Sovereign wealth funds meet this week to uncloak any political motivations that might lurk behind their rich capital infusions. The talks are focused on devising a code of ethics to allay Western fears and could help create transparency. Alas, most of substance is being debated behind closed doors. It is being held in Singapore, so perhaps we shouldn’t be surprised that transparency is not a particularly high priority. The funds, controlling an estimated $3 trillion in assets, are owned by national governments and often armed with cash piles from soaring oil prices and trade. They have sunk billions into Citigroup and UBS, which were reeling from the collapse of the U.S. subprime mortgage market. Goldman Sachs estimates U.S. and European banks may need a further capital infusion of more than $200 billion.

It’s a good thing for Anheuser-Busch that Bud Light is so popular. If Belgian-Brazilian brewer InBev manages to take over the company, it will probably put it on a serious diet as it aims to trim up to $1.4 billion of costs. Employees and union officials at InBev describe the tightest of budget controls: mobile phones taken back and returned only to employees who justified a need for one; new pens given out only in return for used ones; and an elevator at the global headquarters closed for several months. The elevator is back in use now, although signs in the lobby read: “Why not take the stairs?” InBev says many such measures, and notably larger water and energy conservation efforts, also serve sustainability targets and that its cost-saving push is simply one pillar of an overall strategy also focused on boosting beer volumes.

Shares in British retailer Marks & Spencer are up on market talk of possible bid interest in the retailer. Rival department stores owner Philip Green, who was linked with a stakebuild in M&S in January, was again mentioned as a possible suitor, traders said, but some attributed the bounce to expectations for upbeat news from an upcoming M&S annual general meeting. Boss Stuart Rose, lauded for reviving the landmark British retailer just a year ago, is battling to save his job after a big profit warning and bungled management changes.

Want more evidence the credit markets are on ice? CIT completed a $100 million loan agreement with Daryl Katz for the purchase of Canadian ice hockey team the Edmonton Oilers, according to the Wall Street Journal. Katz agreed to purchase the Oilers in February for $200 million. “The debt markets have been a little finicky,” Gordon Saint-Denis, managing director of media, entertainment and sports for CIT, told the paper. “But this is a deal for a hockey team in Canada, where hockey is king, and Edmonton has been doing very well from an economic standpoint,” he was quoted as saying.

Other deals of the day:

* Spanish oil company Repsol is in talks with Russian oil major Rosneft about taking a stake in the Sakhalin-III oil and gas fields, a company spokesman said on Tuesday.

* Singapore conglomerate Fraser and Neave said its property unit has bought 17.7 percent of Allco Commercial REIT and all of the real estate investment trust’s manager for S$180 million ($132 million).

* Spanish low-cost airlines Vueling and Clickair have agreed to merge, Vueling said, in a move to create a carrier better equipped to tackle stiff competition and high fuel costs.

* U.S. asset manager Janus Capital Group said it is paying $90 million cash to raise its stake in Chicago-based money manager Perkins, Wolf, McDonnell and Company to 80 percent from 30 percent.

* Ameriprise Financial, an asset manager and broker specializing in retirement plans, said it agreed to buy asset manager J & W Seligman & Co for $440 million.

* China’s Sinosteel took a big step closer to acquiring Australian iron ore prospector Midwest Corp, with Midwest’s directors lining up to sell their shares after a merger with Murchison Metals collapsed.

* Designer Roberto Cavalli has decided not to sell his fashion house, he told Il Sole 24 Ore newspaper, because prices have fallen during the financial market crisis.

Once upon a time, bank analysts were uniformly upbeat on investment banks. “Sell” ratings were nearly unheard of, and potholes in balance sheets were never as big as the huge, routine earnings beats. Now, with Goldman Sachs’s sector u-turn perhaps at the apex, there is plenty of mud to go around. Today’s hit list includes Barclays, the recipient of 4.5 billion pounds in balance-sheet aid this week. Citigroup says Britain’s third-biggest bank may need to raise a further 9 billion pounds and could take more significant write-downs. Lehman Brothers analyst Roger Freeman took aim at Merrill Lynch, saying the big broker will probably see $5.4 billion of write-downs in the second quarter, mainly from its exposure to monolines. Freeman raised his write-down view by $3 billion for Merrill, making his estimate the highest among Wall Street analysts.

Merger activity in the United States dropped 29 percent in the second quarter, faring better than the 40 percent global slump, as corporations filled the void left by buyout firms and targeted big consumer brands such as Anheuser-Busch and Wrigley. “Strategic buyers see an opportunity here due to the absence of the financial buyers. For the last 24 months, prior to the downturn, strategic buyers were getting outbid by financial buyers. That’s not happening now,” said Bob Filek, a partner with PricewaterhouseCoopers’ transaction services. During the first half of the year, private equity deal volume dropped 85 percent in the U.S. and 76 percent globally, according to Thomson Reuters data.

A couple more European banks have increased their China exposure. Deutsche Bank signed a deal with Shanxi Securities to set up an investment banking venture, a source with knowledge of the deal said on Friday. Deutsche planned to take 33 percent of the envisioned Beijing venture, the most allowed. Beijing this year re-opened its coveted but shuttered securities industry to foreign firms after a hiatus of more than a year to let local players merge and strengthen. Several banks, including BNP Paribas, have since expressed an interest in setting up local ventures. Chinese stock markets have shed nearly half their value this year, but foreign banks remain keen on securing a foothold there with an eye on the longer term. Royal Bank of Scotland has won approval from Chinese regulators to buy a nearly 20 percent stake in Suzhou Trust as it expands in corporate banking and wealth management services in China, sources with direct knowledge of the situation said. Suzhou Trust is a mid-sized trust and investment firm.

Other deals of the day:

* French insurer Groupama said it had bought Turkish insurers Guven Sigorta and Guven Hayat for 350 million lira ($287 million) from the TTKMB association of agricultural credit cooperatives.

* Telstra, Australia’s largest telephone firm, expects strong revenue and profit growth at its newly acquired Chinese online advertising websites.

* Mexico’s KOF, the world’s second-largest bottler of Coca-Cola drinks, said it acquired Brazilian soda maker and brewer Refrigerantes Minas Gerais Ltda for $364.1 million.

* New Zealand dairy cooperative Fonterra and National Foods have had talks about a possible joint bid for Australia’s Dairy Farmers, which is valued at up to A$1 billion ($961.5 million), a source familiar with the situation said.

* Russian mid-sized bank InvestTorgBank said its Russian owners had sold just under 40 percent of the bank in two stakes for a total of 5 billion roubles ($213 million).

* Australian-listed miner Herald Resources advised its shareholders to decide themselves on which of two rival takeover bids to accept.

Talk about a friendly bid. InBev CEO Carlos Brito gushes about Bud in this video statement, making a $46.3 billion bid sound almost cheap. “We respect the Anheuser-Busch board a lot,” he said. “We admire them a lot and we think that the business rationale is very strong. But Bud shares are still trading well below the $65 per share offer, so skepticism abounds. With analysts calling for a bid closer to $70, expect at least a few more rounds.

India’s Ranbaxy Laboratories sees huge opportunities for growth in Japan’s generics drug market and mergers and acquisitions are a likely option for it to expand. The attractiveness of the market was a big factor in its decision to team up with Daiichi Sankyo, Ranbaxy Chief Executive Malvinder Singh told a news conference in Tokyo. Faced with an ageing population and ballooning healthcare costs, Japan’s government has recently taken steps to promote the use of the off-patent drugs — currently only 17 percent of volume compared with 63 percent in the United States. Ranbaxy and Daiichi Sankyo announced on Wednesday that Japan’s No. 3 drug maker would pay up to $4.6 billion for control of the Indian generic drugs maker.

Citigroup Chief Executive Vikram Pandit must have seen this coming. The Wall Street Journal reports that the bank plans to close the hedge fund he co-founded, and which more-or-less launched his rocket ship to the top. Last month, Citi said it was looking at restructuring the fund, called Old Lane. Nearly all investors unaffiliated with the fund have requested to redeem their money. Citi bought Old Lane last year for more than $600 million, but the fund’s performance has since been disappointing. Citi wrote down $200 million of intangible assets linked to the acquisition in the first quarter.

Other deals of the day:

*BHP Billiton took its case for a takeover of rival Rio Tinto to well-heeled investors on Thursday, saying a marriage could better capture markets in fast-industrializing Asian economies.

*InBev courted shareholders of Anheuser-Busch after making a $46.3 billion bid, hoping to add Budweiser to its own Stella Artois and Beck’s beers and create the world’s largest brewer.

*Britain’s Chloride Group, which makes products to protect against power shortages, said it rebuffed a 696 million pounds ($1.37 billion) takeover bid last week as the offer undervalued the firm, and it is seeking acquisitions to grow in Asia.

*Spanish power company Iberdrola ruled out a bid for nuclear power operator British Energy, an Iberdrola spokeswoman said.

Citigroup chief Vikram Pandit has sold off assets here and there in the months since taking over the top job, including stakes in CitiStreet, CitiCapital and Diners Club. But with sources saying some $400 billion of extraneous assets are going on the block, it’s fair to ask whether the head of the country’s biggest bank is being boldly aggressive or slamming the panic button.

“The only reason you’d sell off that many assets is you have a lot more losses coming than you originally thought,” said Jim Huguet, co-chief executive at fund manager Great Companies LLC, which does not own Citi shares. Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41 percent. The Financial Times, which first reported the story on Thursday, said the moves would take place over several years.

Global economic instability has created huge investment opportunities for China Investment Corp, but the sovereign wealth fund’s head said he will be careful not to destabilize countries where it operates. CIC paid $5 billion in December for a stake in U.S. investment bank Morgan Stanley but has otherwise kept its powder dry as Western financial institutions have sought to replenish capital depleted by big subprime credit losses. “The current international market turbulence has produced unprecedented investment opportunities,” said Lou Jiwei, head of the $200 billion sovereign wealth fund. “In the 1990s, some hedge funds exploited defects in the macroeconomic policies of some emerging economies and attacked them, which damaged their economies and caused hardship for people,” he said. “CIC will certainly never do a similar thing.”

Sovereign Bancorp, the second-largest U.S. savings and loan, plans to raise just over $1 billion in an equity offering to help it navigate a difficult economic environment, according to a person close to the transaction. The offering will be broadly distributed to institutional investors and will likely be conducted over the weekend. Sovereign is determining how much Banco Santander, which has a 24.99 percent stake in the thrift, might participate in the offering, while keeping any transaction with the Spanish bank at arms-length, the person said.

Google expects to launch new products for its YouTube Web video service in the next few months and sees reason for closer cooperation with Yahoo, Google Chief Executive Eric Schmidt said. Schmidt has said getting the video sharing site to make money is the Web search company’s top priority for the year. He did not give details of the products, however, and they are not even in beta testing. The Web search leader played a large role in the takeover battle between Microsoft and Yahoo. During a two-week test, it sold search advertisements on rival Yahoo last month as part of Yahoo’s attempt to find an alternative option to Microsoft’s offer. Schmidt said the trial run provided good reason for the companies to discuss cooperation, but there was no deal yet.

Other deals of the day:

* U.S. private equity firm The Carlyle Group will lead a 58.1 billion yen ($560 million) management buyout of an LCD glass venture jointly owned by Japan’s Hoya Corp and Nippon Sheet Glass, Hoya said.

* Norwegian aluminum group Norsk Hydro said it has agreed to buy privately owned Spanish aluminum building systems group Alumafel for 77 million euros ($118 million).

* Shares in British engineering software firm Flomerics Group surged after rejecting a buyout offer from larger U.S. rival Mentor Graphics, saying it would explore interest from several other parties.

* A local fund managed by U.S-based Lombard Investments plans to buy 10 percent of Asiasoft Corp, Thailand’s top online gaming firm, for up to $11.3 million, partly via an IPO this month, an IPO underwriter said.

* Australia’s Macquarie Group is interested in buying a key part of German power giant E.ON as it prowls for investment opportunities, one of its top managers said.

Citigroup’s $3 billion $4.5 billion stock offering didn’t exactly dazzle one of its most well-known critics, as Oppenheimer analyst Meredith Whitney said the company will need to raise an additional $10 billion to $15 billion or sell assets worth billions to truly shore up its capital position. “The fact that Citi raised capital at this time did not come as a surprise to us, but the fact that the company raised such a small amount of capital at this time confounds us,” said Whitney, who correctly predicted last year that the company would have to cut its dividend.

Time Warner is kissing its majority-owned cable division goodbye, part of CEO Jeffrey Bewkes’s attempt to revamp the company and lift its sluggish stock price. Details on how the transaction will be structured were scarce, but analysts have speculated that the separately listed unit could be spun off to shareholders.

UK gas producer BG Group has made a $12 billion bid approach to Origin Energy, seeking to bolster its position in the fast-growing Asia-Pacific gas market by securing the Australian utility’s gas reserves. The companies said BG, valued at around $85 billion, had approached Origin with a proposal of A$14.70 per share in cash — a 40 percent premium to Origin’s close of A$10.47 on Tuesday.

* Huaneng Power, China’s largest independent electricity provider, said it will buy Singapore’s Tuas Power from its parent China Huaneng Group in a deal worth about $3 billion.

** Carmaker Daimler is buying a 22.3 percent stake in heavy diesel engine maker Tognum from Swedish investment group EQT for around 585 million euros ($911.2 million), Daimler said.

** Malaysian state investment arm Khazanah Nasional Bhd will buy a stake of 16.41 percent in Singapore healthcare service provider Parkway Holdings Ltd for S$531.51 million ($389.5 million), Khazanah said.

** Indian drugmaker Dr Reddy’s Laboratories Ltd said it had agreed to acquire BASF’s drug contract manufacturing business and a related facility in the United States for an undisclosed amount.

** Philippine National Bank (PNB) and Allied Banking Corp, both owned by tycoon Lucio Tan, announced a long-awaited merger, and said the new entity would the fourth-largest bank in the country.

** Thailand’s Siam Cement Group PCL (SCC) said it planned to buy outstanding shares of Thai Cane Paper from minority shareholders at 16.0 baht each ($0.504) and would delist the paper firm.

** Daimler AG has reached a preliminary agreement to set up a truck-making joint venture with Beiqi Foton Motor Co in China, the Chinese company said.

** SMR, the mining unit of Russian billionaire Oleg Deripaska’s Basic Element company, has pulled out of negotiations with the Serbian government about the sale of copper miner RTB Bor, the company said.

Sovereign wealth funds — the increasingly powerful investment arms of governments around the world — are growing at a rapid pace, according to the Preqin Sovereign Wealth Funds Review.    

There are currently 46 active sovereign wealth funds worldwide, with aggregate assets at $3.05 trillion, the study says, adding that assets have risen 51 percent from the end of 2006.    

The Middle East is the biggest region for SWFs in terms of value, with 41 percent of all capital centered there. Asia has 31 percent of the capital, with Europe laying claim to 19 percent, according to the study.

Boosted by ballooning trade surpluses, these countries have been investing overseas, leading some to fear their strategic intentions. But several fund executives have recently said these funds present little threat to the fund management industry, but rather offer opportunities for asset growth.

Sovereign funds such as Temasek and the Government of Singapore Investment Corp have made high-profile investments in U.S. financial institutions such as Citigroup and Merrill Lynch, who sought billions of dollars after suffering huge subprime-related losses.

About 60 percent of the funds are investing in private equity, the study said.

“Sovereign wealth funds have long-term investment horizons, relatively few restrictions on investment, and are seeing their total assets being driven even-higher by record oil prices,” Tim Friedman, the editor of the study, says.

Morgan Stanley economist Stephen Jen earlier this week said the funds could reach $12 trillion in total assets by 2015, soon surpassing total official foreign reserves held by central banks, and becoming the main vehicle for capital investment.

The sovereign funds have been focusing on recapitalizing the sectors, like banking, where cash is needed to rebuild their balance sheets after the subprime meltdown resulted in massive losses. U.S. and European banks have been actively seeking cash from sovereign wealth funds.  

While some fear these funds are investing for political gain, many say there is only evidence of financial incentives for these investments.  U.S. lawmakers two weeks ago unveiled a task force to examine funds owned by foreign governments.

While the jury is out on SWF’s motivation, no one disagrees that times are tough, and the cash comes in handy.  But as Ralph Waldo Emerson once said: “Money often costs too much.”