Wary Old Mutual sharpens jobs axe

Patrick Hosking12 April 2012

OLD MUTUAL has warned it would be forced to cut more jobs in its UK stockbroking businesses unless the current 'very difficult' market conditions improved.

The South African-based, London-listed financial services group said its main UK business, Gerrard, had produced a small profit in the first four months of the year, but added that this was normally the season when it could rely on bumper revenues.

Old Mutual has already pruned 300 jobs from its 1,800-strong London workforce, but there could be more cuts, according to finance director Julian Roberts: 'If revenues aren't coming through the front door, you have to take continued management action.'

Flat markets were hitting demand from the core customers, private clients, he said. 'The markets have done nothing. Retail volumes have been disappointing.' Demand briefly picked up in March, but had slumped again.

The group reiterated its plan to sort out Old Mutual Securities, possibly through a sale, after talks to sell it to Beeson Gregory collapsed in March. OMS owns the former Albert E Sharp Securities business and the institutional business of Greig Middleton. 'We remain committed to finding the appropriate means to secure OMS's continued development, whether that is within Old Mutual or as part of another group.'

The group, which demutualised in 1999, picked up Gerrard at the top of the market the following year, paying £529m. Much of the purchase price has since had to be written off.

Outside the UK, trading was more encouraging, according to a statement issued ahead of the annual general meeting at Claridges today. The group made 'a solid start to 2002', thanks in part to the rand's recovery.

New life insurance business was strong, particularly in the US. The fund management arm in the US picked up a net $300m (£206m) of new business. The US business is also on track to deliver $25m of head office savings. South African sales improved significantly in the first four months but rand profits were dampened by falling bond values.

Chief executive Jim Sutcliffe said the group was well positioned but his outlook was cautious. The company 'remains highly sensitive to equity market, interest rate and currency exchange rate levels, which, with some notable exceptions, have generally continued to be unfavourable so far in 2002. While these conditions persist, the group's operating environment will be challenging.'

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