

“We apologise for our past mistakes in relation to anti-money laundering controls,” said group chief executive Stuart Gulliver, adding that it is a priority for the bank’s senior management to build on steps already taken to manage risk and ensure compliance more effectively. Group chairman Douglas Flint also said that he was “very sorry” for mistakes made by HSBC in the past.

Group revenues fell to USD29.6bn, from USD31.1bn in the first half of last year. On an underlying basis revenues were 4% higher than in the first half of 2011 thanks to strong growth in emerging markets, particularly in Hong Kong and the rest of the Asia-Pacific region and in Latin America.

UK miner Stratex to sell 51% of Muratdere project in Turkey

British gold and metals explorer Stratex International Plc (LON:STI) said on Monday it had agreed to sell a 51% stake in the firm that holds its Muratdere assets in Turkey to a unit of local investor Pragma Finansal Danismanlik Ticaret AS.

The transaction calls for Pragma’s wholly-owned mining investment firm, Lodos Maden Yatirim Sanayii ve Ticaret AS, to pay USD1.7m (EUR1.4m) in cash for the controlling stake in the joint venture Muratdere Madencilik Sanayi ve Ticaret AS, which holds the assets related to the Muratdere porphyry copper-gold-molybdenum project in Turkey. The signing of the deal comes after Pragma concluded a four-month due diligence on the particular project.

Under the terms, Lodos may increase its stake in the JV to 61% if it pays a further USD500,000 and also funds an additional 3,000 m (9,843 ft) of diamond drilling within 15 months of the date of the initial stake purchase. Later, it will also have the right to raise its holding to 70% if it finances a comprehensive feasibility study.

Stratex focuses on exploring and developing gold and high-value base metals projects in Turkey as well as in east and west Africa. The company currently has two Turkish projects that are expected to initiate gold production next year.

British clients of HSBC-controlled bank in Switzerland avoid £200m in taxes

British clients of an HSBC-owned private Swiss bank that is the focus of a major HM Revenue & Customs investigation are alleged to have evaded tax by an amount likely to exceed £200m, according to a report by the Bureau of Investigative Journalism.

The potential scale of the tax loss will heighten pressure on trade minister Lord Green, who was chairman of HSBC’s private banking division during the period the HMRC is investigating. He is already facing questions from MPs about the bank’s links to Mexican drug
cartels and terrorists that came to light this month in a devastating US Senate investigation.

Emails released as part of that investigation showed Green was twice warned about compliance failures and allegations that huge sums were laundered by Mexican drug gangs through a subsidiary of HSBC.

Green, chairman and previously chief executive of HSBC until 2010, when he entered government, last week spoke of his regret at HSBC’s failures to implement anti-money laundering protocols.

Now it has emerged that the sums allegedly evaded by Britons using HSBC’s Swiss bank are massive. HMRC told the Bureau “the early indications are that the amounts are significant”.

The HMRC in 2010 received data smuggled out of HSBC by a former bank IT worker, now under arrest in Spain and facing possible extradition to Switzerland, that contained details of 6,000 UK-linked individuals, companies and trusts. Two senior tax investigators who both worked at HMRC told the Bureau the average amount evaded in the 6,000 accounts is likely to range between £33,000 and £50,000.  Three weeks ago, HMRC secured its first high profile conviction from the HSBC Swiss bank data. Property developer Michael Shanly, estimated to be worth £132m, admitted evading £430,000 in inheritance tax.

HSBC documents show that Green was chairman and a director of HSBC Private Banking Holdings (Suisse) SA for ten years from 2000 — the bank at the centre of HMRC’s investigations. It is unclear if the investigation affects the period when Green was in control.

It has been suggested wealthy Britons have placed £120bn in Swiss banks with £6bn in HSBC Swiss branches. HSBC says it does not condone tax evasion and it is the responsibility of clients to ensure they pay appropriate tax rates.

Labour shadow finance secretary Chris Leslie said: “We learn more and more each day about the network of high risk affiliates and tax haven linkages which HSBC and its senior executives were clearly familiar with. It is therefore more important than ever for those individuals now determining the future of banking culture and policy in this country to set out what they know about these things, and whether they took appropriate steps to defend the rules on tax and propriety.”

Green last week held a series of Olympic-related meetings with world business leaders to secure new contracts and investment for British companies.

Under his tenure, HSBC withstood the global economic crisis without requiring a taxpayers’ bailout. But the bank has in the past faced questions over its anti-corruption compliance. In 2010, a US Senate investigation criticised it for lax oversight of accounts held by Angolans.
HSBC, the biggest western bank in Egypt, last year faced strong criticism for its connections to the Mubarak regime.

A Church of England lay preacher, Green co-chaired the Egyptian British Business Council in 1998, which reported to then British and Egyptian prime ministers Tony Blair and Kamal Ganzouri.

UK insurance group Aviva puts its US business on the block

UK insurance major Aviva Plc (LON:AV) is gearing for a sale of its US business after receiving several unsolicited approaches from trade buyers and private equity groups, the Sunday Telegraph reported without specifying its sources.

According to the UK newspaper, Aviva’s finance chief Pat Regan has spent quite a while in Des Moines, Iowa – the city where Aviva USA’s headquarters are located – to make preparations for the sale and launch the process. An investment bank is yet to be formally appointed but Aviva’s executives are believed to have settled on Goldman Sachs Group Inc (NYSE:GS) as manager of the sale.

Aviva agreed to pay GBP1.8bn (USD2.8bn/EUR2.3bn) in mid-2006 for what was then called AmerUs, combining it with its existing US business to create Aviva USA. The sale of the business is expected to leave the UK company with a loss of GBP800m on its initial investment since the division is now estimated to be worth GBP1bn, the Sunday Telegraph said.

Following shareholder pressure, Andrew Moss stepped down as chief executive of Aviva in May, leaving newly appointed executive chairman John McFarlane to fill the gap on a temporary basis.

Earlier in July, McFarlane presented his plan for a strategic overhaul of the company, saying that 16 out of 58 businesses have been designated non-core and will either be sold or shut down. However, Aviva could not be drawn into commenting at the time on whether its US division was one of those businesses.

The company has already pulled out of Hungary, Romania, the Czech Republic and Australia and is set to exit Taiwan as well, selling its 49% stake in its local joint venture.

The Sunday Telegraph was unable to extract a comment from an Aviva spokesman with regard to the US divestment.

Sale of IMO Car Wash postponed as investors opt for refinancing

The the planned sale of  IMO Car Wash Group has been terminated, the Telegraph reported without specifying its sources, and the company’s owners have opted to refinance the business instead.

Exponent and Permira recently did the same, the former scrapping the sale of Trainline and the latter dropping plans to sell Iglo Group. According to sources familiar with those auctions, the two private equity groups decided not to proceed with the divestments due to the unwillingness of potential buyers to meet their pricing expectations.

IMO, which was set up in Germany in 1965, is the biggest car wash company in the world, operating from 900 locations across 14 countries and washing more than 34m vehicles a year. Before investors opted to shelve the sale, it had been engaged in exclusive negotiations with UK-based private equity outfit TDR Capital LLP, the Telegraph said.

 

BSkyB acquires Pantheon Media in move to create content distribution arm

British Sky Broadcasting Group Plc (LON:BSY), or BSkyB, said today it had finalised the takeover of international distribution and multi-media rights management firm Parthenon Media Group as part of a move to form a new content distribution arm.

BSkyB has closed the transaction yesterday, it said, without disclosing the financial terms. The UK pay TV company only noted that Parthenon had gross assets of GBP18.2m (USD28.6m/EUR23.3m) as at the end of June 2011.

The acquisition is part of BSkyB’s efforts to create a unit to market the international rights to its originated content, which in turn is in line with the company’s on-going commitment to boost investment in the field.

In 2012 alone, BSkyB has spent over GBP450m in British commissioning and production, the company said, adding it expects to raise the amount to GBP600m a year by 2014. The focus will be on genres like drama, comedy, entertainment, arts and factual.

Parthenon’s founder and chief executive officer Carl Hall will lead the new distribution division within BSkyB alongside his current team.

As of 30 June 2012, British Sky Broadcasting had total customers of about 10.6m. Its financial results for the 12 months to that date showed an operating profit of GBP1.22bn and a revenue of almost GBP6.8bn on an adjusted basis. The company has some 22,800 employees.