TWO of the Capital’s biggest employers are set to enter merger talks – sparking fears more jobs could be threatened.
Standard Life and Scottish Widows, two of Edinburgh’s historical arch-rivals in the life and pension sector, are being tipped to unite.
Both Standard Life, which has 6300 workers – and Scottish Widows – which employs 3500 staff – declined to comment on reports about a deal.
Lloyds Bank, which owns Widows, has been looking for a new home as, since regulations were tightened in the wake of the last financial crisis, it is penalised for owning a life assurer.
Talks are expected to begin after Standard Life shareholders vote today on an £11 billion marriage with Aberdeen Asset Management.
Around 800 jobs would be cut over three years from the combined 9000 roles between the companies following the merger. The deal to create a new fund management giant called Standard Life Aberdeen needs the support of 75 per cent of AAM investors who vote, and 50 per cent of Standard’s army of 1.2 million shareholders since its demutualisation.
Completion of the Standard/Aberdeen merger is expected by mid-August.
At an analyst and investor conference in March when the deal with Aberdeen was announced, Standard’s chief executive Keith Skeoch was asked whether it was moving towards an investment house and away from life assurance.
Mr Skeoch said: “We are – yes, you are right in terms of becoming more of a world-class investment company than a life assurer. I would argue this is a process that was put in place about 13 years ago.”
Standard Life Aberdeen would be a top 20 global fund manager, with £670bn under management.
Skeoch was also asked about where the deal left Standard’s annuity business and replied the company had not ruled out selling it.
Lloyds Bank, which has recently returned fully to private ownership after gradually selling off the entire 40 per cent-plus taxpayer stake taken in the financial crash, sold the fund management business of Widows to AAM three years ago.
As part of that transaction the bank has a near-10 per cent holding in AAM, whose chief executive Martin Gilbert will be joint chief executive of Standard Life Aberdeen with Skeoch.
Page 74 of the Standard/Aberdeen merger prospectus reads: “Since Aberdeen acquired Scottish Widows Investment Partnership Limited in 2014, Aberdeen and Lloyds have enjoyed a strong business partnership and Lloyds remains a key customer of Aberdeen.
“It is the intention that the Combined Group will explore ways in good faith to build a successful relationship with Lloyds for the benefit of their respective customers, businesses, shareholders and other stakeholders.”
Standard’s investor meeting todayis in the Assembly Rooms, while Aberdeen’s meeting will be at its London offices.