Friends Life gives F&C 12 months’ notice to pull £2.3bn

F&C Asset Management says Friends Life’s decision to pull £2.3 billion in assets in December 2012 will have a “minimal” impact on its revenues for this year.

The asset manager made the announcement as it revealed assets under management shrank to £100.1 billion during the fourth quarter of 2011.

The firm says net outflows were “due principally to strategic partner assets including £1.3 billion from the nationalisation of the past pension obligations of Portugal’s largest banks”, which saw the firm’s total AUM shrink from the £103.2 billion in the prior quarter.

The asset manager says the Friends Life assets, which have been pulled due to its decision to launch an in-house asset management business, currently generate £1.1m in annualised revenues.

F&C executive chairman Edward Bramson says there were net inflows into third-party institutional funds, with a further £1.2 billion in mandates awaiting funding at the end of the year.

He says: “While asset performance during the fourth quarter was positive, a decline in the sterling/euro exchange rate magnified the reduction in strategic partner assets under management. However, the yield on the strategic partner assets which were withdrawn was significantly lower than our average rate at approximately six basis points.”

Bramson, who was appointed last year following a management change, says the cost reduction plan remained on track.

He adds: “We are continuing to work on initiatives to deploy the resources this programme will release into areas of growth for F&C and to the overall improvement of shareholder value.”