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AMP slashes jobs, banking business
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest life insurer and funds manager AMP Ltd. is to slash almost 1,200 jobs and sell parts of its banking business under a far-reaching restructuring. The plan, announced Thursday by CEO Andrew Mohl, is designed to turn around AMP's performance and share price, which has fallen 40 percent since March. The market immediately responded, with AMP shares closing 1.86 percent higher at A$12.04 on a day the broader market fell about 0.3 percent. AMP said it plans to have a new banking structure in place by December 2003. It will sell its mortgage businesses in the United Kingdom and New Zealand, its property finance business in Australia and New Zealand, and will stop making credit-card products. It said that if the sales and potential outsourcing go ahead, it will cut its banking staff by 500 by the end of next year. Another 550 jobs will go in its Australian financial services business and about 120 net jobs in its corporate offices in Australia and the United Kingdom, for a total of 1,170. Cost savingsMohl said the changes would produce savings of A$100 million ($56 million) in 2003 and the release of about A$500 million ($280 million) in capital. AMP shares have been pummeled in recent months following concerns about the company's disclosure and handling of problems in its troubled Pearl insurance business in Britain, exacerbated by the fall in global equity markets. That led in late September to incumbent CEO Paul Batchelor standing down to take responsibility for the dramatic share price fall. (Full story) Mohl was confirmed as his successor on September 30. Mohl said Thursday that "tough times call for tough measures," adding that the restructuring changes are designed to turn around the company and improve returns to shareholders. Earnings dropIn August, AMP cited the toughest market conditions in 20 years for a 25 percent drop in first-half earnings to A$303 million ($165 million). The shares touched a record low of A$10.73 on September 25, down more than 45 percent from a one-year high of A$19.76 in March. Mohl said that after a review of AMP Banking it was decided the best approach was to ensure it operated only in profitable areas and to focus on its strengths of distribution and packaging. He said AMP will continue to provide retail deposits and mortgage products in Australia, but will quit the British and New Zealand businesses. AMP is best known for in insurance and fund-management business. It has about A$266 billion in assets under management, of which 73 percent is in Europe.
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