Richard Pennycook’s future as finance director of the RAC remained in doubt this week, as the business prepared for its merger with Aviva-owned Norwich Union Insurance.
If he stayed, Pennycook could find himself in the same role but for a subsidiary of Aviva. NUI’s current finance director is Mark Hodges.
‘Many plc functions become irrelevant if it becomes a subsidiary,’ said Mark Freebairn, head of the CFO practice at recruitment firm Odgers Ray & Berndtson.
‘You lose City contacts, investors, tax and treasury responsibilities. However, in some instances the FD will stay. Perhaps they could become the FD of the main group one day.’
Ernst & Young is expected to retain its role as auditor of Aviva and its subsidiaries, raising questions about the future of KPMG as the RAC?s auditor.
The billion-pound deal will generate cost savings of £80m a year, but the savings are expected to include an undisclosed number of redundancies among finance support staff. Total job losses among all support staff, including IT and HR, will number 900. Another 800 back-office and administration jobs will move offshore, although Aviva does not plan to move customer-facing operations abroad.
Staff cuts will be achieved through natural turnover ‘where possible’, according to Aviva. NUI’s staff turnover is ‘in excess’ of the roles to be cut.
Freebairn said that he did not expect all the job losses to come from the RAC’s ranks. ‘You’d recognise that the top 50% of staff in the purchased organisation could be better than the bottom 50% in your business,’ he said.
Aviva will spend around £100m in restructuring following the acquisition. The company intends to minimise disruption to customers during the integration of the RAC into the group.
Both the RAC and Aviva declined to provide a comment.
Harrison Beale & Owen will (HB&O) have a new chairman and managing director at the helm for 2017
Satvir Bungar promoted to managing director in the mergers and acquisitions team
Carolyn Brown appointed as the first head of client legal services practice RSM Legal
UK senior partner Phil Verity has been elected for a second term at Mazars