RBS to sell life stake to Widows
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Your support makes all the difference.Royal Bank of Scotland said yesterday it was preparing to sell a stake of at least 20 per cent in its life assurance subsidiary to the mutually- owned insurer Scottish Widows, in a move which some analysts said could lead to a merger between both companies.
The two companies' announcement of plans to work together follow the ending by RBS of its relationship with Scottish Equitable.
Scottish Equitable, owned by the Dutch company Aegon, is selling back its 20 per cent share in RBS' bancassurance subsidiary, Royal Scottish Assurance (RSA). It is understood the bank was unhappy with Aegon's acquisitive strategy. Scottish Widows is expected to buy a similar number of shares in RSA.
Both the bank and the Widows yesterday declined to set a value on the stake at issue. Analysts said that RSA was valued at about pounds 80m, which would lead to a price of between pounds 15m and pounds 20m.
George Mathewson, chief executive at Royal bank of Scotland, said he hoped to reach an agreement with Widows in a few weeks. The life assurer is likely to play a wider role with RSA than Scottish Equitable did.
Mr Mathewson said: "We're focused at the moment on Royal Scottish Assurance, but we do see the potential for other types of co-operation and so we're building a relationship which will give us a stability and a confidence whereby we can develop other products.".
In addition to providing administrative services for Royal Scottish Assurance and developing a range of products, Widows will also play a crucial role in the expansion of Direct Line Life, the telephone-based life division of RBS.
Scottish Widows has in the past 12 months launched a highly successful pensions-selling operation by telephone.
Mike Ross, group chief executive at Scottish Widows, said: "The fact that we are able to work together in this way shows that it is possible to make a distinction between co-operation and integration."
Both companies are worth about pounds 4bn.
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