Introduction to NatWest’s Decision
NatWest Group is looking to sell Cushon, a provider of Workplace Pensions, which it acquired two years ago for £144 million. This decision is part of the bank’s reorganization of its core strategic priorities under the leadership of its managing director.
Background on Cushon
Cushon offers pension products at the workplace and a number of Isas, including Junior Isas, Lifelong ISAS, and general investment accounts. The company serves around 650,000 members with around 21,000 employers. Its Master Trust offer has almost £3 billion of assets and administration, with income from this area achieving £17.4 million last year, which is 97% of Cushon’s total turnover.
Reasons for the Sale
NatWest’s acquisition of Cushon aimed to diversify the bank’s non-interest-free income by offering Cushon products to its commercial and business customers. However, the bank is now working on a sale of Cushon with consultants. According to city sources, the bank is in detailed discussions with a number of potential buyers of the business.
Market Interest and Pension Reforms
A market source said that Cushon is of interest to a considerable number of strategic actors on the pension market in a growing wave of consolidation. This year, the government announced large pension reforms to make a higher scale and reduce unnecessary bureaucratic expenses to manage defined contribution systems by 2030 by at least £25 billion.
Strategic Priorities
The disposal of Cushon would reflect the strategic priorities of NatWest’s managing director, which include a bank-wide simplification program and a more active balance and risk management. Under his leadership, NatWest has considered a small number of larger acquisitions but has not continued with deals that do not meet its shareholders’ expectations.
Current Status
NatWest returned to full private ownership at the beginning of this year when the government sold the last shares it had acquired as part of the £2008 rescue of the then Royal Bank of Scotland. A spokesman for the NatWest Group said, "We do not comment on speculation. Our focus remains on the delivery for our customers."
