Disposal

RNS Number : 3795B

Standard Life plc

26 October 2009

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION 

Standard Life plc

26 October 2009 

SALE OF STANDARD LIFE BANK TO BARCLAYS AND STRATEGIC AGREEMENT BETWEEN STANDARD LIFE AND BARCLAYS UK RETAIL BANKING

Highlights

-	Standard Life plc to sell Standard Life Bank plc to Barclays Bank PLC.
-	Cash proceeds of at least £226 million.
-	Standard Life plc and Barclays UK Retail Banking agree heads of terms to enter into a strategic agreement.

Standard Life plc ("Standard Life") today announces it has entered into an agreement with Barclays Bank PLC ("Barclays"), to sell Standard Life Bank plc ("Standard Life Bank"), its UK mortgage and savings business. The consideration of at least £226 million is payable in cash upon completion, subject to adjustment based on changes to Standard Life Bank's tangible net assets at completion.

As previously announced, Standard Life has limited the lending activity of Standard Life Bank during the recent economic downturn.  Standard Life no longer sees growing the volume of lending activity as being consistent with the long-term financial objectives of the group.  The transaction is therefore in the best interests of the group, its shareholders and its customers.

Separately, Standard Life and Barclays UK Retail Banking have agreed heads of terms to enter into a strategic agreement to explore joint opportunities in the UK retail long-term savings and investments sector. The initial focus is expected to be on the development of a simplified pension product. Thereafter, both parties will continue to explore and develop further opportunities in this market.

Commenting on the transaction, Sir Sandy Crombie, Group Chief Executive of Standard Life said:

"Since its launch in 1998 Standard Life Bank has grown steadily, but we no longer believe that increasing the lending activity of the bank is consistent with our long-term financial objectives.  The transaction we have agreed with Barclays, along with the strategic agreement we have also announced today, supports our plan for growth as an asset managing business and will result in significant potential for future value creation for both parties.

"Barclays is an attractive partner for Standard Life, and also provides continuing security for the existing depositors and bondholders of Standard Life Bank. We look forward to working with Barclays to shape this strategic agreement and explore new market opportunities."

Standard Life Bank is Standard Life's wholly owned UK mortgage and savings subsidiary, with outstanding mortgage loans of £8.8 billion and customer deposits of £5.5 billion at 30 June 2009.  For the year ended 31 December 2008, Standard Life Bank reported IFRS underlying profit before tax of £26 million. (Note 1)

On completion of the transaction, the 268 employees who support Standard Life's UK mortgage and savings business will transfer to Barclays, in accordance with TUPE (Note 2) transfer regulations.  

The sale will result in a reduction of group tangible shareholders' equity of approximately £40 million on completion. The cash proceeds will be retained for general corporate purposes and Standard Life's regulatory capital surplus will remain strong at approximately £3.1 billion (Note 3).  

The transaction is subject to certain conditions, including regulatory approval, and is expected to complete in January 2010.

BofA Merrill Lynch is acting as sole financial adviser to Standard Life in connection with the transaction.  BofA Merrill Lynch and UBS are acting as joint corporate brokers.

-ENDS-

Enquiries:
Standard Life Media Barry Cameron [phone] Institutional Equity Investors Gordon Aitken [phone] Debt Investors Andy Townsend     [phone]	Nicola McGowan [phone] Duncan Heath [phone] Alan Coutts [phone]
BofA Merrill Lynch Henrietta Baldock [phone]	Anna Shiel [phone]
UBS Tim Waddell [phone]	Anna Swire [phone]
Barclays Media Alistair Smith [phone]	Phillippa-Jane Vermoter [phone]
Investor Relations James Johnson [phone]	Neil Temple [phone]

Note 1 - Per Standard Life Group Annual Report and Accounts 2008

Note 2 - Transfer of Undertakings (Protection of Employment) Regulations 2006

Note 3 - As at 30 June 2009

Notes to editors:
1.	It is anticipated that there will be no impact on customer terms and conditions and level of service.
2.	The reduction in tangible shareholders' equity to the group of approximately £40 million is based on the estimated net assets of Standard Life Bank as we would expect them to be reflected on a Group consolidated basis at 31 August 2009 (30 June 2009: actual unaudited net assets of £261 million). The reduction in tangible shareholders' equity excludes transaction costs.
3.	Standard Life is principally involved in the provision of life assurance and pensions, investment management and healthcare insurance.
4.	Standard Life has approximately 6.5 million customers worldwide and provides an extensive range of products and services, aimed at meeting the financial requirements of customers throughout their lives.
5.	In the first half of 2009, Standard Life reported Worldwide life and pensions new business sales of £7,451 million, with UK life and pensions new business sales of £5,246 million (Note 1). EEV operating profit for the first half of 2009 was £243 million. Group embedded value was £5,859 million at 30 June 2009 and FGD surplus was £3.1 billion.
6.	Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the USA, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs over 145,000 people. Barclays moves, lends, invests and protects money for over 49 million customers and clients worldwide.
7.	Merrill Lynch International ("BofA Merrill Lynch"), a subsidiary of Bank of America Corporation, is acting exclusively for Standard Life in connection with the transaction and for no one else and will not be responsible to anyone other than Standard Life for providing the protections afforded to its clients or for providing advice in relation to the transaction or the contents of this announcement.

Note 1 - New business sales are measured on a Present Value of New Business Premium (PVNBP) basis.

 

END

 

 

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