AMP chief executive Francesco De Ferrari has vowed to push on with his efforts to turn around the wealth giant’s fortunes after US investment firm Ares pulled its takeover bid for the company, sending the stock tanking.
The wealth manager revealed early on Thursday Ares had ditched its offer to buy 100 per cent of its shares as flagged in November, triggering an investor stampede that pushed AMP’s share price down 10 per cent to below $1.40. Investor sentiment wasn’t improved by its full-year results announced the same morning, which showed assets under management had again declined and the company would pay no final dividend to shareholders.
Mr De Ferrari said he was “sleep deprived” after negotiating with Ares partners in New York and Los Angeles late into Wednesday night over their decision to terminate the takeover, but wouldn’t disclose why the deal fell apart.
“Obviously the share price reacted significantly because of this proposal,” Mr De Ferrari said. “I don’t think any CEO could say they’re happy about the share value.”
AMP has now removed its wealth and bank arms, AMP Australia and AMP Bank, from the sale process and continues to talk with Ares over a potential new transaction that would carve out AMP Capital.
AMP’s share price is around 30 per cent lower than when it launched its three-year strategy to cull unproductive advisers, improve technology and simplify super products in August 2019. Mr De Ferrari said he would continue with the turnaround plan, pointing to the progress that had been made to date – even though he acknowledged there was still a long way to go.
“I appreciate the interest that the share price has moved the other way, [but] you have to look at the progress on the strategy and are we doing the right thing?,” he said. “If you look at RBS [Royal Bank of Scotland], it took them nine years to turn this around.”
“My job is to make sure we continue to deliver against our commitments to the market and we stay the course.”
AMP enlisted a team of accountants and lawyers in September after receiving a number of unsolicited bids for its assets, which Mr De Ferrari described as “totally unexpected”. While acknowledging that the portfolio review has been creating uncertainty for shareholders, Mr De Ferrari wouldn’t say how many suitors were engaged in discussions or reveal the timeline AMP’s board was working to.
“Clearly for us, it’s really important that whatever deal we put on the table is in the best interest of shareholders,” he said.
In its full-year accounts, AMP reported a statutory profit of $177 million for 2020, reversing the $2.5 billion loss from the previous year after its bruised reputation from the banking royal commission saw clients abandon the company en masse.
Yet despite the stronger headline figure, AMP’s assets under management fell by 8 per cent in its wealth management business and 7 per cent in AMP Capital, “reflecting volatile investment markets and net cash outflows”.
The group saw investors pull $8.3 million from its funds, including $1.8 billion withdrawn under the federal government’s emergency access to super scheme.
The volatility caused by COVID-19 also contributed to profits falling across most of AMP’s businesses, including AMP wealth management (44 per cent), AMP Bank (16 per cent) and AMP Capital (32 per cent).
In AMP Bank, around 11 per cent of customers paused mortgage repayments through the year, but the company said around 80 per cent of these had now restarted repayments.
Mr De Ferrari vowed to make fixing AMP’s culture his number one priority after chair David Murray and board member John Fraser left the company following an investor revolt over a poorly handled sexual harassment complaint.
Mr De Ferrari said his focus on culture had “absolutely not” been sidelined by COVID-19, or the asset sale process.
AMP’s shares were down 10.1 per cent at $1.38 in early afternoon trading.
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Source: Thanks smh.com