British Prime Minister Gordon Brown plans to outline a sale of government assets on Monday aimed at raising 3 billion pounds, according to a draft speech provided by his office. The sale will be carried out over the next two years and include betting company Tote and the cross-channel rail link between the UK and France.

In other stories reported by the media on Monday and over the weekend:

British bank Lloyds has lined up a syndicate of investment banks to underwrite a 11 billion pound rights issue, the Sunday Times reports, without citing sources. The deal would be linked to Lloyds’ attempts to reduce its participation in the UK government’s toxic asset scheme.

Barclays is planning to spin off a 4 billion pound portfolio of complex credit assets as its presses ahead with a process to clean up its balance sheet, the Financial Times says, quoting people familiar with the matter.

Chinese state-owned metals conglomerate Chinalco does not intend to tale a stake in UC RUSAL when the indebted Russian aluminium company lists shares in Hong Kong later this year, the South China Morning Post reports. Last week a Russian newspaper had reported that Chinalco may be interested in acquiring a stake in RUSAL, citing unnamed banking sources.

(From Sarah Young at Acquisitions Monthly)

This week has seen policy-makers on both sides of the Atlantic contemplate the future of the banking industry.

Yesterday, Switzerland’s central bank joined the discussion. It is one country that truly knows the meaning of too big to fail – the combined assets of Credit Suisse and UBS were last year equivalent to six times Swiss GDP.

The restructuring and M&A activity that would come about should regulators introduce restrictions on the size of banks, or push for the division of investment and retail banking, must have deal advisers’ eyes watering with the thought of the fees that would be up for grabs.

But enforced disentangling of enormous banking groups seems somewhat improbable, or at least a long way off, so for now advisers will have to content themselves with the prospect of heightened disposal activity by banks.

It’s no secret that banks such as Lloyds Banking Group and RBS will consider selling off assets in the coming years to satisfy the conditions of the UK government’s investment – to boost capital and free up lending capacity – in both institutions.

After taking on HBOS, Lloyds has an enormous range of assets that it could divest. Already in the frame is fund management business Insight, previously part of HBOS.

There’s no doubt that there is, and will in the future continue to be, appetite for the assets banks want to offload. There isn’t a buyout firm in sight that isn’t beefing up its financial services team.

Chinese banks, too, could want to acquire some assets. Buying in specific expertise in the investment banking or private banking space would certainly appeal to them.

Asian appetite for European financial assets was shown last month when Japanese investment bank Daiwa Securities SMBC bought the corporate finance unit of merchant bank Close Brothers.

But this deal and the BGI sale are rare agreements in today’s market. As with other sectors, before a wave of M&A in financial services can kick off, there needs to be some accord on price.

As one sector banker said recently: “Price is the biggest inhibitor. At the moment no-one knows what anything is worth.”

Barclays will look a whole lot healthier after securing $13.5 billion from BlackRock for its crown-jewellish BGI asset-management arm. This is the same Barclays that turned down aid from the British government and bought defunct Lehman Brothers’ U.S. investment banking business in September, giving it that heroic posture of a down-but-not-out, maybe somewhat punch-drunk prize fighter — Britain’s own Rocky Balboa. Now, as far as Chief Executive John Varley is concerned, BGI-less Barclays is one of the best-capitalized banks in the world.

Investors are cheering Barclays on. Its share price has soared more than fivefold in the last three months, after crashing to a 24-year low on fears that it might need taxpayer funds.

The deal makes BlackRock the world’s biggest asset manager. Though the wealthy of the world are hurting in the recession along with the paycheck-to-paycheck crowd, it’s hard to see Barclays staying in the back seat of the lucrative asset-management market for long. Under the cash-and-shares deal, Barclays takes a 19.9 percent stake and two seats on the board of the enlarged group, to be called BlackRock Global Investors (giving the new firm the added bonus of not having to change BGI’s stationery).

Barclays‘ seemingly never-ending effort to get top dollar for its Barclays Global Investors unit appears to be enticing some Middle East money behind the current best bid from U.S. fund manager BlackRock, which is believed to be in the neighborhood of $12 billion.

Barclays said it had received proposals for BGI and iShares from a number of parties, including BlackRock, and was continuing talks. BlackRock confirmed the talks, but both sides said issues remained that could derail a deal. San Francisco-based BGI is the world’s biggest fund manager, with $1.5 trillion in assets under management and would more than double the size of BlackRock.

With Bank of New York Mellon also in the hunt, sources say Barclays may keep a hand in the game after a sale, possibly taking a stake of up to 20 percent in the enlarged asset manager. Media reports say BlackRock may get funding from Middle East investors, possibly including some Barclays shareholders. The Qatar Investment Authority and Adia, the government investment arm of Abu Dhabi, are in talks alongside Kuwait’s KIO to inject $3 billion into BlackRock for a 12 percent stake, the UK’s Sunday Telegraph newspaper said.

In April Barclays agreed to sell iShares, which is part of BGI, to buyout house CVC for $4.4 billion, but a “go shop” clause allows it to seek higher offers until June 18. So even if a deal is struck this week, the BGI sale may continue to dominate headlines for another week and a half.

Abu Dhabi sells 3.5 billion pounds of shares in Barclays, making a handy profit, and sending the stock down well over 10 percent. In another share sale, wind turbine maker Gamesa is suspended after Iberdrola offloads 10 percent of the company in the market. Otherwise, cars still dominate: GM has filed for bankruptcy, Germany is to pay bridge financing to Opel today and a U.S. judge said overnight the sale of Chrysler will be effective on Friday. Here are today’s top deals headlines.

And in the newspapers:

British publishing group Pearson is in talks with Prisa over the possibility of buying a stake in Santillana, the Spanish media firm’s publishing house and market leader in school textbooks in Latin America, the Financial Times reported.
Prisa could be looking to sell up to 30 percent of the unit in a 315 million pound deal. Other bidders include Cengage Learning, Oxford University Press and Infinitas Learning, the paper says.

Citigroup Inc told about five former top executives they will not be paid tens of millions of dollars in promised severance payouts, the Wall Street Journal cited people familiar with the matter as saying.

France’s Carrefour is close to buying a stake in a unit of India’s Pantaloon Retail, the Business Standard reported.

French carmaker Peugeot declared itself open to any form of alliance amid turmoil in the car industry as long as the Peugeot family maintains a core presence, Peugeot Citroen PSA supervisory board chairman Thierry Peugeot, Les Echos reported.

Barclays Capital is thinking big. As Reuters banking correspondent Steve Slater wrote earlier:

“Barclays Capital, the investment bank arm of Britain’s Barclays Plc (BARC.L), will hire more than 750 staff this year as part of its plan to win leading positions in equities and M&A advisory, a top executive said.

“The bank, which bought the U.S. business of Lehman Brothers in September, is now expanding in Europe and Asia. It is also targeting a top three spot in prime services to take advantage of a retreat by rivals servicing hedge funds, he said.

“Barclays Capital (BarCap) has hired 450 people in equities and plans to hire another 250 by the end of the year, said Jerry del Missier, president of BarCap. It plans to hire about 65 merger and acquisition (M&A) advisers this year, he said.

“It’s certainly our intention to be a leading global player in equities and advisory over the next three years,” del Missier told Reuters in an interview this week.”

Read the full story here. And see an earlier story on two key M&A hires here.

As Steve Slater and I wrote earlier:

“British bank Barclays has sidelined private equity houses bidding for iShares, its exchange-traded fund unit, and is looking to sell its entire asset management arm instead if offers approach $12 billion.

“U.S. money manager BlackRock and Bank of New York Mellon are among the interested bidders for Barclays Global Investors (BGI), the world’s biggest asset manager, people familiar with the matter said.”

Looking to boost its capital position and to justify its decision not to take state aid, Barclays is aiming to maximize the proceeds from any asset sales.

But BlackRock crashing the party to buy all of BGI is not necessarily the end for CVC or indeed any of the other private equity firms that are still serious about buying iShares.

Once a firm offer from BlackRock is on the table, the games can begin in earnest. It’s not beyond the realms of possibility for CVC to team up with another trade buyer and trump BlackRock with a consortium bid.  After all, it does have the right to match any rival offers for iShares or all of BGI under the “go shop” clause that was inserted in the deal.

Barclays is one of the first European companies to use these clauses, which were a feature of the U.S. buyout market earlier this decade. Unlike many other leftovers from the boom years, this one looks like a smart move.

Barclays Capital has hired a senior Citigroup banker and a former top Morgan Stanley banker as co-heads of European mergers and acquisitions (M&A), as the former debt powerhouse repositions itself as a full-service, global investment bank.

The duo are Matthew Ponsonby, formerly Citigroup’sglobal co-head of infrastructure investment banking, and Mark Warham, who until earlier this year had been chairman of UK investment banking at Morgan Stanley.

BarCap, like SocGen and others, sees a chance to grab market share in M&A and other advisory work. Granted, European M&A volumes are less than a third of 2007’s — but some competitors are weakened and some bankers are restless (if not actually unemployed).

In an interview this week with Reuters (only available to professional subscribers), SocGen M&A head Michel Payan, who’s looking to hire 35 senior bankers, pointed to something of a recovery in dealmaking.

“(M&A) activity is much higher than it was in the first quarter, projects that were in incubation have been re-started since mid-April and we are working on some new initiatives,” he said. What’s more, he added: “We have an extraordinary window of opportunity in terms of recruitment.”

Is now the time to be bulking up in M&A and other kinds of corporate finance advice?

On Monday, Societe Generale trumpeted the hire of a top French dealmaker from JPMorgan — the auspiciously named Thierry d’Argent — and reiterated its big plans for European M&A. Daiwa Securities SMBC agreed to buy mid-market corporate finance house Close Brothers Corporate Finance. Meanwhile Barclays Capital is making lots of equity markets hires, and says it aims to be one of the world’s top full-service investment banks.

As I wrote:

“A clutch of banks with previously limited reach in European takeovers and other corporate advisory work are betting now is a good time to grab market share — before the dealmaking business recovers.

“There are experienced bankers on the job market at bargain prices after the bloodletting of the financial crisis, while others who survived the culls are restless, recruiters say.

“Advisory businesses, like the one Japanese banks bought in Britain on Monday, offer institutions the prospect of lucrative fees and follow-on work without gobbling up precious capital. But the latecomers may find they are chasing a limited pool of deals, competing with both better-established rivals and with newly emboldened boutiques fresh from their own hiring sprees.”

And here’s a sobering thought. The dollar value of European M&A in the year to date is less than 30 percent of the levels reached in the halcyon days of 2007. Read the full story here.

EuroFresh, a leading producer of greenhouse tomatoes and cucumbers, filed for Chapter 11 bankruptcy protection Tuesday, partly blaming crackdowns on undocumented migrant workers for its woes.

In a bankruptcy filing in Arizona, where it is based, EuroFresh essentially said the government’s actions has raised demand for workers with legal papers, making them scarce.

“The pool of illegal immigrant labor in the area surrounding the Facilities shrank, creating higher overall demand for legal immigrant labor,” the company complained.

One might wonder whether this particular bankruptcy might prompt investors such as Apollo Investment Management, Barclays and JP Morgan, which hold millions of dollars to join the ranks of corporations such as Microsoft urging immigration reform including more visas.

As unsecured creditors, pretty much at the bottom of the totem pole, the three investors stand to lose $76.5 million, $47 million and $35 million respectively because of the bankruptcy.