Regional Home Price Disparity Widens In April

Help To Buy: 80% Go To First Time Buyers

Updated: 3:26pm UK, Thursday 29 May 2014

Some 80% of the Help To Buy loans granted in the mortgage scheme's first six months were given to first time buyers, the Treasury has said.

A total of 7,313 loans were issued between October last year and March this year, with a total value of £1bn.

The average value of each loan taken out under the controversial scheme was £136,742.

Only about 1% of all mortgages taken out in the period were helped by the scheme, undermining critics of the programme who have said it is prompting a house price bubble.

Most mortgage completions through the scheme were on properties outside London and in regions where prices are lower.

A high proportion of homes supported by the scheme were in the North West and the East of England.

Blackstock property expert Andrew Teacher said: "Today's figures reinforce the fact that Help to Buy has not helped to blow up the London market as numerous commentators have suggested.

"The figures show the scheme has been most effective in areas of reduced growth where prices have remained relatively flat."

The mean value of a property purchased or remortgaged through the scheme is £151,597, compared to a national average house price of £252,000.

A total of 38% of loans were for terraced houses.

The scheme's rollout in October saw only four completions, followed by 164 in November and 818 in December.

However, the monthly figure jumped significantly in the first three months of this year.

In January, completions reached 1,580, while the number rose further in February and March, to 2,090 and 2,657 respectively.

Only 5% - a total of 385 completions - were made on properties in the capital.

The Help To Buy mortgage guarantee scheme was boosted by a second phase equity loan scheme in the spring.

Data for both phases shows a total of 27,861 homes were bought under the scheme, with 85% of sales to first-time buyers.

Prime Minister David Cameron said: "Help to Buy has helped thousands of hardworking people to buy a new home and crucially it is helping to increase the number of new homes being built around the country.

"It is an important part of our long term plan to back those who want to get on and to secure a better future for Britain."

Meanwhile, net lending to small and medium sized businesses as part of the Bank of England's Funding for Lending Scheme dropped  by £723m in Q1, amid a focus on business loans.

The Bank said that between February and March lenders drew just £2bn from the scheme. It was launched in mid-2012 to encourage banks to improve borrowing facilities.

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Retailers' Credit Union To Defy Payday Lenders

By Mark Kleinman, City Editor

Some of Britain's biggest high street names, including New Look and Next, are forming a credit union that will offer staff an alternative to the sky-high interest rates charged by payday lenders.

Sky News has learnt that RetailCure, which has also received backing from entrepreneurs such as Rymans owner Theo Paphitis, is drawing up plans to launch later this year.

The new venture has received start-up funding of £1m and will eventually be accessible to the 4.8 million people who work directly in retail or in related sectors of the economy, half of whom earn less than £8 an hour.

It will be chaired by John Lovering, a veteran retailer who has led buyouts of companies including Debenhams, Homebase and Somerfield.

Speaking to Sky News, he said: "The industry feels that we have to find a way of providing a source of cheap, reliable credit for our people.

"The three million in retail and the nearly five million in the wider industry do have a need for low-cost, value-for-money, short-term borrowing facilities, and that's what we as an industry are trying to provide."

Booker and Matalan have also agreed to support RetailCure, while John Lewis Partnership and Wm Morrison have been approached and are expected to provide financial assistance.

The launch of RetailCure comes amid a still-intense political debate about the business model employed by payday lenders, which charge interest rates that work out at more than 5,000% on an annual basis.

The high street chains' credit union will charge interest on a sliding scale from roughly 7% to nearly 28% depending upon the borrower's credit history.

Mr Lovering expects the average loan request to be lower than £5,000, and believes that RetailCure could ultimately become Britain's biggest credit union.

"We think we can build a loan-book of £50m and attract 50,000 members relatively quickly," he said.

Assuming it receives regulatory approval, savers who deposit funds with RetailCure will be protected by the same Government guarantee as that which covers high street banks.

Earlier this week, the Church of England unveiled a pilot scheme through which a new credit union network will be piloted in three of its dioceses.

That project is being led by Sir Hector Sants, the former boss of the City watchdog, which since April has had oversight of consumer credit providers such as payday lenders.

Last year, the Archbishop of Canterbury, Dr Justin Welby, said he had told the then boss of Wonga that he wanted to "compete (the company) out of existence".

The remarks sparked acute embarrassment for the Archbishop, however, when it emerged that the Church of England's pension fund was among the investors in one of Wonga's financial backers.

In its annual report this week, the Church Commissioners said they had yet to dispose of the holding because doing so would crystallise a significant loss for its pension fund.

Some industry stakeholders were sceptical about the prospects for RetailCure.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents short-term lenders, said greater choice was welcome but warned that it faced significant uncertainties.

"What this body will have to do is make sure it complies with very stringent regulations that are applied to financial services.

"I would ask questions around what is going to be the collection policy, what happens if somebody leaves the retailers business still owing a debt, how are you going to collect that?"

RetailCure hopes to launch formally in November.

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Drugs And Prostitution Worth £10bn Annually

Illegal drugs and prostitution contribute more to the UK economy than housebuilding, according to newly-released official data.

The Office for National Statistics (ONS) said the two "illegal activities" had a combined impact of £10bn on gross domestic product (GDP) in 2009, calculated at current prices.

In comparison, it said only £4bn, some 60% less, was spent on "own-account construction".

The ONS defines own-account construction as "the production of new dwellings and major repairs and improvements by enterprises and households for their own use".

Of the £10bn estimate, around £5.3bn was attributed to prostitution and at least £4.4bn to the illicit drugs trade.

A small estimate error was factored into the figures.

The ONS has published the data ahead of National Accounts due to be released in September, which will include latest figures for both enterprises.

It said the £10bn amount for drugs and prostitution is based on a variety of sources and assumptions.

It added: "The new estimates cover the import, production and sale of illegal drugs and the provision of prostitution services."

The ONS said that between 1997 and 2009 the annual impact of drugs and prostitution varied annually between £7bn and £11bn, measured at today's prices.

The inclusion of the two underground sectors is part of a move to ensure consistent economic comparisons between EU member states.

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Insurers Expose £1.3bn In Fraudulent Claims

A record £1.3bn worth of fraudulent insurance claims were uncovered last year as the industry continues to crack down on cheats.

The Association of British Insurers (ABI) said some £3.5m worth of dishonest claims are uncovered every day.

The figures show an 18% increase in the value of fraudulent claims detected in 2012.

In 2013, some 118,599 fraudulent or exaggerated claims were detected, the equivalent of more than 2,000 each week.

Motor insurance claims were the most expensive and common dishonest claims to be uncovered.

The average value of fraud detected across all kinds of insurance products was £10,813.

Aidan Kerr, the ABI's assistant director, said: "The message is clear: never has it been harder to get away with committing insurance fraud.

"Never have the penalties - ranging from a custodial sentence and a criminal record, to difficulties in obtaining financial products in the future - been so severe."

The ABI says the figures also reveal a "significant" rise in the number of people reporting suspected fraudsters.

Calls from members of the public reporting frauds to the Insurance Fraud Bureau's "cheatline" rose by one third (32%) in 2013 compared with the previous year.

Malcolm Tarling, a spokesman for the ABI, said the industry has also seen an increase in the number of "staged accidents".

This dangerous practice sees fraudsters cause deliberate accidents, often with innocent motorists, in order to cause injuries and claim insurance.

"Staged accidents, which are extremely serious, involve criminal gangs deliberately staging an accident, normally involving an innocent motorist," Mr Tarling said.

"These are increasingly becoming more commonplace and the industry is actively working very hard to crack down on them."

One insurer, AA Insurance, said it identifies more than 100 fraud attempts each week.

Simon Douglas, director of AA Insurance, said: "These figures are encouraging because they reflect the growing success of the insurance industry in the war against fraud, rather than more fraud taking place.

"This should send a strong signal to anyone thinking of trying it on."

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British Gas Chiefs Poised To Quit In Shake-Up

By Mark Kleinman, City Editor

The bosses of British Gas and its parent company are close to stepping down as part of a management shake-up at Britain's biggest energy supplier.

Sky News can reveal that Chris Weston, who runs Centrica's international downstream division, which includes British Gas, is in detailed talks about taking the top job at Aggreko, the temporary power group.

His exit from Centrica has not yet been finalised, and sources close to the situation insisted that he had not yet formally landed the Aggreko job.

If Mr Weston does secure the role, however, his departure is likely to be announced at roughly the same time as that of Sam Laidlaw, Centrica's long-serving chief executive, sources indicated.

Mr Laidlaw's future has been the subject of intense speculation in recent months, and Sky News understands that the company is in advanced negotiations to appoint Iain Conn, a senior BP executive, as his successor.

Centrica said at its annual meeting earlier this month that it was beginning the process of exploring options for management succession, with a replacement also due to be found for Nick Luff, its finance director.

British Gas chief Chris Weston Pic: Daniel Lynch

The intense row about energy prices is said to have been a factor in recent deliberations of both Mr Laidlaw and Mr Weston, who has only held the British Gas role for 15 months, over their futures.

Mr Laidlaw agreed to donate his latest annual bonus to charity, while Mr Weston and other Centrica executives have been the subject of tabloid newspaper attention about their domestic energy consumption and lifestyles.

Announcements about one or more of these moves could be made as soon as this week, although the complexity of ongoing negotiations means that they could yet be delayed or even fall apart, the source added.

"There are a lot of moving parts around all of these appointments," one source said.

One of the factors relating to Mr Conn's potential appointment as Centrica's new boss is understood to be his multimillion pound BP shareholding.

BP's latest annual report shows that Mr Conn owns approximately £3m-worth of BP shares and has about £16m-worth of additional awards which are subject to performance criteria.

Mr Laidlaw's future has been the subject of speculation in recent months

It was unclear on Wednesday whether Centrica would agree to compensate him for part or all of this sum, with a further political row likely to be ignited if it does so.

Mr Conn is one of Britain's most respected industrialists, having run BP's downstream business since 2007 and also serving as a director of Rolls-Royce Holdings, the engine manufacturer.

He is also understood to have been sounded out about becoming chief executive of BG Group, the FTSE-100 gas producer.

The energy sector is expected to be the subject of a full investigation by the Competition and Markets Authority, while Ofgem, the regulator, has mounted an aggressive assault on the conduct of the 'Big Six' gas and electricity suppliers amid criticism of its own performance.

Aggreko, BP and Centrica declined to comment, while Mr Weston and Mr Conn could not be reached for comment.

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Lloyds Steps Towards Female Executive Target

By Mark Kleinman, City Editor

The state-backed Lloyds Banking Group has taken a step towards meeting a self-imposed gender target for senior managers with the appointment of another top female executive.

Sky News understands that Lloyds issued an internal announcement on Wednesday which named Mary Hall as the lender's new group audit director, one of its most senior positions.

Ms Hall, who joins from KPMG, will report to Nick Luff, the departing finance director of Centrica who chairs Lloyds' audit committee.

She will become the second-most senior woman at the bank after Alison Brittain, who runs its retail banking operations.

Ms Hall's arrival comes nearly four months after Lloyds said that it wanted 40% of its top 5,000 posts to be filled by women by 2020.

That ambition will entail the appointment of an additional 600 women to senior jobs at Lloyds within six years, with roughly 28% of its top 5,000 jobs currently held by women.

One of Ms Hall's priorities will be to launch an exercise to tender Lloyds' audit contract, one of the most lucrative in British business.

PricewaterhouseCoopers, the incumbent, is expected to compete to retain the mandate from 1 January 2016, which will be subject to shareholder approval at next year's annual meeting.

Lloyds' pledge this year to bolster the number of top women at the bank came amid mixed results from a concerted push to improve boardroom diversity.

The Government has thrown its weight behind a voluntary campaign to ensure that 25% of the directorships of FTSE-100 companies are held by women by the end of next year and has threatened to impose formal quotas if the objective is not met.

Glencore, the miner and commodities trader, is now the only company in Britain's blue-chip share index which has an all-male board, a situation it has promised to rectify by the end of the year.

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Lloyds Banking Group Confirms Float Of TSB

Lloyds Banking Group has confirmed a decision to sell around 25% of retail lender TSB, enticing investors with the offer of free shares.

The flotation is expected next month on the London Stock Exchange, following publication of a prospectus mid-month.

On Monday, Sky News City Editor Mark Kleinman revealed details of a plan to lure investors with an offer of free shares as part of the £1.5bn initial public offering (IPO).

Shareholdings of up to £2,000 must be held for 12 months after the float to be eligible for the 5% additional free shares.

The long-awaited sale is part of a mandated divestment programme following its taxpayer-backed bailout of more than £20bn following the global financial crisis.

Lloyds CEO Antonio Horta-Osorio said TSB would offer more competition

TSB, which was relaunched as a standalone brand last autumn and operates 631 branches, has a growth strategy focusing on consumers and small business customers.

It currently employs 8,000 and is responsible for £22bn invested on behalf of 4.5 million customers.

It is marketing itself on a history dating back more than 200 years and intends to lure customers away from bigger rivals that operate risky - but profitable - investment banking arms.

TSB will be taken fully public by the end of 2015 as part of the European Commission mandate on state-aid to companies.

Lloyds still owns the Halifax and Bank of Scotland and the banking group remains 25% owned by the British taxpayer.

Lloyds chief executive Antonio Horta-Osorio said: "The decision to proceed with an initial public offering of TSB is an important further step for the group as we act to meet our commitments to the European Commission.

"TSB has a national network of branches, a strong balance sheet and significant economic protection against legacy issues.

"It is already operating on the UK high street and is proving to be a strong and effective challenger, further enhancing competition in the UK banking sector."

It was originally planned to sell more than 630 TSB branches to the Co-operative Bank, until a £1.5bn capital black hole was discovered in the mutual's books.

IMF boss Christine Lagarde said the global banking sector needs to do more

The floating bank's chief executive Paul Pester said: "Today is a significant milestone on our journey to create a major new competitive force in UK banking."

TSB - originally standing for Trustees Savings Bank - dates back to 1810 when Reverend Henry Duncan created a community-based local bank.

Meanwhile, International Monetary Fund managing director Christine Lagarde, speaking at a conference in London, said the global banking system is slowly adapting to modern realities, amid sector "push back".

She said: "We're moving forward with stronger capital lending and liquidity requirements. It should certainly make the system safer, sounder and hopefully more service-oriented.

"The bad new is that progress is still much too slow and the finish line is still too far off.

"Some of this arises for the complexity of the task at hand, yet we must acknowledge that it also stems from fierce industry 'push back' and from the fatigue that is bound to set in at this point in the race."

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Nationwide Big Winner From Seven-Day Switch

By Mark Kleinman, City Editor

Britain's biggest building society will emerge on Wednesday as one of the principal winners from a new system designed to encourage customer mobility when it discloses that it opened more than 420,000 current accounts last year.

Sky News understands that Nationwide will disclose in its annual results that it benefited from mistrust in mainstream banking rivals by seeing an increase of more than 15% in year-on-year current account openings.

Nationwide is also expected to announce that it has met a target imposed by banking regulators to reduce its leverage ratio - a measure of its financial stability - a year ahead of schedule.

The announcements will cement a successful year for Nationwide, which is targeting an increase in its current account market share from approximately 6% to 10%.

It benefited from the traumas endured by the Co-operative Bank, which flirted with outright collapse during 2013, as well as the ongoing series of scandals which continued to afflict other high street banks.

The net number of new current accounts that Nationwide opened last year is understood to be lower than the 420,000-plus gross account openings, but it said in February that it was adding three times more customers than it was losing.

In its previous financial year, it opened 365,000 current accounts, taking its total to 5.2m.

A new seven-day switching system came into effect last autumn, although official figures show its overall impact has been less significant than some banking experts had forecast.

Between the final week of September 2013, when the new regime came into effect, and the end of April, approximately 700,000 consumers used the service, with a far smaller number of small businesses and charities also doing so.

Nationwide's confirmation of its strong current account growth will come at a time when ministers are trying to stimulate competition in the current account market.

TSB said on Tuesday that it would float on the stock market next month, with Metro Bank, Santander UK and Virgin Money all planning to follow suit during the next two years.

Insiders said Nationwide would also confirm on Wednesday further strong growth in the amount of money deposited with it by savers, underpinning its plans for broader expansion.

Earlier this month, the mutual poached the deputy chairman of Lloyds Banking Group to replace Geoffrey Howe as its chairman next year.

Graham Beale, its chief executive, will face questions about his views on the mortgage market following Lloyds' decision last week to curb lending to some London-based borrowers.

Nationwide declined to comment on Tuesday.

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Pfizer Walks Away From £69bn AstraZeneca Deal

US firm Pfizer has confirmed it will not make another offer for British pharmaceuticals group AstraZeneca as a deadline expired for it to lodge a formal bid.

Last weekend, Pfizer offered £55-a-share for AstraZeneca, valuing it at £69bn, which was rejected by its prospective merger partner.

Ian Read, chairman and CEO of Pfizer, said in a statement: "We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us. 

"As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy. 

"We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients' needs and remaining responsible stewards of our shareholders' capital."

Ian Read believes Pfizer's bid represented 'full value' for AstraZeneca

AstraZeneca investors are divided about the board's handling of the £55-a-share bid, with its shares closing on Friday at £43.28.

Last week, Schroders issued a statement criticising the actions of both companies, while Sky News revealed that BlackRock, AstraZeneca's biggest shareholder, wanted it to invite Pfizer to reopen merger talks.

Those which backed the board's stance that AstraZeneca would be stronger as a standalone business include Fidelity Investments, M&G Investments and Woodford Investment Management.

Under rules supervised by the City takeover watchdog, Pfizer will be prohibited from making a further offer for AstraZeneca for six months. 

It has said it will not make a hostile bid by going directly to AstraZeneca's shareholders.

However, the British group, which will set out further details of its cancer drug pipeline at a key industry conference in the US this week, could approach Pfizer to enter talks in three months' time.

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Taxman Investigations Rake In Record £24bn

A record £23.9bn has been collected through investigations by taxmen over the last year, official figures have revealed.

The total was an increase of £3.2bn on the previous 12-month period and £9bn on three years ago.

HM Revenue and Customs said it was nearly £1 billion above the target set by Chancellor George Osborne in his 2013 autumn statement.

More than £8bn has been raked in from large business, £1bn from criminals and £2.7bn through tackling avoidance schemes in the courts.

Exchequer Secretary to the Treasury David Gauke said: "The Government supports the hard-working, honest majority of taxpayers that play by the rules, and is determined to tackle the minority that seek to avoid paying the taxes they owe.

"We set HMRC ambitious targets to increase its yield and the figures published today demonstrate that HMRC is successfully meeting these challenges.

"It also sends a clear signal - HMRC will pursue those seeking to avoid their responsibilities and will collect the taxes that are due."

HMRC investigated the tax affairs of 237,215 people in 2012/13, compared with around 119,000 in 2011/12.

In 2013, 690 tax fraudsters and benefit cheats were convicted following probes by HMRC officials.

The number was an increase on the 477 convictions in the previous 12 months - and led to sentences totalling 355 years in prison.

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InterContinental Rebuffs Secret £6bn US Bid

By Mark Kleinman, City Editor

The FTSE-100 hospitality provider InterContinental Hotels Group (IHG) has rejected a secret takeover bid from the US which valued the company at about £6bn.

Sky News has learnt that IHG's board met a few weeks ago to consider the offer, but dismissed it on the grounds that it was too low.

The identity of the bidder was unclear this weekend, although analysts said it may have been Starwood Hotels & Resorts, the owner of the Le Meridien, St Regis and Westin brands, or a specialist investment fund such as Starwood Capital.

Sources said that IHG was braced for the bidder or a rival to return, with US hotel operators understood to be enticed by the prospect of moving their tax domicile to the UK in a process known as a tax inversion.

That mechanism, which allows US companies to avoid paying tax on their overseas cash holdings, has been at the centre of Pfizer's £69bn offer for AstraZeneca, provoking a political outcry on both sides of the Atlantic.

Senior sources said on Saturday that Pfizer was likely to issue a statement on Monday under Rule 2.8 of the City's Takeover Code, which will confirm its intention not to make a formal bid at this stage for its British pharmaceuticals rival.

Pfizer would then be barred from making another approach for six months, although as Sky News revealed this week, AstraZeneca's biggest investor is pressing it to re-open talks with the US company in three months' time.

The recent approach for IHG, which owns brands such as Crowne Plaza, Holiday Inn and its eponymous chain, could fade away and not be revived, according to insiders.

One added that IHG's stock repurchases in the last fortnight meant that it was not involved in live takeover talks.

Starwood Hotels has a market value of just under $15bn (£8.9bn), while IHG is capitalised at £5.6bn.

The British group is chaired by Patrick Cescau, a former boss of Unilever, and run by Richard Solomons, who has pleased investors with a series of large capital returns.

These have been generated by the sale of many of its flagship hotel properties, including most recently sites in San Francisco and New York, as IHG shifts its business model to hotel management rather than ownership.

IHG still owns the LeGrand Paris and InterContinental Hong Kong, but is also expected to sell these properties and return hundreds of millions of pounds more to shareholders.

It has also been accelerating the expansion of its pipeline of new hotels, with 237 locations opened last year and 444 more added to its roster of future openings.

The company operates about 5% of the world's hotel rooms but has more than twice that volume of the industry's known slate of new rooms.

Last year, IHG reported pre-tax profits of £600m, a 10% rise on the previous year.

Its future growth will be driven by emerging markets, with Hualuxe, a premium brand aimed at Chinese customers, launched in 2012.

A spokeswoman for IHG, shares in which closed up 0.3% on Friday at 2226p, declined to comment.

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AstraZeneca 'Must Link Pay To New Targets'

By Mark Kleinman, City Editor

AstraZeneca should link future executive pay to the price that its board signalled it would be willing to sell the company for, a leading shareholder has told it in a move which intensifies the pressure on it to justify the rejection of a string of takeover bids.

Sky News has learnt that in a letter sent to the British pharmaceuticals group last week, Legal & General Investment Management (LGIM) said long-term share awards should pay out in full only if AstraZeneca's share price reaches £58.85.

That was the level at which the company has said it would be willing to discuss a takeover by Pfizer, its US rival.

Last weekend, Pfizer offered £55-a-share for AstraZeneca, valuing it at £69bn, which was rejected by its prospective merger partner.

It emerged on Wednesday that LGIM was among AstraZeneca shareholders which were disappointed by the decision to spurn Pfizer's offer, which is expected to lapse on Monday when a deadline expires for it to lodge a formal bid.

Sources said that LGIM, which owns approximately 3.5% of AstraZeneca and is its sixth-largest investor, had also called for executives' pay to be linked to a $45bn (£26.7bn) revenue forecast which was outlined by the drugs-maker's chief executive, Pascal Soriot, as part of its defence against Pfizer's approach.

LGIM's demand goes further than those of other AstraZeneca shareholders, a number of which have called for pay to be partly-determined by the shares hitting £55, the level of the most recent Pfizer offer.

"If the remuneration committee of AstraZeneca – and, indeed, any company rejecting an offer in favour of long-term independence – was to recalibrate any current and future incentives to vest only at the level of the spurned takeover, it would provide comfort to shareholders that if things do not play out as the management envisage, the executives have shared in the pain felt by shareholders at the lost opportunity," Richard Buxton, head of UK equities at Old Mutual Global Investors, wrote in a letter to the Financial Times.

AstraZeneca investors are divided about the board's handling of the bid, with its shares closing on Friday at £43.28.

Last week, Schroders issued a statement criticising the actions of both companies, while Sky News revealed that BlackRock, AstraZeneca's biggest shareholder, wants it to invite Pfizer to reopen merger talks.

Those which have backed the board's stance that AstraZeneca would be stronger as a standalone business include Fidelity Investments, M&G Investments and Woodford Investment Management.

Under rules supervised by the City takeover watchdog, Pfizer will be prohibited from making a further offer for AstraZeneca for six months if it abandons its interest. It has said it will not make a hostile bid by going directly to AstraZeneca's shareholders.

However, the British group, which will set out further details of its cancer drug pipeline at a key industry conference in the US this week, could approach Pfizer to enter talks in three months' time.

Pfizer's interest in AstraZeneca has sparked a row in Westminster about the US company's track record in research and development.

LGIM, AstraZeneca and Pfizer all declined to comment.

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Blackstone In Joint Bid For Friends' Tax Arm

By Mark Kleinman, City Editor

The private equity giant Blackstone has joined forces with a US-based specialist insurer to table a bid for the tax planning arm of Friends Life, the FTSE-100 financial services group.

Sky News understands that Blackstone and Philadelphia Financial will make a joint offer for Lombard, which specialises in wealth planning solutions for some of the world's wealthiest people.

Philadelphia Financial targets high net-worth families through a network of intermediaries, and is understood to view Lombard as an attractive opportunity to expand that area of its business.

Friends Life has been in talks to sell the division for more than six months and is understood to have set a deadline in June for offers from interested parties.

Permira, another private equity group, is also expected to lodge a bid, while interest from Warburg Pincus, another private equity firm, is said to have waned.

Responding to Sky News' disclosure of the sale plan last November, Friends Life, which was then called Resolution, said: "Resolution notes the recent speculation in the press regarding the potential disposal of its Lombard division, which comprises Lombard International Assurance S.A. and Insurance Development Holdings AG, and confirms that it is currently in discussions regarding the possible disposal.

"There is no certainty these discussions will result in a transaction being agreed. A further announcement will be made as and when appropriate."

Analysts say the Lombard unit, which is being auctioned by investment bankers at Barclays, could be sold for £400m.

Based in Luxembourg, Lombard offers "wealth planning solutions to high and ultra-high net worth individuals".

The business is viewed as non-core by Friends Life's board and a sale would see the company re-orient itself towards its home market in the UK, analysts said.

Lombard uses Luxembourg's light-touch tax regime to help shield clients' assets from the taxman and is understood to include dozens of billionaires among its key customers.

Insiders said that Friends Life was also likely to consider the sale of Friends Provident International (FPI), which provides life assurance and investment products in Asia, the Middle East and some other markets, in due course, although no sale process for that business had yet been formally planned.

FPI has offices in the United Arab Emirates, Hong Kong, Singapore and the Isle of Man, and primarily distributes through independent financial advisers and strategic partnerships.

Andy Briggs, Friends Life's chief executive, said late last year that it was planning to compete more aggressively with specialist annuity providers such as Just Retirement, which recently floated on the London Stock Exchange.

In March, it issued updated guidance on its plans in the wake of George Osborne's shake-up of the annuities market.

He said: "There is a negative implication for new business flows in the individual annuity market, as some people utilise the increased flexibility provided by the Chancellor's proposals.

"However, we believe that annuities will continue to be an important product for those who value the guaranteed income throughout increasingly long retirement periods."

Blackstone, Permira and Friends Life all declined to comment on Friday.

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InterContinental Rebuffs Secret £6bn US Bid

By Mark Kleinman, City Editor

The FTSE-100 hospitality provider InterContinental Hotels Group (IHG) has rejected a secret takeover bid from the US which valued the company at about £6bn.

Sky News has learnt that IHG's board met a few weeks ago to consider the offer, but dismissed it on the grounds that it was too low.

The identity of the bidder was unclear this weekend, although analysts said it may have been Starwood Hotels & Resorts, the owner of the Le Meridien, St Regis and Westin brands, or a specialist investment fund such as Starwood Capital.

Sources said that IHG was braced for the bidder or a rival to return, with US hotel operators understood to be enticed by the prospect of moving their tax domicile to the UK in a process known as a tax inversion.

That mechanism, which allows US companies to avoid paying tax on their overseas cash holdings, has been at the centre of Pfizer's £69bn offer for AstraZeneca, provoking a political outcry on both sides of the Atlantic.

Senior sources said on Saturday that Pfizer was likely to issue a statement on Monday under Rule 2.8 of the City's Takeover Code, which will confirm its intention not to make a formal bid at this stage for its British pharmaceuticals rival.

Pfizer would then be barred from making another approach for six months, although as Sky News revealed this week, AstraZeneca's biggest investor is pressing it to re-open talks with the US company in three months' time.

The recent approach for IHG, which owns brands such as Crowne Plaza, Holiday Inn and its eponymous chain, could fade away and not be revived, according to insiders.

One added that IHG's stock repurchases in the last fortnight meant that it was not involved in live takeover talks.

Starwood Hotels has a market value of just under $15bn (£8.9bn), while IHG is capitalised at £5.6bn.

The British group is chaired by Patrick Cescau, a former boss of Unilever, and run by Richard Solomons, who has pleased investors with a series of large capital returns.

These have been generated by the sale of many of its flagship hotel properties, including most recently sites in San Francisco and New York, as IHG shifts its business model to hotel management rather than ownership.

IHG still owns the LeGrand Paris and InterContinental Hong Kong, but is also expected to sell these properties and return hundreds of millions of pounds more to shareholders.

It has also been accelerating the expansion of its pipeline of new hotels, with 237 locations opened last year and 444 more added to its roster of future openings.

The company operates about 5% of the world's hotel rooms but has more than twice that volume of the industry's known slate of new rooms.

Last year, IHG reported pre-tax profits of £600m, a 10% rise on the previous year.

Its future growth will be driven by emerging markets, with Hualuxe, a premium brand aimed at Chinese customers, launched in 2012.

A spokeswoman for IHG, shares in which closed up 0.3% on Friday at 2226p, declined to comment.

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