PRUDENTIAL Corporation has decided to close down Scottish Amicable Investment Managers (Saim) in Glasgow. Responsibility for managing most of its #15bn assets will be transferred to the Pru's own fund management operation in London over the next week or two.

The demise of Saim had been widely anticipated. Few thought, when Scottish Amicable decided to accept the Pru's takeover proposals in March, that Saim would survive the merger.

Nevertheless its closure deals a further blow to Scotland's troubled fund management industry. And at a stroke it reduces the amount of funds managed from Glasgow by half, severely damaging the city's standing as a financial centre.

Sir John Shaw, the chairman of Scottish Financial Enterprise, the organisation which represents Scotland's financial services industry, said the decision to close down Saim was ''a disappointment,'' but ''hardly unexpected''.

The only crumb of comfort is that part of Saim's fund management team and #830m of third party funds will remain in Glasgow under the wing of Britannia Investment Management.

This fast-growing offshoot of the Britannia Building Society outbid Glasgow-based Murray Johnstone for the contracts to manage Saim's sole investment trust and 137 pension fund mandates.

Saim chief executive Douglas Ferrans and seven of his top fund managers are moving over to Britannia Investment Management to continue looking after this pot of assets. About 10 back office staff will go with them.

But for the 100 plus other employees at Saim's headquarters in Gordon Street opposite Central Station the future is bleak.

The back office staff, who handle investment and administration, have their jobs guaranteed until the year end. Some may eventually be offered new posts at Scottish Amicable's headquarters at Craigforth, near Stirling. But most will probably be made redundant.

Saim is being closed down well before the Pru formally takes control of Scottish Amicable on September 30 in order to end the atmosphere of uncertainty surrounding its future.

This has done nothing for its staff morale and 15 of its original 35 fund managers have already abandoned the sinking ship for new jobs in Edinburgh and London.

Mr Ferrans said the management of Saim funds would be transferred to Prudential Portflio Management and Britannia Investment Managers on a contract basis until the Pru's takeover of ScotAm is formally completed.

But the Saim back office team in Glasgow will continue to handle the associated administration work for several months yet via computer links to the Pru and Britannia.

Saim's #830m of pension fund and investment trust business is only staying in Scotland because it would inevitably have scattered to the four winds had the Pru taken it south and transfered it to a new team of investment managers in London.

Unlike the #14bn in Scot-Am's life fund, these were not captive assets. Their pension fund administrators and the investment trust board are free to seek new managers for their money any time they wish. It was therefore natural for the Pru to try to sell this business along with the team of managers that looked after it.

Murray Johnstone, which is based round the corner from Saim in West Nile Street, put in a bid . And Mr Ferrans unsuccessfully tried to interest Ivory & Sime in Edinburgh in taking on the business.

He also looked at the possibility of management buy-out or some sort of joint venture. But in the end Britannia Investment Managers offered the best deal.

This included an undisclosed payment to the Pru, which according to insiders, ran to several million pounds. Equally importantly, Britannia offered the environment where it was felt the Saim fund managers and their clients would feel most comfortable.

''The price wasn't the only issue,'' said Danny O'Neil, the managing director of Britannia Investment Managers. ''It was trying to find a place where the people would want to go and work and where the clients would want to stay on as well.''

Mr Ferrans, 42, will become sales and marketing director of Britannia Investment Managers, with a mandate to build up Britannia's pension funds business still further. He brings with him David Sutherland, Saim's director of fixed interest investments, who also gets a seat on the Britannia board.

The closure of Saim is the latest in a long line of setbacks for the Scottish fund management industry

Last year General Accident cut the heart out of its fund management operation in Perth by transfering the management of #9000m south of the Border.

And since then, Edinburgh Fund Managers and Ivory & Sime have seen their funds under management eroded.

Nevertheless, Sir John Shaw said the publicity surrounding these ''dramatic changes'' had overshadowed ''the steady accretion of business that is won by Scottish fund management houses, particularly in the life and pension sectors''.