F&C knocked by £3.7bn outflow as client made large withdrawal

Assets under management had fallen to £96.8bn at the end of September from £98.2bn at the beginning of July, due in part to a previously announced £2.9bn of withdrawals of fixed income assets by Friends Life, according to the company’s trading statement.

Its consumer and institutional assets under management increased by £500m to £36.74bn, including £400m of net inflows from institutions and a 2.2 per cent investment gain.

Friends Life is set to withdraw a further £2.4bn in the final quarter of 2012, F&C said.

The impact of foreign exchange movements also contributed to £968m of the net outflow figure, the company added.

The update comes a year after executive chairman Edward Bramson, who won control in a controversial management coup 18 months ago, announced a shake-up which set out to cut costs, reduce the company’s workforce and focus on institutions.

The company said yesterday cost reductions “remain on schedule.”

F&C said the institutional net pipeline of won, but unfunded mandates taking into account notified withdrawals was at £1.4bn, down from £1.6bn in the previous quarter.

The results were “slightly disappointing” according to Numis Securities’ analysts who had expected slower outflows, and that cost savings were now fully priced into the shares.

The company also said that it will see initial revenues from its refocused direct-to-customer marketing approach in the first half of 2013.

In yesterday’s interim management statement, Mr Bramson said: “Inflows and performance in our third-party institutional business continue to be encouraging as we implement the strategies set out in our strategic review last October.

“We have now put in place a new management structure to implement the consumer strategy set out earlier this year. We currently anticipate initial revenues from our refocused direct-to-consumer marketing approach will occur in the first half of 2013 and look forward to growing our presence in this area.”