Clydesdale and Yorkshire Banks Enter Strategic Alliance with AXA

14th November 2008

14 November 2008: Today, Clydesdale and Yorkshire Banks have agreed a strategic alliance with AXA Life. The exclusive alliance is designed to provide an enhanced financial advisory service and a wider choice of investment and protection products for their UK retail banking customers.

Through the agreement, the responsibility for providing new investment and protection products to Clydesdale and Yorkshire Banks' 2.3 million retail banking customers across the UK will be handled by AXA under a tied distribution agreement. Completion of the deal is expected to take place in February 2009.

Key strengths of the strategic alliance are:

• Enlargement of Clydesdale and Yorkshire Banks' financial planning sales team in the retail network
• The financial planners will use Elevate, AXA's wrap platform, to manage cliets' investment portfolios
• Improved customer choice and enhanced levels of service for the banks' retail banking customers
• Increased investment by AXA in the business and in its employees to leverage greater economies of scale
• Sharper focus for the banks on their traditional banking operations
• A transfer of £1.2 billion of funds under management from MLC to Architas Multi-Manager¹

The strategic alliance is the main outcome of a major review of Clydesdale and Yorkshire Banks' financial planning operation, which was completed at the end of 2007. Primarily, the agreed arrangement will provide improved choice and enhanced service for Clydesdale and Yorkshire Banks' retail customers, and will strengthen AXA's distribution model.

Clydesdale and Yorkshire Banks will retain their separate team of senior financial planners, who will move from a multi-tie arrangement to a whole of market proposition, offering a broader, segmented, range of products to better meet customer needs.

The 129-strong team of financial planners, based in Clydesdale and Yorkshire Banks' 342 retail branches will transfer under TUPE (transfer of undertakings and protection of employment) to AXA and will provide advice on AXA's investment and protection products. This team will benefit from wider professional development opportunities, enhanced career opportunities and other benefits by being part of AXA. The 15th largest company in the world, measured by revenues, AXA has a high quality balance sheet and is positioned strongly in the current market.

With such a strong cultural fit across the two organisations, both parties are committed to working together to ensure employees experience a smooth transition. AXA has a strong track record in this area having managed a strategic alliance with Britannia Building society since 2005.

Commenting on the announcement, Lynne Peacock, CEO, Clydesdale and Yorkshire Banks, said: "Our full year results clearly demonstrate the strength and resilience of our business, but we are always thinking about how we can do things better and more efficiently. This alliance allows both parties to each achieve their future aspirations while offering more choice and even better service for our customers.

"Clydesdale and Yorkshire Banks' core strength is in traditional retail and business banking and this initiative allows us to focus even more sharply on this, while participating in the creation of a world class wealth management and protection business for our UK customer base."

Steve Reid, retail and wealth management director for Clydesdale and Yorkshire Banks, added: "In AXA we have a hugely successful partner with a strong record in this arena. They are fully committed to growing this business and investing in its infrastructure, and their close cultural fit will help to ensure a smooth transition for transferring employees."

Paul Evans, CEO, AXA Life, said: "This is an exciting alliance for AXA Life as it enhances our Bancassurance distribution network by drawing on our key strengths in the field of wealth and investment management, and furthermore improves the distribution of our Protection products."

Simon Philp, Director of Bancassurance, AXA Life, added: "In Clydesdale and Yorkshire Banks, we are very fortunate in finding a partner with a high quality customer base and a team of highly skilled, professional financial planners who will contribute a considerable amount to the success of this alliance."