Legal & General (L&G) is plotting a swoop on the workplace pensions provider owned by NatWest Group, the FTSE-100 lender, as its chief executive seeks to grow its share of the UK retirement market.
Sky News has learnt that L&G is among a handful of suitors which have expressed an interest in acquiring Cushon from NatWest.
This weekend, City sources said there was “significant” competition to buy the business and L&G was not certain to be the eventual buyer.
If a deal with L&G does transpire, Cushon would augment a master trust business which manages more than £36.5bn in assets, making it the largest commercial entity of its kind in the UK.
The L&G master trust unit serves 349 employers and 1.9 million members.
Cushon manages assets worth £3.7bn, according to the latest figures provided by NatWest, which bought a controlling stake in the business for £144m two years ago.
The pensions business serves roughly 650,000 members across approximately 21,000 employers.
NatWest owns an 85% stake in Cushon, with the remainder held by the subsidiary’s management.
For NatWest, a sale would reflect chief Paul Thwaite’s determination to refocus the bank – which shed the last vestiges of taxpayer ownership earlier this year – on its core strategic priorities.
These include a bank-wide simplification programme and more active balance sheet and risk management.
Under Mr Thwaite, NatWest has considered a small number of larger-scale acquisitions, including that of Santander UK.
That deal did not progress because of NatWest’s determination to pay a price that would be deemed attractive by its shareholders.
Cushon offers workplace pension products as well as a range of workplace ISAs, including Junior ISAs, Lifetime ISAs and General Investment Accounts.
NatWest’s acquisition of the business was aimed at diversifying its non-interest income by offering Cushon’s products to the bank’s commercial and business banking customers.
For Antonio Simoes, the former HSBC and Santander executive who runs L&G, an acquisition of Cushon would bolster its offering in an important strategic area.
The government announced major pensions reforms this year aimed at driving greater scale and reducing unnecessary bureaucratic expenses, with a view to defined contribution schemes managing at least £25 billion in assets by 2030.
A NatWest Group spokesperson declined to comment on the talks with L&G but had previously said in relation to an auction of Cushon: “We do not comment on speculation.
“Our focus remains on delivering for our customers.”
The identities of other bidders for Cushon were unclear on Saturday.
L&G declined to comment.
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