Edinburgh emerges as preferred location for life, pensions and asset management jobs, with Scottish Widows the preferred name
EDINBURGH has emerged as the preferred location for the merged Lloyds-HBOS bank to locate both its merged life and pensions businesses and its combined £200 billion asset management business. Senior figures in Scottish finance are also lobbying for the merged financial services giant to locate its global corporate banking operations in the Scottish capital.
The insurance and investment businesses — which currently trade under the names Scottish Widows, Clerical Medical and Halifax Life (in life insurance and pensions), and Scottish Widows Investment Partnership (SWIP) and Insight Investment (in asset management) — are all expected to adopt the Scottish Widows brand and relocate their operations to Edinburgh once Lloyds TSB’s £12.2bn takeover of HBOS completes later this year.
SWIP, based on Edinburgh’s Morrison Street, was formed from the merger of Scottish Widows Investment Management and Lloyds-owned Hill Samuel Asset Management in 2000. Led by chief executive Dean Buckley, it manages funds worth £90.2bn. With about 400 employees, SWIP is strong in cash funds, fixed income, global equities and emerging market equities.
Insight Investment, founded after Halifax’s merger with Bank of Scotland in 2002 and based in the City of London, has £112bn under management and employs more than 500 people. The latest interim report from HBOS said it had net inflows of £8.7bn in the first half of 2008. A new chief executive, Abdallah Nauphal, took over in July 2007 when his predecessor Dougie Ferrans became chairman.
If the merged bank’s life insurance and investment arms are to be headquartered and run from Scotland and rebranded under the 193-year-old Scottish Widows name, it would provide some consolation following a devastating week for the Scottish economy, in which it emerged that HBOS — wounded because of over-exposure to the UK’s beleaguered property market, poor asset quality, and dependence on short-term, wholesale funding — had fallen into the arms of Lloyds TSB.
Graham Campbell, who left SWIP with colleague Sandy Nairn to found Edinburgh Partners in 2003, added: “In fund management, SWIP is the stronger party and in life insurance Scottish Widows is definitely the stronger player. Costs in Edinburgh is also significantly lower than it is in London.”
The merged SWIP/Insight would have assets under management of £202.2bn — making it the third-largest asset manager in the UK after Legal & General Investment Management and Barclays Global Investors.
In life insurance, a merger between Lloyds’s Scottish Widows subsidiary and HBOS’s Clerical Medical would create an insurance giant with a market-leading 18% share of the UK life and pensions market, according to analysts at investment bank KBW.
This would provide a significant new competitive threat to Edinburgh-based rivals Standard Life and Aegon, as well as to London-based Legal & General and Friends Provident.
Neither Lloyds nor HBOS were prepared to comment.
SCOTTISH WIDOWS – A BRIEF HISTORY
In March 1812, a group of prominent Scots, including Sir Francis Walter Drummond of Hawthornden, met in Edinburgh’s Royal Exchange Coffee Rooms (now the City Chambers) to discuss the creation of a general fund that would provide support for widows, sisters, and other female relatives of fundholders.
Their aim was to prevent families from falling into poverty upon the death of a breadwinner during and after the Napoleonic Wars, at a time when no welfare state existed and the loss of income could mean destitution. The Scottish Widows’ Fund and Life Assurance Society was established in 1815, becoming Scotland’s first mutual life office.
Though the society was set up to protect women, applications from female customers were rare in its early years. Between 1815 and 1819 only ten policies were granted to women, one notable example being Catherine Drummond, who in 1818 requested an annuity of £50 to begin when she turned 60.
Over the course of the nineteenth and twentieth centuries, Scottish Widows established itself as one of Britain’s best-Known life assurers. In 1986 it launched a now-iconic advertising figure known as the “Scottish Widow,” in an ad shot by David Bailey.
The society entered a new chapter in 1999, when Lloyds TSB, under chairman Sir Brian Pitman, agreed to acquire Scottish Widows for £7 billion. To enable the deal, the society was demutualised in March 2000, triggering windfall pay outs to policyholders. As part of Lloyds TSB, Scottish Widows became the cornerstone of the group’s insurance and investment business. By 2005, it was managing assets of more than £100 billion.
The integration of Clerical Medical and Lloyds TSB Life Assurance in 2006 further strengthened Scottish Widows’ position within the Lloyds TSB group.
Here’s a Scottish Widows “Brighter Future” ad from 2002.