GAM Holding Expects Sharply Lower 2019 Result As Outflows Bite

Tom Burroughes Group Editor Interlaken Switzerland 17 January 2020

GAM Holding Expects Sharply Lower 2019 Result As Outflows Bite

The international asset management house has been battling to turn its fortunes around after a prominent senior figure was forced out over a year ago amid misconduct claims, triggering a heavy exodus of client funds.

GAM Holding, the Zurich-listed investment house hit by big outflows amid the suspension and later firing of a senior manager more than a year ago, said it predicts that its full-year 2019 underlying results will be "materially lower" than a year before.

The firm is due to issue final figures for 2019 on 20 February; it updated the market today in accordance with Swiss rules. The firm has been battling to recover its fortunes since Tim Haywood, who had managed the ARBF business, was suspended more than a year ago amid claims of misconduct (he was subsequently dismissed). Clients have withdrawn billions of funds.

GAM said it expects to report an underlying profit before taxes, which excludes non-recurring and acquisition-related items, of about SFr10 million ($10.3 million), including approximately SFr12 million of performance fees, for 2019 compared with SFr126.7 million (including SFr4.5 million of performance fees) for 2018.

A sharp fall in assets under management - SFr56.1 billion at the end of 2018 to SFr48 billion at the end of 2019 - in parts of the GAM business has hit related revenues. Across the whole business, GAM expects total group AuM of around SFr132 billion, against SFr132.2 billion a year before. (The firm anticipates its private labelling business to notch up a rise in AuM, offsetting declines elsewhere.)

GAM also expects to report a full-year 2019 net result on IFRS reporting standards, including non-recurring and acquisition-related items, of about zero, versus a net loss of SFr929.1 million for the full-year 2018 which included a SFr883.4 million goodwill impairment charge, it added.

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