Standard Life in talks to buy Ignis Asset Managment for £400m

Industry insiders expect more deals as increased pressure on margins pushes small and mid-sized managers to assess their future, while bigger players look to build even larger operations.

“There is definitely going to be a lot more consolidation as it is hard to see how some of the smaller businesses keep going,” said one source.

In a statement, London-listed Phoenix said on Sunday talks over the sale were at an “advanced stage” and that it would update the market on the deal with its annual results on Wednesday.

Banks across Europe are looking at selling their asset management arms as lenders come under increased pressure to dispose of non-core businesses and to bolster their loss buffers against a new financial crisis.

The so-called bancassurance business model had been popular among major international and domestic financial groups in the years before the crash, but with capital requirements rising and regulators keen to see lenders simplify their operations fewer banks are pursuing the strategy.

Selling Ignis will help Phoenix continue to cut its £2bn debt pile, which at its peak stood at around £3.5bn.

Standard Life’s acquisition of Ignis comes amid growing uncertainty at the group in the run up to the Scottish independence vote in September. Last month, the company said it could quit the country in the event it left the union, saying it would take “whatever action we consider necessary – including transferring parts of our operations from Scotland – in order to ensure continuity and protect the interest of our stakeholders”.

Shares in Standard Life were hit last Wednesday by the announcement in the Budget of the end of compulsory annuities for pensioners. However, the stock recovered quickly and only 3pc of the company’s profits come from new annuities business.

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