FCA intervenes in Aviva preference shares controversy

The Financial Conduct Authority (FCA) has stepped in after Aviva’s
pronouncement about the possibility of cancelling preference
shares at par value caused quite a stir.

“In 2018, we have signalled our intention to reduce hybrid debt
by £900 million,” said Aviva in its results report last week. “We
are targeting more than £500 million in additional capital returns,
incorporating liability management and returns to shareholders.
In this regard, we have the ability to cancel preference shares at
par value through a reduction of capital, subject to shareholder
vote and court approval.”

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This did not go down well with preference shareholders, with
some going as far as accusing Aviva of trying to cheat. Now the
FCA is intervening and has talked about its “active inquiries into
the matter,” according to The Times.

“We are seeking to understand the basis upon which the firm is
taking this action and we are considering whether they have put
sufficient information into the public domain,” the FCA was
quoted as saying. It has confirmed reaching out not only to
Aviva and its advisers but also to those who hold shares.

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Meanwhile the report added that fixed income market expert Mark
Taber, who campaigns for ordinary bondholders’ rights, will be
challenging the insurer’s plans and is currently putting together a
group.
“As we evaluate the alternatives, one of the things we are
considering is how to balance the interests of ordinary and
preferred shareholders,” Aviva said previously, but for now it has
some explaining to do with the FCA.

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