HSBC CEO Michael Geoghegan isn’t just furniture shopping for the big move back to Hong Kong.

The Wall Street Journal reports HSBC is in “advanced discussions” to acquire Royal Bank of Scotland’s banking assets in three Asian countries. The talks concern RBS’s retail and commercial banking assets in China, India and Malaysia, according to the report, which cited a person familiar with the situation.

In late September, HSBC decided to return its CEO to the place of the bank’s birth 144 years ago, as it refocuses on Asia. Europe’s biggest bank said it would stay based in London for tax purposes and had no plans to move, and Britain’s Financial Services Authority will remain its lead regulator. After the drama of Britain’s 1997 retreat from its lucrative colony, there are clearly still limits on just how Asian HSBC wants to be.

But it is also clear this is a buyer’s market for banking assets, not just in Asia but around the world. On Sunday we reported that Standard Chartered’s talks to buy the RBS assets had collapsed over differences on valuation. One person familiar with the matter said Standard Chartered had been willing to pay about $200 million but RBS wanted more.

Julius Baer will buy ING’s private bank in Switzerland, the two have said (Reuters has long been reporting that Baer was the frontrunner to seal the deal).

The battle for Dutch retailer Super de Boer heats up, with Ahold now showing interest to buy 30 to 50 of its supermarkets. For these and other stories about deals, click here.

And two deal stories in other media:

Citigroup is working on a sale of its commodities unit Phibro in a move that could raise hundreds of millions of dollars, according to the Financial Times.

HSBC would be forced to delay raising its dividend if new capital rules are applied too heavily or too quickly, The Times reports the bank’s head of investment banking as saying.

HSBC, perhaps the most Chinese of the big European banks, says it is in talks to set up an investment banking joint venture in China. Australia and New Zealand Bank and Asia-focused Standard Chartered have lined up opportunistic buys in Asia, picking up the pieces of imploded RBS. Even beaten-down Citigroup is talking about acquisitions … in Indonesia.

ANZ said it agreed to pay a smaller-than-expected $550 million to buy some Asian units from RBS. StanChart, just nine months after launching a 1.8 billion pound rights issue, unveiled a surprise 1 billion pound ($1.7 billion) share placement to give it firepower to grasp opportunities as Asia’s economies recover. The bank said it was in talks about small acquisitions in China and India likely to cost between $100 million and $200 million. We’re told those talks involve RBS assets.

HSBC’s move would allow it to expand into China’s domestic securities and debt markets, areas it is presumably well-placed to exploit, given its dominant role in Hong Kong finance. Asia chief Vincent Cheng said HSBC Hong Kong has enough capital for acquisitions, has looked into some RBS Asian assets but has found, in general, that Asian assets are too expensive. So it will focus on organic growth.

Bank of America-Merrill Lynch said just days ago it was moving to boost its position in China with the hiring of veteran banker Wang Bing to head its corporate finance business there. Last week, we reported that Bank of America planned to set up a wholly owned subsidiary in China to bolster its corporate, investment banking and wealth management businesses.

Since Asia’s biggest asset is its position as manufacturing base for the world, the banks’ moves can be seen as a leading indicator of confidence in recovery. Or they could just be bold bets.

News that top investment banks want to pay back their TARP funds is welcome news for the M&A market. Though the tens of billions of dollars in capital that will slosh out of the banks and into government coffers may sap the banks of the funds to make big buys, the fact that most post-stress-test capital-raisings have gone smoothly must be encouraging for dealmakers.

Plus, banks that are unable to pull themselves from the government teat will have a whole lot less pricing power. It was interesting to see HSBC commenting on Tuesday that it expects industry consolidation in the second half of this year and in 2010. Though they may be looking more closely at non-U.S. assets, given the burns on their fingers from their foray into the U.S. mortgage market, that big global may sit out the next round of mergers. Will they be missing the boat, particularly given the conviction of many analysts that the U.S. economy will be the earliest to recover?

A key question that could rain on any M&A party is asset quality, and the radiation emitting from the toxic assets still poisoning the financial system. While most of it has been moved to the bomb shelter balance sheet of the U.S. taxpayer, there is little conviction that valuations will have the golden glow of yesteryear, and plenty of lingering fear that the glow is the toxicity of the lost decade.

(From Acquisitions Monthly)

The coming financial services new world order could unleash a wave of mergers and acquisitions as providers look to thrive under a regime of tighter regulation and diminished risk appetite. As such, the IBM Institute for Business Value calls into question some of the ideological shibboleths still held by many senior banking executives.

Whilst banks such as Citigroup, UBS and the UK’s Barclays cling to the notion of universal banking – effectively one stop shops – research by IBM argues that this particular model may not be fit for purpose anymore. The days of soaring profits from what it calls “pockets of opacity” such as over the counter derivatives are over.

“Some of the largest institutions may be required to downsize or dispose of business lines,” says IBM.  It predicts that outperformers will become much more specialist and aligned with their customers’ needs. Many universal banks were found to be more self-serving in outlook. “On average the specialists have seen their revenues grow 30 percent more than the universal banks and enjoy operating margins of 25 percent compared with the 16 percent universal banks command,” says the IBM Institute.

It sees the industry splitting into three segments: The first are utilities providing infrastructure to facilitate capital allocation and relying on economies of scale to drive down costs. The second are those that give advice such as wealth management firms and boutique M&A advisors. The last category, are those geared to investment outperformance such as private equity groups and hedge funds. Barclays for example might inadvertently be contributing to this trend with its disposal of passive fund manager, iShares for 3 billion pounds ($4.3 billion).

Basically the IBM Institute is suggesting there could be more disposals to come from the universal banks as the market forces them to streamline or investors seeking higher returns demand it.

Banks such as Barclays also face growing competition in retail banking with the likes of giant retailer, Tesco, planning their own banks. Their offerings threaten to be much more customer-centric and this will force the traditional banks to rethink their approach and as IBM predicts, possibly to specialise.

Reporting by Justin Pugsley, Acquisitions Monthly

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Deals of the Day:

* German insurer Allianz and U.S. credit card group American Express raised a combined $1.9 billion on Tuesday through the sale of share’s in Chinese banking giant ICBC.

* Japan’s Toshiba said it would set up a joint venture with U.S.’s Amkor Technology and Japan’s Nakaya Microdevices in October to assemble system chips. Toshiba, Japan’s biggest chipmaker, said the outsourcing move would help improve earnings in its battered chip business.

* Sumitomo Mitsui Financial Group has agreed to buy Citi’s Japanese retail brokerage and part of its investment banking operations here for more than $5.2 billion, sources said

* Qatar is in talks to buy a stake in Germany’s Porsche and may also invest in other carmakers as the Gulf gas exporter looks to park some of its sovereign wealth abroad, according to media reports.

* German Economy Minister Karl-Theodor zu Guttenberg is meeting senior representatives of Magna to discuss a possible investment by the car parts supplier in Opel, a unit of General Motors.

* Consumer goods exporter Li & Fung, which manages supply chains for retailers such as Wal-Mart and Target, expects to sign more outsourcing deals within months as cash-strapped retailers in the United States look to cut costs in the economic downturn.

(PHOTO: Flags fly outside the Citigroup headquarters in New York, November 24, 2008. REUTERS/Brendan McDermid)

Few can claim to have ever gotten very rich betting against Goldman Sachs. The bank is reported to be cutting its stake in Industrial and Commercial Bank of China and perhaps buying into exchange-traded funds provider iShares.

The Wall Street Journal reports Goldman and ICBC have been talking. Goldman’s 4.9 percent stake in ICBC is worth about $8.5 billion. The timing of a sale seems right, as a lock-up period tying Goldman’s hands ends late next month. The Journal reported Goldman could raise more than $1 billion by selling 15-20 percent of its holding.

Over the last few months, others have also beaten a retreat from China and other points East as risk aversion has grown to dizzying heights. But other financial heavyweights, notably Citigroup, had to repair tattered balance sheets, while Goldman appears to be acting from a position of relative strength. The New York Times reports Goldman plans to pay back the $10 billion it borrowed from U.S. taxpayers last fall — perhaps within the next month.

And a stake sale sanctioned by Goldman’s rocket scientists hardly indicates the direction of the herd. A vocal band of revolutionary economists and financial wizards expects China to take over from the United States as the global growth engine and is adding to bets in the People’s Republic. HSBC recently redistributed some of its wealth into China after cleaning house in the U.S. mortgage-banking market.

Goldman is in talks with Barclays about buying the British bank’s iShares unit, a source familiar with the situation said, adding another name to the growing list of possible bidders. Sources said over the weekend that private equity groups Hellman & Friedman, Bain Capital and TPG had all shown interest in iShares, so a rare bit of pricing power could be emerging for the Barclays unit, which could raise up to $5 billion.

Deals of the day:

* Consulting firm BearingPoint Inc said it agreed to sell a large portion of its public services unit to Deloitte for $350 million.

* Stifel Financial Corp said it would acquire up to 55 branches of UBS Wealth Management Americas to expand across the United States in a deal that will boost the investment bank’s profit in the first year.

* Global energy giants BP, Eni and Shell are eyeing possible bids for Australia’s No.3 oil and gas firm Santos, which one analyst valued at around $7 billion, but a bid from China looks unlikely, dealmakers say.

(PHOTO: The flags of the U.S. and China hang outside of 85 Broad Street, headquarters for the investment bank Goldman Sachs in New York, October 23, 2008. REUTERS/Brendan McDermid)

HSBC Holdings, Europe’s biggest bank, says it hopes to boost its stake in China’s Bank of Communications. On the face of it, this should raise no eyebrows. HSBC has been in China in one way or another since the height of the British Empire. This is its area of expertise, and it’s not surprising the bank would seek to lead the charge into China, even in a period of global financial market meltdown and economic retreat.

What is more interesting is the rationale being employed by HSBC executives. “Our U.S. business has contracted and there is room for us to seek opportunities in the Asia-Pacific region,” HSBC’s executive director and chairman for Asia-Pacific, Vincent Cheng, told reporters. “We will increase our stake in BoCom if opportunities arise.”

Traditionally conservative HSBC was badly burned in the U.S. mortgage party. The bank said on Monday it would close most of its U.S. consumer finance business as it seeks to put an end to its troubled 2003 purchase of Household by writing off most of the value of the subprime business. “With the benefit of hindsight, this is an acquisition we wish we had not undertaken,” HSBC Chairman Stephen Green said. HSBC bought Household for $14.8 billion — its biggest acquisition ever and one noted for its high-risk exposure to subprime lending.

HSBC said it would take a $10.6 billion goodwill charge for its U.S. business, leaving its main focus in the world’s biggest economy on corporate and commercial business, private and premier banking, and credit cards.

Now it wants to up its bet on China by raising its stake in BoCom to 20 percent, the maximum permitted by the government. Its current 19 percent chunk is worth $6.7 billion. BoCom says it would be willing to have HSBC take up to 40 percent by August 2012 if the government approves.

Deals of the Day:

* Belgium and French bank BNP Paribas wrestled over revised terms for the break-up of stricken financial group Fortis on Friday, the deadline for a deal to be struck.

* Citigroup plans to sell its 26 percent stake in Japanese online broker Monex Group Inc as part of the struggling U.S. bank’s efforts to raise cash, the Yomiuri newspaper reported.

* Spain’s largest bank, Santander, is among potential bidders for the Polish banking arm of the troubled insurer American International Group, a Polish daily reported, citing an unnamed source.

* Fraud-hit Satyam Computer Services won regulatory approval to sell a majority stake in itself, but suitors said there was still uncertainty about the Indian company’s accounts and liabilities.

* Entertainment One Ltd said Marwyn Neptune Fund LP intends to raise its stake in the British audio and visual media group to 48.5 percent from 27.7 percent via a partial cash offer at 12.5 pence per share.

* Africa’s biggest bank by assets, Standard Bank, bought a third of Russia’s No. 2 investment bank, Troika Diago, in an asset swap and cash deal.

* Private equity firm 3i Group Plc has put its majority stake in Franklin Offshore International up for sale, sources said, hoping to fetch about $400 million for the oil services group.

* French smart card provider Gemalto will buy NXP Semiconductors’ wireless chip services business, which develops and markets software for chip technology MIFARE, the two companies said.

(PHOTO: A man enters a branch of a HSBC bank in the City of London, March 2, 2009.  REUTERS/Andrew Winning)

Deutsche Bank’s latest writedown comes with a reality check - the global credit crisis it had largely fought off is still snarling away. The top German bank’s $3.6 billion in fresh writedowns come with a reversal of optimism from CEO Josef Ackermann. “We remain cautious for the remainder of 2008,” he said as his bank became one of the world’s top crisis casualties. As late as November, Ackermann had been suggesting no further writedowns would be necessary, and had stood by a 2008 pretax profit goal of 8.4 billion euros. Now, with no indication that the books are completely cleaned of toxic paper, further write-offs seem a lot less unlikely and that full-year profit goal is going quietly by the wayside.

Japan’s TDK Corp said it plans to buy German electronic parts manufacturer Epcos for $1.9 billion in cash, as it pursues growth overseas and seeks to expand sales of industrial-use components. TDK said in a statement it would launch a friendly tender offer for all shares of Frankfurt-listed Epcos, offering 17.85 euros ($27.81) per share, a 29 percent premium to the closing price on Wednesday and valuing the deal at 1.2 billion euros. TDK said the offer would begin at the end of August. The acquisition is expected to boost TDK’s global market share of capacitors and inductors just as price falls hit earnings at rivals such as Murata Manufacturing and Kyocera, analysts said.

Global lender HSBC is likely to stand firm on its $6.3 billion bid to buy Korea Exchange Bank from U.S. private equity firm Lone Star as a formal deadline looms, cheered by a more accommodating South Korean government. The long-running deal, mired in outstanding legal issues, is seen as a test of whether South Korea is genuine in its pledge to open its financial sector wider to international investors. A successful deal would be the biggest cross-border move in South Korea’s banking sector and catapult HSBC into the ranks of the country’s top local banks.

Other deals of the day:

* Swedish media company Modern Times Group said it had signed a deal to buy Nova TV Bulgaria for 620 million euros ($966 million) in cash, expanding its reach in eastern Europe.

* Serbia is to go ahead with the sale of up to 51 percent of JAT Airways valuing the flag-carrier at about 100 million euros ($156.2 million), said the country’s privatization agency.

* Finland’s Atria has agreed to buy loss-making pigs-to-pizza group Campomos in Russia from Spanish Campofrio Alimentacion for 75 million euros ($116.9 million), it said.

* Japanese drug maker Daiichi Sankyo is yet to receive Indian regulatory approval for an open offer for Ranbaxy Laboratories, and so will not launch it on Aug. 8 as previously planned.

* Indian plastic products maker Sintex Industries said its unit has acquired 90 percent in German auto component maker Geiger technik GMbH, at an enterprise value of 35.6 million euros.

U.S. brewer Anheuser-Busch accepted a hopped-up $52 billion takeover bid from Belgium-based InBev. InBev agreed to pay $70 per share for the maker of Budweiser, up from its original unsolicited bid of $65 per share, both companies said on Monday. The improved offer marked a 27 percent premium to Anheuser’s record-high stock price in October 2002. The deal is expected to gain regulatory approval. It would be the largest in the industry and the third-biggest ever foreign takeover of a U.S. company. Now, let the naming begin. While not nearly as bouncy as Microhoo, the union does lend itself to some intriguing combinations. The company seems to be settling on Anheuser-Busch Inbev. ABI Brewing, or ABIB, could suggest beer drinkers need to protect their shirts. The company could certainly be forgiven for seeking something more mouth friendly. Some DealZone suggestions from reporters who have spent far too much time thinking about it: InBusch, AmBusch, InBever-Busch, AmBever, BudBev or BevBud, lending itself to BevBuddies and BuddyBev.

Spain’s Santander is buying British bank Alliance & Leicester for 1.3 billion pounds ($2.6 billion) in an agreed deal that will bulk up its existing UK bank Abbey. Santander, Europe’s second-biggest bank after HSBC, has long been considered a potential buyer of A&L, but has been able to secure a knockdown price after a collapse in its target’s share price in the past year. Santander said it was offering 1 of its shares for every three A&L shares, plus a cash dividend of 18 pence per share. The deal values A&L stock at 317p, compared with a 12-month high of 1,170 pence. A&L shares soared 54 percent to 338 pence by 1000 GMT after Santander confirmed the deal, reflecting the prospect that a takeover battle could ensue.

GlaxoSmithKline could pay Swiss company Actelion up to 3.3 billion Swiss francs ($3.28 billion) to develop a promising insomnia drug in the largest biotech partnering deal. Glaxo, Europe’s biggest drugmaker, beat many of the world’s top pharmaceuticals companies to partner Actelion’s sleeping pill almorexant and the deal sent the Swiss biotech’s stock soaring nearly 10 percent. “The deal terms already allow significant value to be transferred to shareholders,” said Landsbanki Kepler analyst Denise Anderson. Glaxo, which like other big drugmakers is keen to snap up promising new medicines to bolster its pipeline, had been tipped as a likely partner for almorexant, currently in late-stage clinical development. But some analysts had questioned whether it would go for the deal as it has the only other similar drug in clinical development, on hold in mid-stage trials.

Other deals of the day:
* Australian gaming company Tatts Group has said merging parts of its business with rival Tabcorp might make sense, following tougher state controls on their operations.

* An associate of India’s Kotak Mahindra Group has bought 27.76 percent stake in publisher Business Standard that was held by Great Eastern Shipping, the publisher said at the weekend.

* Israeli holding company Koor Industries said it has accumulated 8.97 million shares of Credit Suisse Group for 1.28 billion shekels ($378 million).

* Israel’s Hadera Paper said it agreed to buy 53 percent of Carmel Container Systems for $20.77 million, to bring its stake in the maker of paper-based packaging to 89.3 percent.

* United Capital Corp said its Chief Executive Officer has offered to buy the company for $23 per share in cash.

 Ford’s soon-to-be-signed sale of Jaguar and Land Rover to Tata Motors could bring in as much as $2.65 billion, according to local TV, or $2 billion according to the FT. Though the stage appears to be set, a Tata Group spokesman told Reuters discussions were ongoing. Tata Motors, India’s top vehicle maker maker of trucks and busses, received union backing for the deal and was named the front-runner in January by Ford, which is seeking to shore up its balance sheet and reduce debt.

JPMorgan’s revised takeover offer for Bear Stearns is a “high risk transaction,” Punk Ziegel analyst Richard Bove said after JPMorgan boosted its all-stock offer five-fold to about $10 a share. “What is most disturbing about this deal is that it uses a great deal of Morgan capital to buy a company that is losing market share, in a series of businesses that are declining in size, with a top management team that is best described as sclerotic,” the veteran bank watcher wrote in a note to clients. “Investors believe that JPMorgan is underbidding for Bear Stearns… I do not. … Bear Stearns is a deeply troubled company which would have no value if the Federal Reserve had not stepped in to bail it out.”

China’s state-owned aluminum giant Chinalco - which teamed up last month with Alcoa to buy a $14 billion stake in Rio Tinto - may spend more than $4 billion this year on acquisitions at home and abroad, according to the South China Morning Post. That’s no great pile of investment. BHP has bid $147 billion for Rio. Though the company did not specify targets, it said non-ferrous metals would be the main focus.

Top Chinese chipmaker Semiconductor Manufacturing International Corp said it was in advanced talks to sell shares to a strategic investor, sparking a 16 percent surge in its shares. The news comes one year after media reports that the company hired two investment banks to find a strategic partner in a search that ultimately failed to win a suitor. SMIC’s market capitalization is around $1.1 billion.

Singapore state investor Temasek is close to selling its 42 percent stake in Bank Internasional Indonesia for over $1 billion, but not to HSBC. Europe’s biggest bank dropped out of the race, leaving Malayan Banking, Bank of China and late entrant Kookmin of South Korea to duke it out.