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Future is clouded for F&C

The merger talks mean the future is uncertain for F&C Asset Management, which is 52 per cent owned by Friends,

Investment management is seen as the main overlap if the deal goes through and commentators say any merger of Resolution and F&C’s fund businesses would mean job losses.

F&C has struggled in recent years, posting losses of £30.6m in 2006 and £106.3m in 2005 after losing several big institutional mandates and restructuring costs.

Resolution withdrew a £20bn contract from F&C in 2005 after it acquired the closed life book of Royal & Sun Alliance and moved the management of the funds back in house. Both Resolution and F&C are top 20 players in assets under management with £29bn in total.

Hargreaves Lansdown head of research Mark Dampier says: “Resolution could easily sell off F&C or keep it as a separate business but I am not sure it would want to integrate the two businesses as there are numerous problems with this. This deal does give the impression of insurance companies looking for economies of scale but there are always going to be fund manager changes as a result.”

Chelsea Financial Services managing director Darius McDermott says any merger would result in job cuts, pointing to both teams’ strength in property and fixed interest.

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