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Fund manager bill for split-cap fallout passes £100m

Aberdeen Asset Management’s bill for the split-cap trusts debacle has soared passed the £100m barrier after it was revealed that the firm had to pay £30m to settle a dispute with one of it’s former trusts.

The Real Estate Opportunities Investment Trust sacked Aberdeen as manager of its income portfolio back in 2003, without notice, after the value of the fund evaporated. This was followed by the REO board mounting a legal claim to win £80m in compensation from Aberdeen and its broker UBS. The wranglings continued for some two years, with Aberdeen launching a counterclaim against the firm.

Aderdeen announced last week that the group has reached a settlement with the firm totalling some £30m after existing provisions and tax. The group also reiterated that the decision was not an admission of liability but one made by the board in the best interests of the group and the shareholders.

REO has revealed in a statement that the net effect of the settlement would bolster the funds assets to £49.7m (19.6p a share), a figure which does include the release of provisions put aside for Aberdeen’s counterclaim.

Aberdeen has also settled a claim with Treasury Holdings, who managed the property component in the trust, for an undisclosed fee. REO is still chasing UBS.

Aberdeen has made a number of settlements in the wake of the scandal already, including a £35m contribution to the split-capital compensation fund and a £39m compensation bill to investors in its progressive growth fund. Schroders is to launch a global equity income fund which opens to investors on 18th May 2007.

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