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Daily Dispatches – GIC, Blackstone team up for billion dollar investment

Major co-investment with Blackstone

Major co-investment with Blackstone

Singapore’s sovereign wealth fund GIC and US private equity group Blackstone are each set to buy 30% of Goldman Sachs’ UK pensions insurance operation, Rothesay Life, according to a report in Singapore’s Business Times this morning.

The Business Times article, which quotes the Financial Times, says it values the insurance operation at US$1.40 billion.

Meanwhile the Financial Times says that Massachusetts Mutual, the US life assurer, is set to acquire a 6% stake in Rothesay. The deal, first reported by the Insurance Insider, would leave Goldman with a holding in the business it set up in 2007 of little more than a third.

The disposal is the latest sign that more onerous regulations are forcing banks to sell assets to more lightly regulated operators. In the face of the Basel III capital requirements.

Such so-called bulk annuity businesses such as Rothesay Life have become less attractive for banks to own, analysts have warned.

BoJ backs sales tax hikes

The Financial Times reports that Haruhiko Kuroda, governor of the Bank of Japan, has thrown his weight behind plans to raise consumption taxes, saying he does not think the fiscal squeeze will “break” the world’s third-largest economy.

After a two-day policy meeting on Thursday the BoJ said Japan’s economy is “recovering moderately”, boosted by a pick-up in exports and in companies’ investment in fixed assets. Public investment is also rising, it noted, while the housing sector is looking stronger.

Kuroda, who had a 36-year career at the finance ministry before taking up the BoJ governorship in March, said that the sales tax increase would neither upset the recovery nor prevent inflation rising towards the bank’s 2% target.

IMF’s US$6.6 billion lifeline to Pakistan 

The International Monetary Fund has approved a $6.6 billion loan for Pakistan to stave off a balance of payments crisis, which should reassure investors concerned that foreign reserves had sunk to about six weeks worth of imports, says the Financial Times.

“Pakistan is facing serious economic challenges. Overall vulnerabilities and crisis risks are high, with subpar growth and unsustainable fiscal and balance of payments positions,” Nemat Shafik, IMF deputy managing director, said in Washington after the board’s decision on the three-year loan.

Macquarie in tax probe

The Sydney Morning Herald reports that Australia’s Tax Office is conducting a full-scale audit of investment bank Macquarie Group over its use of a controversial tax deduction related to offshore subsidiaries.

News of the audit emerged in a Federal Court ruling throwing out a bid by Macquarie to stop the ATO issuing new tax bills for previous years over the group’s use of offshore banking unit  deductions.

”Since 7 March 2011, the Macquarie Group has been the subject of a ‘large business audit’ by the ATO in respect of the 2006, 2007 and 2008 income years,” Justice Richard Edmonds said in handing down his judgment.

A large business audit involves ”intensive case examination where material underpayment of income tax, GST or excise is a risk”, the ATO says on its website.

Chinese banks march across the globe

By the end of 2012, Chinese banks had opened 1,050 outlets overseas, a near seven-fold increase from 30 years ago when the country started its economic reform policies, according to a report by People’s Daily Online.

The overseas outlets covered more than 49 countries and regions across the globe. But the lion’s share is held by China’s top five banks, including the Industrial and Commercial Bank of China and Bank of China, with 92% of the total.

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