Sunday paper round-up: RBS/Lloyds, Prudential, Desire Petroleum

Advisers to the government are working on a secret plan that could allow the state to start cutting its shareholdings in British banks just weeks after the general election.The plot would see the Treasury create "convertible gilts" ? government bonds that could be exchanged for shares in the banks once certain price targets are met. It is understood that a sale of the new instruments could be launched as early as June, if officials decide to press ahead with the plan, the Sunday Time reports.The former Prudential chief executive Mark Tucker and the Resolution chief Clive Cowdery, are believed to be working on plans that could see them join forces with the Chinese insurance giant Ping An, to enter the fray should the Prudential fail to seal its bid for AIA. Prudential's chief executive, Tidjane Thiam, spent last week in Asia attempting to seek approval from regulators in the region for the $35.5bn takeover of AIG's insurance arm, the Sunday Independent reports.Shareholders in Eurotunnel have objected to the proposed appointment of Patricia Hewitt, Labour's ex-health secretary, as a non-executive director after she appeared on the Dispatches television programme last week offering her lobbying services to a fictitious US consultancy. One shareholder, who has written to the board to complain, said the way Ms Hewitt portrayed herself was "scandalous", and showed a serious error of judgement, the Sunday Independent reports. The Financial Services Authority is looking into the alleged abuse of "restricted lists" as part of its probe into a City insider dealing ring. Seven people were arrested last week. The FSA is examining suspicious trading in the shares of 15 firms. All of these companies are understood to have been on institutions' "restricted lists" ? a line-up of stocks that employees at a bank or fund manager are not allowed to trade, the Sunday Times reports.The UK's biggest ever insider dealing investigation is centred on trades carried out ahead of recent fund-raisings by Barclays, Segro and Taylor Wimpey, according to City sources. The trades form one of the main lines of inquiry into what the Financial Services Authority and the Serious Organised Crime Agency believe is a London-based insider dealing ring using inside information to place trades ahead of the capital raisings, the Telegraph adds.EMI is being sued in the US for alleged non-payment of royalties in an action that is being brought against the British firm by a company in Tennessee that oversees payments to music writers. Bluewater Music Services, a music copyright administrator, has filed a lawsuit against EMI Music North America that is due to go to court in May. The suit involves about two dozen songs, by artists including Chris LeDoux and the Doobie Brothers that were used in compilations and sold as ringtones. The total amount of royalties in dispute has not yet been determined, the Observer reports.Britain's £35bn defence industry could shrink by up to 70% if the next Government continues to cut research and equipment spending and fails to back defence exports. Speaking to The Sunday Telegraph ahead of the launch of the defence industry's manifesto for the upcoming election, Ian Godden, chairman of industry body ADS, warned the UK's 10pc share of the global defence market could slip by two-thirds to around 3%, the same share the country has in the world's car industry and the chemicals sector.The first well drilled off the Falkland Islands in 12 years has struck oil ? but not enough to be commercially viable. Desire Petroleum, the UK explorer, is expected to announce the disappointing findings this week, according to industry sources. The news could defuse the political row that erupted between London and Buenos Aires after a handful of British oil exploration groups announced plans to drill wells in the territorial waters of the islands, which are 300 miles off the coast of Argentina, the Sunday Times reports.Vodafone is in talks with US counterpart Verizon Communications about resolving the future of their American mobile phone joint venture, Verizon Wireless. Several options are being discussed - in what is described as an "informal dialogue" - including a full merger of the two companies. The issue is becoming more urgent as Verizon Wireless moves into a position of generating cash having paid down its debts, a point that is expected to be reached later this year, the Sunday Telegraph reports.Mike Ashley is considering raising his £26m takeover bid for Blacks Leisure, the outdoor equipment retailer. Advisers to the billionaire owner of Newcastle United are thought to have written to Blacks on Friday raising the possibility of a "materially increased offer" for the business. But Ashley's Sports Direct is first seeking assurances that suppliers to Blacks, including North Face, would carry on selling stock to the company if he took control, the Sunday Times reports.Directors at Easyjet have quietly agreed to pay a dividend to shareholders, ending a long dispute with Sir Stelios Haji-Ioannou, founder of the low-cost airline. Senior sources on the board said directors had conceded that Easyjet could grow more slowly and use cash earmarked for new aircraft to make regular payouts to investors, the Sunday Times reports.Britain's mobile-phone companies will this week be ordered to slash call charges by at least £1bn a year. The ruling comes after a review by Ofcom, the telecoms regulator, of the cost of connecting calls from one network to another. Operators charge each other £2bn in fees. Prices have already been falling, but there are still concerns that these so-called mobile termination rates contribute to excessive profits, the Sunday Times reports.Best Buy, the US consumer electronics retailer, will today reveal details of its challenge to Currys owner DSG International, with four stores across the UK in the spring and summer and a fifth in south London later in the autumn. The first 50,000 square foot store will open in Thurrock, Essex, offering advice on buying and integrating home entertainment systems, computers and mobile phones.from "blueshirted" staff, the Obsrever reports.Gazprom, Russia's state-owned gas giant, is preparing an audacious bid to become one of the biggest fuel suppliers in Britain. The company is expected to lodge an offer this week for a network of 800 petrol stations and the Lindsey oil refinery at Killingholme, Lincolnshire. The assets have been put up for sale by Total, the French oil group. It has hired JP Morgan, the investment bank, to sell its UK business, which employs 5,000 people. The business is expected to fetch more than £1bn, the Sunday Times reports.