Australia's embattled AMP merges banking, domestic wealth management units

Australia's embattled AMP merges banking, domestic wealth management units

Reuters ?|?Oct 09, 2019 11:16PM ET

Australia's embattled AMP merges banking, domestic wealth management units

By Nikhil Nainan

(Reuters) - Australia's AMP Ltd (AX:AMP) said on Thursday it will merge its banking and Australian wealth management units as part of a turnaround plan aimed at making the firm more customer-focused, after an inquiry revealed widespread misconduct.

AMP has been struggling to repair its reputation after the Royal Commission inquiry found it had for years wrongfully charged fees to thousands of clients and then attempted to mislead the regulator about it.

Its shares are languishing near record lows and customers have been pulling out in droves, with the wealth manager undergoing a major restructuring that has included culling some financial advisers aligned to it.

Chief Executive Officer Francesco De Ferrari (NYSE:RACE) said the decision to merge the two units comes after Sally Bruce, AMP Bank's CEO, decided to step down.

"Closer integration of the businesses was part of our long-term plan, and with Sally's decision to step down we have been able to accelerate our internal reorganization," De Ferrari said.

In September, AMP said it had raised A$784 million ($528.49 million) to fund the restructuring of its flagship wealth-management business in Australia and New Zealand.

"Wealth management is still a business with a future in Australia, but if there's any sector of the market that relies on its reputation, it surely must be in the financial services sector," said James McGlew, an executive director of corporate stockbroking at Argonaut.

"It takes 50 years to build a reputation and it only took a few months to see it trashed," he said.

The new combined business will be called AMP Australia and will be led by Alex Wade, the current CEO of the Australian wealth management arm.

In August, AMP said it was targeting A$300 million a year in savings by 2022. It also said outflows at its Australian wealth-management unit totaled A$3.1 billion, more than three times the rate of the net cash outflows it reported at the same time a year earlier.

OPPORTUNITY?

Following the inquiry, Australian banks have been offloading non-core business units, including wealth management.

"The banks have pretty much gone and pushed their wealth management businesses out, which in turn creates an opportunity for AMP," McGlew said.

But it all comes down to AMP rebuilding its reputation, he said.

Shares of AMP were flat by 0235 GMT, amid minor gains by the broader market (AXJO).

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media?would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not?necessarily?provided by any market or exchange, but may be provided by?market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes.?Fusion Media?and?any provider of the data contained in this website?will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Espa?ol (Espa?a) Espa?ol (México) Fran?ais Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türk?e ????????? Ελληνικ? Svenska Suomi ????? 日本语 ??? 365国际平台官网 香港 Bahasa Indonesia Bahasa Melayu ??? Ti?ng Vi?t ?????
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+