Standard Life, Europe's largest mutual life assurance and pensions company, is to launch its own bank.

Standard Life Bank has been given a full banking licence by the Bank of England and will initially offer a telephone-based savings account.

With more than four million policyholders, the company said it expected to attract around £1bn in deposits in the first year.

It is the latest in a long line of newcomers, like Sainsbury's supermarkets and Virgin, to take on traditional high street banks.

The new Edinburgh-based bank will initially employ 100 people, rising to 300.

At first the new account will be aimed at individual customers, but the group said it planned to extend it to the business market.

Standard Life is already a financial giant with assets of £56n and is mutually owned by its members.

It annually pays out £911m in maturing endowments and £500m in pensions - expected to rise to £4bn. Instead of seeing customers take their money elsewhere, it wants them to save with its new bank.

The Direct Access Savings Account will be made available to the public from January 5, 1998.

Managing Director of Standard Life Bank, Jim Spowart, said: "We are determined that this new bank will offer personal and business users highly competitive interest rates."

Mr Spowart said the new bank's rates would not only be competitive against rates paid at high street banks, but also against those offered by Sainsbury's and Tesco.

"Unlike most other direct operators we are able to sell our products through Independent Financial Advisers and therefore do not incur heavy advertising costs," added Mr Spowart.

"This means our customer will have all the benefits associated with direct banking and the comfort of being able to deal face-to-face with their financial advisers."

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