Abrdn ‘to axe 500 staff’ amid exodus of funds
Asset manager, Abrdn, is to announce about 500 job losses as it prepares to admit that billions of pounds have been withdrawn by clients, according to City sources.
The Edinburgh-based institution, which has undergone a controversial restructuring under chief executive Stephen Bird, has also seen its long-term credit rating downgraded by Moody’s.
There was speculation that it will confirm the loss of about 10% of its 5,000 workforce in London and Edinburgh when it delivers a trading update at a scheduled trading update on Wednesday. It is believed to be part of a £150 million cost-cutting plan.
It is due to announce full-year results on 27 February when investors will look to see if it has turned around a first half loss before tax of £169m.
The company, originally Standard Life Aberdeen, was created out of the 2017 merger of Standard Life and Aberdeen Asset Management, and its rebranding as Abrdn under new management prompted widespread derision.
More pressing has been its inability to stem an outflow of funds and to re-position itself after it jettisoned its historic names. The Standard Life brand and business was sold to Phoenix. The firm reported a net £5 billion of customer outflows in the first half of 2023.
It has not been alone in suffering outflows. Most active investment houses in the UK have seen a move to cheaper passive index-tracking investment and investor caution towards equities generally.
Moody’s said it was cutting Abrdn’s long-term issuer rating by one notch to Baa1 from A3 because of what it called “idiosyncratic weaknesses in its credit profile, exacerbated by industry-wide headwinds”.
It was reported last month that Abrdn had introduced a 52-week cap on redundancy payments from this month in a fresh effort to curb costs. Paid parental leave is also being reduced for staff from October.
Standard Life Aberdeen had adopted a controversial co-CEO model, but after both Martin Gilbert and Keith Skeoch departed, the board hired former Citigroup banker Mr Bird in 2020.
He was tasked with turning the business around and as part of the re-modellingof the group he paid £1.5 billion for Interactive Investor, the investment platform, which helped build a position in the DIY retail market.
Under its newly-hired finance director Jason Windsor, the company now plans to reintroduce quarterly reporting which was dropped in 2017 in a move to encourage long-termism.
Its shares have performed poorly, closing at 172.25p, valuing the company at just over £3bn compared with £11bn at the time of the 2017 merger.
In recent years it has yo-yoed in and out of the FTSE 100 and there has been pressure from some investors to break up the business.
Last year the company vacated its purpose-built head office in St Andrew Square that it only moved into six years earlier and relocated to its historic base in nearby George Street where it employs fewer staff.
This article has been updated here