Aberdeen targets cuts on top of Swip deal savings

Martin Gilbert: No idea where job loss figures came from. Picture: Neil Hanna

The fund manager said weakness in emerging markets had seen more money exit its funds in the first two months of the year and it remained cautious on the global market outlook and investor sentiment.

Aberdeen’s founder and chief executive Martin Gilbert said : “Conditions in emerging markets remain subdued, and we have therefore identified and are implementing some cost savings, over and above the synergies we expect from the SWIP transaction.”

No figure was put on the latest cost saving measures or where cuts would be made but shares soared on the news. Gilbert has previously stressed that the SWIP deal was “not prefaced on cost-cutting” and has said he had “no idea” where reports of 150 job losses which emerged when the deal was announced last year had come from.

Some analysts have pointed to £50m of cost savings over 12 months being targetted from the deal.

Aberdeen also said today that it would pay Lloyds a £39.4m “top-up” payment for the purchase of SWIP, which may lift the UK bank’s stake in Aberdeen to near 11 per cent.

Under the terms of the deal agreed in November it has to pay the top-up in shares or cash to Lloyds to compensate for a fall in its share price below 420p.

In a trading update for the first two months of the year, Aberdeen said outflows were £3.9 billion, largely from its Asian and emerging market equity funds, although it had secured £4bn in gross new business.

Numis analyst David McCann said the cost savings “should help cushion earnings from current revenue pressures”, although he retained a “hold” recommendation on the stock, largely on valuation grounds.

Shares in Aberdeen closed up 26.2p, or 6.71 per cent, at 416.5p last night.