FEARS are mounting over the future of Abbey National Asset Managers, the (pounds) 28bn funds operation in Glasgow, and Abbey yesterday provided a less-than-reassuring response to a rumour that thedivision could be axed by Christmas.
Asked about a claim made to The Herald that the “demise of asset management in Scotland” could occur before Christmas, a spokeswoman at Abbey’s life and pensions operation in Glasgow replied: “We have a business-wide programme going on across the entire (Abbey National) group. We are reviewing all of our operations. That includes that of Abbey National Asset Managers. At this stage, we have made no decisions.”
Abbey National Asset Managers employs about 50 front-line fund managers, and some 60 back-office staff. Its presence in Glasgow is vital to the critical mass of the city’s financial sector.
Pressed on whether it were possible the business would be closed, the spokeswoman replied: “It would be wrong to speculate on the outcome of whatever review is not complete.”
She added: “There are announcements and changes being made all the time. This is part of a huge exercise being undertaken across the whole (group). When we have an announcement to make, we do it first with our employees then we (might) make an external announcement.”
Asked if it were possible asset management could be outsourced, as part of banking group Abbey National’s review of operations under new chief executive Luqman Arnold, the spokeswoman replied: “We wouldn’t discuss that at all, and wouldn’t make any comment on what we could do with it, beyond what we have said already.”
Senior industry experts signalled yesterday that they would be surprised if Abbey National Asset Managers were axed before Christmas, but added that this did not mean it would not happen.
One very senior source said Abbey National Asset Man-agers “doesn’t really seem to fit” within its parent bank’s personal financial services strategy.
“The word on the street is people are nervous. They (Abbey) are not doing anything at all that is encouraging people (in the fund management business),” said the source.
“Some actions they are taking internally – actions speak louder than words – their actions are not very reassuring. I am not surprised there are rumours about it.”
The source said employees of the fund management division knew their activities were being looked at and “details are being stressed”.
However, the source considered it more likely that Abbey might follow the example of Royal & Sun Alliance by trying to sell the asset management business, rather than merely shutting the division down and outsourcing the investment function.
Another very senior source did not believe the economics of outsourcing fund management would stack up, but was not surprised there might be a debate within Abbey National about whether it needed its own fund management operation given it was a medium- sized player in this arena.
The source claimed Abbey National Asset Managers might be earning a management fee of only six or seven basis points, 0.06% or 0.07%, for the in-house life funds, and believed the bank would not find another company which would do it more cheaply.
However, the source added: “For all I know, it could be true (that fund management will be outsourced). They certainly are making some radical changes. Perhaps some consultants have convinced them that (outsourcing) is the right thing to do.”
Abbey National has shifted control of the fund management division from Glasgow to London, in terms of the top few executives who look after it.
Worries over the future of Abbey National Asset Managers heightened when it emerged about two months ago that the ambitious Talorcan hedge fund business in Glasgow was being axed by parent Abbey National.
