Fears for Standard Life jobs amid plans for £100m cuts

Published on Wednesday 10 March 2010 20:32

STANDARD Life has raised the spectre of job cuts after laying out plans to strip £100 million in costs from the business over the next two years.

• Picture: TSPL

The Edinburgh-based life and pensions giant, which has been on an efficiency drive since its flotation in 2006, yesterday said it made savings of 47m last year and that the trend would be continued for the next two.

David Nish, who became chief executive at the start of this year and was yesterday presiding over his first set of full-year results, said he believed that up to 95 per cent of the transactions Standard's customers make could be done "without touching human hands", suggesting wider use of automated systems.

However, Nish argued that savings made through efficiency could be used to drive growth elsewhere, and would not necessarily lead to staff cuts. "I would not be surprised if we could markedly grow the assets of the business, say add 25 per cent, 50 per cent on, and the cost base would stay pretty much flat," he added.

The group reported an operating profit of 919m for 2009, a 1.5 per cent fall compared with a year earlier.

A fall in profits in the UK and Canada – Standard's two largest markets – was offset by a move into profit in its small but fast-growing Asian business, which has operations in China and India.

While the headline result was better than the City had forecast, analysts said the reported figures included a number of one-off technical items and did not represent better trading than expected.

A recovery in world markets and new investment mandates meant the amount of assets managed by Standard Life jumped 15 per cent to 170.1 billion.

During the year, the firm sold its banking business to Barclays for 200m. Nish refused to comment on recent speculation that the group is planning to sell its healthcare business, but stressed that health would form part of its future product offering.

Standard said it would pay a final dividend of 8.09p, giving it a total dividend of 12.24p, a 4 per cent increase over 2008. Shares in the company closed up 2 per cent at 208.3p.

In a bid to improve its systems, Standard Life is to double spending on product development to 200m this year.

Admitting he had been "frustrated" by systems which had slowed down product development, the new chief executive said the investment was designed to remove bottlenecks in the company.

Nish also gave a strong defence of the market opportunity Standard Life has, arguing it was best placed to capitalise on growth opportunities in the UK, its largest market. While Prudential is currently negotiating with shareholders about a major expansion in Asia through the assets being sold by AIG, the Scots insurer is targeting major growth in UK bulk corporate pensions.

"The UK market is a stupendous market to be in, in regards to growing assets to manage," Nish said.

Currently, Standard Life is a market leader in bulk UK pension management, managing some 17bn, out of a total market of 1.4 trillion.

While much of the market may never be available to Standard Life, Nish said tripling its current share "is certainly something we should be aspiring to do".