Split-cap firm Aberdeen axes a tenth of staff

Aberdeen Asset Management, the fund management company under investigation for the failure of five of its split capital investment trusts, is making about 100 of its staff redundant by outsourcing the administration of its retail funds.

Aberdeen sold six of its best performing retail funds to New Star Asset Management earlier this year for £92m. The deal meant a number of its administration staff would lose their jobs, and about 50 will go by June this year when the running of the funds is transferred to New Star.

Aberdeen has since reviewed staffing levels for its remaining funds and has decided to transfer the majority of its remaining retail administration functions to the outsourcing services provider, International Finance Data Services, by September with the loss of another 50 jobs.

Only 18 posts will be available in Aberdeen's division by the end of the year. Staff have been asked to apply for these roles, which include dealing with client enquiries, complaints handling and liaising with its outsourcing partner. Interviews for the posts began yesterday and Aberdeen intends to tell employees by the end of March who will be made redundant. Those that stay until the outsourcing deal is completed will receive an additional bonus of one month's salary.

Martin Gilbert, the chief executive of Aberdeen, said at the time of the New Star deal that redundancies would be in the "10s, rather than the 100s", but it is now understood that the job losses will be towards the 100 mark. Aberdeen employs about 1,000 people across the group.

It is anticipated that IFDS, which already assists Aberdeen in the running of its funds, will take on some of Aberdeen's employees. A spokeswoman for the company said yesterday the job losses were "unfortunate", but said the shrinking of the retail fund business to three-quarters of its size after the New Star deal meant it was not "cost-efficient" to employ the same number of staff.

Aberdeen has effectively withdrawn from launching new retail investment funds for the foreseeable future while stock markets remain poor and the company is still dogged by its involvement in a number of failed split capital investment trusts.

Five of its funds have so far breached their banking covenants and collapsed into administration. The Financial Services Authority is looking into claims that Aberdeen's fund managers colluded in a "magic circle" with other managers to artificially inflate the value of the funds. The FSA is also reviewing how the trusts were sold, as they were marketed as low-risk investments when they were in fact highly geared to the fortunes of the stock market. Aberdeen, which may have to compensate investors, has been struggling with up to £250m of debt and is hoping to float is property division to strengthen its balance sheet.