Friends Provident's new boss may scrap asset sales

Lombard, which Friends bought in 2005 for around 400 million pounds including earnout clauses, is attracting offers below that, with only two private equity firms left in the running.

"Given the current environment, we expect the company to shelve the plan to dispose of Lombard and to opt to distribute its shares in F&C (in) specie," UBS analysts said in a note.

Others said they would support that decision.

"If they can't find a buyer at a reasonable price, they should walk away -- the only reason they need the money is to increase the dividend, they don't need it for solvency or for investment," one industry analyst said.

A decision to postpone the sales, however, would be the second major strategy turnaround for Friends in under two years.

TOUGH TIMES

Friends was plunged into crisis late last year after a merger with rival Resolution fell through and forced it to abandon key growth targets. It ousted Chief Executive Philip Moore in November, just months after he had taken the helm.

In January, the company's executive chairman Adrian Montague announced a controversial strategy review to slash costs, refocus its core UK business and sell non-core assets.

Since then, however, conditions have deteriorated.