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Aegon Serves Up Chunk Of UK Arm To Bidders

The Dutch financial services group Aegon (Swiss: AGN.SW - news) is preparing to offload chunks of its UK operations amid radical changes to the industry's regulatory landscape.

Sky News has learnt that Aegon has hired investment bankers at Citi to oversee a number of asset sales that sources said could generate substantial proceeds for the parent company.

The process is said to be at an early stage, and a final decision about whether to proceed had not yet been taken, sources said.

Aegon's decision to hire bankers to sell parts of its UK operations comes at a time of intense corporate activity across the pensions and insurance industries as executives grapple with new capital and other regulatory requirements.

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The Dutch company is best-known in the UK for its sponsorship of the annual men's pre-Wimbledon tournament at Queen's Club in southwest London.

It (Other OTC: ITGL - news) has roughly two million customers in the UK, although it was unclear on Wednesday the extent to which they would be affected by the sale of any of Aegon's UK interests.

Reforms to the annuities market introduced by George Osborne have created pressure on pension providers to consolidate, triggering the recent announcement of a merger between Just Retirement (LSE: JRG.L - news) and Partnership Assurance.

Moody's, the ratings agency, recently warned that companies such as Aegon and Scottish Widows are "vulnerable to margin pressures" because they lack a "differentiating asset management proposition".

Speaking to the Financial Times last month, Adrian Grace, Aegon UK's chief executive, said the company's profits in the second half of this year would "face continued pressure from the fee cap and the pension flexibility".

He added: "The pace of change does put a strain on technology, on people, on getting things ready.

"You need to be able to adapt your systems very quickly. It’s not easy."

He also told the newspaper that Aegon was "fully committed” to the UK, but referred to overcapacity in the market, saying: "To some extent, that has to be flushed out over the next three to five years. I absolutely expect more M&A activity."

An Aegon spokesman declined to comment on the impending asset sales (Other OTC: UBGXF - news) .