Deutsche Bank has announced the completion of a £570 million pensioner buy-in transaction with Legal and General.
The deal has been described as the first step in a Deutsche Bank’s pension scheme’s de-risking strategy, and now means it has reached full insurance over the medium-term.
According to LCP, which provided strategic longevity de-risking advice to the trustee, the transaction was completed under an “umbrella contract” which allows future transactions with Legal and General to be completed quickly and easily on pre-agreed terms when favourable pricing opportunities arise.
The Deutsche Bank (UK) Pension Scheme currently has assets of £4.5 billion and has a funding surplus.
Commenting on the deal, Jeremy Sowden, head of pensions and benefits UKI, Deutsche Bank AG, said: “This transaction enables Deutsche Bank to hedge a material portion of the liabilities of the scheme, and we will work closely with the trustee board to evaluate future de-risking opportunities.
“We have a very strong working relationship with the trustee board and this transaction represents a continuation of that productive partnership.
“It is part of the ongoing journey to reduce risk in relation to our defined benefit pension obligations, benefitting the scheme members, the trustee board and the bank.”
David Pink, partner, LCP, said: “We believe a targeted, intelligent strategy using umbrella contracts is going to increasingly be the norm for large schemes.”
Commenting on the announcement, Aysha Patel, Legal and General retirement institutional director, said: “We’re very pleased to have completed this initial transaction with the trustee of the Deutsche Bank (UK) pension scheme. We look forward to continuing our relationship with the trustee and bank and providing additional security to their pension scheme members.”
CMS provided transaction legal advice to the trustee and also worked alongside LCP on the execution of the initial transaction.
Insurance and reinsurance broker, Aon, acted as scheme actuary and investment adviser, and Slaughter and May as ongoing legal adviser. Eversheds Sutherland provided legal advice to Legal and General.