JPMorgan may settle U.S., UK 'Whale' probes for $600 million - source

A sign stands in front of the JPMorgan Chase & Co bank headquarters building in New York, March 15, 2013.

Credit: Reuters/Lucas Jackson

By Emily Flitter

NEW YORK | Wed Aug 28, 2013 5:55pm BST

NEW YORK (Reuters) - JPMorgan Chase & Co is in talks with a group of regulators, including U.S. prosecutors, to settle probes of the bank's "London Whale" trading losses last year for about $600 million (386 million pounds), according to a person familiar with the talks.

Regulators, including the U.S. Securities and Exchange Commission and the UK Financial Conduct Authority, are in intense negotiations with lawyers for JPMorgan to reach a global settlement, the source said.

Prosecutors from U.S. Attorney Preet Bharara's office were also involved in the talks, the source said. Their role in the talks was unclear.

Julie Bolcer, a spokeswoman for Bharara, declined to comment. The SEC and JPMorgan did not immediately respond to requests for comment.

The global settlement talks are expected to address events surrounding the losses JPMorgan incurred when London-based traders in the bank's chief investment office amassed an oversized stake in an illiquid derivatives market, building positions so big they earned one trader, Bruno Iksil, the nickname "the London Whale."

JPMorgan Chief Executive Jamie Dimon initially dismissed the London Whale losses as a "tempest in a teapot," but the remark came back to haunt him. The bank had to quickly unwind the trades, incurring a loss of more than $6 billion, and had to restate a quarterly earnings report.

An internal investigation concluded the traders in London had mismarked some of the prices of the positions they held to try to hide losses.

U.S. prosecutors charged Spaniard Javier Martin-Artajo and a junior colleague, Frenchman Julien Grout, with wire fraud and conspiracy to falsify books and records related to the trading losses, which were executed by Iksil.

(Reporting By Emily Flitter)

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New G4S boss seeks over $900 million for turnaround drive

Members of G4S security and a police officer open a gate at the Alexander Stadium in Birmingham, central England, July 18, 2012.

Credit: Reuters/Darren Staples

By Neil Maidment

LONDON | Wed Aug 28, 2013 11:24am BST

LONDON (Reuters) - G4S, the world's largest security services firm, plans to raise about 600 million pounds ($932 million) by selling shares and assets as its new boss seeks to restore its battered reputation by cutting debt and focusing on emerging markets.

Chief Executive Ashley Almanza, a former executive at oil and gas firm BG Group, was promoted from finance chief in June after a string of blunders by his predecessor, including a failed takeover bid in 2011, a botched contract to staff the 2012 Olympic Games and a profit warning in May.

He said on Wednesday he would give a detailed plan in November, but that the initial measures he was putting in place should help to avoid a costly credit-rating downgrade, improve profit margins and start to deliver tangible benefits in 2014.

Panmure Gordon analyst Mike Allen welcomed Almanza's debut announcement as chief executive. "We applaud the quick work undertaken by management to re-structure the group and shore up the balance sheet," he said.

At 0905 GMT, G4S shares were up 3.7 percent at 255.14 pence, the biggest rise by a UK blue-chip company and reversing early losses. Shares often fall following the announcement of equity fundraisings, as these cut earnings per share for investors.

G4S, which runs services from managing prisons and transporting cash to guarding the Wimbledon tennis championships, aims to benefit from a trend among cash-strapped governments and businesses to outsource security work.

However, it has come under pressure as governments in developed markets in particular have cut back services.

The company said its first-half operating profit margin slipped to 5.5 percent from 5.9 percent in the same period last year, reflecting a lost prison contract in the Netherlands and squeezed pricing in Britain and elsewhere in Europe.

Net debt rose to 1.95 billion pounds as of June 30, some 3.2 times earnings before interest, tax, depreciation and amortisation compared with a target of 2-2.5 times.

However the group, which wants to grow revenue in developing markets in Asia, Africa and Latin America from a third to half of its total, said it had a global sales pipeline of 4 billion pounds. It did not provide details, but noted strong demand from financial services, mining and government sectors in Africa.

"G4S has excellent market positions, particularly in developing markets and as a result of which we have very material growth opportunities," Almanza said.

RAISING MONEY

G4S, which leads rival Sweden's Securitas by sales, said it would place 140.9 million new ordinary shares representing up to 9.99 percent of its existing share capital with new and existing investors via an accelerated bookbuild.

That equates to around 350 million pounds at current prices.

The company said its largest shareholder, Invesco, supported the placing and intended to participate in it. Citigroup, JP Morgan and Barclays are joint bookrunners for the share sale.

G4S also said it would sell a number of businesses, likely to be in developed markets, which could raise up to 250 million pounds in the next year, and would restructure other units in a group which spans 125 countries in order to improve margins.

On Wednesday - and included in the asset sale total - G4S said it had agreed to sell its Canadian cash security and Colombia Data solutions businesses for 100 million pounds. The sale of its U.S. business was ongoing, it added.

G4S said it had taken a one-off charge of 180 million pounds following a review of its assets and that it had started restructuring programmes - including cutting staff numbers and ending some lower-margin services - in Britain, Ireland and Europe at a cost of 30-35 million pounds over 2013 and 2014

Almanza declined to give an operating margin target.

First-half operating profit came in at 201 million pounds, little changed from a restated 202 million a year earlier, with turnover up 7.2 percent to 3.65 billion pounds.

The firm also named Misys's Himanshu Raja as its new chief financial officer on Tuesday.

(Editing by Mark Potter)

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LGI Homes files for $125 million IPO as U.S. housing market recovers

n">(Reuters) - Homebuilder LGI Homes Inc filed with U.S. regulators on Wednesday to raise up to $125 million in an initial public offering, at a time when the recovery in the U.S. housing market picks up pace.

LGI Homes started in 2003 and currently builds entry-level homes that are priced between $115,000 and $260,000 in Texas, Arizona, Florida and Georgia.

U.S. homebuilder confidence neared an eight-year high in August as strong demand for and the limited supply of new and existing homes outweighed higher mortgage rates, data from the National Association of Home Builders showed.

LGI Homes' revenue nearly tripled to $143.4 million in 2012 from 2010, the company said in a filing with the U.S. Securities and Exchange Commission. (link.reuters.com/tyt62v)

The Woodlands, Texas-based company said it revenue has grown at a compound annual rate of 61 percent since 2010.

LGI Homes sold 1,062 homes in 2012, almost 2.5 times higher than 2010. It has sold over 5,000 homes since 2003.

The filing did not reveal how many shares of common stock the company planned to sell or their expected price.

The company intends to list its common stock on the Nasdaq under the symbol "LGIH".

It said Deutsche Bank Securities, JMP Securities, JP Morgan, Barclays, Bank of America Merrill Lynch and Builder Advisor Group were underwriting the IPO.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

(Reporting By Varun Aggarwal in Bangalore; Editing by Savio D'Souza)

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Merrill Lynch to pay $160 million to settle racial bias lawsuit: NYT

The company logo of the Bank of America and Merrill Lynch is displayed at its office in Hong Kong March 8, 2013.

Credit: Reuters/Bobby Yip

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New G4S boss seeks over $900 million for turnaround drive

A police Swat team member walks on the roof of G4S cash depot in Vastberga, Stockholm September 23, 2009.

Credit: Reuters/Pontus Lundahl/Scanpix

By Neil Maidment

LONDON | Wed Aug 28, 2013 6:32am EDT

LONDON (Reuters) - G4S (GFS.L), the world's largest security services firm, plans to raise about 600 million pounds ($932 million) by selling shares and assets as its new boss seeks to restore its battered reputation by cutting debt and focusing on emerging markets.

Chief Executive Ashley Almanza, a former executive at oil and gas firm BG Group (BG.L), was promoted from finance chief in June after a string of blunders by his predecessor, including a failed takeover bid in 2011, a botched contract to staff the 2012 Olympic Games and a profit warning in May.

He said on Wednesday he would give a detailed plan in November, but that the initial measures he was putting in place should help to avoid a costly credit-rating downgrade, improve profit margins and start to deliver tangible benefits in 2014.

Panmure Gordon analyst Mike Allen welcomed Almanza's debut announcement as chief executive. "We applaud the quick work undertaken by management to re-structure the group and shore up the balance sheet," he said.

At 0905 GMT, G4S shares were up 3.7 percent at 255.14 pence, the biggest rise by a UK blue-chip company and reversing early losses. Shares often fall following the announcement of equity fundraisings, as these cut earnings per share for investors.

G4S, which runs services from managing prisons and transporting cash to guarding the Wimbledon tennis championships, aims to benefit from a trend among cash-strapped governments and businesses to outsource security work.

However, it has come under pressure as governments in developed markets in particular have cut back services.

The company said its first-half operating profit margin slipped to 5.5 percent from 5.9 percent in the same period last year, reflecting a lost prison contract in the Netherlands and squeezed pricing in Britain and elsewhere in Europe.

Net debt rose to 1.95 billion pounds as of June 30, some 3.2 times earnings before interest, tax, depreciation and amortization compared with a target of 2-2.5 times.

However the group, which wants to grow revenue in developing markets in Asia, Africa and Latin America from a third to half of its total, said it had a global sales pipeline of 4 billion pounds. It did not provide details, but noted strong demand from financial services, mining and government sectors in Africa.

"G4S has excellent market positions, particularly in developing markets and as a result of which we have very material growth opportunities," Almanza said.

RAISING MONEY

G4S, which leads rival Sweden's Securitas (SECUb.ST) by sales, said it would place 140.9 million new ordinary shares representing up to 9.99 percent of its existing share capital with new and existing investors via an accelerated bookbuild.

That equates to around 350 million pounds at current prices.

The company said its largest shareholder, Invesco, supported the placing and intended to participate in it. Citigroup (C.N), JP Morgan (JPM.N) and Barclays (BARC.L) are joint bookrunners for the share sale.

G4S also said it would sell a number of businesses, likely to be in developed markets, which could raise up to 250 million pounds in the next year, and would restructure other units in a group which spans 125 countries in order to improve margins.

On Wednesday - and included in the asset sale total - G4S said it had agreed to sell its Canadian cash security and Colombia Data solutions businesses for 100 million pounds. The sale of its U.S. business was ongoing, it added.

G4S said it had taken a one-off charge of 180 million pounds following a review of its assets and that it had started restructuring programs - including cutting staff numbers and ending some lower-margin services - in Britain, Ireland and Europe at a cost of 30-35 million pounds over 2013 and 2014

Almanza declined to give an operating margin target.

First-half operating profit came in at 201 million pounds, little changed from a restated 202 million a year earlier, with turnover up 7.2 percent to 3.65 billion pounds.

The firm also named Misys's Himanshu Raja as its new chief financial officer on Tuesday.

($1 = 0.6435 British pounds)

(Editing by Mark Potter)

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AstraZeneca to buy U.S. cancer firm for up to $500 million

LONDON | Mon Aug 26, 2013 12:47pm BST

LONDON (Reuters) - AstraZeneca Plc (AZN.L) took a further step to bolster its pipeline of new cancer drugs on Monday by agreeing to acquire privately held U.S. biotech company Amplimmune for up to $500 million (321 million pounds).

The deal is the second within 24 hours in the cancer drug space, following Amgen Inc's (AMGN.O) much larger acquisition of Onyx Pharmaceuticals Inc (ONXX.O) for about $10.4 billion.

Amplimmune specialises in developing treatments designed to help the immune system fight cancer and the purchase will give AstraZeneca access to a number of compounds currently in pre-clinical development.

While it will not yield commercially viable new medicines for several years, the move fits with the British drugmaker's strategy of building up its capability in oncology - a key area identified for investment by CEO Pascal Soriot.

AstraZeneca's MedImmune biotech unit will acquire 100 percent of Amplimmune's shares for an initial $225 million and a deferred consideration of up to $275 million based on reaching predetermined development milestones.

"It will allow us to strengthen our arsenal of potential cancer therapies," Bahija Jallal, executive vice president of MedImmune, said of the deal.

AstraZeneca already has other immune-mediated cancer therapies in clinical development and its decision to place a further bet on early research reflects its determination to compete with companies such as Roche Holding AG (ROG.VX) and Merck & Co Inc (MRK.N) in a hot area of cancer research.

The new wave of medicines that tap the power of the immune system to fight cancer could become the biggest drug class in history, with potential sales of $35 billion a year, according to analysts at U.S. bank Citigroup.

Amplimmune's product line-up includes AMP-514, an anti-programmed cell death 1 (PD-1) medicine that is expected to ready for testing in patients later this year.

(Reporting by Ben Hirschler; Editing by Mark Potter)

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French July jobless claims hit new high of 3.29 million

Job seekers wait inside a National Agency for Employment (Pole Emploi) in Marseille March 26, 2013.

Credit: Reuters/Jean-Paul Pelissier

PARIS | Tue Aug 27, 2013 6:37pm BST

PARIS (Reuters) - The number of jobless people in mainland France hit a new all-time high in July, squeezing the time left for President Francois Hollande to fulfil a pledge to reverse the trend by the end of the year.

The total number of people registered as out of work rose by 6,300 to 3,285,700 according to data from the labour ministry on Tuesday.

The increase was 0.2 percent over one month and 10.0 percent over one year.

French jobless claims have risen steadily every month over the last 27 months as the euro zone's second-biggest economy has struggled to eke out growth.

Hollande has promised to get unemployment falling by the end of the year, although most economists doubt that the economy will prove strong enough to allow that.

(Reporting by Leigh Thomas; Editing by Ruth Pitchford)

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U.S. to sell Indonesia Apache attack helicopters in $500 million deal

A U.S Army Apache helicopter flies near the town of Walli Was during an operation in Paktika province, near the border with Pakistan November 2, 2012.

Credit: Reuters/Goran Tomasevic

JAKARTA | Mon Aug 26, 2013 9:14am EDT

JAKARTA (Reuters) - The United States will sell the Indonesian army eight Apache attack helicopters in a deal worth $500 million including radar, training and maintenance, a U.S. defense official said on Monday.

"We are working on further details of the delivery and training time line now," the official said on condition of anonymity.

The sale of Boeing's (BA.N) AH-64E Apache helicopters was announced during a visit by U.S. Defense Secretary Chuck Hagel to Jakarta, his second stop on a week-long four-nation trip to Southeast Asia that began in Malaysia on Saturday.

"Providing Indonesia these world-class helicopters is an example of our commitment to help build Indonesia's military capability," Hagel told reporters.

(Reporting by Phil Stewart, editing by Jonathan Thatcher)

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U.S. to sell Indonesia Apache attack helicopters in $500 million deal

A U.S Army Apache helicopter flies near the town of Walli Was during an operation in Paktika province, near the border with Pakistan November 2, 2012.

Credit: Reuters/Goran Tomasevic

JAKARTA | Mon Aug 26, 2013 9:14am EDT

JAKARTA (Reuters) - The United States will sell the Indonesian army eight Apache attack helicopters in a deal worth $500 million including radar, training and maintenance, a U.S. defense official said on Monday.

"We are working on further details of the delivery and training time line now," the official said on condition of anonymity.

The sale of Boeing's (BA.N) AH-64E Apache helicopters was announced during a visit by U.S. Defense Secretary Chuck Hagel to Jakarta, his second stop on a week-long four-nation trip to Southeast Asia that began in Malaysia on Saturday.

"Providing Indonesia these world-class helicopters is an example of our commitment to help build Indonesia's military capability," Hagel told reporters.

(Reporting by Phil Stewart, editing by Jonathan Thatcher)

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U.S. to sell Indonesia Apache attack helicopters in $500 million deal

A U.S Army Apache helicopter flies near the town of Walli Was during an operation in Paktika province, near the border with Pakistan November 2, 2012.

Credit: Reuters/Goran Tomasevic

JAKARTA | Mon Aug 26, 2013 9:14am EDT

JAKARTA (Reuters) - The United States will sell the Indonesian army eight Apache attack helicopters in a deal worth $500 million including radar, training and maintenance, a U.S. defense official said on Monday.

"We are working on further details of the delivery and training time line now," the official said on condition of anonymity.

The sale of Boeing's (BA.N) AH-64E Apache helicopters was announced during a visit by U.S. Defense Secretary Chuck Hagel to Jakarta, his second stop on a week-long four-nation trip to Southeast Asia that began in Malaysia on Saturday.

"Providing Indonesia these world-class helicopters is an example of our commitment to help build Indonesia's military capability," Hagel told reporters.

(Reporting by Phil Stewart, editing by Jonathan Thatcher)

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Exclusive: SocGen plans $300 million sukuk program in Malaysia - sources

A logo is seen is seen in front of French bank Societe Generale headquarters in La Defense near Paris, February 13, 2013.

Credit: Reuters/Christian Hartmann

By Al-Zaquan Amer Hamzah

KUALA LUMPUR | Sat Aug 24, 2013 3:42am EDT

KUALA LUMPUR (Reuters) - Societe Generale (SOGN.PA) will launch a 1 billion ringgit ($300 million) Islamic bond program in Malaysia, two sources familiar with the deal told Reuters, becoming the second major European bank to issue sukuk and the first to do so in Asia.

SocGen, France's second-largest listed bank, is planning to issue the first tranche of the sukuk by the year-end, said one of the sources, who declined to be identified as he was not authorized to speak on the matter.

Western banks looking to raise capital are increasingly drawn to the Islamic bond market as the cost of credit is lower than in conventional markets. The Middle East unit of HSBC Holdings (HSBA.L) tapped the market in 2011 with a five-year $500 million issuance.

The growing popularity of Islamic debt as a choice of investment among Muslim banks and funds is also buoying the outlook for sukuk, as Islamic bonds are known.

Issuers of sukuk do not pay interest, a practice forbidden in Islam. Instead, buyers of sukuk become co-owners of the debt and receive annual profits from the issuer.

Global sukuk issuance grew 54 percent to $131.2 billion last year, with Malaysia accounting for 74 percent of primary market issuances.

Saudi Arabia followed with a 8 percent market share, and the United Arab Emirates with 4.7 percent and Indonesia with 4.6 percent, according to KFH Research, an Islamic investment research firm.

Malaysia has emerged as the world's No.1 market for primary sukuk issuances, with its strong regulatory framework, low taxes and geographical proximity to expanding Asian wealth.

The Malaysian central bank last month implemented new laws to stress compliance with Islamic laws, introducing higher penalties and making sharia advisors legally liable for the first time.

Hong Leong Islamic Bank (HLCB.KL) is advising the SocGen deal, according to the source.

SocGen will soon seek approval for its issuance plans from Malaysia's Securities Commission, having already received the green light to become a bond issuer from the central bank, the source said.

The central bank did not immediately respond to a request for comment, while a Hong Kong-based spokesperson for SocGen declined to comment.

The funds raised will go towards buying assets in Dubai, where SocGen's Middle East private banking operations are headquartered, said the source.

"Everything is in place," the source said.

EYE ON MALAYSIA

The issuance will help SocGen diversify its funding sources while benefiting from attractive premiums.

In the past year, three-year AAA-rated sukuk have offered yields of 3.65 to 3.72 percent, while conventional bonds with a comparable tenor and rating have yielded 3.69 to 3.76 percent. The lower yield range for sukuk translates into higher savings for issuers.

SocGen's sukuk in Malaysia will carry tenors of up to 15 years, according to the second source.

"For European countries that have yet to develop a regulatory framework for Islamic finance, Malaysia is an attractive destination," said Baljeet Kaur Grewal, managing director and vice chairman of KFH Research.

The large number of industry players in Malaysia, including foreign institutions mandated to invest in Islamic instruments, creates a ready market with significant demand for sukuk, said Kaur.

"There are a number of corporations planning to raise funds in the Malaysian Islamic capital market, from Australia to the Middle East, and this trend looks set to continue."

Other foreign companies such as the National Bank of Abu Dhabi NBAD.AD and Singapore-based palm oil producer Golden Agri-Resources Ltd (GAGR.SI) have in the past year tapped Malaysia's sukuk market.

In the first seven months of this year, issuers in Malaysia raised 19.8 billion ringgit through 47 sukuk, according to Thomson Reuters data.

That was a decline of nearly a third from a year earlier due to uncertainties surrounding a May election in Malaysia and a dip in external demand.

However, demand from Malaysia's public institutional funds such as the Employees Provident Fund and Lembaga Tabung Haji has remained resilient.

($1 = 3.3 ringgit)

(Additional reporting by Bernardo Vizcaino in SYDNEY and Umesh Desai in HONG KONG; Editing By Stuart Grudgings and Ryan Woo)

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Exclusive: SocGen plans $300 million sukuk program in Malaysia - sources

A logo is seen is seen in front of French bank Societe Generale headquarters in La Defense near Paris, February 13, 2013.

Credit: Reuters/Christian Hartmann

By Al-Zaquan Amer Hamzah

KUALA LUMPUR | Sat Aug 24, 2013 3:42am EDT

KUALA LUMPUR (Reuters) - Societe Generale (SOGN.PA) will launch a 1 billion ringgit ($300 million) Islamic bond program in Malaysia, two sources familiar with the deal told Reuters, becoming the second major European bank to issue sukuk and the first to do so in Asia.

SocGen, France's second-largest listed bank, is planning to issue the first tranche of the sukuk by the year-end, said one of the sources, who declined to be identified as he was not authorized to speak on the matter.

Western banks looking to raise capital are increasingly drawn to the Islamic bond market as the cost of credit is lower than in conventional markets. The Middle East unit of HSBC Holdings (HSBA.L) tapped the market in 2011 with a five-year $500 million issuance.

The growing popularity of Islamic debt as a choice of investment among Muslim banks and funds is also buoying the outlook for sukuk, as Islamic bonds are known.

Issuers of sukuk do not pay interest, a practice forbidden in Islam. Instead, buyers of sukuk become co-owners of the debt and receive annual profits from the issuer.

Global sukuk issuance grew 54 percent to $131.2 billion last year, with Malaysia accounting for 74 percent of primary market issuances.

Saudi Arabia followed with a 8 percent market share, and the United Arab Emirates with 4.7 percent and Indonesia with 4.6 percent, according to KFH Research, an Islamic investment research firm.

Malaysia has emerged as the world's No.1 market for primary sukuk issuances, with its strong regulatory framework, low taxes and geographical proximity to expanding Asian wealth.

The Malaysian central bank last month implemented new laws to stress compliance with Islamic laws, introducing higher penalties and making sharia advisors legally liable for the first time.

Hong Leong Islamic Bank (HLCB.KL) is advising the SocGen deal, according to the source.

SocGen will soon seek approval for its issuance plans from Malaysia's Securities Commission, having already received the green light to become a bond issuer from the central bank, the source said.

The central bank did not immediately respond to a request for comment, while a Hong Kong-based spokesperson for SocGen declined to comment.

The funds raised will go towards buying assets in Dubai, where SocGen's Middle East private banking operations are headquartered, said the source.

"Everything is in place," the source said.

EYE ON MALAYSIA

The issuance will help SocGen diversify its funding sources while benefiting from attractive premiums.

In the past year, three-year AAA-rated sukuk have offered yields of 3.65 to 3.72 percent, while conventional bonds with a comparable tenor and rating have yielded 3.69 to 3.76 percent. The lower yield range for sukuk translates into higher savings for issuers.

SocGen's sukuk in Malaysia will carry tenors of up to 15 years, according to the second source.

"For European countries that have yet to develop a regulatory framework for Islamic finance, Malaysia is an attractive destination," said Baljeet Kaur Grewal, managing director and vice chairman of KFH Research.

The large number of industry players in Malaysia, including foreign institutions mandated to invest in Islamic instruments, creates a ready market with significant demand for sukuk, said Kaur.

"There are a number of corporations planning to raise funds in the Malaysian Islamic capital market, from Australia to the Middle East, and this trend looks set to continue."

Other foreign companies such as the National Bank of Abu Dhabi NBAD.AD and Singapore-based palm oil producer Golden Agri-Resources Ltd (GAGR.SI) have in the past year tapped Malaysia's sukuk market.

In the first seven months of this year, issuers in Malaysia raised 19.8 billion ringgit through 47 sukuk, according to Thomson Reuters data.

That was a decline of nearly a third from a year earlier due to uncertainties surrounding a May election in Malaysia and a dip in external demand.

However, demand from Malaysia's public institutional funds such as the Employees Provident Fund and Lembaga Tabung Haji has remained resilient.

($1 = 3.3 ringgit)

(Additional reporting by Bernardo Vizcaino in SYDNEY and Umesh Desai in HONG KONG; Editing By Stuart Grudgings and Ryan Woo)

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Exclusive: SocGen plans $300 million sukuk program in Malaysia - sources

A logo is seen is seen in front of French bank Societe Generale headquarters in La Defense near Paris, February 13, 2013.

Credit: Reuters/Christian Hartmann

By Al-Zaquan Amer Hamzah

KUALA LUMPUR | Sat Aug 24, 2013 3:42am EDT

KUALA LUMPUR (Reuters) - Societe Generale (SOGN.PA) will launch a 1 billion ringgit ($300 million) Islamic bond program in Malaysia, two sources familiar with the deal told Reuters, becoming the second major European bank to issue sukuk and the first to do so in Asia.

SocGen, France's second-largest listed bank, is planning to issue the first tranche of the sukuk by the year-end, said one of the sources, who declined to be identified as he was not authorized to speak on the matter.

Western banks looking to raise capital are increasingly drawn to the Islamic bond market as the cost of credit is lower than in conventional markets. The Middle East unit of HSBC Holdings (HSBA.L) tapped the market in 2011 with a five-year $500 million issuance.

The growing popularity of Islamic debt as a choice of investment among Muslim banks and funds is also buoying the outlook for sukuk, as Islamic bonds are known.

Issuers of sukuk do not pay interest, a practice forbidden in Islam. Instead, buyers of sukuk become co-owners of the debt and receive annual profits from the issuer.

Global sukuk issuance grew 54 percent to $131.2 billion last year, with Malaysia accounting for 74 percent of primary market issuances.

Saudi Arabia followed with a 8 percent market share, and the United Arab Emirates with 4.7 percent and Indonesia with 4.6 percent, according to KFH Research, an Islamic investment research firm.

Malaysia has emerged as the world's No.1 market for primary sukuk issuances, with its strong regulatory framework, low taxes and geographical proximity to expanding Asian wealth.

The Malaysian central bank last month implemented new laws to stress compliance with Islamic laws, introducing higher penalties and making sharia advisors legally liable for the first time.

Hong Leong Islamic Bank (HLCB.KL) is advising the SocGen deal, according to the source.

SocGen will soon seek approval for its issuance plans from Malaysia's Securities Commission, having already received the green light to become a bond issuer from the central bank, the source said.

The central bank did not immediately respond to a request for comment, while a Hong Kong-based spokesperson for SocGen declined to comment.

The funds raised will go towards buying assets in Dubai, where SocGen's Middle East private banking operations are headquartered, said the source.

"Everything is in place," the source said.

EYE ON MALAYSIA

The issuance will help SocGen diversify its funding sources while benefiting from attractive premiums.

In the past year, three-year AAA-rated sukuk have offered yields of 3.65 to 3.72 percent, while conventional bonds with a comparable tenor and rating have yielded 3.69 to 3.76 percent. The lower yield range for sukuk translates into higher savings for issuers.

SocGen's sukuk in Malaysia will carry tenors of up to 15 years, according to the second source.

"For European countries that have yet to develop a regulatory framework for Islamic finance, Malaysia is an attractive destination," said Baljeet Kaur Grewal, managing director and vice chairman of KFH Research.

The large number of industry players in Malaysia, including foreign institutions mandated to invest in Islamic instruments, creates a ready market with significant demand for sukuk, said Kaur.

"There are a number of corporations planning to raise funds in the Malaysian Islamic capital market, from Australia to the Middle East, and this trend looks set to continue."

Other foreign companies such as the National Bank of Abu Dhabi NBAD.AD and Singapore-based palm oil producer Golden Agri-Resources Ltd (GAGR.SI) have in the past year tapped Malaysia's sukuk market.

In the first seven months of this year, issuers in Malaysia raised 19.8 billion ringgit through 47 sukuk, according to Thomson Reuters data.

That was a decline of nearly a third from a year earlier due to uncertainties surrounding a May election in Malaysia and a dip in external demand.

However, demand from Malaysia's public institutional funds such as the Employees Provident Fund and Lembaga Tabung Haji has remained resilient.

($1 = 3.3 ringgit)

(Additional reporting by Bernardo Vizcaino in SYDNEY and Umesh Desai in HONG KONG; Editing By Stuart Grudgings and Ryan Woo)

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Exclusive: SocGen plans $300 million sukuk programme in Malaysia - sources

A logo is seen is seen in front of French bank Societe Generale headquarters in La Defense near Paris, February 13, 2013.

Credit: Reuters/Christian Hartmann

By Al-Zaquan Amer Hamzah

KUALA LUMPUR | Sat Aug 24, 2013 8:43am BST

KUALA LUMPUR (Reuters) - Societe Generale (SOGN.PA) will launch a 1 billion ringgit ($300 million) Islamic bond programme in Malaysia, two sources familiar with the deal told Reuters, becoming the second major European bank to issue sukuk and the first to do so in Asia.

SocGen, France's second-largest listed bank, is planning to issue the first tranche of the sukuk by the year-end, said one of the sources, who declined to be identified as he was not authorised to speak on the matter.

Western banks looking to raise capital are increasingly drawn to the Islamic bond market as the cost of credit is lower than in conventional markets. The Middle East unit of HSBC Holdings (HSBA.L) tapped the market in 2011 with a five-year $500 million issuance.

The growing popularity of Islamic debt as a choice of investment among Muslim banks and funds is also buoying the outlook for sukuk, as Islamic bonds are known.

Issuers of sukuk do not pay interest, a practice forbidden in Islam. Instead, buyers of sukuk become co-owners of the debt and receive annual profits from the issuer.

Global sukuk issuance grew 54 percent to $131.2 billion last year, with Malaysia accounting for 74 percent of primary market issuances.

Saudi Arabia followed with a 8 percent market share, and the United Arab Emirates with 4.7 percent and Indonesia with 4.6 percent, according to KFH Research, an Islamic investment research firm.

Malaysia has emerged as the world's No.1 market for primary sukuk issuances, with its strong regulatory framework, low taxes and geographical proximity to expanding Asian wealth.

The Malaysian central bank last month implemented new laws to stress compliance with Islamic laws, introducing higher penalties and making sharia advisors legally liable for the first time.

Hong Leong Islamic Bank (HLCB.KL) is advising the SocGen deal, according to the source.

SocGen will soon seek approval for its issuance plans from Malaysia's Securities Commission, having already received the green light to become a bond issuer from the central bank, the source said.

The central bank did not immediately respond to a request for comment, while a Hong Kong-based spokesperson for SocGen declined to comment.

The funds raised will go towards buying assets in Dubai, where SocGen's Middle East private banking operations are headquartered, said the source.

"Everything is in place," the source said.

EYE ON MALAYSIA

The issuance will help SocGen diversify its funding sources while benefiting from attractive premiums.

In the past year, three-year AAA-rated sukuk have offered yields of 3.65 to 3.72 percent, while conventional bonds with a comparable tenor and rating have yielded 3.69 to 3.76 percent. The lower yield range for sukuk translates into higher savings for issuers.

SocGen's sukuk in Malaysia will carry tenors of up to 15 years, according to the second source.

"For European countries that have yet to develop a regulatory framework for Islamic finance, Malaysia is an attractive destination," said Baljeet Kaur Grewal, managing director and vice chairman of KFH Research.

The large number of industry players in Malaysia, including foreign institutions mandated to invest in Islamic instruments, creates a ready market with significant demand for sukuk, said Kaur.

"There are a number of corporations planning to raise funds in the Malaysian Islamic capital market, from Australia to the Middle East, and this trend looks set to continue."

Other foreign companies such as the National Bank of Abu Dhabi NBAD.AD and Singapore-based palm oil producer Golden Agri-Resources Ltd (GAGR.SI) have in the past year tapped Malaysia's sukuk market.

In the first seven months of this year, issuers in Malaysia raised 19.8 billion ringgit through 47 sukuk, according to Thomson Reuters data.

That was a decline of nearly a third from a year earlier due to uncertainties surrounding a May election in Malaysia and a dip in external demand.

However, demand from Malaysia's public institutional funds such as the Employees Provident Fund and Lembaga Tabung Haji has remained resilient.

(Additional reporting by Bernardo Vizcaino in SYDNEY and Umesh Desai in HONG KONG; Editing By Stuart Grudgings and Ryan Woo)

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Diamond Foods to pay $96 million to settle shareholder lawsuit

n">(Reuters) - Diamond Foods Inc (DMND.O) will pay about $96 million to settle a lawsuit related to the restatement of its results after an accounting scandal rocked the maker of Emerald Nuts and Kettle Chips last year.

Shares of the company, which also forecast higher-than-expected fourth-quarter sales, rose as much as 20 percent in morning trading on the settlement of the class action lawsuit.

Diamond said it will pay $11 million in cash and issue 4.45 million common shares to a fund to settle the lawsuit against the company and two of its former officers.

According to court documents, the settlement amount, subject to court approval, represents about 25-40 percent of what the lead plaintiffs saw as the maximum damages theoretically recoverable in this case.

Diamond has been trying to get past the scandal that claimed the jobs of its two top executives and caused its planned purchase of Pringles from Proctor & Gamble (PG.N) to fall apart.

The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement that wiped out $56.5 million in profit from fiscal 2010 and 2011.

The company said on Wednesday it denies any wrongdoing related to the claims, which were made on behalf of investors who acquired Diamond stock between October 5, 2010 and February 8, 2012.

Diamond also forecast sales of $196 million to $201 million in the fourth quarter.

Analysts on average were expecting sales of $187.4 million, according to Thomson Reuters I/B/E/S.

The company's shares, which have risen about 40 percent this year, were up 16 percent at $22.27 on Wednesday on the Nasdaq.

The case is Re Diamond Foods Securities Litigation, case number 3:11-cv-05386, in the U.S. District Court for the Northern District of California.

(Reporting by Chris Peters in Bangalore)

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Former Grant Thornton partner pleads guilty to stealing $4 million

By Nate Raymond

NEW YORK | Wed Aug 21, 2013 1:46pm EDT

NEW YORK (Reuters) - A former partner at Grant Thornton pleaded guilty on Wednesday to stealing nearly $4 million in client payments to the global accounting firm.

Craig Haber, who prosecutors said diverted money to his own bank accounts between 2004 and 2012, pleaded guilty to a charge of mail fraud in federal court in New York.

"I knew my conduct was wrong," Haber said at a court hearing. "I apologize sincerely to the firm for my actions."

Haber, 59, had been a partner at Grant Thornton from 1993 to 2012 in the firm's New York offices.

As part of his plea, he has agreed to not appeal any order requiring up to $4.34 million in restitution. He also agreed to forfeit $3.97 million, as well as all rights to his downtown Manhattan apartment and $1.8 million in a brokerage account.

Haber was arrested in February in connection with the theft, in which Haber stole $3.97 million in payments intended for Grant Thornton, a court document said.

Grant Thornton is the sixth-largest accounting firm globally with $4.2 billion in revenues in 2012, according to International Accounting Bulletin.

The firm was not named in court documents, but a spokesman for Grant Thornton previously confirmed its role and said it cooperated with the investigation. Grant Thornton terminated Haber in July, charging documents said.

Tim Blair, a spokesman for the firm, said Wednesday the firm was "pleased that the authorities have resolved this matter swiftly."

At a hearing on Wednesday, Haber admitted to telling clients to mail checks directly to his office instead of through the normal processing channel. He then deposited the checks into a bank account he controlled, Haber said.

Charging documents said Haber then used the money for personal expenses, including his New York apartment's mortgage, according to charging documents.

Sentencing before U.S. District Judge Kevin Castel is set for December 13.

Haber faces a maximum 20 years in prison. Under a plea agreement detailed in court, prosecutors have stipulated to a sentencing guideline of 51 to 61 months in prison and a fine of $10,000 to $100,000.

The case is U.S. v. Haber, U.S. District Court, Southern District of New York, 13-cr-434.

(Additional reporting by Dena Aubin; editing by Andrew Hay)

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Diamond Foods to pay $96 million to settle shareholder lawsuit

n">(Reuters) - Diamond Foods Inc (DMND.O) will pay about $96 million to settle a lawsuit related to the restatement of its results after an accounting scandal rocked the maker of Emerald Nuts and Kettle Chips last year.

Shares of the company, which also forecast higher-than-expected fourth-quarter sales, rose as much as 20 percent in morning trading on the settlement of the class action lawsuit.

Diamond said it will pay $11 million in cash and issue 4.45 million common shares to a fund to settle the lawsuit against the company and two of its former officers.

According to court documents, the settlement amount, subject to court approval, represents about 25-40 percent of what the lead plaintiffs saw as the maximum damages theoretically recoverable in this case.

Diamond has been trying to get past the scandal that claimed the jobs of its two top executives and caused its planned purchase of Pringles from Proctor & Gamble (PG.N) to fall apart.

The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement that wiped out $56.5 million in profit from fiscal 2010 and 2011.

The company said on Wednesday it denies any wrongdoing related to the claims, which were made on behalf of investors who acquired Diamond stock between October 5, 2010 and February 8, 2012.

Diamond also forecast sales of $196 million to $201 million in the fourth quarter.

Analysts on average were expecting sales of $187.4 million, according to Thomson Reuters I/B/E/S.

The company's shares, which have risen about 40 percent this year, were up 16 percent at $22.27 on Wednesday on the Nasdaq.

The case is Re Diamond Foods Securities Litigation, case number 3:11-cv-05386, in the U.S. District Court for the Northern District of California.

(Reporting by Chris Peters in Bangalore)

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Former Grant Thornton partner pleads guilty to stealing $4 million

By Nate Raymond

NEW YORK | Wed Aug 21, 2013 1:46pm EDT

NEW YORK (Reuters) - A former partner at Grant Thornton pleaded guilty on Wednesday to stealing nearly $4 million in client payments to the global accounting firm.

Craig Haber, who prosecutors said diverted money to his own bank accounts between 2004 and 2012, pleaded guilty to a charge of mail fraud in federal court in New York.

"I knew my conduct was wrong," Haber said at a court hearing. "I apologize sincerely to the firm for my actions."

Haber, 59, had been a partner at Grant Thornton from 1993 to 2012 in the firm's New York offices.

As part of his plea, he has agreed to not appeal any order requiring up to $4.34 million in restitution. He also agreed to forfeit $3.97 million, as well as all rights to his downtown Manhattan apartment and $1.8 million in a brokerage account.

Haber was arrested in February in connection with the theft, in which Haber stole $3.97 million in payments intended for Grant Thornton, a court document said.

Grant Thornton is the sixth-largest accounting firm globally with $4.2 billion in revenues in 2012, according to International Accounting Bulletin.

The firm was not named in court documents, but a spokesman for Grant Thornton previously confirmed its role and said it cooperated with the investigation. Grant Thornton terminated Haber in July, charging documents said.

Tim Blair, a spokesman for the firm, said Wednesday the firm was "pleased that the authorities have resolved this matter swiftly."

At a hearing on Wednesday, Haber admitted to telling clients to mail checks directly to his office instead of through the normal processing channel. He then deposited the checks into a bank account he controlled, Haber said.

Charging documents said Haber then used the money for personal expenses, including his New York apartment's mortgage, according to charging documents.

Sentencing before U.S. District Judge Kevin Castel is set for December 13.

Haber faces a maximum 20 years in prison. Under a plea agreement detailed in court, prosecutors have stipulated to a sentencing guideline of 51 to 61 months in prison and a fine of $10,000 to $100,000.

The case is U.S. v. Haber, U.S. District Court, Southern District of New York, 13-cr-434.

(Additional reporting by Dena Aubin; editing by Andrew Hay)

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Lloyds Banking sells German life insurer for $400 million

A man waits outside the corporate headquarters of Lloyds Banking Group in the City of London August 1, 2013.

Credit: Reuters/Andrew Winning

By Sinead Cruise

LONDON | Wed Aug 21, 2013 7:14am EDT

LONDON (Reuters) - British lender Lloyds Banking Group (LLOY.L) has sold German life insurer Heidelberger Leben to private equity group Cinven and reinsurer Hannover Re (HNRGn.DE) for around 300 million euros ($400 million), raising hopes that the state-rescued bank is moving closer to restoring its dividend.

The deal, which will boost Lloyds' core capital by 400 million pounds, and the separate sale on Wednesday for 254 million pounds of a portfolio of leveraged loans, helps strengthen the bank's balance sheet and could accelerate government plans to start selling down its 39 percent stake, analysts said.

"It's another step along the road to just focusing on the domestic retail business, and another step along the road to a fourth-quarter dividend," said Mike Trippitt, director of banks' research at London-based Numis Securities.

Funds advised by Cinven will acquire 80 percent of Heidelberger Leben shares, leaving Hannover Re, the third-largest reinsurer worldwide, with the balance.

Demand for new life insurance policies has been hit by low interest rates, while stricter capital requirements for insurers have made the policies more expensive to underwrite, leaving owners of many smaller operators looking to sell.

Cinven plans to buy up and consolidate life insurers in Germany, allowing it to invest in updating systems and improving service while achieving cost savings through scale in a similar way to what it has done in the UK following its investment in life and pension products provider Guardian Financial Services.

"Germany is a very large market, and it is very fragmented," Cinven Partner Caspar Berendsen said.

"We see dozens of acquisition opportunities in Germany, it is growth through buy and build," he said, adding that the consolidation process would take several years.

Heidelberger Leben, which employs around 300 people, has a portfolio of around 600,000 policies, mainly unit-linked, and ran 5.2 billion euros of assets as at December 31 2012.

SPECULATION SALE IMMINENT

Lloyds has been aggressively selling non-core assets this year, raising 450 million pounds from shares in wealth manager St. James Place (SJP.L), U.S. mortgage portfolio disposals and the sale of branches from its Spanish retail banking network.

The bank's share price has surged by more than 50 percent in the year to date to around 74 pence, well above the UK government's so-called break-even price of 61 pence, prompting speculation that a 5 billion-pound state share sale is imminent.

Lloyds shares were up 0.34 percent at 74 pence by 0632 ET.

The government has said it has no timetable or target price for the sale but it appointed JP Morgan in late July to advise on the possible sale of taxpayer interests in Lloyds and a much larger 81 percent stake in Royal Bank of Scotland (RBS.L).

Speaking at the bank's half-year results this month, Lloyds Chief Executive Antonio Horta-Osorio also said he expects the bank to be a "high dividend" paying stock in the future, potentially paying out at least half of its earnings.

Shareholders have not received a dividend from Lloyds since it took over crisis-stricken lender HBOS in 2008. But management are back in talks with regulators about restarting the payout, a key milestone in its long-term recovery plan.

Trippitt said the asset sales helped the bank's dividend aspirations because they left the bank with a cleaner, more streamlined portfolio and boosted it's capital, encouraging regulators to allow the bank to return cash to shareholders.

The Heidelberger sale will result in a loss of around 330 million pounds in Lloyds' group accounts but, combined with the sale of other assets, is expected to boost the bank's common equity Tier 1 capital by around 400 million pounds when it completes, Lloyds said in a statement.

This is largely because of accounting conventions, which required Lloyds to deduct the embedded value of the insurance company from its assessment of its core Tier 1 equity, a deduction that will no longer have to be made.

(Additional reporting by Laura Noonan and Kylie MacLellan; Editing by David Cowell and Greg Mahlich)

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Morgan Stanley fined $1 million over bond pricing violations

The headquarters of Morgan Stanley is seen in New York January 9, 2013.

Credit: Reuters/Shannon Stapleton

By Sarah N. Lynch

WASHINGTON | Thu Aug 22, 2013 10:20am EDT

WASHINGTON (Reuters) - Morgan Stanley will pay a $1 million fine and compensate harmed investors to settle civil charges that the bank failed to give customers the best market prices for some corporate and municipal bonds, U.S. brokerage regulators said on Thursday.

The Financial Industry Regulatory Authority said Morgan Stanley Smith Barney LLC and Morgan Stanley & Co would pay the fine plus roughly $188,000 in restitution for the various pricing violations, which occurred between January 2008 through September 2011.

The bank agreed to settle the case without admitting or denying the charges by FINRA, which self-polices the brokerage industry.

Morgan Stanley spokesman James Wiggins said the company had cooperated with FINRA's investigation.

"The settlement involved fewer than 300 fixed income transactions over a four-year period during which some 4 million such trades were conducted," Wiggins said. "FINRA did not allege any willful or fraudulent conduct by the firm."

According to FINRA, Morgan Stanley failed to use "reasonable diligence" to ensure that prices were fair under current market conditions in 116 corporate bond transactions.

In addition, FINRA said it found that the bank did not reasonably price 165 different municipal bond trades.

"Firms must ensure that customers who buy and sell securities - including corporate, agency, and municipal bonds - receive execution prices that are consistent with prices available in the marketplace," said Thomas Gira, the executive vice president for FINRA Market Regulation.

(Reporting by Sarah N. Lynch; Editing by Lisa Von Ahn)

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