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ScotProv&#39s real cost could be slashed

Industry analysts predict the actual figure Abbey National will pay for Scottish Provident is nearer £1.4bn if its reported £2bn bid is accepted.

Speculators originally estimated a price of £1.2-£1.4bn. Experts say Abbey&#39s £2bnbid could mean some ScotProv assets being redistributed toits policyholders, which could involve an estimated £400m.

Another option for Abbey could be the sale of Aberdeen Asset Management. ScotProv&#39s 38 per cent holding in Aberdeen is valued at £400m. Aberdeen&#39s share price has rocketed this year, reaching a high of 665p and could be accounted for in Abbey&#39s offer.

Industry insiders say savings would come from synergy between ScotProv and Scottish Mutual, which Abbey bought in 1992, with up to 500 ScotProv jobs likely to be lost.

But they say a total merger of the brands seems unlikely. ScotMut and ScotProv could transfer business to allow focus on their individual markets of pensions and protection.

The future of their offshore businesses is less easy to resolve. There could be regulatory problems in moving funds between ScotProv International&#39s base on the Isle of Man and Scot Mutual International&#39s base in Dublin.

Industry analyst Ned Cazalet of Cazalet Financial Consulting says: “Nobody knows what this figure of £2bn comprises of. It sounds like a huge fee but that does not mean Abbey will be paying that out.”

Johnston Financial Services managing director Adrian Johnston says: “How did they arrive at the £2bn figure? Redistributing the estate will be one of the things they could try. If the Axa Equity & Law court action succeeds, I would not doubt Abbey National would want to do the same thing.”

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