Schroders introduces £30m share scheme sweetener for employees

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Schroders, the asset management group that sold its investment banking arm to Salomon Smith Barney in May, yesterday announced a £30m share scheme to entice key staff to stay with the company.

Schroders, the asset management group that sold its investment banking arm to Salomon Smith Barney in May, yesterday announced a £30m share scheme to entice key staff to stay with the company.

The scheme, which will distribute shares to about 130 staff, comes in the wake of a stream of defections of high-flyers at fund management houses that have undermined the confidence of brokers.

David Salisbury, chief executive of Schroders, said the cost of the share distribution scheme, which will be spread over the next two and a half years, was justified. He said: "The higher level of share distribution will align the interests of our key employees with clients and shareholders, which will make us less vulnerable to loosing important people."

However, Mr Salisbury said he would benefit from defections from other asset management groups, including Jupiter Asset Management, which recently lost its chairman John Duffield. "While we are not ambulance chasers, we are always on the look out for new business," he said.

The news came as Schroders unveiled a 41 per cent rise in pre-tax profit to £129.5m for the six months to 30 June, compared with the same period last year. The private equity arm recorded particularly strong results, more than tripling its size to £49.9m. About half the gain was tied to an increase in market value for Schroder Ventures International Investment Trust. The investment banking business generated a further £38.4m in pre-tax profits before it was sold off.

The group, which is now the UK's third biggest asset manager, said it expected future growth to be driven by expanding its European and Asian operations and from increased business in the retail market in the UK and abroad.

Mr Salisbury said: "We have a large surplus in the bank and are currently looking at how we will use it. If we make a purchase, a European asset management company would make sense."

Schroders' client base for its £143.6bn funds under management shifted slightly in the first half to reflect its new strategy. European clients grow slightly to account for ownership of 7 per cent of funds. Asia, the other area pin-pointed for growth, fell 1 per cent to make up 13 per cent of the funds.

In the UK Schroders said its target to increase its retail client base would be driven by the launch of a private bank by the end of the year. Schroders said it wanted to capture a slice of the lucrative high income market. Its shares closed up 5p at £14.50.

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