Ending an 11-year – and once highly ambitious – foray into
banking, UK insurer Standard Life has sold Standard Life Bank (SLB)
to Barclays Bank in a cash deal worth a minimum of £226 million
($370 million), or about £35 million less than the bank’s net asset
value as at 31 August 2009.

The sale is in keeping with the insurer’s strategy of focusing on
growth as an asset managing business, commented Sandy Crombie,
Standard Life’s outgoing group CEO.

Reflecting how strategy and economic times have changed, Crombie,
stated in June 2003: “Standard Life Bank is central to our strategy
in the UK and will be an increasingly important contributor to our
overall success.”

At that stage SLB was being groomed for aggressive growth in the
UK’s then-booming mortgage market and had already built its
mortgage book to £8 billion and retail savings business to £4.6
billion.

SLB’s mortgage book peaked at over £10 billion but under Standard
Life’s policy since the onset of the financial crisis of limiting
lending activity had dwindled to £8.8 billion by 30 June 2009.
Customer savings deposits stood at £5.5 billion.

From Barclays’ perspective, Frits Seegers, the departing CEO of
Barclays Global Retail and Commercial Banking, said SLB represented
“a good fit” with Barclays’ UK retail banking business.

“This transaction brings to Barclays high-quality savings and
mortgage books, and an attractive customer base,” he said.

Not a major contributor to Standard Life, SLB recorded a pre-tax
operating profit on a European embedded value basis of £26 million
in 2008, 3.4 percent of the insurer group’s pre-tax profit of £933
million.

As part of the deal, Standard Life and Barclays have agreed terms
to enter into a strategic agreement to explore joint opportunities
in the UK retail long-term savings and investments sector. Initial
focus is expected to be on developing a multi-channel, simplified
pension product.

The final consideration to be paid by Barclays is dependant upon
SLB’s tangible net assets at completion which is expected in
January 2010.