Black day for equity desk at Scottish Widows amid sale talk

Struggling fund management business owned by Lloyds to lose 23 of 38 experts in strategy shift

Scottish Widows Investment Partnership (Swip) yesterday tore the heart out of its Edinburgh equities business amid persistent rumours that state-backed owner Lloyds Banking Group is fattening the struggling fund management business up for a sale.

The company said 23 of the 38 fund managers and analysts who work at the operation, which manages £58bn, would be casualties of a switch to a lower-risk investment strategy. Investment advisers who have queried the move have been told that a future sell-off "has not been ruled out".

Swip said the move had been driven by "client demands" as it seeks to boost business from third parties, which has badly lagged rivals.

Including the £58bn-strong equities business, Swip manages £143bn in total, but 80 per cent comes from the in-house life insurance business of Scottish Widows, and only 20 per cent from external clients. Nearly half of the £154.9bn managed by its rival Standard Life Investments comes from third parties.

Swip refuses to disclose how its revenues are split between in-house and third-party business, but improving the latter is vital if Lloyds' chief executive, Antonio Horta-Osorio, is to derive value from a sell-off as part of his strategic review of his businesses.

The bank is grappling with the forced sale of more than 600 branches known as "Verde". Plans to sell to the Co-op have been hit with delays as a result of regulatory issues.

Experts have questioned whether the Swip's new investment strategy will attract the new clients it needs. Swip's plan will see it looking to beat benchmark indices such as the FTSE 100 by between 0.5 per cent and 1 per cent, as opposed to 3 per cent or more at present. Such a low-risk strategy can be managed by fewer people, with computer modelling taking up much of the strain.

But Meera Patel, a senior analyst at Hargreaves Lansdown, described the plan as making "bets around the edges" of stock market indices. She said: "Our view of Swip's active equity management arm is that it isn't very good. They've generally delivered less than average performance.

"The other issue we have had with them is that the moment a team gets anything behind them in terms of performance they get poached. I'm not sure that what they say they are going to be doing is what the market wants."

Another fund management industry source, who asked not to be named, said other life insurers have made similar moves as they grapple with a new era which allows savers with products such as pensions to choose who manages their money rather than being stuck with the in-house option.

"Fund management groups linked to life insurers need to evolve as they can no longer count on a big wedge of money coming from their sister company," the source said.

Swip had been operating 45 investment strategies but that will be down to just six in the UK after the restructuring is complete.

Francis Ghiloni, a director of distribution and client management for Swip, said: "This has been driven by our clients. They are increasingly asking us to manage equities on a global basis rather than on a regional basis like, say, Europe or the US. In switching from 45 to six strategies we will be able to manage the money with a lot less people."

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn