ALEX BRUMMER: Keep the Pru in the City at this crucial time for Britain

ALEX BRUMMER: Keep the Pru in the City at this crucial time for post-Brexit Britain

Barely six months have passed since the Prudential split off its high-flying international operations from its UK fund management and life assurance side.

It hasn’t taken long for investment activists to see a flaw in the new structure. US hedge fund Third Point does not see much sense in the UK-quoted insurer operating in two territories, Asia and the US. It has a £1.5billion stake and is demanding further changes.

Third Point, run by Daniel Loeb, wants Prudential to close its London HQ and a further split between the Asian operations and US annuity specialists Jackson Life.

Threat: Third Point, run by Daniel Loeb, wants Prudential to close its London HQ and a further split between the Asian operations and US annuity specialists Jackson Life

It has struck when the new Pru is in transition. After a hugely complex separation, which involved sorting out the legacy of 170 years as a life company, it has barely had a chance to establish a record as an independent outfit.

Indeed, the assault from across the Atlantic comes at an awkward moment as the architect of the current shape of the group, Paul Manduca, makes way for Shriti Vadera who currently chairs Santander UK and is one of the most experienced hands in financial policy making.

There is some logic to Third Point’s call for hiving off the American operations. In fact, it would not have been surprising if a new structure had been high up on Baroness Vadera’s agenda.

What would be deeply disturbing, in the post-Brexit era, would be a departure from these shores of the UK’s most historic and largest insurers with a market value of £37billion. 

Even though much of the Pru’s earnings are in the Pacific region, most investors are here in traditional UK long funds. 

It is carefully supervised from London, and well away from political upheaval in Hong Kong and coronavirus and autocracy in China.

It is also a large overseas earner for the City, UK plc’s service sector, and pays its taxes in the UK. 

Chief executive Mike Wells should show the New York marauders the door. It will be up to new chairman Baroness Vadera and her board to decide if the current structure is fit for purpose.

Chinese chutzpah

The World Intellectual Property Organisation (WIPO) is one of those UN agencies most people have never heard of. As the trade battle between China and the United States moves from physical trade to AI, telecoms and technology, it is at the centre of the geopolitical universe.

There is a tendency to regard any campaigns led by the Trump White House as misguided. But when it comes to intellectual property the US President enjoys widespread support in his determination to head off China.

Trump is not alone in disparaging Boris Johnson’s decisions to give Huawei a big role in our next-generation 5G networks. 

The Democrat-controlled House of Representatives and our Anglosphere pals in Australia don’t like it either.

Evidence suggests that some 85 per cent or more of technology and intellectual property theft is down to Beijing. 

The cost of tech transfer is reckoned to be £460billion a year to the US alone. It also costs Europe billions of pounds a year.

As Britain has the most highly developed tech sector in Europe we are highly vulnerable. China, preposterously is seeking to put one of its own, Wang Binying, in charge of WIPO when the job of director general comes up in Geneva on March 5.

WIPO regulates and polices 46m patents across 200 jurisdictions so allowing the Chinese delegation to seize control could encourage the biggest breach in patent and data security ever. 

Beijing is campaigning hard and has fertile support in Africa, where it has invested billions of dollars in infrastructure, and across the world.

American officials believe that widespread corruption has been involved. The US and other Western countries are seeking to rally support for a more neutral candidate. Singapore and Japan have been mentioned.

Allowing China to take charge of WIPO is to invite the fox into the chicken house.

Brexit bonus

Blackstone has a mixed history in the UK as anyone who followed its short but highly profitable and ethically questionable stewardship of Southern Cross care homes would testify.

Even so, it will be music to the ears of No 10 that the New York private equity colossus is ready to plough billions of pounds into renewing British infrastructure.

If it happens, that should go some way to cleaning the slate.



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