Aberdeen sets sights on Murray Johnstone

Aberdeen Fund Managers yesterday expressed strong interest in buying its smaller rivals Murray Johnstone and Foreign & Colonial, which are both up for sale.

Aberdeen Fund Managers yesterday expressed strong interest in buying its smaller rivals Murray Johnstone and Foreign & Colonial, which are both up for sale.

Martin Gilbert, chief executive, said yesterday the group saw itself predator rather than prey despite the uncertainty over its future following yesterday's agreement on the sale of Scottish Provident, the mutual life insurer, to Abbey National, the high street bank, for £1.8bn. Scottish Provident owns 38.8 per cent of Aberdeen.

The Abbey National deal will lead to 325,000 Scottish Provident with-profits policyholders receiving cash bonuses of £4,500, plus top-ups to their policies worth £1,500 on average.

Scottish Provident said it had no plans to sell the Aberdeen stake. However, Abbey has said it intends to bring a contract with Aberdeen to manage £10.5bn of Scottish Provident funds in-house when the current deal lapses in 15 months.

It is widely expected that the stake, which is held in Scottish Provident's life fund, will ultimately be sold. Concern about the loss of the Scottish Provident business hit Aberdeen's shares, which fell 51p to 630p.

However, Mr Gilbert said that given Aberdeen's rate of growth, the impact would be limited. "At the present rate we can replace that business in three months or at a stroke if one or other of the two or three things that we are looking at come off," he said.

An announcement is expected within the next few days about whether Aberdeen has made the short-list for Murray Johnstone. Other bidders for the business, which is expected to fetch around £100m, are believed to include Allied Irish Banks and Royal London.

Following the deal, the 450,000 Scottish Provident members who do not own with-profits policies will receive £500. Scottish Provident will also pay out £5,000 retention bonuses to those of its 2,000 staff who stay on until the deal is completed next year.

Although Abbey says the deal will lead to savings of £55m over two years, Ian Harley, Abbey National's chief executive, said yesterday there would be no wholesale redundancies at Scottish Provident's Edinburgh headquarters.

Abbey beat rival bids from Royal London and Liverpool Victoria. Geographical proximity between Scottish Provident and Scottish Mutual, Abbey's Glasgow-based life and pensions provider, were among the factors that clinched the deal.

Abbey shares fell 5.5p to 843.5p.