“The Scottish life offices were too resistant to change, through a combination of complacency and arrogance,” James Gilchrist, the retired sales director of Scottish Life, says. “They didn’t manage companies as businesses, in the way entrepreneurs would They were actuaries and thought they were infallible. If you didn’t play by Aslo rules, such as on commission rates, you got kicked out. Three years ago Abbey paid top dollar for Scottish Provident, but last month it closed its Edinburgh office, threatening 700 jobs and wiping out the brand. Scottish Widows, for which Lloyds TSB paid £7bn in 2000, is also now under review.St Andrew’s Square, a marvel of Georgian architecture, was once bordered by eight life insurers in the days when the Association of Scottish Life Offices (Aslo) was in charge. An old Clydesdale Bank branch, now owned by National Australia Bank, is an All Bar One, and in a former Bank of Scotland branch, former customers queue for a pint in what is now known as The Standing Order.At least Scotland’s banks have shrugged off their parochial image and produced record growth, witness RBS’s £6bn profit last year.

Takeovers of Scottish life insurers have not been as successful. Even Mike Ross, the former chief executive of nearby Scottish Widows, had a telescope in his office thought to be fixed on Standard.But things are changing fast, with consolidation and takeovers aplenty, and Edinburgh institutions seem to be falling prey more than most. Walk along George Street, in Edinburgh’s New Town, and you will be hard pressed to find a bank that is not now a trendy wine bar. A flagship RBS branch, with a magnificent marble banking hall, is now a restaurant and nightclub. Indeed one in 10 jobs in Scotland is in the financial services sector. More than 200,000 are employed in and around the sector and more than 50 per cent of companies increased staff numbers during 2003, according to a recent report from Joslin Rowe.

But the same survey shows a third of companies are planning to cut headcounts this year.Standard, which hosts its annual general meeting today less than a week after announcing it is to surrender its mutual status, is already axing 1,000 jobs and many fear that the move to public company status will mean a lot more redundancies.Edinburgh is still reeling from the news of Standard’s dramatic volte face. The company is renowned for its iron grip on Edinburgh and staring down from the executive offices of its Lothian Road headquarters and enjoying one of the best views of Edinburgh Castle going, it is indeed easy to feel like you own the city. Standard even has the clout to force the bus companies to run on Hogmanay so that those staff who need to can make it into work.While the other Scottish insurers – Widows, Equitable, Amicable, Mutual, Life and Provident – have all succumbed to demutualisation and new owners in recent years, Standard’s unstoppable rise to become market leader in the UK while staying mutual has been much envied.No wonder, then, that when the Sheraton hotel was built next door, users of its spa whooped with delight at being able to recline in the roof-top hot tub while watching the Standard Life ants in action. Standard Life, the Edinburgh-based insurance company that once prided itself as the very cornerstone of the Scottish financial services industry, will face its policyholders today to explain what, by any standards, has been a stark reversal in fortunes. Its troubles have raised fears that the Scottish capital’s once venerated financial community is beginning to crumble. It is the home to RBS, formerly the Royal Bank of Scotland, and HBOS, the merged Halifax and Bank of Scotland, two of the biggest companies in the UK.