Scotland’s financial services sector was last night braced for upheaval, as Standard Life and Aberdeen Asset Management put the final touches to a merger that is expected to lead to hundreds if not thousands of job cuts.

The two investment giants were working towards unveiling an £11bn deal to the City as soon as this morning, after their talks were revealed over the weekend.

The planned combination will create Europe’s second-biggest fund manager, with £660bn under management, but is being viewed as a sign of weakness, not strength. Back office functions at Edinburgh-based Standard Life and Aberdeen, headquartered in Scotland’s oil capital, are in line to bear the brunt of cost saving efforts.