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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The Week's Big Business Stories

Once you've caught up on last week's business news, you can get ahead on what's coming up next week with Sky's Week Ahead.

:: Monday, June 2

On Monday at 6.30pm, Sky News launches its new flagship business show, Ian King Live.

Also on Monday, Apple is hosting its Annual Worldwide Developers Conference. The event is often used by the company to launch new products. It is reportedly gearing up to announce a smart home software platform, powered by iPhones and iPads which would allow users to control household appliances with the swipe of a finger.

:: Tuesday, June 3

The Nationwide House Price Index for May is out on Tuesday morning. Britain's biggest building society reported an annual pre-tax statutory profit of £677m, up more than 300% on the figure last year. Chief executive Graham Beale said there could be early signs of a natural correction to house price rises in London, but warned that measures to cool capital prices might have a negative impact elsewhere.

:: Wednesday, June 4

Tesco will release its first quarter sales on Wednesday. The UK's biggest retailer has refurbished a significant number of stores and some analysts think this will stand it in good stead for the future, but these figures are still likely to show a like-for-like sales decline. Watch for more about the appointment of a new finance boss.

:: Thursday, June 5

At 12pm on Thursday, the Bank of England will announce whether it is to raise interest rates or not. The rate has been at a record low of 0.5% since 2007. The outgoing deputy governor Charlie Bean has said that rates could increase to 3% in the next three to five years.

:: Friday, June 6

The United States will release its jobless data for the month of April on Friday. Consumer spending unexpectedly fell 0.1% in April, according to a report by the Commerce Department. The drop was the first in a year, but economists expect it to be temporary

:: Missing something? Tweet your business stories to @SkyNKTweets

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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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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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Google Agrees To Erase Disputed Search Results

Google has bowed to a European court ruling which upheld the "right to be forgotten" online.

The search engine giant has introduced a mechanism for people to request the censorship of links to other internet sites which they believe contains outdated or damaging information.

Each request will see Google weigh the privacy rights of an individual against the public's right to know.

The online request form asks for copies of the URL complained of, reasons the search results should be removed, and photo ID to prove an individual's identity.

The system used to decide on each request has not yet been set up by Google.

Larry Page has warned the rules could help repressive governments

Those unhappy with the outcome of their request can appeal to the Information Commissioner's Office (ICO) - Britain's data watchdog - or take their case to court.

The ICO has told Sky News that sufficient time must now be given for Google and other search engines to set up internal structures to handle the requests, before it will rule on them.

Google chief executive Larry Page has warned the new privacy rules will make it hard for internet start-ups, and be exploited by repressive governments.

He told the Financial Times: "We're a big company and we can respond to these kind of concerns and spend money on them and deal with them, it's not a problem for us.

"But as a whole, as we regulate the internet, I think we're not going to see the kind of innovation we've seen."

He added: "It will be used by other governments that aren't as forward and progressive as Europe to do bad things.

"Other people are going to pile on, probably … for reasons most Europeans would find negative."

Next week, all of the EU states' data watchdogs are due to meet as part of the Article 29 Working Party on the protection of individuals with regard to the processing of personal data.

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UK Economic Growth At 11-Year High: CBI Survey

A survey of more than 700 UK firms has indicated the strongest rate of growth since data was first collected more than a decade ago.

The Confederation of British Industry (CBI) said its poll of 726 companies showed May growth expansion at its best since 2003.

The findings come as a second lobby group, the British Chambers of Commerce (BCC), upped its 2014 growth forecast by a tenth.

The BCC said it now expects growth this year at 3.1% instead of an earlier estimate of 2.8%.

Its forecast for 2015 has been upwardly revised from 2.5% to 2.7%, and it continues to expect 2.5% growth in 2016.

BCC director general John Longworth told Sky News: "The figures show the economy is in good state and growing very rapidly.

"But growth at the moment is based too much on consumer spending and consumer credit.

"We need to rebalance the economy towards investment, infrastructure and exports."

The BCC said too much of Britain's growth is coming from consumer spending

The CBI said data indicates growth continuing to expand in the second quarter, building on gains of 0.8% during the first three months of the year.

It added that May's growth was up significantly in the poll compared to the April figure.

CBI deputy director-general Katja Hall said: "The UK economy is performing strongly thanks to rising business and consumer confidence, better credit conditions at home and improving global economic conditions.

"What's encouraging is that growth is becoming more broad-based, with solid increases in business investment over the past year. This bodes well for the year ahead.

"But there are risks to the UK's outlook from global developments, including the possibility that the situation in Ukraine and Russia could impact on global commodity prices."

Meanwhile, a separate consumer survey by data researcher Markit has highlighted householders' concerns.

It said fears of a rising cost of living, interest rates and energy bills topped the list.

It added that nearly a fifth of mortgagees believed there would be "very significant" impact from rising rates.

The concerns match lenders new protocol prior to accepting mortgage applicants.

Last month the Mortgage Market Review (MMR) was introduced, designed to better calculate applicants' ability to pay if loan rates rise in the future.

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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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Centrica Confirms Exit Of Weston To Aggreko

The top boss at British Gas is to leave the company, amid a management shake-up at the UK's biggest energy supplier.

Centrica issued a statement saying Chris Weston, managing director of its international downstream business, had tendered his resignation in order to become CEO of Aggreko.

He is expected to join the temporary power group next year, once he has fulfilled his commitments at Centrica.

Details of the energy supplier shake-up were first revealed by Sky News City Editor Mark Kleinman.

Meanwhile, speculation has been mounting about the future of Sam Laidlaw, Centrica's long-serving chief executive.

Centrica said at its annual meeting earlier this month 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.

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.

Kleinman said: "I understand Mr Weston was uncomfortable at the amount of scrutiny the role attracted as the boss of British Gas, especially as he had only been in the role for a short time.

"He was under intense pressure to hand back or give up the £281,000 bonus he received earlier in the year. He didn't do that.

"I think for him, this is an easy way out of the maelstrom that surrounds British Gas and the other big energy companies."

Britain's energy sector is facing a full competition inquiry, turning the heat up even further for the so-called big six suppliers.

Centrica is now expected to try and fill the roles of three top executive positions, including that of its finance director.

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Help To Buy: 80% Go To First Time Buyers

A total of 80% of the Help To Buy mortgage scheme loans granted in its first six months were given to first time buyers.

The Treasury said a total of 7,313 loans were issued, with a total value of £1bn.

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

The figure shows that 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 completed on properties outside London and the South East, 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.

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.

More follows...

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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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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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RBS And NatWest Hit By Mobile Banking Glitch

Mobile banking services for RBS and NatWest have been hit by an IT glitch, along with an unconnected problem that affected some Lloyds, Halifax and Bank of Scotland online users.

In a statement given to Sky News, a spokesperson for RBS Group said: "Some customers may have had trouble getting into mobile banking today between 8.40am and 2.30pm.

"All services are back up and running as normal.  We apologise for any inconvenience this caused."

A spokesman for Lloyds Banking Group said there was a temporary issue on Friday morning that affected mobile and online services for a small number of customers who were trying to set up payments at Lloyds, Halifax and Bank of Scotland.

The apology seen by NatWest smartphones users

A Lloyds spokesman said: "We are aware that a small number of customers experienced issues accessing payments this morning.

"The issue has now been rectified and we are working with those customers who were affected."

The RBS Group has been hit be a sequence of system-wide IT failures in the past, which affected RBS, NatWest and Ulster Bank.

More recently, it has suffered 'pay day problems'  in the past, when workers expect to see funds enter their accounts.

Branch and cash machines are believed to be unaffected by the latest woes.

In its last annual results, the group said it was investing heavily in computer infrastructure to modernise its systems.

A number of banks were affected in February when workers expected funds to be deposited.

According to the British Bankers' Association, the use of mobile devices for banking services has doubled in the past 12 months.

RBS saw more than 17 million log ins in one week, through its mobile app, earlier this month.

In late December the group was hit by its fourth IT failure, after a cyber attack left online users unable to access accounts.

That followed an outage in early December, on one of the year's busiest shopping days.

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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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