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Takeover of Ignis highlights Glasgow's plight in a tale of two cities

Standard Life Investments's takeover of Ignis might be good for the overall health of Scotland's fund management industry, but it is a great shame for Glasgow.

Back in the 1990s, Glasgow had a thriving fund management sector. Now this is all but gone. The £390 million takeover of Ignis, unveiled this week by Edinburgh-based SLI, takes out the last remaining big mainstream player in Glasgow, although we should not forget Maven Capital Partners is prospering in the private equity arena.

Back in the mid-1990s, even the most committed of doomsayers would have struggled to warn of what has come to pass. Glasgow, while somewhat in the shadow of Edinburgh, was a big enough player on the European fund management stage.

It had some critical mass, as demonstrated by the fact that the top brass of the UK's biggest companies felt they had to visit fund managers in Glasgow as well as Edinburgh when giving an account of themselves.

Scottish Amicable Investment Managers was a heavyweight back in those days, running about £15 billion of funds from Glasgow. But Prudential bought life office Scottish Amicable in 1997, closed the SAIM operation in Glasgow, and transferred management of the funds to London.

Although it was far from apparent at that stage, this was to mark the beginning of the end for the fund management sector in Glasgow.

Murray Johnstone, a Glasgow stalwart which had more than £4bn of funds, was bought by Aberdeen Asset Management for £150m in 2000.

And a devastating blow came in January 2004 when Abbey National decided to axe its near-£30bn asset management operation in Glasgow, which ran the funds of the venerable Scottish Mutual and Scottish Provident life offices.

In February 2004, Gartmore announced it was quitting Glasgow, a city in which it had managed about £1bn only a few years earlier.

Glasgow Investment Managers was then acquired by Aberdeen in 2007.

And, in 2010, the Saracen Fund Managers operation created by Jim Fisher announced it was moving from Glasgow to Edinburgh. This announcement came with news that senior industry figure Graham Campbell was buying into Saracen.

Mr Fisher and Mr Campbell cited the sharp decline in the number of fund management houses in Glasgow in explaining their decision to move Saracen to Edinburgh.

As a former employee of Scottish Amicable's fund management operation, a veteran of the industry, and a proud Glaswegian, few would be better qualified than Mr Fisher to assess the degree to which the sector in Glasgow had declined.

All the while, however, the fund management operation that now goes under the Ignis banner remained a beacon of hope on Bothwell Street.

This operation had, in many ways, defied the odds over the years.

This was in no small part down to the success of Danny O'Neil, who had joined the operation back in the days of FS Assurance, in building up the business under the Britannia and then Britannic Asset Management names.

Mr O'Neil's successors, Leslie McIntosh and former Scottish Amicable executive Gavin Stewart, were also acutely aware of the importance of the operation to the Glasgow economy and financial sector.

Ownership changes have been the norm for this fund management operation, which also traded under the Resolution banner before it became Ignis. There has been a feeling in recent years that, while headquartered in Glasgow, more and more of the operation might be shifting to London.

However, Ignis has remained a very important business for Glasgow.

It had funds under management of £59bn at December 31, with a very large chunk of these assets run out of Glasgow. And the Glasgow operation employs about 250 people.

SLI chief executive Keith Skeoch talked about retaining particular "talent" in the deal. But he gave no indication of being keen to keep the Glasgow operation in anything even loosely resembling its current form.

And SLI made no secret of its cost-cutting ambitions. It is targeting £50m of annual cost savings from the deal.

In fund management businesses, the main cost is the people.

SLI, which already manages funds of £184bn, is a fine example of the degree to which the fund management sector in Edinburgh has prospered in recent years.

In the 1990s, the Edinburgh fund management sector had at least its fair share of problems. Dunedin Fund Managers hit serious turbulence, before being acquired by Edinburgh Fund Managers. EFM then had its own difficult times, and was eventually acquired by Aberdeen in 2003.

And the venerable Ivory & Sime found itself being effectively taken over by Friends Provident in the late-1990s after a raft of senior departures.

There was plenty of turbulence at Standard Life's own fund management unit, before the successful creation of SLI as a standalone operation within the life and pensions group.

In contrast to this period, the sector in Edinburgh has, overall, done just fine in recent years, with stunning growth by SLI and an impressive showing from partnership Baillie Gifford. Edinburgh Partners, founded by Sandy Nairn, has grown into a big player from a standing start in 2003.

Glasgow has done all it can to reinvent itself as its fund management operations have been closed or acquired over the years, attracting the back-office activities of global financial groups. But this will be cold comfort for those at Ignis in danger of losing their jobs. And we are a far cry from the days in which the decisions affecting the financial sector in Glasgow were made in the city.

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