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Scottish Friendly to sell wrap business to Citi

Scottish Friendly Assurance, which handles the back office administration for Nucleus and the Aviva Wrap, is selling its wrap administration business to Citi.

The deal will see the transfer of all 134 Scottish Friendly wrap administration employees to Citi.

The business is being sold to Citi’s Global Transaction Services, a division of Citi’s institutional clients group.

Upon completion Scottish Friendly’s wrap business will be integrated into Open Wealth, Citi’s service offering for wealth managers.

Nucleus chief operating officer Andy Smith says: “The transaction accords precisely with our market expectations and as such it appears the market continues to develop in line with our plans. I am sure Citi will be keen to build on the foundation Scottish Friendly has established and we look forward to consolidating our position as the fastest growing independent wrap in the UK.”

Scottish Friendly established its wrap administration business in 2006.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Oh dear oh dear – exactly the sort of shock that Nucleus users did’nt want to hear – Nucleus was a very important customer to Scottish Friendly but is a minnow in a very big ocean as far as Citi is concerned – stand by for service standard horror stories.

  2. And a question mark over Aviva’s commitment to it’s (Mk2) Wrap?

    Surely if they wanted to control their own destiny in Wrap, they would have bought the operation themselves?

  3. @ Stanley Kirk – that is one way of looking at it. The other is that in a world of diminishing margins and scale-based administration functions (it is all about repeatable processes) this will actually only be a good thing for Nucleus users. For those of a positive bent, Nucleus the platform remains but is simply now powered by a business that has over $13tn (yes trillion) of assets under administration and carries out over 3billion (yes billion) transactions a day world wide. I would take being a small fish in that very efficient, profitable big ocean.

  4. Stan, I’d love to know what your beef with Nucleus is. It can’t be just me that’s noticed how you are all over any Nucleus story like a fat kid on a Smartie to spread your poison. So what’s the deal?

    Scottish Friendly’s wrap business was getting too big and becoming the cuckoo in the nest. I think this is good news.

  5. Tim, I think you are somewhat confused, I can’t even remember the last time that Nucleus appeared strongly enough on my radar screen to stir me to a comment. Normally I’m in total agreement with most of what David Ferguson has to say about Wrap because I’ve been peddling the identical story for even longer than he has!

    I can say that colleagues of mine were a bit too close to the Skandia/Selestia disaster not that long ago when all current Skandia plans were transferred to the selestia platform after Old Mutual bought Skandia. That was the last big data/systems transfer that I know of in the platform world and let’s just say it caused a few ‘service’ problems for period of time. In fact, speak to any big project data transfer expert and they will tell you that these are very messy and inevitably cause problems. Not a great experience for the affected IFAs and clients. At least Skandia went into what they did voluntarily – I can’t imagine that Nucleus had much say in the sale by Scottish Friendly – but I stand to be corrected by an insider with details of the deal.

  6. Interested passer by 9th November 2011 at 6:44 pm

    Will be interesting to see if they can sort out those horrendous reconciliations they have been failing to do for Nucleus amongst others, be interesting to see the timeline for transfer to their own systems

  7. I have to say I agree with Stanley. I suspect this is why most life companies who have entered the wrap market have not purchased any of their competitors to assist with scale. a few have shut down their wraps and could not find buyers: Norwich Union, UBS & Macquarie to name a few.

    Time will tell I guess…

  8. It appears from the comments above that naivete rules the day. It would serve the Nucleus users well to study the past record of Citi including its previous guises. Can anyone suggest good reasons why anyone would trust a bank – let alone an American one?

  9. wraps what a waste of effort

  10. You all sound like red top jounalists. Maybe Citi have bought Scot Friendly’s wrap business because its a cool piece of kit AND the staff that make it work are excellent. Maybe there is no MIGRATION or reconciliation to be done. Maybe Citi are going to INVEST in it because they see the potential. Maybe Citi’s financial strength and and scale signals confidence and security for the business going forward. Maybe, Citi’s scale will allow charging to be even more competitive. Maybe this could be a good thing for IFAs and their clients. And maybe Nucleus and Aviva could benefit too? Or maybe red top jounalists just dont like good news?

  11. Is the Scottish Friendly sale or exit price, and earnings multiple known?
    5 years old, 134 (of 220) staff, and £4bln is assets..?

  12. If it was lucrative part of the business they would not have sold it. Wonder how they can justify having 7 executives now when they have less than 100 staff.

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