The Co-operative Banking Group has boosted its bid to become a major banking force in Scotland by raising more than £200 million from its first big disposal.
The Co-operative is in a race against time to acquire from Lloyds Banking Group the 600 branches which have to be separated from the group by the end of 2013, 180 of which in Scotland would revert to their historic TSB brand.
But the Financial Services Authority is in the process of defining the extent of balance sheet deficits and the repairs needed, with the Co-op said to be facing a £1 billion shortfall that could scupper the sale by Lloyds, which continues to say the deal is on track.
Now a deal first agreed in July 2011 will see fellow mutual Royal London pick up the Co-op's life insurance and asset management businesses for £219m.
It follows a lengthy legal hold-up as Royal London, owner of the Scotttish Life, Scottish Provident and Bright Grey businesses all based in Scotland where the group employs 1200, sought leave to run the mutually-structured CIS insurance arm for commercial profit.
The Co-op, meanwhile, has already put its general insurance business up for sale and is said to have bankers running the rule over its pharmacies and mortgage book in efforts to boost the balance sheet.
Royal London, the UK's biggest life and pensions mutual, said funds under management would increase by £20bn to £70bn and its customer base by 50% to six million.
It will become the fifth- largest with-profits insurer with a £36bn fund, behind Prudential, Aviva, Phoenix and Standard Life.
Chief executive Phil Loney is said to be looking at other potential acquisitions in the sector.
Mr Loney said: "The increased scale of our asset management operations and introduction of over two million new customers will enable us to develop further efficiencies to support our profitability and contribute towards future bonuses and mutual dividends for members."
Barry Tootell, chief executive of The Co-operative Banking Group, said the completion was "expected to generate a significant release of capital".
He said the deal "will ensure continued protection of our policyholders, within a strong, mutual business with the necessary scale and focus on the long-term savings sector".
CIS policyholders will benefit from "increased certainty over charging structures" and from Royal London's experience of insurance fund management, the two groups said.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article