Schroders chief quits as profits collapse to £41m

Schroders, the fund management group, has parted company with its chief executive following a collapse in profits. David Salisbury, who was promoted to the job only 15 months ago, is leaving the firm with immediate effect.

Peter Sedgwick, Schroders' chairman will take on the role of chief executive until a replacement can be found. He said the group had identified a candidate and that an announcement is expected "within weeks rather than months". Commenting on Mr Salisbury's departure, the chairman said: "The business needs new blood from outside to increase the pace of the strategy we have put in place. We have recognised that we need to be alert to changes in the industry, be dynamic and take on ideas from outside as well as inside."

One possible choice is Michael Dobson, the former chairman of Deutsche Asset Management , who is currently a non-executive director at Schroders. It is thought that Mr Dobson is committed to his role at Beaumont, a relatively new fund management group. But a solution could be found if Schroders were to acquire Beaumont.

Mr Sedgwick payed tribute to Mr Salisbury, who had spent 27 years with Schroders. "He made a magnificent contribution. He leaves with our best wishes and he is welcome through our front door any time. It was an extremely amicable parting."

He was cautious on the role taken in the decision of the Schroder family, which holds 47 per cent of the shares, though they hold only two seats on the 14-strong board. "The Schroder family were not specifically pushing for this," he said.

Mr Salisbury, 49 ,was paid £840,000 last year and will be in line for substantial compensation.

Analysts said Mr Sedgwick had probably paid the penalty for failing to restructure Schroders more swiftly. One institutional shareholder said Schroders had "messed up" the succession ahead of the retirement of its former chairman Sir Win Bischoff, who left this year with a controversial £5m bonus.

Schroders shares have halved since last November after a string of senior defections and a huge outflow of pension fund business, which followed disastrous performances in 1998 and 1999. It has also been criticised for failing to act on its £700m cash pile following the sale of its investment banking operations to Citigroup in January last year.

Mr Sedgwick said there were no plans to return funds to shareholders, though acquisitions are possible. "We are not uncomfortable about being cash rich at the present time. We are interested in principle in acquisitions if they are in the retail or private banking arenas, most likely in continental Europe."

The comments came as Schroders reported a dramatic fall in profits for the six months to June to just £41.5m from £100m in the same period last year. The shares rose 39.5p to 860p yesterday.