Selloffs on the cards at Standard Life

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The Independent Online

Standard Life, the troubled insurer, is to consider selling its banking business and its Canadian operations or even selling itself as part of the strategic review it launched last week.

The Edinburgh group's chairman, Sir Brian Stewart, admitted last week that the group was contemplating demutualisation as a reaction to having to bolster its capital to comply with new "realistic accounting" rules being brought in by the Financial Services Authority.

Standard Life's chief executive, Iain Lumsden, quit after disagreements with the FSA emerged over the amount of capital needed. His replacement, Sandy Crombie, told The Independent on Sunday that the review would consider all options, including selling non-core operations or putting the entire group up for sale.

The insurer owns two major subsidiaries that are not part of the main UK life and pensions business. The best established is the Canadian pensions operation, which in 2002 had a turnover of £1.25bn, down from £1.4bn a year before. It is believed to be worth more than £500m.

Younger, but potentially more valuable, is Standard Life Bank. Launched six years ago, it already has a mortgage book of more than £8bn and has drawn in savings of more than £5bn.

It could be worth over £1bn to a rival bank, with the acquisitive Bradford & Bingley a favourite to buy it if it was put on the market.

The terms of reference for the strategic review would be set at a board meeting due to take place in the next couple of weeks, Mr Crombie said. At that point a merchant bank would be appointed to assist in the review, with UBS being widely tipped as the favourite.

He would not rule out any eventuality and said that the sale of the whole group might even be on the agenda.

This extreme course of action would send a shiver through the Edinburgh financial community which is reeling from the decision by Abbey National last week to move all its life and pensions operations out of the city - with some jobs going to India and the rest to Glasgow.

If Standard Life was sold, pressure for a Scottish financial institution to buy it would be immense. HBOS is highly unlikely to be interested, as it has a large life and pensions business in Clerical Medical, while Royal Bank of Scotland has shown no interest in owning a life company.

However, buying Standard Life would be a coup for RBS's chief executive, Fred Goodwin. "It would make him very popular at the 19th hole of the Royal and Ancient at St Andrews," said one well-placed source.

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