RBS and Aviva Plans to Renew

RNS Number : 5790Q

Royal Bank of Scotland Group PLC

05 August 2010

 

The Royal Bank of Scotland Group plc ("RBS") and Aviva plc announce plans to Renew Strategic Partnership

5 August 2010

The Royal Bank of Scotland Group plc ("RBS") announces today that it has signed non-binding heads of terms with a view to entering into a new distribution agreement with Aviva plc (Aviva), replacing their current joint venture. 

The existing joint venture provides protection, pension and investment products, utilising Aviva's product capabilities and RBS's distribution strength, with the parties sharing profits. 

Subject to agreement, the new distribution arrangement is expected to build upon the success of the joint venture by better aligning each party's incentives to create and distribute market leading products. Under the new arrangement Aviva will be the manufacturer of protection and selective pension products while RBS will receive all of the profits from the distribution of these products and will also manufacture and distribute its own investment products. The new agreement will position RBS to compete more effectively and to respond to developments in the bancassurance market.

It is expected that discussions will be completed in the second half of this year and that the existing joint venture relationship will terminate from 31 December 2010.  As a result of terminating the joint venture, including the re-purchase of Aviva's right to share in distribution profits which Aviva acquired from RBS at inception of the joint venture, RBS will recognise a one-off loss of £235m in its interim results which will be announced tomorrow.

Brian Hartzer CEO, UK Retail, Wealth & Ulster said: "Over the past 10 years RBS and Aviva have built a strong and successful joint venture.  As part of our commitment to becoming Britain's Most Helpful Bank, we need to provide our customers with the right quality of investment products, insurance, and  financial advice, both now and in the future.  The changes we are proposing to make to our partnership with Aviva will give us added flexibility to ensure we help customers to make the right choices for them and their money, while maintaining and building on the strong record of service and product excellence that we have built together as partners."

For further information please contact

Alexander Holcroft

Deputy Head of Investor Relations

[phone]

Group Media Centre

Tel: + 44 (0) 131 523 4205

 

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