Royal London and Liver in merger talks
ROYAL London and Royal Liver, Britain’s two biggest mutual companies, are understood to be in the early stages of merger talks.
The proposed deal comes after Royal Liver failed in discussions with Liverpool Victoria, the UK’s largest friendly society, over a potential £10bn merger.
Royal Liver turned down a previous bid from Royal London in 2007, with the Board insisting at the time that it would do better as an independent business.
But plenty has changed in the mutual business since then. The financial crisis has hit the industry hard and following an investigation by the FSA, named Project Chrysalis, mutuals have been asked to hold more capital.
Some mutuals that do not have shareholders to call upon for cash calls are short of cash.
Chris Evan, chief executive of the mutual society MGM Advantage, said: “The industry has to work through a difficult set of criteria agreed on by the FSA. Businesses might have to close, merge or develop new ways of growing.”
Steve Burnett who stepped down as chief executive of Royal Liver in August last year, said at the time: “What was a tough job to manage our legacy cost base while growing our new businesses, has just got a whole lot tougher.”
The two mutuals merging would result in a business with nearly 6m customers and holding £33bn in assets.
Asked about the proposed deal Royal Liver said it refused to comment on speculation.
Royal Liver is reported to be looking into making its own acquisitions and has appointed CBRE to advise on potential purchases in the Irish commercial property market.
The mutual company started life as the Liverpool Lyver Burial Society, set up to fund funerals and save families from financial ruin when a wage-earning relative passed away.