Friends Provident hires Standard Life executive but axes 600 other jobs
01 February 2008 / by Joy Tibbs
Following the announcement on January 29 that former Standard Life chief executive, Trevor Matthews, is to take up the equivalent post at rival Friends Provident, Friends has revealed that 600 other jobs are to be cut in the UK and overseas as part of a major review.
The UK-based financial services and products provider has also warned that most of its profits for last year will be wiped out by a £440 million charge. However, it claims its review will "transform the company into a more streamlined, more focused and more profitable business".
The group hopes to save almost £60 million as a result of its restructuring plan and, according to reports, has also decided to sell its 52 per cent stake in F&C Asset Management along with two other non-core businesses in order to focus on its core operations.
"The new strategy will reposition the Group towards those areas where it has true competitive advantage, such as protection, pensions and international life and pensions markets," says chief financial officer, Jim Smart.
Due to charges that will be imposed in relation to the shake-up, the company expects to report underlying profit before tax of approximately £300 million for 2007 compared with £509 million in 2006.
Share prices plummeted as the news broke and there is growing speculation that private equity firm JC Flowers may submit a formal bid for the firm.
Meanwhile, it is now unlikely that Mr Matthews will join Friends until July. There have been rumours suggesting that his decision to leave Standard Life was prompted by boardroom disagreements.
On January 30, Standard Life posted a 20 per cent decrease in UK sales for the fourth quarter of 2007 and is expecting difficulties in certain divisions to continue into 2008.
Its shares also fell when the financial results were disclosed, despite CEO Sandie Crombie's comment that: "The group's performance in 2007 was good, consolidating the strong progress in recent years."
© Fair Investment Company Ltd