Home Financial News Barclays buys insurer Standard Life for £226 million

Barclays buys insurer Standard Life for £226 million

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Barclays bought the bank arm of insurer Standard Life for 226 million pounds on Monday to build up its mortgage and savings business.

The country’s second-biggest bank said Standard Life Bank would bring with it 78,000 mortgages and 8.8 billion pounds of outstanding balances, and a savings book of about 5.5 billion pounds in 287,000 accounts.

The deal will add about 10 percent to Barclays’ mortgage loan book, which stood at 84.4 billion pounds at the end of June, and 6 percent to its deposit balance of 88.5 billion.

About 270 Standard Life employees will transfer to Barclays when the deal completes.

Barclays, which has weathered the crisis better than most rivals, staying out of state hands, said the deal fitted its aim to target high quality loan and savings books.

At the end of June the average Standard Life Bank mortgage was about 48 percent of the value of the related property, better covered than the average and near the Barclays average of 44 percent. Loans more than three months in arrears were 0.68 percent, compared with 1.16 percent at Barclays, both well below the industry average.

There had been speculation Standard Life might offload its banking business and a source said last month it was in talks with Barclays. The insurer said in February it would not be replacing the unit’s departing chief executive.

Edinburgh-based Standard Life launched its bank in 1998 and became known as one of the relatively few lenders offering long-term fixed-rate mortgages and focussed on lending to customers with a sound credit history.

The unit made an underlying pretax profit of 26 million pounds in 2008, but it dramatically scaled back operations in response to the banking crisis and house price slump, with 2008 gross lending down 70 percent on the year at 1.1 billion pounds.

Barclays and Standard Life said they also plan to enter into a strategic agreement to explore joint opportunities in the retail long-term savings and investments sector.

With reuters