AFTER shareholders in Standard Life and Aberdeen Asset Management gave backing to what is billed as a £11bn merger between the firms, many in Scotland will be regarding developments with mixed feelings.

Standard Life chairman Sir Gerry Grimstone believes the takeover will create a powerhouse that will have the scale needed to compete in an asset management business which is becoming increasingly global in nature.

With growing amounts of money needing managed following the rise of a new class of savers in areas such as Asia there will be big prizes on offer to those that get it right.

Some worry, however, that the decision to have joint chief executives run the group is unsustainable.

In the short term the integration process is likely to result in pain in Scotland. Jobs will be shed in areas such as central functions as the group removes areas of overlap and looks to deliver the efficiency gains promised to investors.

As Standard Life has seemed intent on turning itself into an asset management business, news yesterday that the less sexy pensions and savings arm may lose relatively few jobs was unexpected.

Some will be delighted Scotland will be home to Britain’s biggest fund manager if the deal goes through. It will be good for the country’s standing as a financial services centre to have such a behemoth based in Edinburgh.

For any fund management firms that don't have a specialist offering, however, the prospect of taking on a business with the scale and reach of Standard Life Aberdeen will be daunting.

Standard Life and Aberdeen have both hoovered up smaller Scottish players in recent years.

The creation of such a huge business may put pressure on the supply chain in the investment administration sector, which is an important employer in Scotland.

The merger will also see Scotland lose another listed company, depriving professional services firms of valuable fee income, once all the work generated by the merger is done.