Bank of Scotland owner Lloyds inks £96m deal to sell Scottish Widows Europe

The Bank of Scotland owner has sold the Luxembourg-based operation to FTSE 250 firm Chesnara. The UK-based pensions consolidator said the deal would add €1.7 billion of assets under administration and about 46,000 in-force policies.

It added that the agreement also provided entry into Luxembourg, which it described as an “attractive market”, while the addition of new policyholders, based in Germany, Austria and Italy, provided a platform for increased consolidation and scale across Europe.

Completion of the acquisition is expected around the end of 2026, subject to regulatory approvals.

Chesnara chief executive Steve Murray said it was the firm’s second significant acquisition in the past 12 months.

“Scottish Widows Europe is another material and value-accretive transaction with a product set that we know well,” he added. “It marks our entry into Luxembourg, providing a new platform for in-market and wider European consolidation and expansion.

“We are pleased that another major financial institution, Lloyds Banking Group, has chosen us to look after their policyholders. We look forward to welcoming Scottish Widows Europe policyholders and new colleagues to Chesnara.”

Last month, Lloyds Banking Group beat profit forecasts despite making hefty provisions for motor finance compensation. The lender, which still owns the rest of Scottish Widows, reported a 12 per cent increase in pre-tax profit to £6.66bn for 2025, up from £5.97bn a year earlier.

The stronger result came despite higher remediation costs, which hit £968m for the year - some £800m of which related to potential motor finance redress provision.

The UK’s biggest mortgage lender had flagged earlier that the cost of dealing with the motor finance scandal would drag down its overall results for 2025.

Chief executive Charlie Nunn said: “The group demonstrated sustained strength in financial performance in 2025, including in the final quarter, with continued balance sheet and income growth, as well as strong cost discipline and credit performance.

“Looking ahead to 2026 and the culmination of the five-year strategy we set out in 2022, our continued business momentum and strategic delivery enable us to upgrade guidance.”