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Schroders cites equity markets for £21m loss

Falling markets and inflated costs drove Schroders&#39 balance sheet into the red last year for the first time in 43 years as the firm made a loss of £20.6m.

The loss comes after profits £221.3m in 2000 and £244.6m in 1999, with the company placing most of the blame on “weak equity markets and increased volatility”.

Long-term infrastructure projects and redundancy costs accounted for around £40m of the fall in profits while losses in the group&#39s private equity division cost a further £19.6m. An acc-ounting error, made in the sale of its banking division to Citigroup in 2000, added another £10.8m of losses to the balance sheet.

In an effort to cut costs further, Schroders is to sell the admin arm of its unit trust and pension businesses, which will reduce staff numbers by around 400.

Despite poor results for the group as a whole, Schroders UK retail business looked in reasonably good health in 2001, with an increased share in the IFA market and 60 per cent of funds staying ahead of their benchmarks over three years.

Chairman Peter Sedgwick says: “2001 was a tough year. A combination of weak equity markets, some fund outflows, a high expense base and the cost of one-off, long-term infrastructure projects led to a sharply lower result.

“However, our fund management team has started making the changes necessary to align our business to the more difficult environment facing the asset management industry.”

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