Lloyds Bank to buy Zurich's UK workplace pensions and savings business
Lloyds Banking Group has agreed to buy Zurich Insurance's UK workplace pensions and savings business, which has assets under administration of £19bn, for an undisclosed sum.
The bank said the deal enhances Scottish Widows' current offering and broadens its participation in the financial planning and retirement segment, while delivering a modern, flexible workplace savings platform. Scottish Widows currently manages more than £124bn of funds, of which £35 billion is workplace pensions business.
The acquisition is expected to partially close in the first quarter of next year, with subsequent completion and transfer of assets following the required regulatory and legal approvals.
Antonio Lorenzo, director of insurance & wealth and chief executive of Scottish Widows, said: "Today's announcement is a clear signal of Lloyds Banking Group's commitment to the financial planning and retirement segment. The acquisition of Zurich's UK workplace pensions and savings business complements Scottish Widows' growth to date and provides us with an ideal opportunity to accelerate our goal to become a market leader in this important sector, for advisers and customers."
Analyst Laith Khalaf at Hargreaves Lansdown said the move underlined Lloyds’ commitment to the pensions market, scotching rumours that have circulated for years that the bank is looking to sell off the Scottish Widows franchise.
"This part of the business adds some diversification to the Lloyds stable without the risks inherent in the investment banking activities practiced by its peers. By comparison the workplace pensions business is sleepy, steady and sticky. The defined contribution market is also growing, thanks to the government’s automatic enrolment programme which is forcing employers and employees to pay money into workplace pensions."
He the wider pressure on fund management fees meant there is strength in numbers for the likes of Scottish Widows and Zurich.
"This is compounded by the increasing regulation faced by financial services firms. We have already seen Standard Life and Aberdeen tie up to battle these headwinds together, no doubt that deal raised an eyebrow or two across the Edinburgh streets at Scottish Widows HQ."
At 1130 BST, the shares were up 0.2% to 66.63p.