U.K. woes prompt AMP trading halt

By Geoff Hiscock
CNN Asia Business Editor

AMP chief executive Paul Batchelor cited tough market conditions for a first-half profit fall last month

Story Tools

SYDNEY, Australia (CNN) -- Shares in Australia's biggest life insurer and funds manager AMP Ltd have been put in a trading halt Friday ahead of a statement on its U.K. financial services business.

AMP closed at a record low of Aust. $11.84 Thursday after skittish sellers stripped more than A$1 billion ($550 million) from the company's market valuation.

AMP shares are now down 40 percent from a one-year high of A$19.76 in March, with the market questioning the company's credibility after the revelation that the capital position of its Pearl business is below the minimum capital requirements of the U.K. Financial Services Authority.

The capital shortfall was revealed in a prospectus this week for AMP to sell up to A$1 billion ($550 million) in new reset preference shares.

AMP said in the prospectus it expected Pearl to meet the minimum capital requirements by year end, subject to capital management and no further "material deterioration" in its investment markets.

'Press speculation'

AMP sought the trading halt Friday morning from the Australian Stock Exchange.

"The reasons for the trading halt are that AMP anticipates it will be in a position to make a release to the market today in relation to the recent speculation in the press regarding capital requirements of our UK Financial Services business," AMP company secretary Phil Mackay said in a letter to the ASX.

AMP, which has about 73 percent of its A$266 billion in assets under management in the U.K. and Europe, has been rocked by the fall in global equity markets this year.

Last month, chief executive Paul Batchelor cited the toughest market conditions in 20 years for a 25 percent drop in first-half earnings to A$303 million ($165 million). (Full story)

Batchelor said then that he believed the global economy would be stronger in 2003.

The Australian Stock Exchange said AMP shares would either resume trading next Tuesday, or when the announcement is released to the market, whichever is the earlier.

Nikkei rebounds to above 10,000 • Japan talks trade at ASEAN summit • Japan-Thailand move on trade talks • China, U.S. lead oil demand boom

CNN/Money: Security alert issued for 40 million credit cards • Bin Laden deputy sends message • U.S. House votes to keep U.N. dues • Iran poll to go to run-off