Barclays will acquire the £5.5bn savings book and £8.8bn mortgage book of Standard Life Bank in the deal which is expected to be completed in the first quarter of 2010.
The acquisition will also see the Standard Life brand disappear from the bank’s name “a short time after completion”.
Standard Life Bank, which was set up in 1998, was one of the pioneers of telephone banking in Scotland and was also one of relatively few UK lenders to offer long-term fixed-rate mortgages as it focused on customers with a sound credit history.
Standard Life Bank made an underlying pre-tax profit of £26m last year, but it significantly scaled back operations in response to the banking crisis and house price slump, with 2008 gross lending down 70% on the year at £1.1bn.
The bank also said the sale, thought to have been conducted by David Nish, Standard Life’s chief executive designate, would result in a reduction of group tangible shareholders’ equity of around £40m on completion.
Meanwhile, Barclays, which has weathered the crisis better than most rivals and has stayed out of government hands, said the takeover – which is still awaiting approval – will drive value for its customers and shareholders.
Barclays said the deal fitted its aim to target high quality loan and savings books.
A spokeswoman for Barclays told The Herald: “The rationale behind the deal is that we get a high quality mortgage book with a 48% loan value – very important these days – and we also get 350,000 broadly affluent customers, most of whom are in Scotland, which of course will be added to the 13 million customers we have already across the UK.”
Barclays’ own mortgage book has an average loan value of 44%. The percentage of loans which are more than three months in arrears were 0.68% at Standard Life Bank, compared with 1.16% at Barclays, although both are significantly below the industry average. Barclays, which also has 23 branches across Scotland and its Barclays’ wealth management operation Glasgow, already employs more than 1000 staff north of the border.
Nicola McGowan, a spokeswoman for Standard Life, said the bank’s staff, which is currently based at offices on Dundas Street, Edinburgh, will move to offices nearby at Exchange Crescent in Conference Square once the transaction is completed.
Asked if the transfer included all Standard Life Bank jobs, she said: “Everyone who has been identified as working with Standard Life Bank – that’s 268 people – will transfer over.
“There will be no redundancies as part of the deal.”
Nonetheless, some uncertainties remain over the security of the jobs once the transaction is complete.
Over the past half-decade, Barclays has moved many of its business processes offshore, and now relies on about eight operational sites in India.
Nonetheless, the Barclays spokeswoman yesterday insisted: “There are no planned job cuts. Yes, we are intending to review the business, but that doesn’t mean there will be redundancies.”
There had been mounting speculation that Standard Life might offload its banking business following an article in the Sunday Herald last month, which said the Edinburgh institution was in talks with Barclays.
The insurer also said it would not be replacing the banking unit’s departing chief executive, Anne Gunther. McGowan said: “We have been limited in the lending activity of Standard Life Bank for some time during the recent economic downturn.
“Standard Life no longer sees growing the volume of lending activity as being consistent with the long-term financial objectives of the group. Our focus going forward is on our growth as an asset managing company. Life and pensions will of course play a key role in this.”
At the end of June, Standard Life had £156.5bn of assets under management.
Meanwhile, Barclays and Standard Life also said they planned to enter into an agreement to explore joint opportunities in the UK retail long-term savings and investments sector.
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