Man Group's capital boosted as regulatory status is changed

Asset management Man Group has said that a change in its regulatory status means that the capital it needs to hold as a buffer has been reduced by 250m dollars.

Man told the Financial Conduct Authority (FCA) that it is changing its status from being a Full Scope Group to a Limited Licence Group and has submitted a revised Internal Capital Adequacy Assessment Process (ICAAP) document to the regulator.

The revised ICAAP, part of the mechanism through which regulated firms are set capital requirements by the FCA, means that Man's capital requirement is now $250m lower, according to a statement on Thursday.

"This reduction has been possible primarily in light of the less balance sheet intensive nature of the company's activities relative to earlier years, for example with respect to fund seeding activities and the scale of the guaranteed products business," the company said.

Shares were up 6.76% at 104.3p in early trading.

The ICAAP submission still remains subject to a review by the FCA which is expected in the third quarter of 2013.

Man's pro-forma surplus capital stood at $370m, after taking into account a capital planning buffer of $300m it was required to hold. However, the removal of this buffer, as well as the $250m reduction in reduced capital requirements (as part of its Limited Licence Group status) means that it will now have a surplus capital of around $920m.

"The board of Man Group will continue to assess the appropriate level of capital required to operate the business from time to time and the potential uses of any surplus capital, and will provide further detail in due course in connection with future results announcements."