WHEN he looks back over his five years as chief executive of Man Group, Peter Clarke will probably want to focus solely on his first 18 months in charge.
Stepping up from finance chief in early 2007 to lead the hedge fund that he had joined in 1993, Clarke must have thought he had an easy ride ahead of him.
Shares were riding high at more than 600p, it was firmly in the FTSE 100, and its key computer-driven AHL fund had more than £16bn in funds under management.
Fast-forward to yesterday and the picture is far less pretty. Shares closed at 75.48p, AHL’s funds have shrunk to £10.1bn, and in June the firm slipped into the FTSE 250. So it’s not surprising that investors and analysts alike greeted yesterday’s news with a five per cent boost to the share price, and widespread welcome for incoming boss Manny Roman’s cost-cutting prowess and solid fund credentials.
Unlike Clarke, Roman is untainted by the GLG acquisition, having joined Man as part of the $1.6bn deal for the smaller hedge fund in 2010.
GLG, far from being Clarke’s manmade antidote to the AHL disaster, has so far failed to offset the volatility that its machine-controlled counterpart is so vulnerable to. In addition, analysts are predicting investors will continue to bail out of the struggling fund. According to RBC analysts AHL’s performance has declined 3.5 per cent in the year to date compared to an 8.1 per cent rise in the MSCI World index – and the broker expects lacklustre inflows for the foreseeable future.
Roman’s appointment certainly puts a turbo booster behind changes at the group. He’s already been instrumental in driving through recent cost cuts – working closely with new recruit and finance chief Jonathan Sorrell to show investors that the once-great firm’s revival is in the right hands.
But initial optimism that changes at the top will turn Man’s fortunes around could be short lived – particularly for those investors that have been hanging around to make the most of Man’s ever-healthy dividend payouts.
The group has already signalled it will lower dividends from next year, and if Roman is serious about cost cutting he’ll have to tread a fine line between giving investors what they want and alienating them completely.
MERRY CHRISTMAS, MR WERNER
Meanwhile, HSBC has been busy negotiating one of the biggest banking payouts in history to settle multiple investigations with the US authorities.
The headline amount of $1.9bn (£1.2bn) will of course make a dent in the bank’s balance sheet (making the recent $9.4bn disposal of Chinese insurer Ping An rather more understandable), but as with so many of these scandals, it’s the reputational hit that will linger longest. As part of the settlement, HSBC will have to admit breaking terrifying-sounding US laws including the Bank Secrecy Act and the Trading with the Enemy Act.
It scrambled to set up a financial crime compliance unit in the wake of the scandal, and yesterday’s appointment of ex-US Treasury man Bob Werner to lead it looks savvy in the face of last night’s news.
Let’s hope he’s ready for one hell of a first day on the job.
Elizabeth Fournier is News editor of City A.M. @ej_fournier