National Australia Bank, which owns the Yorkshire, Clydesdale and Northern Banks in the UK, is understood to be putting together a bid for the struggling AMP group.
A mystery buyer yesterday put out an order to snap up shares worth 11.4 per cent of the Australian life insurer through the brokers Citigroup and JB Were. Although the buyer was not named, it is understood that NAB was behind the order for between 100 million and 174 million AMP shares at A$5.60 a piece, and that the stake is a precursor to launching a bid for the company.
AMP shares have lost two thirds of their value in the past 18 months and the order price is at an 8.7 per cent premium to its close on Tuesday. A full bid at A$5.60 a share would value AMP at A$8.5bn (£3.5bn).
The bank, Australia's biggest lender, already owns a 4 per cent stake in AMP and under Australian rules, it cannot raise its stake above 15 per cent without approval from the federal Treasurer.
NAB is, however, unlikely to take on AMP's raft of UK businesses, which have been the root of its difficulties in the past few years. It last week had to take a £900m write-down on its assets here, which has contributed to its record A$2.2bn six-month loss. To stem the drain on the company, AMP plans to hive off its UK businesses by the end of the year.
NAB, which had previously courted AMP when its shares were more than A$20 each, put together a group of internal executives into an acquisition team at the end of last year to look at AMP's UK businesses, which include Pearl Assurance, NPI and London Life. It also owns the financial advisers Towry Law, the online investment portal Ample and a 50 per cent stake in Virgin Money. But the team is known to have reported back to NAB's management that AMP's UK businesses were not worth bidding for. The life companies have now been closed down and Virgin Money, a joint venture with Sir Richard Branson's Virgin Group, yesterday reported a £5.2m loss.
NAB may want to wait, however, until the demerger is completed before taking out the remaining Australian divisions. Old Mutual, which is thought to be interested in AMP's UK assets, was yesterday rumoured to be working with NAB on a carve-up of the company. But it, too, is likely to wait for the demerger so that it can pick up the assets on the cheap.
The only UK business NAB would be interested in is the fund management division, Henderson Global Investors. Its reputation has been tarnished, however, by revelations in a draft internal audit that showed compliance and staff monitoring procedures were failing and it was at risk of breaching client mandates. The news sparked fears that the demerger may be derailed and caused shares to sink to a record low.
While Citigroup's brokers were trying to buy stock in the company, its research analysts have voiced fears that more capital will have to go into the AMP business to complete the demerger. A research note published in the past few days said that there will not be enough capital in the demerged company, and described the stock as "high risk". "We believe UK capital remains very tight," its analysts said. "If the demerger proceeds without a further raising, "new Henderson" looks likely to be decidedly light on capital. There is a strong likelihood it may need to raise more shortly after it splits from AMP."
Andrew Mohl, chief executive of AMP, yesterday put the share order down to improving investor sentiment to the company. "Investors are becoming more confident in our management of what has been a difficult situation," Mr Mohl said.