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Relocation on the menu for ScotProv

The rumour mill says Scottish Provident employees started getting jittery about their jobs when a For Let sign went up outside their office in St Andrew Square, Edinburgh, late last year and then quickly came down.

Then catering staff began talking about how their contracts were not being renewed.

ScotProv&#39s parent, Abbey, has now revealed that 900 jobs in Edinburgh are being transferred to Glasgow, with the Edinburgh office closed by the end of the year.

Analysts and IFAs seem content that this is a restructuring move by Abbey and not the start of a move out of life and protection business to focus on its roots of mortgage and bank lending.

Abbey stresses that it is not closing any aspect of its UK life, investment and protection business, including Scottish Provident, Scottish Mutual and Abbey National Life. With-profits funds for the three brands are already closed to new business.

But the ScotMut and ScotProv brand names will be phased out this year as part of the company&#39s rebrand as Abbey.

Abbey has promised that all its Edinburgh employees, who work mainly in long-term savings and protection, will be offered packages to encourage them to relocate or commute to Glasgow. It says it is not cutting jobs, merely moving them.

The move means Glasgow will now be Abbey&#39s only Scottish centre for long-term savings and protection business.

However, Amicus regional officer Hugh Scullion says only a handful of staff are prepared to relocate. He believes Abbey intends to increase its staff presence in India and “let the UK wither on the vine”.

Abbey also announced last week that 400 jobs in Warrington, Derby and Bradford are at risk as it plans to outsource some current accounts enquiries over the phone to India.

ScotMut was bought by Abbey National for £285m in 1992 while ScotProv, which was founded in 1837, was bought for £1.8bn in 2001.

In the late 1990s, ScotProv had decided it was spreading itself too thin and began focusing on the protection market, coming up with impressive innovations such as the menu system. Once it joined Abbey, it came under the leadership of ScotMut&#39s management team.

Commerzbank banking analyst Noel Reynolds says closing the Edinbugh office is part of Abbey&#39s move to make £200m in cost savings by the end of 2005. He says: “This is one of the ways that I suspected it may go about it, as it seems to make sense. It is running two separate offices in two separate locations, not doing the same thing but similar. It is obviously sad for the people involved but is part of the plan.”

Reynolds believes it is unlikely that Abbey will shut the insurance businesses completely. “If it wanted to do that it, would not go through the hassle of moving the office in this way now. I think it will maintain them. I understand new products they are selling are being branded Abbey rather than ScotMut or ScotProv but they have made it quite clear that selling insurance products is still part of their strategy.”

Life Policies Direct director Jason King questions why Abbey bought both ScotProv and ScotMut, saying most banks have made enough mistakes having one insurance subsidiary, never mind two.

He says: “The one asset they have got is the brand of ScotProv in the protection market. It has really got to protect that. I cannot see any reason why they would want to close a successful operation like that. It would be a sad day if a major provider like ScotProv dropped out of the market, meaning less choice for the consumer.”

Plan Invest Group joint managing director Michael Owen says the restructure is a sign of the times and suspects last week&#39s announcement will be one of many from companies over the coming months. He says Abbey&#39s figures show it needed a reorganisation and believes it is likely to focus more on its core business of mortgages and bank lending.

Owen says: “It is right in this climate that they should look at all their operations closely but they took over businesses like that to get into the life insurance business and it would seem a bit backward to start pulling out again.”

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