AMP Taps Shareholders to Fund Company Reset After Big 1st Half Loss -- Update
August 07 2019 - 9:34PM
Dow Jones News
By Robb M. Stewart and David Winning
SYDNEY--AMP Ltd. (AMP.AU), Australia's biggest wealth manager,
is turning to investors for cash and will accept less for unwanted
assets as it seeks the money to reinvent itself after a surge in
fund outflows.
The financial-services provider has been struggling with the
loss of funds after a government-ordered probe in 2018 of
misconduct in the country's financial industry heard it was among
companies that had charged fees for customer advice it didn't
provide and that it had sought to mislead regulators. Early last
year, the company's chief executive, chairman and several board
members resigned.
On Thursday, the company said it planned to invest heavily in a
three-year plan to rebuild its wealth-management business, tackle
legacy issues and position AMP Capital and its banking arm for
growth.
It has booked impairment charges of 2.35 billion Australian
dollars (US$1.59 billion), pitching it to a A$2.3 billion net loss
in the six months through June from a A$115 million profit in the
first half of the prior financial year.
The loss reflected the challenges facing AMP and the actions
taken to address them, said Francesco De Ferrari, the former head
of Credit Suisse's Asia-Pacific private banking business who joined
AMP as CEO in December. He added the impairment didn't materially
impact financial stability and shouldn't overshadow a resilient
underlying performance, particularly from AMP Capital and AMP Bank
during the first half.
AMP recorded net cash outflows of A$3.1 billion in the six
months through June, compared with A$873 million outflows in the
same period last year, which it said was a reflection of reputation
damage and a focus on client retention. There were signs of
improvement emerging toward the end of the first half, it said.
AMP said it would invest between A$1 billion and A$1.3 billion
in order to return to growth and deliver A$300 million in running
annual cost savings by 2022.
AMP would seek to raise A$650 million selling shares at a
discount to institutional shareholders in an underwritten placement
and offer shares to small shareholders, to bolster its balance
sheet.
It would also work on a revised deal to sell AMP Life, a basket
of mature businesses and its Australian and New Zealand
wealth-protection insurance unit. An earlier agreement to sell AMP
Life to Resolution Life Group Holdings LP for A$3.3 billion was
derailed this year by the concerns of New Zealand's central
bank.
AMP said it had also cut the price of a deal with Resolution
Life, and would now accept A$2.5 billion in cash and a 20% equity
interest worth about A$500 million in a new Australian company
controlled by Resolution Life that would become the owner of AMP
Life. The pair were working with regulators in Australia and New
Zealand to address requirements for a change in control of the
assets, it said.
AMP has suspended dividend payments and said it was on track to
complete a customer compensation and remediation program during
2021.
It also said Chief Financial officer-designate John Moorhead had
decided to leave to pursue other opportunities, and Deputy CFO
James Georgeson would step in on an acting basis as retiring
finance chief Gordon Lefevre prepares to hand over the role.
Write to Robb M. Stewart and robb.stewart@wsj.com and David
Winning at david.winning@wsj.com
(END) Dow Jones Newswires
August 07, 2019 21:19 ET (01:19 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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