Asian chaos hits Schroders profits

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The Independent Online
ASIA'S financial crisis is expected to be the focus when the UK's largest publicly traded investment bank, Schroders, reports its earnings Wednesday.

The bank recently fired 220 employees in Asia, mainly in Hong Kong and closed most of its Asian broking business as the fallout from the economic chaos there hit profits from Schroder's investment banking operations in the region.

Analysts say the bank's fund management earnings are likely to be more stable. Schroders has limited proprietary exposure in South-east Asia.

"The performance of the stock market is one thing, but the immediate issue is the Far East. We're expecting a decline in investment banking profits - its been flat for several years now," said Martin Green, an analyst with Merrill Lynch.

According to a poll of seven analysts, Schroders is expected to have earnings of around 94.44 pence per share compared with 92 pence a share last year.

Last week the Union Bank of Switzerland announced it was to sack two- thirds of its 2,000 staff based in the region outside Japan and Australia as a result of both the financial crisis in Asia and its recent merger with Swiss Bank Corporation to create the world's second largest bank. Cuts in its Japan-based staff are expected to follow.

Other banks in the region have also fired thousands of staff since the

Asian crisis began shortly before Christmas.

However, the outlook in the Far East is not all doom and gloom for investment bankers. They have been busy taking advantage of new business opportunities that have emerged from the fallout of the crisis in South-east Asia.

Last week Schroder's Asia Pacific Fund bought a 22 per cent stake in Thailand's hotel and shopping centre chain Royal Garden Resort, which also owns the country's largest restaurant chain, Pizza, for $8.7m (pounds 5.3m).

Last year, the rival investment bank, Goldman Sachs, bought a 29 per cent stake in one of Royal Garden's main rivals, Dusit Thani.