Selling Pru's Asian venture will be easy – financing it may be less so

Given that the likes of Standard Life, Baillie Gifford, Scottish Widows and Aberdeen Asset Management, all among the Scottish shareholders in the Pru, know the economic growth rates in Asia, and the comparative flaccidity in the UK, I don't think Thiam will have a big hurdle to leap on strategic thinking.

Strategically speaking, he is likely to be pushing at an open door in his Scottish roadshow.

But I understand the Prudential boss will directly address two other concerns the company's UK investors have.

One is that the British insurer may overpay for this transformational leap in its already substantial Asian exposure (memories linger at UK institutions of their burnt wallets following Royal Bank of Scotland's chastening experience with ABN Amro).

The other is the sheer scale of the $21bn (14bn) rights issue that the Pru will partly bankroll the AIA deal with.

Thiam will say that he does not believe the Pru is overpaying; it is thought he believes those rich multiples for AIA are based on transiently-depressed 2009 new business profits at the company, as it was tainted by the problems afflicting its parent, and was distracted by fighting to keep staff as a result.

The Pru's argument is that, with its management, it can sharply improve the AIA performance over time, so that earnings improve and those multiples won't look high with hindsight.

And the rights issue? My understanding is Thiam is likely to try and turn it into a plus.

It is thought the Pru board emphatically wanted to avoid destroying the pre-emption (or Pru-emption?) rights of existing shareholders by just placing significant slugs of shares with willing Asian sovereign investors.

Barclays recently got into hot water for going down the Asian sovereign investor route, disenfranchising other long-standing institutional shareholders. Who knows, Thiam just might remind Scottish institutional investors of that fact.

So it was incompetence not greed after all, then?

THE financial deck of cards that was belied by the august Lehman Brothers name is shown starkly by the collapsed bank's "addictive" usage of the vaguely games consoles-sounding "Repo105".

Without getting into recondite detail, Repo 105 was a smoke-and-mirrors accounting device – apparently legal in the UK but viewed as at least unethical in America – that allows loans and investments to be temporarily removed from the balance sheet.

In the case of runaway banking train Lehman, this was particularly dangerous as it masked the true risks the group was taking. And how much was the bank hiding via this legerdemain? Oh, just $50bn… in the first two quarters of 2008 alone.

Lehman couldn't get a US legal opinion to back its use of Repo 105, so it went to London law firm Linklaters, the latter saying it was allowed under English law. Boy, when we once said we had light-touch regulation in the City we didn't go lightly on the "light".

The official report into Lehman's collapse by court-appointed lawyer Anton Valukas is also damning of the bank's auditors, Ernst & Young.

While not actually saying E&Y went along for the ride, the report says creditors may well have a claim for professional negligence against the accounting firm as well as Lehman officers, such as chief executive Dick Fuld.

The implication is that the auditors did not ask the tough questions pithily and pungently enough.

The Lehman top brass could also face claims for breaching their fiduciary duties by filing "materially misleading periodic reports", the report says.

Meanwhile, Fuld's lawyers are saying "It wasn't me, guv". He did not know what those dodgy repo transactions were, or their accounting treatment.

Well, if that's true, then it leaves us with a conclusion of fool, rather than knave. An unedifying business.