WINDFALLS of up to £6,000 will be heading to members of mutual insurer Scottish Provident, following the £1.8 bn takeover by Abbey National.

Scottish Provident's 325,000 qualifying with profits policyholders will receive an average payment of £4,500 for loss of their mutual status, plus additional policy benefits averaging £1,500.

Another 100,000 members who are not qualifying with- profits policyholders will receive a flat payment of £500, while the remaining 325,000 policyholders will receive nothing.

The acquisition brings to an end five months of speculation about Scottish Provident's future, following the announcement in April that it was reviewing its mutual status.

For Abbey, the deal will add to its existing insurer Scottish Mutual, based in Glasgow, which it bought in 1992.

Ian Harley, chief executive of Abbey National, said: "This transaction delivers on our stated strategy of significantly diversifying our business and is a major step in changing the shape of our business."

Abbey will retain the Scottish Provident name.

The deal however has raised fears of job cuts among the 4,000 staff employed by Scottish Mutual and Scottish Provident.

Mr Harley said: "Hopefully we will keep redundancies to a minimum."

Scottish Provident confirmed there would be some "rationalisation" of the combined operations but it was intended this would be achieved through "business growth, natural wastage and redeployment elsewhere in the group where possible".

The mutual added there were no plans for wholesale redundancies.

John Wall, Scottish national secretary of the professional and finance union MSF, welcomed the pledge that job losses would be kept to a minimum and said assurances had also been given that no locations in Scotland would be closed.

"What has been proven here is that job losses are not the necessary outcome of takeover and merger," he said.

"Union organisation and recognition, coupled with a progressive employer, mean that jobs can be saved and created.