F&C ASSET Management is in legal wrangling with key client Millennium BCP over compensation due should the Portuguese bank end its contact.
BCP believes it can exit its exclusive contract, which sees F&C manage £15.6bn of its assets, at any time without paying compensation or giving any notice, thanks to a break clause that took effect in 2009 when Friends Provident divested its majority stake.
F&C, which this month saw rebel shareholder Sherborne Investors take control of its board, believes the break clause kicked in when Sherborne raised its stake in F&C to 17 per cent on 17 December, and BCP must still serve 12 months notice.
F&C said BCP’s stance “put F&C on notice that F&C’s continued provision of services to it constitutes payment in lieu of compensation” until 17 December 2011 when it could end the contract without compensation or notice. But it said BCP had not decided to end the contract, which was due to expire in 2014.
The clause allows BCP to walk away if any F&C shareholder gains a higher stake than its two biggest investors when the deal was signed: Friends Provident and Dutch bank Eureko.