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Resolution poised to capture Abbey insurance arm

Resolution Life is on the brink of securing the GBP4 billion purchase of UK high street bank Abbey's life assurance arm, according to media speculation.

Referring to sources at the company, the Independent newspaper has reported that the deal should be sealed in the next two weeks. The purchase price will be somewhere between GBP3.5 and 4 billion, for which Resolution will raise GBP1.5 billion through a new share issue.

The sale will be orchestrated by Abbey’s owner, Spanish bank Banco Santander, and is believed to be a prerequisite to the Iberian outfit’s desire for further retail banking acquisitions in the UK.

According to reports, Resolution has been negotiating with Santander since the beginning of May. However, Resolution needs the deal to be finalized in the next two weeks in order for it to instigate a new share issue brochure based on last year’s figures. Failure to meet this deadline for issuing a prospectus quoting 2005 figures could seriously hamper the purchase.