Old Mutual sheds more jobs

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Old Mutual, the FTSE 100 financial services group, unveiled plans to slash some 600 jobs in the UK and another 200 elsewhere yesterday, but pleased investors with the news that growth prospects for its recent acquisition, Skandia, were much better than expected.

The UK job cuts are to be made in the company's administrative divisions - at its Isle of Man, Southampton and St Albans offices - over the next three years.

Up to another 100 jobs will be cut from Skandia's headquarters in Stockholm, with the remainder spread across the group's other global locations.

Old Mutual also surprised shareholders, however, by revealing that its initial analysis of Skandia, since completing the deal in February, had turned up even better prospects for the business than had originally been anticipated.

Skandia's assets under management are now expected to increase by some 15 per cent a year, compared to original forecasts of nearer 10 per cent.

Combined with anticipated cost savings, Old Mutual now expects Skandia's contribution to its overall profits to triple by 2008. Old Mutual's chief executive, Jim Sutcliffe, said that most importantly, his team's review of Skandia since the acquisition had not thrown up any "nasty surprises", adding that the group was now perfectly poised to benefit from the numerous initiatives encouraging people to save more across Europe.

He said Skandia was also more cash generative than originally forecast, and would throw off sufficient cash to fund its own growth.

Mr Sutcliffe conceded, however, that the group would not begin to realise fully the £70m in synergies from the Skandia deal until the middle of 2008 - some six months later than originally planned. He said this was largely down to the delay in closing the Skandia deal, due to a Swedish shareholder backlash.

The group also announced yesterday that it plans to sell Skandia's Finnish and Spanish divisions, which are expected to collectively raise some €100m (£68m).

Shares in the company fell 1.1 per cent to 160.5p yesterday, after initially rising. The stock is down some 2.6 per cent since the start of the year, slightly more than the FTSE All-share's drop of about 2 per cent.