Bank of Scotland to Break Ties with Standard Life, Set Up Own Life and Pensions Business

Bank of Scotland has announced plans to sever its long-standing tie with Standard Life, the mutual insurer, in order to establish its own life and pensions operation by March 1999. The move marks a significant shift in the bank's strategy, as it will no longer rely on Standard Life to design and provide its investment products. Instead, Bank of Scotland will "cherry pick" high-quality products from established providers and badge them under its own brand.

Key Takeaways:

• Bank of Scotland will establish its own life and pensions business, allowing it to design and distribute products tailored to its customers' needs.
• The bank will not design its own products, but will instead badge a range of investment plans from established providers on a best-of-breed approach.
• Sainsbury's Bank, which is owned 45% by Bank of Scotland, will also cut its ties with Standard Life due to the bank's decision to go it alone.
• The products will be marketed and distributed through Bank of Scotland's branches, by telephone, and by direct mail, with a direct salesforce also being considered.
• Standard Life sold its 32% stake in Bank of Scotland in 1996, and the tie with the insurer was valued at only 2% of new business for the insurer.
• Relations between Bank of Scotland and Standard Life have been strained since the insurer's stake sale in 1996.
• The severance of the tie is unconnected with Standard Life's decision to liquidate its shareholding in Bank of Scotland.

Statistics:

• Bank of Scotland owns 45% of Sainsbury's Bank.
• Standard Life sold its 32% stake in Bank of Scotland in 1996.
• The tie with Standard Life accounted for only 2% of new business for the insurer.
• The decision to severed the tie is scheduled to take effect in February 1999.

Sources:

• The Times, 1998
• Copyright (C) The Times, 1998