Tricky task to raise Standard Life

By LUCY FARNDON FOR THE DAILY MAIL
Updated:

 

David Nish says he goes to bed frustrated and wakes up feeling excited. So in that sense he is a lucky man.

But changing the culture at Standard Life will take years rather than months. Also, as with many old-style bureaucracies - Marks & Spencer and Royal Dutch Shell spring to mind - the intention and the end result can often be rather different.

Having stepped into Sir Sandy Crombie's shoes after a dutiful period as his finance director, Nish is now trying to shake up staff, systems and processes while bringing this business into the 21st century.

As someone with two tiny dormant Standard Life pension policies from previous jobs, I understand exactly what Nish means when he says the insurer hasn't been thinking about customers.

All I get is lengthy paper statements every six months or so, which probably cost more than the negligible rise in value in my pension pots.

In all those years, I have never received a phone call or suggestion to combine my meagre savings or making additional contributions.

Nish doesn't want the Edinburgh-based firm to be known as a life insurance and pensions provider. He wants to be a money manager, offering all types of financial products to companies and individuals.

Trying to pitch the group alongside wealth managers such as St James's Place or Hargreaves Lansdown would obviously be desirable from a share rating point of view.

As Prudential's chief executive Tidjane Thiam would testify, investors aren't enamoured by the prospect of leaving their money sitting in a UK-focused pensions group and want to tap into the next big thing.

While for the Pru, this means betting the house on the Asian growth story, this would never be an option for a smaller scale and risk averse Standard Life.

In many ways, Nish is absolutely right about the opportunities still available in the UK. The demographics are working in his favour and if larger players focus on overseas markets this is even better.

However, it is not the first time that Standard Life executives have been full of great plans about being at the cutting edge of new-style pensions provision. As yet, no one has quite come up with the goods.

Nish seems to have identified the problems, but efficiency savings must not be allowed to distract the group from building a business that will be in a stronger position in ten years' time than it is today.

Rearranging deckchairs

Who would have thought it?

Charles Allen, the man lambasted for turning ITV into a cost centre rather than a television empire is now going to be running Britain's best known music label.

If his lack of creative credentials was an issue at ITV, one can only suspect that the likes of Lily Allen, Robbie Williams and Pink Floyd won't be too impressed with the prospect of a number cruncher taking over at the most vulnerable moment in EMI's 113-year history.

That said, who else could have been persuaded to take the helm? EMI is being destroyed by a cat fight between private equity owner Terra Firma and unhappy bank Citigroup, which has been saddled with all the debt.

Guy Hands at Terra Firma hardly gives the impression of being a willing and supportive shareholder, having launched a lawsuit against Citi for duping him into the deal in the first place. All he wants is to be able to secure an exit at a price which his investors won't see as a total disaster and will allow him to move on.

Allen may be able to help him do just that. He has a better grasp of the media sector than his predecessor Elio Leoni-Sceti and, more to the point, a lot of experience overseeing deals and corporate restructurings.

One suspects this will not be a long-term stewardship. Merging with another music group would be the best fate for EMI and its artists. As EMI's Grammy Award winner Joss Stone asked last month: 'What manager will want their band signed to a company which might not exist in its current form in a year's time?'

FSA caution

The country's top financial watchdog has to prepare for the worst while hoping for the best. But the tightening up of stress tests for banks is hardly a sign of confidence.

While Lord Turner is not himself forecasting a further 2.4% decline in GDP, the fact that he wants institutions to be alive to the prospect reflects underlying fears of a double dip recession.

The last time the FSA drew up its stress test scenarios was in the midst of the panic of last March when confidence was at its nadir. Stock markets have rebounded 60% since then, but such optimism is not shared by all.

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