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Batchelor out as AMP pumps cash into Pearl

AMP group chief executive Paul Batchelor has resigned following the publication of a prospectus aimed at raising money from Australian investors which disclosed the precarious state of the Pearl with-profits fund.

The move, announced following a board meeting in London on Tuesday, will also see group chairman Stan Wallis step down when a replacement is found for Batchelor, who has held the post since 1999.

The resignations follow AMP&#39s admission that subsidiary Pearl is in breach of the FSA&#39s minimum capital requirements. AMP is pumping a further £169m into its UK business to add to the £331m already promised but it says Pearl will need further capital if the FTSE falls below 3,700.

A company must hold 4 per cent more in assets than it has in liabilities to meet the capital requirement. AMP says it has agreed a plan with the FSA to meet the requirement by the end of the year and claims that other companies are in similar talks.

The group disclosed Pearl&#39s difficulties in a prospectus published in Australia last week which led to the suspension of AMP shares on the Sydney stockmarket on Friday. Shares started trading again on Monday.

AMP accepts that the Pearl fund will need further injections if the FTSE falls below 3,700 and that every 100-point fall in the FTSE affects Pearl&#39s solvency by £120m.

Funds were raised through the £230m sale of fund management admin firm Cogent to BNP Paribas.

Research commissioned by Money Marketing Online from KPMG in July first revealed that Pearl had a free-asset ratio of -0.9 per cent, ignoring future profits.

An AMP spokesman says: “AMP remains well capitalised and with a AArating. Under Tom Fraser, we have taken clear steps to counteract the adverse movements in the FTSE, moving away from capital-intensive with-profits to new contemporary-style with-profits, capital injections and a reduction in exposure to UK equities.”

FSA spokeswoman Karin Loudon says: “We are still in discussions with Pearl. If for any reason a company cannot meet minimum requirements, we first expect it to be flagged up and then want to see a plan with a reasonable timeframe for rectification.”

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