Halifax may hold fire on Equitable

By DAILY MAIL REPORTER
Updated:

 

DOUBTS are growing over whether the full deal struck by mortgage bank Halifax to 'rescue' Equitable Life will go ahead in the wake of the latest fiasco at the troubled mutual.

Halifax, down 20p at 784p, earlier this year signed a two-tier agreement worth up to £1bn to take over Equitable.

It has already handed over £500m for its computer and administration systems and its unit-linked business. The bank will only pay the remaining £500m if the mutual reaches a compromise with its guaranteed annuity rate (GAR) policyholders and meets sales targets in 2003 and 2004.

Halifax boss James Crosby was hoping to make hefty profits by selling his own products to Equitable's largely well-off customer base.

This week's shock announcement that policyholders will see up to 16% wiped off the value of pensions and endowments, has added to the uncertainty surrounding the second leg of the deal. There are fears disgruntled Equitable customers may in future refuse to buy products that have any association with the company.

'It is all very contingent,' said one analyst. 'Halifax may not realise the full potential of the deal.'

Halifax has also come under fire for sending marketing brochures to Equitable customers on the day they learned their pensions will be slashed.

It says: 'The timing is unfortunate and we apologise for any upset policyholders may feel.'

Most watched Money videos