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BAT revamps financial services

BAT, the tobacco giant, yesterday announced that it was rationalising its UK financial services operations, including Allied Dunbar, Eagle Star and Threadneedle Asset Management, under a single umbrella company.

British American Financial Services (BAFS) will oversee the development of the three brands, which will aim to cater for different sections of the financial services market.

BAFS believes it can save about pounds 50m a year by bringing some operations under common management, although it declined yesterday to say whether reductions in staff would follow.

At the same time, the company confirmed that it was still looking to develop activities in new areas, including health-care and savings products, possibly by acquisition.

Threadneedle, the fund management arm of BAT, will begin to sell its own badged unit trust and other lump-sum investment products to savers. Its products will also be sold by Allied Dunbar's salesforce, whose unit trusts will be branded under the Threadneedle name.

Allied Dunbar will concentrate on advice to middle-market and professional customers, through its own direct salesforce and via the independent financial advice distribution channel.

By contrast, Eagle Star will develop what the company yesterday called a "directassurance arm", a telephone-based range of general insurance, plus simple life and pensions products aimed at the mass market.

Its own unit trust operation, while continuing with the Eagle Star brand name, will also be managed by Threadneedle. The company said that Eagle Star would be focused on "consumers who want to be in control of the buying process and want to satisfy their needs in quick and simple ways".

BAT's reorganisation follows a review of its entire financial services operation lasting several months.

Although Eagle Star has a high reputation outside the UK, and is a strong force in the UK general insurance market, some experts had suggested the company might lose the right to brand any life and pensions products.

Paul Manduca, chief executive at the fund manager, said: "Now we have a truly high-calibre team in place. We also aim to develop into a truly global investment house, managing money into all markets."