This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
GAM will suspend its 2018 dividend after forecasting its assets under management have fallen to CHF 60.8 billion (€53.8 billion), down from CHF 84.4 billion in June, as well as expecting to report a full-year loss of CHF 925 million.
The announcement sent the Swiss asset manager’s share price into free fall, with it sliding by as much as 30%, hitting CHF 3.22 on Thursday – representing a 20-year low.
‘With today’s announcement we are seeking to give our shareholders and our clients the clearest assessment of our financial situation,’ GAM Group CEO David Jacob said. ‘We are taking decisive action to rebase costs and support profitability, whilst maintaining our focus on client service and control functions.’
‘We are determined to do everything it takes to rebuild the trust of our stakeholders.’
‘We are fortunate to have excellent talent across our business, the ability to continue to invest in areas of strength and an attractive product range to build upon as we reposition GAM for future sustainable growth,’ he added.
2018: A tough year for GAM
The Swiss asset manager has been hit by several setbacks over the course of 2018, with the company forced to issue a profit warning relating to its acquisition of Cantab, as well as a freeze on redemptions from bond funds holding around CHF 7.3 billion in assets.
‘We have experienced a difficult year given our issues relating to ARBF, on top of a challenging market environment,’Chairman High Scott-Barrett said. ‘We have taken the difficult decision to propose the suspension of the 2018 dividend in order to accelerate the pace of our capital rebuild programme.’
‘All the measures announced today allow us to move forward as a leaner business that is focused on those areas where we can add most value to our clients,’ he added. ‘I am convinced that this creates a base for the company to emerge stronger than it was before.’