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Standard Life Investments profits wiped after £90m liquidity fund hit

Standard Life Investment has seen its profit before tax wiped out after bailing out one of its institutional global liquidity funds.

The group decided to restructure an institutional sub-fund within its global liquidity fund plc at a cost of £90m. The group has taken the assets onto its balance sheets after moving to a mark to market basis. This adjustment accounted for £51m of the loss, with a £39m cash injection also being made.

SLI ha aslo seen its third party net new business figures fall by 57 per cent.

Third party net new business fell from £7.9bn in 2007 to £3.4bn in 2008, with total third party assets under management falling from £47.7bn to £45.5bn, a 5 per cent fall.

SLI’s total assets under management fell 14 per cent in 2008 from £143.4bn to £123.8bn. However, the group has unveiled a 9 per cent rise in earnings before interest and tax to £82m.

The group says: “We expect 2009 to be challenging for all players in the industry, including Standard Life Investments. Equity markets are down substantially year on year, and unless there is a marked and rapid recovery, this will impact our revenue streams during 2009.

“On the other hand, we continue to see a good volume of requests for proposals and our pipeline of confirmed third party new business is strong, driven substantially by institutional funds with opportunities skewed towards fixed interest and liability driven investment mandates, due to the current market conditions.

“Against this background we will continue to pursue our strategy of increasing the diversity of our earnings by growing our capability in selected product areas and increasing our global reach. We will also maintain tight control over our costs to drive further efficiencies and allow for necessary investment to support future growth.”

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