Abbey National, which last week cold-shouldered a £9bn bid approach from Bank of Ireland, has quietly put its life and pensions business, Scottish Mutual, up for sale.
The operation is unlikely to raise much more than the £300m of extra capital Abbey had to inject into Scottish Mutual in the summer. Abbey's finance director, Stephen Hester, is determined that the business should not be a drain on the mortgage bank.
Last week Abbey agreed a deal to sell with-profits products from Prudential, a major rival to Scottish Mutual.
A source close to Abbey pointed out that this deal ended any strategic reason for Abbey to own the pensions business. But Abbey's official position is that the operation is still core and not up for sale.
The bank bought Scottish Mutual 10 years ago for £285m and has since bought another small pensions business, Scottish Provident. The two could be bundled together if there was a good enough bid. But the markets are difficult and the only likely bidder is GE Capital, the giant US group.
Abbey has also put its consumer credit side, First National, up for sale with a price tag of around £800m. As yet, there are no takers for it.
Abbey is awaiting publication of Bank of Ireland's bid approach, which the Irish bank has promised this week. The proposal is understood to include an all-share offer giving a dual-listed company headquartered in Dublin.
Analysts have backed Abbey's rejection of the approach and now say that Bank of Ireland is vulnerable to a bid from Royal Bank of Scotland.
National Australia Bank, which has been a suitor for Abbey, has now turned its attentions to AMP, the troubled Australian life company that owns Pearl Assurance in the UK. Two senior executives at AMP resigned last month after the group was forced to pump £500m into its UK business.
Late last week Pearl's credit rating was downgraded by AM Best, the insurance analyst. Best also downgraded Britannic Assurance and Royal London, as well as the UK life assurance subsidiaries of France's Axa and Winterthur of Switzerland.
Best said the downgrades had been prompted by further falls in the UK equity markets, which hit the capital reserves of the life companies.
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