TREVOR Matthews, who has quit Standard Life to become chief executive of Friends Provident, has left a hole in the company's defences that could prove costly to the boss he leaves behind. Chief executive Sandy Crombie will not find it easy to replace the charismatic Australian, but he will have to find the new man or woman quickly or it may impact on his own future.
Matthews helped transform a lacklustre insurer into a more vigorous listed company with sufficient confidence to mount a takeover bid just a year after its arrival on the stock market.
While the board may have messed up its chances of bagging Reso
lution Life, some myths have built up around the bid strategy. Matthews and Crombie had their differences – mainly in style and over Crombie's refusal to let his head of life and pensions succeed him – but it appears that they were united on the approach for Resolution.
Matthews, far from having reservations, was the one who would have benefited most had the deal succeeded. Standard Life chairman Gerry Grimstone told me Matthews was "positively enthusiastic about it" and presented the strategy on why the company should try to acquire Resolution.
Grimstone has given his full support to the beleaguered Crombie, whose position was again thrown into doubt by last week's events which appeared to leave the board weakened and the company vulnerable to takeover. The chairman says the speculation over Crombie's future has become a soap opera, but the chief executive is going nowhere.
However, the pressure to instigate a succession plan will not go away if the company's share price continues to struggle and performance dips. Year-end figures are due on March 12 which may indicate a further slowing of growth and the strategy will once again come under the spotlight.
Grimstone says the transition of Standard Life from mutuality to the listed sector was akin to a privatisation and, to some extent, its experiences do shadow those of other former mutuals such as Friends Provident and Norwich Union, the former also being a perennial takeover favourite and the latter quickly succumbing to a bid. Certainly, the change required a shift in behaviour at Standard Life which was notoriously overstaffed and under-managed. Stories of sales managers being unable to provide figures to back their growth claims and of senior executives admitting they didn't understand the company were a shocking indictment of a company that almost went under.
The board has, at the very least, steered the company to safer waters and turned round a massive under-performer and loss-maker into a business that almost pulled off an opportunistic takeover bid.
But despite Grimstone and Crombie's insistence that there is no vacancy for a chief executive, the succession bid will continue and it will not be a straight fight between David Nish, the finance director, and Keith Skeoch, the head of Standard Life Investments. Otto Thoresen, the chief executive of Aegon UK – which owns Scottish Equitable – and Archie Kane, who holds a similar role at Scottish Widows, are two other names in the frame.
Both would offer another opportunity to break the culture of Standard Lifers running a business that lost its way in the middle part of this decade and has benefited from the injection of fresh thinking.
A lengthy period of uncertainty over both Crombie's future and over who he will find to replace Matthews will be unsettling for employees, investors and policyholders and should be avoided.
Crombie should take credit for his role in reviving Standard Life, but his record is not without its faults. It may be a good time to announce when he's going and get that succession plan in place.
Bank investors fear a call for cash
AS the bank reporting season looms closer, there will be some nervousness among investors that growing evidence of weakened balance sheets will put pressure on dividends and force some companies into raising capital.
Royal Bank of Scotland is raising funds by offloading assets, including the rolling stock leasing company Angel Trains, which is expected to sell for £3bn.
But speculation of a rights issue at RBS persists and there are rumours that it may have to ask shareholders for between £5bn and £12bn.
In recent weeks, Cazenove and Citigroup are among those to have issued notes, raising concerns about Barclays and RBS whose value has slumped by well over a third since its high in March last year. That coincides with the pair's protracted pursuit of the Dutch bank ABN Amro.
The full article contains 764 words and appears in Scotland On Sunday newspaper.
