| Barclays to Buy Standard Life Bank for $369 Million |
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27/10/2009 11:30 (25 Day 11:28 minutes ago) | |||||
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The FINANCIAL -- Standard Life plc ("Standard Life") on October 26 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 Ј226 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," Standard Life reports.
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 Ј8.8 billion and customer deposits of Ј5.5 billion at 30 June 2009. For the year ended 31 December 2008, Standard Life Bank reported IFRS underlying profit before tax of Ј26 million.
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 transfer regulations.
The sale will result in a reduction of group tangible shareholders' equity of approximately Ј40 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 Ј3.1 billion.
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.
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