Friends Provident has admitted defeat in its attempt to offload a second of its three up-for-sale businesses.

Friends Provident has admitted defeat in its attempt to offload a second of its three up-for-sale businesses.

Friends, where Standard Life's former UK chief Trevor Matthews takes over as chief executive at the end of the month, is to hang on to its Pantheon financial advice arm after a reported £30m sale to private equity evaporated.

Last week, the insurer's hopes of selling fund manager F&C Asset Management, which employs over 100 people in Edinburgh, were dealt a blow when its shares fell by almost 30% after 20% shareholder Dawnay Day sold out.

That leaves the European wealth management business Lombard, which, in the absence of an update yesterday, still looks set to find a buyer.

Private equity buyers CVC Capital Partners and Hellman & Friedman have been reported as competing to buy Lombard, with CVC now said to be the front-runner with a higher bid, though substantially below the £700m expected price tag.

Pantheon, which sells financial advice and products to high-net-worth individuals, was acquired for £16.8m in May 2007, with further payments dependent on performance. Its activities include financial planning, tax and investment advice, scheme administration, and a retail investment unit operating via a call centre.

Brokers said the withdrawal of the sale reflected tough markets and uncertainty on IFA business.

Ahead of half-year results on August 7, Panmure Gordon is forecasting pre-tax operating profits of £225m, a fall of 15% on a year ago.

Analyst Barrie Cornes said he was not expecting any immediate improvement in sentiment towards the financial sector.

He added: "Although the insurers do not seem to be impacted to the same extent as the banks with their asset- backed securities, demand for life and savings products will be impacted by the economic downturn."

The shares rose by 1.75p to 83.75p.