F&C sees assets under management drop

F&C Asset Management reported a net outflow of assets in the fourth quarter after it was hit by the Portuguese government nationalising bank pension schemes.

At the end of December 2011 F&C said it had £100.1bn of assets under management (AUM), down from £103.2bn three months before.

The decline in AUM in the second-half of 2011 and difficult market conditions, particularly in the third quarter, would have an effect on management and performance fees compared to the prior year, F&C said.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The outflows came mainly from insurance funds and a £1.3bn institutional gross outflow from the BCP Pension Scheme after the Portuguese government decided to nationalise the past pension obligations of the country's largest banks.

The Portuguese government began a further withdrawal, representing £1bn of assets, in January 2012.

"We are currently not aware of any further withdrawals forthcoming from this nationalisation policy," F&C said.

Insurance and strategic partner net outflows also included £1.4bn withdrawn from a derivatives pool which was not covered under an exclusivity agreement and for which fees were earned on a transactional, rather than management fee, basis, the firm added.

There is another big withdrawal in the pipeline after Friends Life gave F&C 12-months notice of its intention to withdraw £2.3bn of assets, principally in respect of its annuities fund, in December 2012.

This come off the back off a recent announcement that Friends Life is to launch an in-house asset management subsidiary in the second half of 2012.

"These assets represent approximately £1.1 million of annualised revenues and the effect on current year revenues will therefore be minimal," F&C said.

Shares in F&C slid 2% in early trading following the announcement.