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British Bank Lloyds Acquires £19 Billion Pensions Business

The acquisition of Zurich’s U.K. pensions and savings business is part of the bank’s strategy to build out its Scottish Widows retirement unit.

  • Joe McGrath

Lloyds Banking Group will acquire £19 billion of U.K. pensions and savings assets from insurance company Zurich.

In a statement to the London Stock Exchange, the firms said the deal would bolster Lloyds’ Scottish Widows business unit through the addition of around 500,000 customers from Zurich. The Scottish Widows retirement business already manages in excess of £124 billion in funds, and around £35 billion of these assets are from workplace pensions.

In a written statement, Antonio Lorenzo, director of insurance and wealth at Lloyds and chief executive of Scottish Widows, said the announcement was a “clear signal” of the company’s commitment to the retirement and financial planning market.

“The acquisition of Zurich’s U.K. 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,” he said.

In August, the Financial Times reported that Lloyds Banking Group’s chief executive, Antonio Horta-Osorio, was preparing to expand the company’s pensions and investment suite of products when he unveils the company’s 2018 strategic review in February.

Thursday’s announced acquisition will widen the retirement expertise within Lloyds Banking Group, with 200 Zurich employees transferring to the business in management, business development, and operations roles. It will also give Scottish Widows a broader product offering in the large pension scheme market, through master trust and group self-invested personal pension products.

Gary Greenwood, a research analyst at Shore Capital, said the lack of details on deal pricing or implications for earnings forecasts and capital ratios means the business impact of the acquistion is likely “not material.”

“Nevertheless, we believe this acquisition will strengthen the group’s position relative to its principal rival, Standard Life Aberdeen,” he said.

A Zurich spokesman said that the acquisition is expected to partially close in the first quarter of 2018, with the transfer of assets to follow, subject to the necessary regulatory and legal approvals.