ABBEY National's surprise takeover bid for Scottish Amicable could turn out to be only the opening offer in a multi-billion pound auction for control of the life assurance company.
Immediate fears, however, were expressed that hundreds of jobs could be under threat if the hostile bid succeeded.
Stirling-based Scottish Amicable had rejected the offer, worth up to #1400m, as too vague and pledged to forge ahead with its own plans to demutualise and convert to company status.
The Scottish company has lined up a #545m cash injection from Swiss reinsurance giant Swiss Re to help it float on the stock exchange as an independent company in three to five years time.
Scottish Amicable, however, has not ruled out talks with Abbey National or any rival bidder who may appear on the scene while the clock ticks on its own proposals.
The job fears centre on the fact that jointly the two companies employ about 4000 people in Scotland, mainly in Glasgow and Stirling, with obvious duplication in some key departments.
Mr Willie Gibson, regional officer with the MSF union, said: ``We warned last year, when Scottish Widows cut 25% of its staff, that thousands of other finance sector jobs in Scotland could be in danger.
``We do not want to be accused of scaremongering now, but all of these companies are looking to make money; they are labour intensive and if they can maximise profits and reduce costs, they will.''
Mr Jim Fisher, a Glasgow-based fund manager who left Scottish Amicable in 1993 to set up SFM, conceded that many hundreds of redundancies were ``a distinct possibility''. He added: ``After all, most of the overheads are walking on two legs.''
It could also lead to the management of Scottish Amicable's #14bn of funds being transferred south of the Border, although if Abbey National's bid succeeds the fund management operation will remain based in Glasgow.
Scottish Amicable said yesterday it had received several approaches since it announced plans on January 16 to convert from a mutual society owned by its policyholders into a limited company owned by shareholders.
Lloyds Bank, the Halifax building society, and Prudential, the UK's largest insurance company, are thought to be likely suitors.
Abbey National has moved ahead of the pack to put down its own marker but it has faced Scottish Amicable policyholders with a difficult choice.
Should they accept a takeover bid offering a substantial and immediate cash payout?
Or should they stick with a strategy of independence that will only reward their loyalty with increased bonuses and share entitlements of uncertain value in several years time?
``It's going to be difficult enough for people in the industry to work out what's going on, let alone the poor guy in the street,'' said Mr Fisher.
Abbey National has pro-mised to protect the jobs of Scottish Amicable's 1800 staff in Stirling but it has given no guarantees to the company's 400 other employees. About 200 of these work at Scottish Amicable Investment Management in Glasgow, the subsidiary which looks after the group's money.
Abbey National is offering to pay Scottish Amicable's 1.9 million policyholders #400m in cash or Abbey National shares. Most of this money would go to the 1.1 million holders of with-profits life assurance policies.
Abbey National would then inject between #700m and #1000m into Scottish Amicable's with-profits fund to improve its investment performance in return for 10% of the profits. The exact sum to be invested would be determined by independent actuaries.
Scottish Amicable criticised the offer for being too vague and imprecise and hinted that it was too mean.
It also said Abbey National should have waited until Scottish Amicable published fuller financial information about its own demutualisation plans next week. This will be published in a circular to policyholders convening an ex- traordinary general meeting some time in March to vote on the board's proposal to demutualise the company from May 1.
Deputy managing director Paul Bradshaw accused Abbey National of ``jumping the gun''.
``It's early days yet,'' said Mr Charles Toner, the deputy chief executive of Abbey National, hinting at the possibility of an improved bid.
Mr Bradshaw said his personal goal was for policyholders to get shares worth well over #400m at flotation. However, they might have to wait up to five years to get them and a strong investment performance by Scottish Amicable during that time is not guaranteed.
The big attraction of Scottish Amicable is that it would treble the size of Abbey National's life assurance business overnight while at the same time creating a new presence in the endowment sector of the market.
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