NEARLY 1,700 staff at one of Southampton's biggest companies were today coming to terms with the fact that a third of them are to be laid off.

As reported in the Daily Echo yesterday, up to 600 posts will be scrapped within three years at Skandia, which has its UK headquarters in the port city.

Bosses at the global financial services company stressed they are committed to growing the UK arm in Southampton.

Skandia belongs to parent company Old Mutual, a South African life insurance giant, following a hostile £4 billion takeover four months ago.

Local employees, who are among the best paid in Hampshire, were understood to be in a sombre mood today following the 100-day review announcement yesterday by Old Mutual.

Some posts will be lost through staff turnover, with the rest made up of compulsory redundancies.

Workers had already been braced for the worst after the Daily Echo revealed last month that hundreds of jobs were on the line following a leaked report.

One employee, who did not wish to be named, said the cutbacks the biggest at any company in the city in recent years had been on the cards.

He said: "This is not a shock. It is kind of expected after a takeover like that."

Skandia's £1m-a-year group chief executive Julian Roberts acknowledged this was a "sad" time for local staff.

However, he was keen to focus on the positive side, saying the company will continue to grow market share in the UK.

Skandia, which sponsors the world-famous sailing regatta at Cowes Week every August, is tasked by Old Mutual with doubling its UK funds under management within five years.

The brunt of the £26m cuts in Southampton will come through merging back-office operations between the two companies, improving IT capabilities and making changes to the administrative side.

It emerged today that Skandia, which has a record £31 billion of funds under management, is likely to sub-let one of its three offices in the city because less floor space is needed with a substantially reduced workforce.

However, bosses said it was too early to say whether the landmark Skandia House, opposite the Civic Centre, will be vacated eventually.

The job cuts at Skandia, though widely expected, will come as a financial blow to many, as it is regarded as one of the top payers in the county.

According to a salary league table produced by Salisbury-based legal firm Wilsons, the average salary at Skandia is £37,616 although that figure includes the millions of pounds paid to top management.

Last year 13 executives were paid £6.1m between them equivalent to about £470,000 each.

News of the cutbacks was given a mixed reaction by Southampton's chamber of commerce.

Director general Jimmy Chestnutt said: "Skandia is one of the city's larger employers, and it is sad to see them having to take this step.

"The loss of jobs on this scale will of course be a blow to the city but we also know that other Southampton businesses are expanding and taking on extra staff.

"Skandia staff are well-trained and well-placed to take whatever opportunities become available.

"Redundancy, however, is almost always a personal tragedy for those individuals involved, and the chamber has every sympathy for them."

Old Mutual, which is listed on the London Stock Market and is the world's sixth largest life insurer, made £1.2 billion profit last year.

Skandia UK, which made £160m profit and has a million policyholders, was first set up in the city in 1979 with a handful of people by "Midas Man" Alan Wilson.

He was the highest-paid director in Southampton, at £1m, last year.

Mr Wilson, who retired as the UK boss in February, brought financial security to thousands of staff. Under his watchful eye, the business grew to be a £1 billion force that eventually caught the eye of Old Mutual.