Pru surprises City by naming UK chief to head Asian integration

Speculation mounts about what Rob Devey's promotion means for AIA executives
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The Independent Online

Prudential surprised the City by appointing the head of its unloved UK business to lead the integration of AIA in Asia if the life insurer successfully pulls off its $35.5bn (£23bn) takeover.

The move immediately raised questions about what it would mean for the British business, which despite repeated denials is regularly the subject of takeover speculation, and the future of Barry Stowe, the incumbent head of the Asian company, who previously worked for AIA's owner AIG.

The Pru's UK and Europe chief executive, Rob Devey, 41, joined the company in November from Lloyds Banking Group, where he was effectively in charge of UK retail banking. However, he is seen as an integration guru, having been responsible for combining the retail banking operations of the Halifax with those of Bank of Scotland after the two banks merged to form HBoS, the lender which was rescued by Lloyds from near collapse during the financial crisis.

Mr Devey also led the combination of the direct businesses of the two banks during that merger, and advised on financial services integrations when he worked for the Boston Consulting Group. He has led integrations of a number of other insurance companies and banks during his career.

Mr Devey will report to Tidjane Thiam, the Prudential group chief executive who negotiated the AIA deal. Prudential said the appointment of Mr Devey would free Mr Stowe and AIA's executives to concentrate on driving forward their own businesses.

The company said it was "too early" to give any indication about who might do what at Prudential Asia when the integration was complete. Despite this, analysts voiced surprise at the move and raised questions about what it would mean for Mr Stowe's future with the 162-year-old Prudential.

Panmure said it believed the move was as much about placating key AIA executives as it was about Mr Devey. Two of the former have already gone and a significant risk of the acquisition is that more may depart, which could damage the enormous new operation's near-term prospects.

AIG had originally planned to float the Asian unit and its executives were far more excited at the idea of running their own operation than they have been about becoming part of Prudential. This would be bad news for Mr Thiam, who has faced some scepticism from shareholders about the deal and has effectively staked his reputation on making it a success.

Panmure said: "We view the appointment as unexpected as we had anticipated that Barry Stowe would have been given the role. The move is likely to be seen by many as one that placates AIA's current chief executive officer, Mark Wilson, and colleagues following the loss of a couple of senior AIA executives and talk of retention bonuses to keep AIA staff. [The] Pru has indicated that the appointment will enable the two Asian CEO's to concentrate on growing the top line rather than integrating their businesses."

Oriel Securities added: "This move also highlights the increased importance of Asia to the group compared to the UK, and may increase speculation that ultimately the UK is non-core and may be disposed or de-merged.

"We would not expect such a decision to be taken in the short term as the UK still generates significant part of the cashflow of the group and effectively funds much of the dividend."

Mr Thiam said: "The appointment of an executive director to lead this effort is a clear indication of how crucial a successful integration is for the future of our company. Rob is ideally suited to the role."

Mr Devey will remain in charge of the UK operation but Andrew Crossley, its managing director of finance, and Barry O'Dwyer, the managing director of retail life and pensions, have been appointed deputy chief executives of Prudential UK and Europe.

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