Deutsche Bank Sells Abbey Life Unit to Phoenix for $1.2 Billion
September 28 2016 - 5:51AM
Dow Jones News
By Ian Walker
Deutsche Bank on Wednesday said it had sold its Abbey Life
insurance unit to Phoenix Group Holdings for GBP935 million ($1.22
billion) in a deal that will boost the German lender's capital
position.
Shares in the bank rose about 3% in early trading in Frankfurt,
following sharp declines earlier this week amid intensifying
concerns about its financial health.
Deutsche Bank Chief Executive John Cryan said in a statement
that the sale would allow the bank's asset-management arm to focus
on its core business and strengthen its capital position.
The sale, while relatively small, is good news for the bank at a
time of renewed investor concerns about its thin capital cushion
ahead of a potential multibillion-dollar settlement with U.S.
authorities over mortgage-securities probes. The looming charge has
sparked concerns that the bank may need to raise fresh funds, and
questions about whether Berlin might be forced to support the
lender.
Deutsche Bank has dismissed such concerns in recent days, and
Mr. Cryan ruled out the need for a capital increase or government
assistance in a local media interview published Wednesday.
However, the Abbey Life sale--which is subject to regulatory
approval--will result in an expected pretax loss of about EUR800
million ($897.2 million) because of goodwill impairment.
For Phoenix, the deal will add GBP10 billion of assets under
management, 735,000 new policyholders and boost cash flow to
support planned dividend increases. The U.K.-listed business will
partly fund the deal through a GBP735 million rights issue.
As part of the transaction, Deutsche has agreed to indemnify
Phoenix to cover a potential negative outcome from a U.K.
investigation into Abbey Life's fair treatment of customers and
annuity sales practices.
Monica Houston-Waesch contributed to this article.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
September 28, 2016 05:36 ET (09:36 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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