Call for Standard Life to cosy up to Friends

STANDARD Life, still being punished by the market for its failed attempt to buy Resolution, should court a deal with Friends Provident, ABN Amro analysts said yesterday.

In a note titled Standard Friends? analyst Youssef Ziai argued that there was more logic in a merger between Standard Life and Friends Provident than there was for one between Standard and Resolution, and the Scots firm should consider an "opportunistic" approach for its smaller rival.

He argues that as former mutuals, Standard and Friends have "considerable similarities", but lack sufficient scale and as such are likely to be takeover targets. A merger would give the combined entity premium income roughly double that of Legal & General.

Ziai also claims Standard Life's failed bid for Resolution, the closed-life business, created a perception in the market that the company needed additional cash to operate.

He said: "An acquisition of an open-for-business company could help prove to the doubters that for Standard Life the logic behind the Resolution deal was not its own shortage of cash."

Ziai claimed Standard had "abandoned its search for a (new] CEO", which could allow "the carrot of the top job at Standard Life" for Trevor Matthews, who quit the company earlier this year to become chief executive of Friends after apparently becoming frustrated at the lack of progress towards becoming Standard Life chief executive.

The Edinburgh-based insurer declined to comment on yesterday's report but is not thought to be seriously mulling over an approach for Friends.