Listed Swiss asset manager GAM expected to post a loss of CHF925m (€822m) for 2018 and proposed to cancel its dividend for this year, it said in an update yesterday.
It also revealed that assets under management had fallen by CHF7bn in October and November, taking them to CHF146.1bn as at 30 November.
This was mainly driven by net outflows of CHF4.2bn from its investment management division.
The group has had a tough time this year, following the decision to halt dealing in its unconstrained and absolute return bond funds after a surge in redemption requests in the wake of the suspension of a senior fund manager in late July.
In its statement yesterday GAM said it was expecting an underlying profit of around CHF125m for 2018, compared with CHF172.5m in 2017.
It also expected next year’s financial results to be materially lower than those for 2018, because of “significantly lower levels” of assets under management and the phasing in of a cost reduction programme.
As part of a group-wide restructuring programme to “enhance efficiency, support profitability and simplify the organisation”, the group expected to cut fixed personnel and general expenses by at least CHF40m by the end of 2019.
A one-off charge of around CHF30m for 2018 was likely, the group said, in relation to the implementation of the restructuring programme and “professional costs” in connection with the absolute return and unconstrained fixed income strategy.
Lead manager Tim Haywood was suspended on 31 July after an internal investigation identified problems with his risk management and record keeping. Dealing in the unconstrained and absolute return bond funds was subsequently halted after a large number of investors attempted to pull out of the strategies.
GAM did not discover any “material client detriment” during its investigation, but nonetheless was forced to begin winding up funds in August.
GAM aimed to complete the liquidation process for its absolute return bond funds in the first quarter of next year, subject to market conditions. As at 12 December, between 89% and 92% of Luxembourg and Irish-domiciled absolute return bond funds, and 66% to 72% of the assets in the Cayman and Australian feeder funds, had been returned to clients.
Group CEO Alexander Friedman stepped down last month, with replacing him in the interim while a permanent new CEO was sought.