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AMP slashes 1,900 jobs in U.K.
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest life insurer and fund manager AMP Ltd. is slashing another 1,900 jobs from its troubled U.K. operations as it continues a far-reaching restructure designed to resuscitate its share price and performance. AMP said Wednesday that the latest round of job losses includes the entire 1,000 staff in its direct sales force at Pearl Assurance, the U.K.-based business it bought in 1990 for £1.2 billion ($1.9 billion). The other 900 jobs are in office support, and are in addition to 1,500 job cuts announced in June. The move will save AMP about £160 million ($250 million) next year. AMP's share price tumbled 45 percent between March and September this year as the global equity slump bit into investment returns, leading to the resignation of former CEO Paul Batchelor in September. (Full story) The shares recovered slightly in November, but are down 3.3 percent to Aust. $12.86 in early trade on Wednesday. In the past three weeks, Batchelor's replacement as AMP chief executive, Andrew Mohl, has announced a string of decisions aimed at turning around the group's performance. Banking businessesThey include selling parts of its banking businesses in the U.K., Australia and New Zealand, outsourcing others, and cutting about 1,200 jobs in Australia and the U.K. He also slashed the value of AMP's assets by A$1.2 billion ($672 million), with more than 70 percent of the writedown relating to its U.K. businesses. (Full story) The latest decision confirms an end to the once-aggressive expansion plans of AMP. From now on, it will concentrate on core businesses in the Australian, New Zealand and U.K. markets. Although it has operations in the U.S. and Europe, and has recently made some forays into Japan, India and other parts of Asia, these are considered non-core markets. It plans to sell AMP Japan, and scale back the operations of its Henderson Global Investors unit in Japan and Hong Kong. In a statement to the Australian Stock Exchange on Wednesday morning, Mohl said the latest job cut decisions in the U.K. had been "difficult" because of the impact on people. "However, given tough equity markets and the well-publicised issues of the U.K. life market, we have no choice," Mohl said. Salary packageAMP has been battling to overhaul its U.K. businesses since the market downturn put pressure on its Pearl for-profit unit earlier this year. It was forced to inject £500 million ($785 million) into Pearl's life business to ensure it met capital adequacy rules. In August, it cited the "toughest market conditions in 20 years" for a 25 percent drop in first-half earnings to A$303 million ($165 million). Pearl's problems, and questions about AMP's disclosure, rocked investor confidence in the third quarter and sent AMP's share price to 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 every part of AMP had been under scrutiny in the past two months. "We found that the strategy of simultaneously trying to build our U.K. businesses and pursue international growth was inappropriate, particularly in difficult market conditions," he said. Mohl said AMP remained committed to the U.K. market, where its operations include London Life, NPI (bought in December 1998 in a $3 billion deal) and Towry Law. It plans to sell its 50 percent stake in Virgin Money. Mohl said AMP was making good progress in separating the businesses into two streams -- U.K. Life Services and U.K. Contemporary Financial Services. Separately, AMP announced Wednesday that Mohl's salary package as CEO would be made up of a base salary of A$1.5 million, a short-term incentive of up to A$3 million based on performance, and a long-term incentive of 800,000 share options in four lots of 200,000 each between October 2002 and October 2005. AMP is best known for its insurance and fund management business. It has about A$266 billion in assets under management, of which 73 percent is in U.K./Europe, 25 percent is in Australia/New Zealand and about 2 percent in North America and Asia.
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