Exclusive: Bank of America puts non-U.S. wealth arm up for sale

Bank of America Merrill Lynch has put its wealth management units outside the United States up for sale, three sources familiar with the situation said, hoping to bring in up to $3 billion for the sub-scale business.

Bank of America is the world's largest wealth manager, but its non-U.S. arm -- which two of the sources said manages some $90 billion for rich clients -- is not large enough to generate enough money for the bank.

"There is a lot of soul-searching going on by a lot of players as to what to do with their non-U.S. private banking operations," said a fourth person, an investment banker who has knowledge of the financial sector.

Bank of America declined to comment.

The second-largest bank has lagged peers in recovering from the financial crisis, largely because of huge losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial.

Bank of America's non-U.S. private banking business targets so-called "mass affluent" clients whose wealth is measured in hundreds of thousands of dollars, rather than super-rich private banking clients worth tens of millions.

But outside the U.S. it has never been able to build up the business to match the scale of its home market, meaning it is far less profitable.

Across the world, it manages close to $2 trillion of client assets, according to an annual benchmark study issued by consultancy firm Scorpio Partnership.

HANDFUL OF BIDDERS

The bank had asked potential suitors to put in first-round bids this week, according to one of the three sources, who spoke on condition of anonymity.

"The people I spoke to are not expecting this to be a particularly rapid process, just given the broad scope of the operations' geography and the relative skinny information that was made available," the source said.

Bank of America was looking to sell the unit as a whole and the deal could bring in up to $3 billion, the source said, or more than 3 percent of assets under management.

"Three percent of assets under management (is high) in Europe, but it is low in emerging markets. In Asia it is perfectly possible to raise 4 to 5 percent, and the same thing goes for Latin America," the source added.

There was only a handful of possible bidders who could spend money on the business, this person said, naming UBS, Credit Suisse, Deutsche Bank, JPMorgan Chase & Co and Wells Fargo.

Wealth management businesses do not generally contain equity capital, and there was no transfer of a legal entity, so the purchase price consisted entirely of goodwill. This reduces the buyer's regulatory capital, the source said.

"There are not that many buyers who could take a two-to-three billion dollar hit against their core tier I," capital ratio, the person said.

In more than two years under chief executive Brian Moynihan, Bank of America has shed non-core businesses and investments in other companies, in a bid to boost capital and streamline the financial behemoth.

BofA has sold its Canadian and Spanish credit card businesses in the past year, and in March reached an agreement to sell its Irish credit card portfolio. The bank has also said it intends to sell its card business in Britain.

(Additional reporting by Rick Rothacker in Charlotte, North-Carolina.; Editing by David Hulmes)
Reuters

Saudis: Yemen consul's kidnappers demand prisoner release

A suspected al Qaeda militant who claimed responsibility for the kidnapping of a Saudi Arabian diplomat in Yemen has warned that his group will "prepare the knives" unless their demands are met, an official Saudi spokesman said on Tuesday.

Mishaal Mohammed Rasheed al-Shodoukhi, who was named on a list of fugitive al Qaeda militants by the Saudi authorities in 2009, phoned the Saudi embassy in Yemen to demand a ransom and the release of militants in Saudi prisons, the spokesman said.

He also threatened more attacks including an embassy bombing and the assassination of a Saudi prince.

Abdallah al-Khalidi, the kingdom's deputy consul, was kidnapped outside his residence in the south Yemen port of Aden on March 28.

"There are some people here who have been calling, ever since Khalidi was kidnapped, to prepare the knives (to kill him)... Now it is a consul kidnapped, tomorrow it will be an embassy bombing and after that a prince killed," Shodoukhi said, according to a transcript of his conversation with the embassy released by the Saudi authorities.

"The Saudi embassy in Yemen received phone calls by Shodoukhi ... saying that he represents the 'evil group' and confirming that they have kidnapped the deputy consul in Aden," a Saudi security spokesman was quoted as saying by the Saudi Press Agency.

Yemen's political turmoil has strengthened Islamist insurgents in the country, leading to their takeover of some cities in the south of the impoverished Arabian Peninsula state. They are allied with a regional wing of al Qaeda that has sworn to bring down neighboring Saudi Arabia's ruling family.

The Saudi spokesman, Mansour al-Turki, confirmed to Reuters that the reference to the "evil group" meant al Qaeda in Yemen.

"They have demands which include handing over a number of the prisoners, who are members of their organization, in Yemen," the statement on SPA said.

Websites associated with al Qaeda did not carry a claim of responsibility for the abduction.

The transcript quoted Shodoukhi as demanding a ransom but saying he did not know how much it would be as "it will be agreed upon later; I am just a messenger".

The Interior Ministry said last year it was holding 5,696 people for "militant" related cases, most of whom appeared before courts.

A string of security officials have been assassinated in recent months in south Yemen, where an Islamist group linked to al Qaeda has seized territory and claimed responsibility for attacks on Yemeni troops and a U.S. security team last month.

Separately, a suicide car bomber killed four people including three soldiers and wounded four other people on Tuesday near the southern town of Lawder, Yemen's Defence Ministry said in a statement. The bomber blew himself up at the army checkpoint, according to the ministry.

(Reporting By Asma Alsharif in Jeddah, Angus McDowall in London and Mohammed Mukhashaf in Aden; Editing by Mark Heinrich)
Reuters

Hollande-Sarkozy dead heat predicted in first round of presidential election

Latest opinion polls show Socialist challenger François Hollande and incumbent Nicolas Sarkozy level pegging for the first round of the French presidential election on Sunday.

Both have lost points since the broadcast rules came into effect requiring that all 10 candidates be given equal air time on French television and radio, according to Le Monde newspaper. Analysts believe the rules, along with the impression that the result of the first-round vote is already in the bag for Hollande and Sarkozy, may have favoured the fringe candidates.

The most recent research from pollsters Ipsos-Logical Business Consulting for Le Monde, France Télévisions and Radio France, carried out on 13 and 14 April, revealed that Sarkozy had lost two percentage points in a week and Hollande 1.5, putting them tied at 27% each.

Other "small" candidates, as Le Monde describes them, have seen their predicted voting tallies increase. Eva Joly, of the Europe Ecology/Verts party, has gained one percentage point and is at 2.5%. Fringe candidates Philippe Poutou, of the New AntiCapitalist party, and Nathlie Arthaud, of Lutte Ouvrière, have both risen half a percentage point to 1%. Even Jacques Cheminade, a rank outsider who was credited with 0%, has risen half a point, while Nicolas Dupont-Aignan remains at 1%.

Support for those battling for third place appears to have remained stable. Marine Le Pen, of the Front National, has risen half a point to 15.5%, Jean-Luc Mélenchon, of the Front de Gauche, is at 14.5% and François Bayrou has risen slightly to 10%.

Le Monde says that if the poll is confirmed by Sunday's result it will be the first time in modern French history that five candidates have scored more than 10%.

Brice Teinturier, the director general of Ipsos France, said: "The period of strict equality on the amount of speaking time has allowed all the candidates to have the same exposure. It dampens down what we might call the 'privilege of the established candidates', that's to say those that we have seen for a long time and who represent the main political parties.

"As a result the French are discovering the faces and proposals of those who they may not have seen or heard before at the same time as feeling a certain weariness with the 'main candidates' who have been saying what they're saying for a long time."

He added: "The idea, wrong or right, that they [Hollande and Sarkozy] will go through to the second round and that François Hollande will win the second round, allows the voters to support other candidates. That's why we have to keep saying there could be important adjustments made from now until 22 April."

The Ipsos poll predicts that Hollande will win 56% of votes against 44% for Sarkozy in the second round vote on 6 May. It predicts Hollande will get 83% of Mélenchon's first-round votes, and, surprisingly, 37% of the centrist Bayrou's supporters.

The Guardian

UK inflation pushed to 3.5% by food and clothing price rises

A jump in the price of food and clothing compared to a year ago pushed up inflation to 3.5% in March, according to official figures.

The rise was expected by City analysts who said it was likely to prove a blip in a long-term decline over the rest of the year to nearer the Bank of England target of 2%.

But the rise will put pressure on the government, which needs inflation to fall to ease growing pressures on household budgets.

While inflation had been falling steadily since September, it remains higher than rises in average earnings and is blamed for undermining consumer confidence.

In another blow to the government, the Bank's interest rate setting committee is likely to view the figures as a good reason to hold back on a further round of printing electronic money, known as quantitative easing.

The Office for National Statistics said lower gas and electricity bills combined with a slower rise in petrol prices largely offset higher price tags for clothing and food to push up the consumer prices index from 3.4% in February.

Retail price inflation, which is often used as a benchmark for wage deals, inched lower to 3.6%, its lowest since December 2009.

Figures from the British Retail Consortium earlier this month had shown that food prices posted their biggest increase since August 2010. A drought across most of England risks pushing up fresh food prices even further, while petrol prices remain near a record high.

Figures at the end of last week showed factory gate inflation was higher than expected in March, though firms' raw material costs rose at their weakest pace in more than two years.

Separate figures published by the ONS showed UK house prices rose 0.2% in February, taking the annual rate to 0.3%. The average price of a home stood at £224,473.

The ONS said the annual increase was driven by rises in London and the south-east. Prices for first-time home buyers were 1.3% higher on average than a year ago.

The Guardian

Apple under fire over children's app bills

The group was granted permission to go ahead with the class action claim by a federal judge, who rejected Apple’s call for the case to be dismissed.

It surrounds in-app purchasing, whereby users buy virtual currency and add-ons costing up to £70 for games or other software. Apps that use the system are often free to download initially.

The parents argue that Apple made it too easy for children to spend on digital items such as “smurfberries” in the game Smurfs Village without the "authorisation of their parents".

The in-app purchases are billed to the iTunes account and credit card associated with the iPhone or iPad. Several incident shave been reported of children running up hundreds of pounds in charges, in both Britain and the United States.

In their court filing, the American parents accuse Apple of “inducing” children to make in-app purchases.

“Among the many thousands of apps that Apple offers for sale are gaming apps aimed at children,” it says.

“Many such games are designed to induce purchases.”

“These games are highly addictive, designed deliberately to be so, and tend to compel children playing them to purchase large quantities of game currency, amounting to as much as $100 per purchase or more.”

In its attempt to have the case thrown out, Apple highlighted controls in iOS that allow parents to restrict in-app purchasing. According to the parents however, until recently they were not strong enough.

The US Federal Trade Commission is investigating in-app purchasing after complaints from Congressman Edward Markey.

“We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases," the regulator’s chairman Jon Leibowitz said last year.

Apple has not publicly commented on the class action against it.

The Telegraph