Article date: 19 September 2014
- Resolution by the Spanish Arbitration Tribunal in favour of Aviva
- Novacaixagalicia Banco to buy back stake in joint venture for €287 million
- Consideration represents 25x CxG Aviva’s operating earnings
Aviva plc (“Aviva”) announces the sale of its holding in its joint venture CxG Aviva to Novacaixagalicia Banco (“NCG Banco”)1, for €287 million (£226 million) in cash. The transaction results from a decision by the Arbitration Tribunal in Madrid2 issued today, which concludes legal proceedings between Aviva and NCG Banco.
The Tribunal has determined a breach by NCG Banco of its shareholder agreement with Aviva following the merger of Caixa Galicia and Caixa Nova into Novacaixagalicia in December 2010, and the bank’s subsequent restructuring in 20113.
The consideration represents 25x CxG Aviva’s operating earnings4. Cash proceeds will increase Aviva’s central group liquidity by £226 million), and will be used for general corporate purposes. The transaction will increase Aviva Group’s IFRS net asset value by approximately 4 pence per share5 and economic capital surplus by approximately £0.2 billion6. In 2013 CxG Aviva contributed IFRS operating profit of £27 million.
David McMillan, CEO Aviva Europe, said: “This is a good outcome for Aviva which reflects the strong agreements we have in place. We remain focused on maximising returns from our Spanish business in a recovering economy, where we have strong partnerships with leading regional banks, as well as agency and broker distribution.”
The transaction is expected to complete by the end of 2014 and is subject to regulatory approvals in Spain. Aviva’s joint ventures with Banco Mare Nostrum, Banco CEIIS, Unicaja and Pelayo Seguros, and agency distribution unit Aviva Vida y Pensiones are unaffected by this ruling.
Andrew Reid +44 (0)20 7662 3131
Yasmin Saleh +44 (0)20 7662 8710
Colin Simpson +44 (0)20 7662 8115
David Elliot +44 (0)20 7662 8048
Notes to editors:
1NCG Banco S.A, operating as “Abanca”
2Arbitration tribunal created in accordance with the rules of the Arbitration Court of the Madrid Chamber of Commerce and Industry
3The Spanish Fund for the Orderly Bank Restructuring (FROB) acquired indirect control of the stake held by NCG in CxG Aviva in 2011
4Based on CxG Aviva’s 2013 Operating Profit After Tax (net of non-controlling interests)
5Based on IFRS NAV at 30 June 2014
6The economic capital surplus is an estimated position as at 30 June 2014. The economic capital requirement is based on Aviva’s own internal assessment and capital management policies. The term ‘economic capital’ does not imply capital as required by regulators or other third parties
- Total cash proceeds converted to sterling at an exchange rate of €1.27/£1.
- The decision by the Arbitration Tribunal is final. The parties have a one month period to request clarifications on the ruling.
- In December 2010, Caixa Galicia consolidated its banking business with Caixa Nova, which resulted in the formation of NCG Banco. The arbitration was initiated by Aviva in October 2012 on the basis that Caixa Galicia had breached the terms of its shareholder agreement with Aviva as a result of its merger.
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About Aviva Spain
- Aviva distributes life and pensions products to 1 million customers in Spain through bancassurance partnerships Banco Mare Nostrum, Banco CEIIS and Unicaja Banco, as well as agency distribution units Aviva Vida y Pensiones and Pelayo Vida.