Big deal in the City
Lloyds bank has announced it has entered into agreement with Zurich to buy its UK workplace pensions and savings business, with an AUM of £19 billion, adding to Scottish Widows £35 billion invested in workplace pensions.
Laith Khalaf, Senior Analyst, Hargreaves Lansdown:
‘This move underlines Lloyds’ commitment to the pensions market, scotching rumours that have circulated for years that the bank is looking to sell off the Scottish Widows franchise.
This part of the business adds some diversification to the Lloyds stable without the risks inherent in the investment banking activities practiced by its peers. By comparison the workplace pensions business is sleepy, steady and sticky. The defined contribution market is also growing, thanks to the government’s automatic enrolment programme which is forcing employers and employees to pay money into workplace pensions.
However a charge cap on these schemes illustrates the wider fee pressure on fund management, which means there is strength in numbers for the likes of Scottish Widows and Zurich. This is compounded by the increasing regulation faced by financial services firms. We have already seen Standard Life and Aberdeen tie up to battle these headwinds together, no doubt that deal raised an eyebrow or two across the Edinburgh streets at Scottish Widows HQ.’