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GAM Holding Expects H1 2020 Loss; Client Flows Stabilising

Tom Burroughes

22 June 2020

, the Zurich-listed investment business battling to recover after a senior manager was ousted two years ago, on Friday said it expects a SFr400 million ($495.5 million) loss in the first six months of this year. 

The loss is caused by non-cash impairment charges of about SFr410 million, net of tax. The charges are mainly linked to the goodwill created by GAM’s acquisitions by Julius Baer and UBS, respectively, in 2005 and 1999, it said in a statement. 

The loss for H1 2020 compares with a restated net loss of SFr49.7 million in the same period of 2019. In addition, the group expects to report an underlying loss before tax of approximately SFr3 million compared with a SFr2.1 million profit for the first half of 2019.

The firm said it is “well capitalised with a debt-free balance sheet” and the impairment charges have not hit its tangible equity, its cash position or any client related or operational functions.

The firm has been through a rough time. Investors fled its Absolute Return Bond Fund, which at one point was managed by Tim Haywood, who was suspended in 2018, and later dismissed by the firm, for misconduct. The saga highlights how rapidly a listed fund management business can be hit by the woes of a flagship fund or set of funds. In 2018, GAM Holding chief executive Alex Friedman, who had been a senior figure at UBS, resigned.

On Friday, GAM said that it has “continued to see a stabilisation in client flows following the impacts of COVID-19 in the first quarter of 2020”. 

Total assets under management were SFr118.9 billion as at 31 May, with investment management at SFr36.6 billion and private labelling at SFr82.3 billion, compared with SFr112.1 billion, (investment management SFr35.7 billion and private labelling SFr76.4 billion) as at 31 March 2020.

Full half-year results will be announced on 4 August.