RBS reshapes Aviva partnership

5th Aug 2010 07:39

State-owned lender Royal Bank of Scotland (RBS) and insurance giant Aviva have confirmed that they are to renew their strategic partnership.RBS has signed non-binding heads of terms with a view to entering into a new distribution agreement with Aviva, replacing the current partnership arrangement under which RBS's distribution network is used to sell Aviva products, with both companies sharing the profits.RBS said the new agreement will better align each party's incentives to create and distribute market leading products. Under the new arrangement Aviva will be the manufacturer of protection and selective pension products while RBS will receive all of the profits from the distribution of these products and will also manufacture and distribute its own investment products. "The new agreement will position RBS to compete more effectively and to respond to developments in the bancassurance market," RBS said.It is expected that the existing joint venture relationship will terminate from 31 December 2010. As a result of terminating the joint venture RBS will recognise a one-off loss of £235m in its interim results which will be announced tomorrow.