800 jobs set to go as Standard Life Aberdeen merger nears

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The proposed £11bn merger of the UK and global operations of Standard Life and Aberdeen Asset Management is set to see a 800 jobs cut by the combined group.

Where the jobs will be lost has yet to be revealed, but the cuts are set to take place over three years during the restructuring of the two companies, that currently have a combined worldwide workforce of approximately 9,000 people.

The document also outlined that the newly-merged company will be renamed Standard Life Aberdeen plc and confirmed the details of a 16-strong board made up of an equal number of Standard Life and Aberdeen directors.

Standard Life chairman Sir Gerry Grimstone will be the chairman of the newly-merged company while Aberdeen’s chairman Simon Troughton will become deputy chairman. Keith Skeoch, the Standard Life chief executive, and Aberdeen boss Martin Gilbert will become co-chief executives of the new firm.

The deal will be voted on by shareholders of both firms on 19 June.

The information was revealed in a detailed prospectus published by Standard Life, last night. On the proposed job cuts, the prospectus for shareholders stated that “there will be a need to maximise operational efficiencies and cost synergies”, to achieve the expected benefits of the merger.

‘Phased reduction’

It continued: “At this time it is estimated that the integration and restructuring will result in a phased reduction of approximately 800 roles from the total global headcount of the combined group as at 31 December 2016 of approximately 9,000 over the three-year integration period.”

The merger of the two Scottish financial giants has been aimed at creating cost savings that could add up to £200m per year, according to company calculations.

As reported in March, the two companies agreed the terms of the merger, which will create Britain’s largest asset management group. Under the terms of the deal, Aberdeen shareholders would own 33.3% and Standard Life shareholders would own 66.7% of the combined group.

Global revamp

Standard Life has made a series of changes to its international business across the last couple of years with focus moving from insurance to investments in Singapore and an acquisition in Hong Kong. Other joint venture intitiatives have also been rolled out in India and China.

There were also some losses detailed within the prospectus with Standard Life revealing that its Hong Kong operation had, for the year ending 31 December 2016, reported a loss of £5m.

The company lost £46m in Hong Kong in 2015, but the prospectus document added that this was mainly due to “an impairment of deferred acquisition costs following regulatory change” the previous year.

The document also outlined a £31m loss relating to the closure of the company’s Singapore business.

A number of the traditional multinational rivals in the international life insurance space – Standard Life, and Zurich International – have pulled out of the city-state altogether or consolidated business. Earlier this year, as reported, French insurance giant AXA confirmed that it is to merge its life insurance and general insurance business in Singapore.

2017 business flows

Keith Skeoch, Chief Executive, Standard Life plc, said that it has seen positive progress in the first three months of 2017 with “inflows from our growth channels, including notable growth in flows in our pensions and savings business”.

Flows into Standard Life’s two advised platforms have dramatically improved in the three months following the takeover of Elevate. Net inflows into Standard Life platforms hit £1.9bn in the first quarter of this year, up 29% compared to the same period in 2016, the company said.

As reported, Standard Life completed its acquisition of Elevate, later announcing the newly-purchased business would remain as a standalone platform.

Figures from Standard Life also showed assets under administration for both platforms jumped to £47.2bn in the three months ending 31 March – an increase of 23% from the £38.4bn posted over the same period in 2016.

London Stock Exchange

Three London Stock Exchange, through the Regulatory News Service (RNS), announcements have been made in total by Standard Life. The first confirmed the publication of a prospectus and circular for Standard Life shareholders (link).  The second confirmed the composition of the proposed board of the combined group following the completion of the merger (link).  The third provides a Q1 assets and flows update from Standard Life (link).

In addition, Aberdeen has issued an RNS confirming the publication of its scheme Ccrcular document for its shareholders. A link to this RNS announcement is here (link).

The prospectus added that the 800 job losses could be countered by “synergies [that] will come in part from employee departures arising from natural turnover.

“Other appropriate steps will be taken to minimise the number of compulsory redundancies, including the active management of Standard Life’s and Aberdeen’s recruitment and vacancies,” it read.

Next steps

Standard Life will hold a General Meeting at 2pm on 19 June at the Assembly Rooms, 54 George Street, Edinburgh to allow Standard Life shareholders to vote on the resolutions required to approve and implement the proposed merger and related matters. These resolutions will require approval by a simple majority of the Standard Life Shareholders present and voting (in person or by proxy) at the Standard Life General Meeting.

Aberdeen will hold a Court Meeting and General Meeting on 19 June.  The Scheme will require the approval of Aberdeen Shareholders at the Court Meeting (by a majority in number of the Aberdeen Shareholders present and voting (in person or by proxy) at the Court Meeting, representing not less than 75 per cent), and the passing of a special resolution at a general meeting of Aberdeen Shareholders.

Author spotlight

Gary Robinson

Commercial Director, Head of Video at International Investment.