Co-Operative Financial Services, a mutually-owned UK finance group, is in talks to dispose of its £20bn life insurance and fund-management arms to Royal London, another mutual. If approved, the deal would be the third-biggest funds acquisition by assets so far this year.

In a statement released this morning, the two firms said the talks were exclusive, but regulatory approval has not yet been sought. A merger between Co-Op Asset Management and Royal London Asset Management would create a £60bn fund manager - about as big as Henderson Global Investors prior to its takeover of Gartmore Group.