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Swip arms itself to capture big guns

Fund managers headhunted by Scottish Widows Investment Partnership may be able to name their price after the troubled investment group was rocked by another high-profile departure last week.

Chief executive Orie Dudley is the latest in a long line to leave Swip. Since the investment house, formerly Scottish Widows Investment Management, merged with Hill Samuel Asset Management, it has been left reeling by one departure after another.

Among those to quit the firm have been US equities specialist Katherine Garrett-Cox and her team, European equities head David Kiddie and UK small-cap manager David Ashton.

Even before the merger, the fund manager was hit by the loss of unit trust managing director Jamie MacLeod and star European fund manager Albert Mor-illo at the end of 1999.

Dudley&#39s departure again raises the question of how the company can hold on to its fund managers.

Reports from Edinburgh are that an open chequebook has been waved around the city. An industry insider says: “There are headhunters going round all the financial institutions in Edinburgh and there is a lot of money flying around. It is the only way it is going to attract people.”

There are plenty of doors to knock on. Edinburgh is the headquarters for at least four major UK life offices, a number of fund managers and several national banks. The city is a financial headhunter&#39s jungle and Swip must be hoping that fund managers grow on trees.

Hargreaves Lansdown head of research Mark Dampier says: “Swip has got to start all over again. It will throw a lot of money at poaching people. I cannot see it happening any other way.”

But many industry sour-ces still feel that Swip will have difficulty recruiting the calibre of staff it needs to fill the gaps in Edinburgh. The problems have their roots in the fact that the merged company chose Edinburgh as its base, which led to many of its staff losses.

One Edinburgh fund manager says: “Hill Samuel was not approached at the right time or in the right way. They were so busy making the deal, they forgot to talk to the people.”

Dudley was hired to improve Swip&#39s investment record but there is little evidence of success. Only last week, the fund manager announced the loss of mandates worth £1.25bn.

Swip could face a difficult battle to retain investment contracts. One fund manager says: “It will be an uphill struggle. Investors are not stupid, they can see what has been going on and there is a limit to their patience.”

Another says: “It is bound to be very concerned about losing clients. It takes a long time to get new ones.”

Swip denies any problems with staff retention or the ability to attract new blood. Marketing director Roger Brown says: “We have only had three resignations and the rest were casualties of the merger. We are casting the net wider than Edinburgh and we have had a lot of interest to join. We are offering a very attractive proposition.”

Swip may well find the Edinburgh community unreceptive to offers. An insider says: “The people in Edinburgh will be the hardest ones to persuade because they know what has been going on.”

Dampier says: “It will be difficult to recruit people. Being in Edinburgh cuts down on the availability of fund managers. Other than poaching people, I don&#39t know what Swip will do.”

There is a war for talent in Edinburgh and companies have to offer competitive all-round packages to have any hope of attracting and retaining staff.

One fund manager says: “You cannot lock staff in. There is no sense of loyalty to firms and, if Swip throws enough money around, it will get people. That means we are all going to have to pay up.”


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