Deutsche Bank's £1 billion Abbey life sale eases pressure on Cryan

Deutsche Bank went some way to quell fears surrounding its balance sheet today by agreeing to offload Abbey Life to UK insurer Phoenix Group for around £1 billion.

The under-pressure German lender has been rocked in the past week by fears of looming sky-high US fines and waning support from Chancellor Angela Merkel’s government.

But today shares rose 2.5% after the Abbey deal was unveiled.

British chief executive John Cryan said it will help bolster Deutsche’s capital and “build a simpler and better” bank.

For Phoenix, the deal represents its biggest purchase to date. Phoenix has agreed to buy a book of insurance products typically sold door-to door by Abbey Life from 1961 to 2000.

The book is made up of 735,000 customers and worth £10 billion. Phoenix will use the proceeds from a £735 million share sale and a £250 million bank loan to pay Deutsche £935 million for the book.

“Some deals make you bigger and some make you better but it’s pretty rare you get a deal which does both,” Phoenix’s chief executive Clive Bannister said.

Deutsche originally bought Abbey Life, a former FTSE 100 giant, in 2007 from Lloyds TSB, months before the financial crisis.