British banking group Barclays Plc today unveiled an alliance under which it will sell insurer Legal & General Group Plc's products.
The move will cost 750 jobs at Barclays operations in England over the next two years. A deal of some sort between the pair has been mooted for some while. Barclays deputy chief executive John Stewart said the new arrangement put it at the forefront of market developments.
Stewart said that had no plans, either now or in the past, to acquire L&G.
Under the deal, L&G aims to at least double Barclays sales of long-term savings, protection and investment products within four years. It will pay Barclays an undisclosed distribution commission and said it expected to maintain its double digit, net of tax, return on capital. Also, administration of Barclays' existing funds book will be be transferred to L&G within 18 months.
Barclays said it would incur one-off pre-tax costs of up to £40 million by the end of 2002. 'These will be more than offset by a one-off contribution to income in 2001 of £60 million pre-tax derived from an increase in the embedded value of the life fund,' it said in a statement.
