600 jobs go and £1bn sell-off planned in Friends shake-up

Friends Provident is to slash 600 jobs and put three businesses worth a total of more than £1 billion up for sale.

The life insurance and pensions group said today that it will axe 600 of its 3600 staff as part of a group-wide overhaul and cost-cutting drive. The job cuts will be made throughout its business in the UK as it seeks to save nearly £60 million.

It also said it is looking to offload three business that do not fit in the revised strategy following a major review. They are F&C Asset Management, Lombard and Pantheon Financial.

Friends owns a 53% stake in F&C, which analysts reckon could fetch £400 million. Lombard is rated at around £700 million while Pantheon is said to be worth "tens of millions of pounds".

Friends Provident, which this week poached Trevor Matthews from Standard Life to take on the role of chief executive, has long been the subject of takeover speculation.

On Monday private-equity firm JC Flowers said that it was considering a buyout of the group. There has also been speculation that Swiss Reinsurance may join the auction for Friends Provident if there is a bid from Flowers.

Collins Stewart analyst Tim Young said in a note to clients that he expects a bid from Flowers to "be made quickly". He has an add rating and 190p target on Friends Provident's shares.

The stock slid 12p to 143p today while F&C shares were down 3p at 187p.

Friends Provident today said its new business increased by 8% in 2007 to £7.66 billion, much of it coming in the UK.