Time for Standard Life to float

THERE is something wonderfully naive about the opening line in a Press statement today from Standard Life.

It said: ?In order to bring speculation to a close, Standard Life announces it has been having discussions over the weekend with the Financial Services Authority on the application of the realistic approach to the reporting of its capital position.‘

If the assurer thinks this will stop speculation, it is likely to be disappointed both today and on publication of the full agreement with the FSA promised for tomorrow.

The events of the past few days have changed the perception of this, Europe's largest mutual assurance group - probably for ever - and even if the current problem is resolved or fudged, its customers have been badly unnerved. They will find this difficult to forget, no matter how hard the board seeks to convey the impression that it is a fuss about nothing or an honest misunderstanding.

The fact that Standard Life could go for a stock market flotation and transform its balance sheet makes speculation about its solvency problems all the more unfortunate, not to say misplaced, when presented as a possible threat to the ability of the company to continue to do business.

The board may not like the option of demutualising and floating, but it is inconceivable the directors would not embrace it if it became apparent it was the best way to solve any capital problems the society might face. That speculation will continue.

This is good news for its customers. There is little excuse for independent financial advisers to stop selling Standard Life products because of the scary headlines, and even less reason for policyholders to pull their money out for fear that they might be locked into a failing society.

On the contrary, the prospect of demutualisation and a potential windfall for every policyholder is a pretty good incentive to stay with it.

It is ironic, of course, that the stability of the society derives from an option the board has fought tooth and nail against. But there are times when principle has to give way to pragmatism.

As one who has always argued for Standard Life to maintain its mutual status, I take no comfort from saying this, but it does look as if time is running out for mutuality.

The Standard Life saga seems to be moving into the end game, which may well result in a flotation.

BAE choice

When I had lunch with National Grid Transco chairman Sir John Parker a month ago, he raised the question: ?Who is going to succeed Sir Richard Evans as chairman of BAE Systems?‘

Today, after a weekend of speculation in the Press, the answer seems to be that there is a better than evens chance that he will.

There are obstacles. He is already pretty busy orchestrating the recovery of RMC, although his workload at National Grid Transco might be winding down as the post-merger integration programme runs its course.

But given that he wants to stay there a bit longer, there is a potential difficulty in that BAE would constitute a second FTSE 100 corporate chair. However, institutional investors always say these governance codes are flexible. Now is the chance to prove it.

BAE is one of the handful of great engineering businesses left in this country, but it is at a crossroads and has to decide whether to fight on independently, or to collapse meekly into the arms of some predatory American. It is one of the biggest and most important jobs in business and the next chairman guiding this choice will leave a mark for generations to come.

If Parker does take it on, shareholders should be delighted.

Goldman's view

Devotees of the view that you should judge investment banks by what they do, rather than what they say, should note how the traders are once more gaining the upper hand at the top of Goldman Sachs.

A short time ago, following the ousting of arch-trader Jon Corzine who went off to carve out an alternative career as a senator for New Jersey, the investment bankers in the mergers and acquisitions tradition ruled the roost, with Hank Paulson flanked by John Thornton and John Thain.

But Thornton took off to become an academic at university in China last year and Thain will soon leave too, to become chief executive of the New York Stock Exchange.

Paulson is still at the top, but Thain's replacement, and his likely successor, is Lloyd Blankfein, a trader to his fingertips and responsible for more than half the firm's revenue. So even if half the City is predicting a surge in the equity market and an M&A upturn, that is not how Goldman Sachs seems to be positioning itself.

Do you really want to bet against the bank?

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