UK – F&C Asset Management says its chief executive Howard Carter is to retire and be replaced by former institutional chief Alain Grisay.

The move comes amid mandate outflows of more than €2bn attributed to “investment performance issues” and delays and rising costs at an outsourcing deal with Mellon.

F&C, which merged with ISIS Asset Management last year, said Carter plans to retire by the end of next year and that Grisay, who was appointed deputy CEO in March, would take over on January 1 2006.

Grisay, 51, “has been a driving force behind our pan-European proposition”, F&C stated. Prior to joining F&C in 2001 Alain spent over 20 years working for JP Morgan.

Assets under management have risen by £3.3bn to £128.1bn – although gains from equity markets were offset by around £1.6bn (€2.3bn) of net outflows.

It said: “Within client categories, there were some net outflows from institutional clients predominantly in the Netherlands and the UK driven either by continued moves from balanced to specialist mandates or by historic investment performance issues in some instances.”

But it said it has benefited, in the case of some of its Dutch pension fund clients, from higher fees associated with the switch from balanced to specialist mandates.

It said the “further strengthening” of its investment proposition is a major focus for the firm.

It said its investment administration deal with Mellon – inherited via the F&C side of the business - would take now “take longer to implement than originally envisaged”.

F&C said it would now take until late 2006 to fully integrate data and systems onto a single platform, with the full financial benefits not being realised until early 2008.

“We now envisage just over £20m of synergy benefits in the current year, further benefits in 2006 and the full £33m by early 2008,” F&C said.

And it added that its original £50m forecast cost for the project was “likely to be exceeded because of the complexity of the outsourcing requirements and should be in the region of £60m”.

Overall, F&C said first-half pre-tax profits more than tripled to £51.7m, although the loss of the Resolution insurance business would hit profits.