(Bloomberg) — Deutsche Bank AG, Germany’s largest bank, is considering the sale of a unit that helps pension funds protect themselves against the risk of their members living longer than expected, according to people familiar with the discussions.
No decision has been taken on the potential sale of the Abbey Life unit, said the people, who spoke on condition of anonymity because the matter is private. The Bournemouth, U.K.-based business may fetch as much as 3 billion pounds ($4.6 billion), one person said.
Anke Hallmann, a spokeswoman for Frankfurt-based Deutsche Bank, declined to comment.
Deutsche Bank is waiting to hear how much capital the European Central Bank will require lenders to hold against risk from their insurance units, said one of the people. Regulators are requiring banks and insurers to build larger buffers to help them weather losses and avoid a repeat of the financial crisis of 2008, in which taxpayers had to step in to their rescue.
“It looks like it is going to be pretty capital-intensive to hold a stake like this, so it makes sense” to consider a sale, Christian Hamann, an analyst at Hamburger Sparkasse, who has a neutral recommendation on the stock, said by phone on Monday. “Theoretically, quite a few people would be interested in this.”
Hamann listed reinsurers Hannover Re and Swiss Re as well as Paris-based Scor SE and private equity firms as companies that might consider a purchase.
In a transaction involving a business similar to Abbey Life, Swiss Re agreed last month to acquire Guardian Holdings Europe Ltd. from buyout firm Cinven for 1.6 billion pounds to increase its portfolio of U.K. life-insurance policies.
Phoenix Group Holdings Plc, a London-based company that had held talks to buy Guardian, may be interested in bidding if Abbey Life is put up for sale, said a person familiar, who asked not to be identified. A spokeswoman for Phoenix declined to comment.