Aberdeen Asset Management sinks to nine-year low on split cap fears

Aberdeen Asset Management, the beleaguered fund manager, saw its shares suffer their biggest one-day drop ever yesterday as the market took fright due to fears about its exposure to the split-capital investment trust crisis.

The shares sank as much as 22 per cent to 54.5p, their lowest since September 1993, taking this year's drop to 87 per cent. The fresh lows have increased pressure on Charles Irby, the chairman of Aberdeen, to try to stem the losses by forcing those most associated with split caps at the company to resign.

Most vulnerable is Christopher Fishwick, who oversaw the development of Aberdeen's split-cap department and sits on 10 of its split-cap boards. Martin Gilbert, the chief executive of Aberdeen, has also been criticisedfor his handling of the crisis, which has seen four Aberdeen funds go into administration and others in distress.

One City source said: "Charles Irby is unwilling to sack people until he knows whether they are guilty of any of this. But the situation looks like it has passed the point where, guilty or not, the City wants a new management banner to be raised over Aberdeen."

The area of concern is whether or not certain fund managers, including people at Aberdeen, colluded in order to maintain artificially the value of their funds. The Financial Services Authority is investigating this. It has already ruled that some of the marketing literature for split caps was inappropriate because it did not spell out the potential risk in the funds, which include both shares for growth and shares for income.

Aberdeen's shares were hammered as the City realised that if the regulator forced it to compensate more investors, such as holders of zero-dividend preference shares, the bill could be £270m – three times its current market capitalisation.

Rumours were circulating among City institutions that the FSA has decided to force Aberdeen to offer more compensation. The watchdog would not comment and is thought to have not yet decided whether there was collusion between a "magic circle" of fund managers.