Pru to launch telephone bank next month

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Prudential, the UK's largest insurer, yesterday said its plans for a telephone bank offering mortgages and savings products were on target for a launch date of 1 October.

Peter Davis, group chief executive at the Pru, said the bank's services would be aimed primarily at the company's existing customers.

"We are planning to have a range of mortgages available, as well as several deposit accounts, but because of competitive pressures we cannot say too much until the end of the month."

The pounds 33m development costs of the Pru's new banking arm helped dent the insurer's half-year profits, which still reached a record high of pounds 421m, up from pounds 390m in the first six months of last year. Mr Davis said: "The first half of 1996 has been a productive period for [us]. We have made significant progress in shaping the company to ensure continued success."

Among the company's growth areas, seen as key to its medium-term development strategy, the UK delivered profits of pounds 203m, 2 per cent up on last year, excluding the bank set-up charges.

Sales of single premium products rose by 50 per cent to pounds 1.577bn, while regular premium contribution sales reached pounds 157m, up 15 per cent.

Industry analysts have traditionally seen single premium income as less significant for insurers because they are capable of fluctuating heavily.

However, Mr Davis said: "When we spoke to the analysts some were sceptical. But we do not think that is the case. Our view is that this is what customers want now.

"What they are doing has a solid underlying sense. They do not want to take on long-term commitments but prefer to make a single contribution when they have the resources.

"When they feel they have the resources they will come back again. We are quite happy with that approach."

Mercantile & General, the reinsurer which the Pru recently announced it was selling to Swiss Re for pounds 1.75m, contributed pounds 90m to group profits in the first six months of the year.

Despite this contribution, Mr Davis restated his view that there were "no significant operational and strategic synergies between M&G and our other businesses".

The sale of M&G, together with a much smaller Dutch operation, Prudential Leven, gives the Pru a pounds 1.8bn war chest to fund future acquisitions.

Mr Davis said the company wanted to buy a mortgage lender to build its customer base but he refused to be drawn on which building society, if any, the Prudential was talking to.

"We are interested in buying a building society but for its branch network and its customer base rather than its mortgage book," he said, adding that the priority at present was for the Pru to complete its disposal of Mercantile & General.

Profits at Jackson National, the Pru's US arm, rose 30 per cent to pounds 153m, contributing more than a third to the insurer's overall returns.