Lehman Brothers is trying to muscle into the pensions buyout market, having already launched a bid to take over a 450 million scheme, The Telegraph reports.
The investment bank is now going head to head with other banks such as Goldman Sachs and Citi. It is also pitting itself against a number of pension buyout specialists, including well-established insurance companies such as Legal & General, plus new start-ups Paternoster and Lucida.
Lehman Brothers is familiar with the pensions market and active in helping clients manage pension risks. But its decision to enter the market comes as a surprise as the increasing number of companies looking at selling their pension schemes has prompted fierce competition.
Some companies, including Synesis Life – a venture backed by Royal Bank of Scotland, Warburg Pincus and JP Morgan Cazenove – have been established for a couple of years but are yet to sign a deal.
It is understood Lehman Brothers made its first pitch by entering the auction to insure benefits associated with steel company Delta – the 451 million transaction which was won by Pensions Corporation, the buyout specialist run by Eddie Truell.
So far this year, about 2.5 billion worth of schemes have been passed on from companies, including miner Lonmin, life assurer Friends Provident, and casino and bingo group Rank. Telecoms group Cable & Wireless is also looking to pass on risks relating to its 2 billion pension plan.