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Could Standard Life re-ignite ties with Canada?

Two Scottish financial institutions this week start a new life together as one of the world’s biggest investment companies with inevitable questions about its future.

Standard Life Aberdeen has been forged in the cauldron of a savings and investments industry that is responding to the changing needs and demands of customers who are gradually taking greater personal responsibility for their finances.

The creation of a company with £670 billion of assets under administration and clients in 80 countries should be a proud moment for Scotland as it now has a company able to compete with the global giants.

The tie-up has been relatively free of opposition or controversy though there continues to be talk about how long the co-chief executive arrangement will last (Standard Life’s Keith Skeoch and Aberdeen Asset Management’s Martin Gilbert will spit the role) and whether Standard Life Aberdeen will need to seek a further merger or even survive the clutches of a rival.

Sources tell me that a name doing the rounds as a potential partner is Manulife, the Canadian insurance company and financial services provider, headquartered in Toronto.

It is the largest insurance company in Canada and is in the top 30 fund managers in the world with CAN$935 billion (£567bn) of assets under management, 34,000 employees and 63,000 agents.

One reason for the Manulife talk is the recent and historic ties between the two companies and countries.

In January 2015 Manulife acquired the Canadian operations of Standard Life for CAN$4 billion (£2.4bn) which the Edinburgh company had owned since the 19th century. The deal included an agreement for Manulife to distribute Standard Life Investments’ funds in Canada, the US and Asia. Standard Life also has a distribution deal with Manulife’s John Hancock business.

There is no evidence thus far that Manulife, or any other company, is showing immediate interest in taking a shot at Standard Life Aberdeen.  Even so, the sector is rife for further consolidation as shown by last week’s announcement from Prudential that it is merging its life and asset management businesses in the UK to form M&G Prudential.

There has also been regular speculation that Lloyds Banking Group will sell its Scottish Widows life business to the new company, though this does not square with its apparent intention to focus on the asset management sector under the newly-named Aberdeen Standard Investments.

 

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