Halifax in £1bn bid for Equitable

Click to follow

Halifax, the high street bank, will this week launch a £1bn bid to bail out the Equitable Life pensions group.

Halifax, the high street bank, will this week launch a £1bn bid to bail out the Equitable Life pensions group.

The deal will help nearly half a million policyholders whose pension and savings have been under threat since Equitable closed for new business in November.

Bankers are thrashing out the deal over the weekend, but it is expected to be a two-stage offer that will see Halifax immediately take over the running of the Equitable, with a deal that secures policyholders' money likely later this year.

Among the beneficiaries will be scores of MPs, who have a House of Commons-approved policy with Equitable, plus thousands of doctors, lawyers, computer consultants and journalists, who were attracted by Equitable's low charges and good reputation.

That was turned on its head when Equitable lost a Lords ruling last year on whether it could cut the payments to 90,000 holders of guaranteed-annuity policies, largely sold in the 1970s. The decision blew a £1.5bn hole in Equitable's finances and it closed for new business after 238 years.

Halifax, which already owns the pensions group Clerical Medical, will pay around £500m for Equitable's fund management, administration and sales operations and will take over the running of the life fund, which holds the pensions of 450,000 customers.

The £500m will help deal with the guaranteed annuity problem. However Equitable will still need to strike a deal with the guaranteed annuity holders to cap their claims.

Halifax is understood to be willing to pay up to £500m more to take over the life fund if a deal can be reached.

Then it will merge Equitable's operations with Clerical Medical to create one of the UK's biggest pensions company, with more than a million customers and £60bn of assets.

A deal will relieve ministers. City experts and MPs have blamed the regulators - which include the Treasury - for not acting sooner.

Comments