Members of the financial services sector have reacted to the news that Lloyds Banking Group has purchased the Embark platform for £390m.
This morning (29 July), it was announced that platform business Embark and its subsidiary brands were sold to the banking giant.
The deal, which is subject to regulatory approval, excludes the Rowanmoor SIPP and SSAS administration business, which is being retained by existing shareholders.
Lloyds has been toying with launching a platform for many years so this acquisition does the job nicely and brings the Zurich business back together."
Fundscape CEO Bella Caridade-Ferreira suspected the deal would go ahead for some time. "Lloyds bought the workplace bit of the Zurich platform and Embark the adviser bit, so it seemed like a matter of time before the bits were eventually brought together again.
"Lloyds has been toying with launching a platform for many years so this acquisition does the job nicely and brings the Zurich business back together. I wonder, however, what will happen to the D2C businesses Embark currently supports," she added, "I can't see that being of interest to Lloyds. Time will tell."
Lloyds acquired Zurich's UK workplace pensions and savings business, which it said would accelerate the development of its adviser-based offering , in 2017. The acquisition added more than £15bn assets under administration and 500,000 customers to the business.
CWC Research director Clive Waller said the deal makes a change from the private equity sales the sector has been seeing. "The question for me is will a bank and a life company be able to display nimble footwork required in tech arena?"
Philip J Milton managing director and Chartered wealth manager Philip Milton said: "I think it will be good for Lloyds, but with all these big brand shuffles, it does make me chortle to some extent as it seems that as the years go by, ‘they' add, dispose, announce big tie-ups and then the next minute something else pops up. The customers and ex-customers must be left dazed by it all.
"Indeed, I am minded back to Lloyds' far earlier Scottish Widows' acquisition again or even the Halifax and Cheltenham and Gloucester ones and all those mass-affluent and then the ‘what has happened to that and all those mass-affluent contacts' as if all these things do at giant corporate level is destroy value as clients drift away feeling deserted and so it goes on."
"Of course," he added, "I hope that this isn't the case this time round as we have Lloyds' shares for clients too as they are too cheap regardless."
'Embark used to be the acquirer'
"Is this the reversal of Lloyds' 2012 decision to axe mass-market investment advice with the ambition of plugging the advice gap?" Asked Morgan Williams financial planner Daniel Williams in response to the deal. "I'm not too sure about that, but it is certainly a bold move for Lloyds Banking Group, hoping to bring their offering in line with the digital age.
"The M&A space certainly shows no sign of letting up yet. It's not long since Embark were the acquirer, taking over the likes of Zurich, rather than the business being acquired."
He added: "It leaves one question, who's next?
"It will be interesting to hear the regulator's thoughts on the merger, with Lloyds one of the largest high street banks, and Embark being noted recently as one of Britain's most important fintech firms, it would surprise me if there weren't some regulatory concerns on what the future is going to look like for Lloyds' newest asset."
Grosvenor Birch Chartered financial planner Lewis Birch said: "Seems there is an abundance of cash floating around with all these mergers and acquisitions happening lately. If it improves client and adviser experience/functionality then that's great."
Meanwhile, Altus managing director Kevin Okell said: "It's taken a few attempts but LBG [Lloyds Banking Group] finally has its own retail platform and now it will be interesting to see how it fits alongside the joint venture with Schroders.
"It's also intriguing to see both parts of what was the Zurich platform business back under a common owner who I imagine will be looking for at least some shared services between them."
First published by our sister title Investment Week