Deutsche Bank AG DB is in advance talks with Phoenix Group Holdings to sell its U.K. insurance business, Abbey Life Assurance Company Ltd.
Confirming market speculations regarding the potential acquisition, Phoenix noted in a release, “As stated at the time of the interim results on 25 August 2016, Phoenix continues to explore further acquisition opportunities in the UK closed life sector. In this context, Phoenix is in advanced discussions with Deutsche Bank in relation to a possible acquisition of Abbey Life.”
The U.K.’s major specialist closed life and pension fund consolidator also stated that that it is uncertain if the discussions would materialize into a transaction.
According to market reports, the companies are likely to pen the deal in the upcoming weeks. Phoenix intends to raise £800 million for funding the purchase. This likely purchase would help in the expansion of Phoenix’s business amid a challenging, low-rate environment.
Deutsche Bank had acquired Abbey Life in Oct 2007 for around £1 billion. It began exploring the sale of its British insurance unit last October. Apart from Phoenix, several companies including Swiss Re AG and Britain’s Legal & General Group Plc had shown interest earlier.
The German banking giant’s potential offloading of the insurance business seems to be in line with its ongoing restructuring efforts to boost its capital position as well as overall performance of the bank while focusing on core businesses.
Notably, in January, Chief Executive Officer John Cryan had stated that the bank was reviewing strategic options for Abbey Life, adding that the business did not align with its asset management business. As of Dec 31, 2015, Abbey Life's total balance sheet assets were valued at £10.2billion, per its website. The Bournemouth-based company is among the several firms currently under probe by the U.K.’s financial watchdog – the Financial Conduct Authority – related to their practices on exit fees.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell). Some favorably placed stocks in the foreign banks include Itaú Unibanco Holding S.A. ITUB, Banco Macro S.A. BMA and Barclays PLC BCS, each sporting a Zacks Rank #1 (Strong Buy). You can the complete list of today’s Zacks #1 Rank stocks here.
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