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