Jobs warning as financial giants reveal plan to merge
Standard Life and Aberdeen Asset in talks over deal
SCOTLAND could become home to Britain’s biggest asset management firm as two of its financial giants are planning to merge.
Standard Life and Aberdeen Asset Management are in talks to team up to create a new business capable of taking on the global elites of their industry.
The two firms between them manage nearly £600 billion in assets, four times the output of the entire Scottish economy.
In a joint statement issued over the weekend, they said a deal would “leverage Standard Life and Aberdeen’s combined strengths to create a world-class investment company”.
Analysts say the merger – if it goes ahead – would cement Scotland’s place in the asset management industry and enable the new firm to compete with American giants such as Blackrock.
However, there were warnings that jobs could be under threat if the two businesses team up. Between them the firms employ 9,000 people. Both Standard Life and Aberdeen employ staff who pick stocks to try to outperform the market. This is more expensive than using software to simply track stock indices.
There has been speculation that leaks about talks could scupper the merger, which comes while investors are unusually nervous amid global turmoil. Standard Life, the bigger of the two firms, has until the end of the financial year, April 1, to outline a formal bid for Aberdeen.
The companies said: “There can be no certainty that any transaction will occur nor as to the terms on which any transaction may occur.”
Martin Gilbert, chief executive of Aberdeen, said last month the Trump’s US election victory had spooked investors as the firm reported a 15th consecutive quarter of net outflows from its funds.
There have been rumours Mr Gilbert is seeking a new partner. His business, insiders suggest, has been under pressure to cut fees and has also been seen as exposed to emerging markets, which has made its performance appear more volatile than some competitors.
Aberdeen has £312bn of funds under management, while Standard Life Investments, the fund management arm of Standard Life, oversees funds of £269bn. Standard Life also has its more traditional pensions and life assurance arms.
A merger would create a business with far more assets under management and a new entity, experts said, would be the second biggest in Europe. The total value of the new business would be around £11bn.
Standard Life is one of the oldest businesses of its kind in the world and was founded 192 years ago. Aberdeen, which is more clearly specialised in asset management, was set up in 1983 by Mr Gilbert.
Standard Life chief Keith Skeoch said last week the company does not envisage moving thousands of staff due to Brexit as the firm is used to dealing with regulatory complexities overseas as it reported better-than-expected profits.
Under the planned deal, Aberdeen shareholders would own 33.3 per cent and Standard Life shareholders 66.7 per cent of the new group.
Standard Life chairman Sir Gerry Grimstone would become chairman of the board, with Aberdeen chairman Simon Troughton becoming deputy chairman. Mr Gilbert and Mr Skeoch would likely be made joint chief executives.
‘‘ There can be no certainty that any transaction will occur nor as to the terms on which any may occur