Achmea and a.s.r. have agreed that Achmea Bank will acquire part of the banking operations of a.s.r. bank. These operations consist of a liability portfolio with savings of 1.7 billion and approximately 125,000 customers, and an asset portfolio consisting of mortgages with a volume of € 1.5 billion.
The acquisition of the portfolios fits with Achmea’s strategy, which is in part focused on growth in pensions and pension services, along with integrated banking products and asset management. For a.s.r., the transaction is in line with its previously presented strategy update, which stated that a.s.r. bank no longer classified as a core activity.
Willem van Duin, chairman of Achmea’s Executive Board: “As a cooperative insurer, we are committed to a healthy, safe and future-proof society. Good retirement provision is an important element of this. The pension world is undergoing rapid change and the demand for a future-proof and sustainable pension is growing. Achmea works on integrated solutions, along with customers, including pension funds, employers and private individuals. This acquisition contributes by enlarging the scale of our banking activities. We are continuing to invest in further improving our services to our customers.”
Jos Baeten, CEO of a.s.r.: “At an earlier stage, we positioned the bank as non-core activity of a.s.r. This transaction is a crucial step in scaling back our banking operations. We are delighted that we have found a suitable party in Achmea to continue the largest part of our banking operations. Achmea’s products and services are a good match for the operations of a.s.r. bank and the acquisition is in the best interest for customers.”
The acquisition contributes to a further strengthening of Centraal Beheer as a broad financial service provider. Once the acquisition is finalised, customers who currently have an a.s.r. savings product will be served by Centraal Beheer.
For customers with an a.s.r. mortgage, there will be no impact; a.s.r. will remain their point of contact and the agreement and conditions will remain intact. a.s.r. will continue to operate in the mortgage market. a.s.r. has approximately €8.2 billion in mortgages on its balance sheet, €1.5 billion of which is on a.s.r. bank’s balance sheet, which will be transferred to Achmea Bank’s balance sheet.
The transaction will not have a material impact on a.s.r. The contribution of a.s.r. bank to the operating result was €1 million in 2017. The termination of all banking operations is expected to have a limited positive impact on the Solvency II ratio. a.s.r. expects all banking operations to end in the first half of 2020.
The acquisition is subject to approval from the relevant supervisory authorities, an approval by the Netherlands Authority for Consumers & Markets following notification of the acquisition and completion of the advisory process with the Works Councils involved. Achmea and a.s.r. expect to finalise the transaction in the second half of 2019. No further financial details relating to this acquisition will be announced.
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Achmea Bank reported a profit before tax of EUR 39 million in 2018 (2017 EUR 24 million).
The operating profit, excluding exceptional items, increased from EUR 15 million in 2017 to EUR 39 million in 2018. The growth in the operating profit is mainly due to a higher interest margin of EUR 7 million and lower operating expenses of EUR 16 million. The structural lower operating expenses are mainly the result of the outsourcing of our mortgage servicing to Quion and the implementation of the new savings- and payment system. The 2017 result included the following exceptional items: release of the Acier loan loss provision of EUR 7 million and a positive fair value result of EUR 2 million.
In 2018 the implementation of a new system for the administration of payments and savings products and the implementation of the new reporting standard IFRS 9 were finalized. Furthermore the Bank integrated the client services desk of our two brands at Centraal Beheer. Centraal Beheer continues to focus on an excellent digital customer experience.
In line with Achmea Bank’s strategy, Woonfonds has introduced several new niche mortgage propositions, among others a buy-to-let mortgage (2018) and a mortgage product for self-employed persons (end of 2017). Due to Achmea Bank’s focus on niche propositions to achieve better interest margins over additional volume in the mainstream market, production of new mortgages decreased by EUR 0.1 billion to EUR 0.6 billion. In a strong competitive market the production for Achmea Pensioen- en Levensverzekeringen N.V. decreased to EUR 0.3 billion (2017 EUR 0.7 billion). The regular mortgage portfolio of Achmea Bank decreased by EUR 0.5 billion to EUR 9.8 billion with total prepayments stabilizing at EUR 1.1 billion.
The savings portfolio decreased, as expected, to EUR 5.7 billion (2017 EUR 6 billion), mainly driven by expiring term deposits. In 2018 Achmea Bank redeemed EUR 1.2 billion senior unsecured notes. The Bank retained its sound liquidity position with liquidity ratios well above internal and external limits.
The Total Capital ratio increased to 20.9% (2017: 20.5%). The Common Equity Tier 1 (CET1) Capital ratio increased to 20.8% as per December 2018 (20.4% at the end of 2017). The decline of the mortgage portfolio and 2017 result more than compensated the dividend pay-out of EUR 50 million in May 2018.
Achmea Bank currently applies the standardized approach to calculate the risk weighting of its assets. Achmea Bank is working towards the implementation of Advanced Internal Rating Based (AIRB) models which will have a positive effect on Achmea Bank’s credit risk and data management capabilities. The latter will ultimately impact capital ratios in the future, depending upon approval of the DNB.
As of 1 January 2018, Achmea Bank applies the IFRS 9 reporting standards for financial instruments. The initial impact of IFRS 9 on equity amounts to EUR 13 million negative after tax, mainly related to a change in the classification and measurement of a small part of the mortgage portfolio. The negative impact on equity of the implementation of IFRS 9 per 1 January 2018 on the loan loss provision of the regular portfolio amounted to EUR 3 million (3 basis points). Achmea B.V. issued a capped guarantee to cover credit risk and legal claims related to the Acier portfolio. The impact on the Acier portfolio was largely compensated by this guarantee.
Achmea Bank proposes to pay out a total dividend which equals the net result of EUR 29 million.
In line with the simplified and more efficient organization, the responsibilities of the Director of Operations decreased and have been transferred to the other Board members. As of April 1 2018, the Board of Directors consists of Mr. Pierre Huurman and Mr. Pieter Emmen.
Since year-end 2017 Achmea Bank has retained its Issuer Default Rating of A/Stable (Fitch) and its A-/Negative Issuer Credit Rating from Standard and Poor’s.
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Achmea Bank N.V. has successfully completed the second issuance of € 500 million bonds under its € 5 billion Conditional Pass Through Covered Bond Programme. The transaction was very well received in the capital markets and received broad interest from institutional investors across Europe. This transaction enables Achmea Bank to further diversify its funding sources and to attract new external long-term funding. The net proceeds will be used to refinance part of the existing Dutch prime residential mortgage portfolio.
The bonds have a maturity of seven years with a maturity date on 20 February 2026 and are priced at 18 basis points above mid-swap. The coupon on the bonds is 0.5% with an effective yield of 0.534%.
The bonds are rated Aaa by Moody’s and AAA by Fitch and were placed by a syndicate of banks comprising Barclays, Deutsche Bank, DZ BANK, Rabobank and UniCredit.
The bonds are listed on Euronext Amsterdam.
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Achmea Bank is part of Achmea, the largest insurer in the Netherlands. We provide mortgages and savings products to private individuals under the brand names Centraal Beheer and Woonfonds. We complement Achmea's insurance propositions with savings and mortgage products. In doing so, we strive for the full trust of all our stakeholders: customers, distribution partners, employees, regulators, investors and the shareholder.