Investec to replace Resolution in FTSE 100

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Resolution is the only blue chip stock below 111th position.

LONDON (Reuters) - South Africa-based investment bank Investec (JSE:INL) is set to replace insurance-focused takeover vehicle Resolution in the FTSE 100 index after the latest quarterly index review on Wednesday.

As at the market close on Tuesday, Resolution was the only blue chip stock below 111th position in a ranking based on market capitalisation, according to index compiler FTSE, setting it up for relegation from the blue chip index.

Investec was the highest ranking mid-cap stock, being above 90th place based on Tuesday's closing prices and putting it in line for promotion.

Results of the regular quarterly rejig were due to be announced after the market close on March 10.

Companies outside the FTSE 100 that grow to rank among the 90 largest by market capitalisation are automatically promoted into the blue chip index, while FTSE 100 constituents with the lowest value or which fall to 111th spot or below drop into the FTSE Midcap 250 index.

Resolution's share price has fallen by around 20 percent since the beginning of the year, having first been offered to investors at 100 pence in a December 2008 flotation that raised 600 million pounds to fund takeovers.

The company, which aims to buy and merge at least three life insurers or asset managers before selling or listing the enlarged group in 2012, has so far completed just one deal, last year's 1.8 billion pound purchase of insurer Friends Provident, although a number of potential takeovers have been mooted.

Investec shares, meanwhile, have jumped 22 percent this year, riding the coat-tails of the equity market's recovery, although nine-month results from the company at the end of January were pretty static.

However, a number of banks and brokerages including Goldman Sachs and Morgan Stanley have upgraded ratings for Investec in the wake of the numbers, saying there was more conviction that the group's earnings will trough in 2010 as impairments peak.

Index compiler FTSE will formally announce the changes to the FTSE UK index series after the market close on Wednesday.

The review uses the closing prices from Tuesday, but the changes have to be confirmed by a FTSE committee on Wednesday.

The index changes will be implemented from the start of business on Monday, March 22.