City backing for Bramson’s cuts at F&C

THE CITY took an upbeat view of F&C Asset Management after its new chairman wielded the axe on its back office functions.

Shares closed up 2.65 per cent as Edward Bramson, the activist investor who took the post in February after winning a bitter boardroom battle, announced plans to nearly treble cost-savings to £33.2m by 2013.

The asset manger will lay off 65 per cent of its IT and back office workers, more than a third of corporate staff and seven per cent of its investment professionals.

It will mean between 50 and 75 jobs are cut, City A.M. understands. F&C needs fewer staff to support its investors after outsourcing 100 jobs in July. The latest cull is also driven, however, by Bramson’s belief that F&C is underperforming.

Bramson, whose Sherborne Investors has a stake in F&C of nearly 20 per cent, took over as executive chairman earlier this month when chief executive Alain Grisay announced his retirement, a decision widely blamed on conflicts between the two men.

Now F&C wants to focus on institutional business, which serves mainly insurance and pension clients and accounts for around 60 per cent of its revenues and 80 per cent of its assets. It represents a change of focus for the company, which has spent recent years trying to re-position itself towards higher-margin retail flows.

Yesterday the manager also said insurance and institutional fund clients pulled £1.8bn in the three months to 30 September. Assets fell to £105.8bn at the end of September, down two per cent from June.

Exclusivity periods for contracts with several of F&C’s biggest institutional clients will expire over the next few years, but low-margins mean few firms will compete for them when they are up for grabs.

The second phase of Bramson’s review, covering the retail side of the business, will be published next year.