Standard Life set to move south if Scots vote 'yes' to independence
Insurance firm's chief warns: 'We have duty to protect our customers and shareholders'
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Friday 28 February 2014
Standard Life sent a cannonball from its Edinburgh castle HQ into Scotland's independence debate by becoming the first major Scottish business to publicly declare that it is registering new companies in England into which it could transfer chunks of its business in the wake of a "yes" vote.
The life insurer said it was making the move "in the interests of stakeholders", not least the 90 per cent of its 4 million UK customers who live south of the border, chiefly in England, amid continuing uncertainty about Scotland's future currency. It is a volte face from its decision to shun English registration in 2006 when the business demutualised and listed shares on the London Stock Exchange.
The Independent understands the option of registering Standard's holding company south of the border was considered then at board level, only to be rejected. By contrast, Scottish Equitable registered its holding company in England when it was taken over by Dutch group Aegon in 1999 as Aegon UK.
The decision to start registering English companies - and even exploring the option of shifting its headquarters south - inevitably made waves far beyond the confines of life insurance, completely overshadowing results which exceeded City forecasts.
Standard, which employs 5,000 people in Scotland, is an Edinburgh institution.
To its chagrin, it even made it into the pages of Irvine Welsh's Filth - recently adapted as a film - whose protagonist questioned the masculinity of any Edinburgh male who had not had relations with at least two of its employees by the age of 25. Standard has been at the heart of Edinburgh's powerful financial services industry for nearly two centuries, and despite the turmoil of demutualisation forced on it by watchdogs chary of its parlously weak capital base, it is now flying the flag as the last remaining independent Scottish life insurance group.
Its chief executive David Nish insisted that the company had not intended to interfere in an increasing ill-tempered debate over secession with its move. "We have a long-standing policy of strict political neutrality and at no time will we advise people on how they should vote. However, we have a duty and a responsibility to understand the implication for our 4 million customers, our shareholders, our people and other stakeholders in our business and take whatever action is necessary to protect their interests."
Mr Nish cited Scotland's currency, EU membership, regulation, tax and "the shape and role of the monetary system" as "uncertainties" worrying the company.
Scotland's "back-up" option of using sterling if the rump UK refuses to enter formal monetary union with it is not believed to be looked on favourably in Standard Life's boardroom.
Chairman Gerry Grimstone insisted that Standard was "strictly apolitical" but "as one of the largest companies headquartered and based in Scotland, it is appropriate that we have carefully thought out the consequences if Scotland were to become an independent nation.
"Scotland has been a good place from which to run our business and to compete around the world. We very much hope this can continue but if anything were to threaten this we will take whatever action we deem necessary - including transferring parts of our operation from Scotland."
The import of such a bald statement will not be missed in Scotland. Despite the changes forced upon it by conversion to a plc Standard remains a citadel of Edinburgh conservatism and unionism, with a strict dress code (wearing brown shoes will attract adverse comment) and a tight hierarchy dominated by so-called Standard Life-ers.
But the potential impact upon sales of Scottish secession is also a genuine concern at Standard. A spokesman said the company had yet to see any tangible impact on sales as a result of the referendum battle. Standard in fact reported assets under administration rose 12 per cent to £244.2bn in 2013 with net inflows up 92 per cent to £9.6bn. Pre-tax operating profits dipped by 13 per cent to £751m but analysts had feared worse.
One life insurance executive said: "In England, if you look at Standard Life against Legal & General, or Prudential, the products, charges and investment performance are very similar. How would you chose? Independence represents a real risk for Standard." Deputy Prime Minister Nick Clegg also warned "it is no wonder major employers are saying 'maybe we can't continue with our presence north of the border'.
But Scottish First Minister Alex Salmond insisted Scotland would remain "a good place to do business" after a yes vote.
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