The Scottish financial sector was shocked by the resignation of Trevor Matthews, the high-profile UK chief of Standard Life, after what appears to be a boardroom fall-out.

Mr Matthews, 54, who earns more than £1.3m a year, last night quit Edinburgh to take up the job of chief executive at Standard's smaller and struggling rival Friends Provident, which is threatened with being broken up or taken over.

The Australian, appointed in 2004 to help turn the company round and prepare it for the stock market, broke the Standard Life mould and also cost them £1m to lure him from his previous job in Japan.

He had been seen as the natural successor to £2.2m-a-year chief executive Sandy Crombie, 58. Mr Crombie, however, has said regularly that he is in no hurry to step down.

But following the appointment last year of a finance director from outside the industry, David Nish formerly of ScottishPower, Standard Life insiders began to tip him as the favoured successor to Mr Crombie.

Earlier this month, rumours began to circulate that Mr Matthews had rebuffed an approach from Friends Provident. Last night, Standard was forced to rush out a statement admitting he had quit, and that Mr Crombie was taking over his roles until a successor could be found. Mr Crombie commented that Mr Matthews had "played an important role", but that Standard had "a strong team".

One industry insider said: "There was a bit of friction between him and Sandy Crombie . . . Trevor was probably forward enough to have asked the board whether or not he was to have the job in six or 12 months."

Bruno Paulsen, an insurance analyst with Sanford Bernstein, commented: "I presume that if they had promised him the job within a certain time he would not have walked."

Last year, Mr Matthews remortgaged his new £1m Edinburgh home to fund an £894,000 investment in the group's newly listed shares, dwarfing the purchases of all other directors, and he told The Herald at the time he was " determined as hell" to take the company forward.

He was well-liked by staff despite a "racist" gaffe 12 months ago at a staff presentation which, following a report in The Herald, prompted him to issue a company-wide apology.

He is highly regarded in the City and was seen as having escaped blame for Standard's botched £4.5bn bid for its rival, Resolution, two months ago.