◆ CEO tells Scott Reid that second-half market conditions remained challenging as financial giant hopes to save £150m a year
Scottish investment giant Abrdn is cutting some 500 jobs or about 10 per cent of its workforce as part of a “transformation programme” to slash £150 million of costs per annum. However, some City analysts said a more radical strategy was required to clamp down on costs and make the business more profitable, including a potential break-up of the group.
The Edinburgh-headquartered firm, which last year announced it was quitting its vast offices on the capital’s St Andrew Square, said most of its savings would be from “non-staff costs”, but that it would also remove management layers.
The cost-cutting will include making outsourcing and technology more efficient, and much of the savings will come from support services. It expects the move “to result in the reduction of approximately 500 roles”. Abrdn said about 80 per cent of the annualised savings would benefit its core investments business.
In a trading update, the asset manager, formerly known as Standard Life Aberdeen, told investors: “A streamlined operations and management structure will enable the group to deploy its resources more efficiently and improve management accountability. The increased profitability will enable incremental investment in the capabilities to deliver excellent customer outcomes.
“Implementation of the programme is expected to take place primarily in 2024, with circa £60m benefit expected to accrue this year and will be completed by the end of 2025. To achieve the desired simplification and cost savings, total implementation costs are estimated to be around £150m.”
Chief executive Stephen Bird said: “Market conditions have remained challenging for our mix of business, and this is reflected in our year-end AUMA [assets under management and administration], flow numbers, and margins. The board and I are committed to taking these significant cost actions now to restore our core Investments business to a more acceptable level of profitability.
“Although our business model benefits from the diversification that comes from operating three businesses, we will not rest until all of them are contributing strongly to group profitability, as adviser and Interactive Investor have done in 2023. The new transformation programme announced today, when completed, will change in our cost to income ratio. We exceeded our £75m cost reduction target for 2023 for investments, but more needs to be done.”
Abrdn chief executive Stephen Bird admits that more needs to be done to reduce costs have argued strongly that the company has needed to address the cost base in its investments division, as well as more broadly. It is now (belatedly) doing so, but the need for that cost cutting becomes ever more apparent: flows in [the second half of 2023] were awful and the profit outcome for 2023 has been rescued by interest income for which management should not seek to take credit.
“The cost cutting is undoubtedly welcome but not yet the end of the story. There remains value in the shares, at least now there appears to be an attempt to preserve some of that value.”
August’s first-half results, for the six months to the end of June, showed that assets under management had slipped to about £496bn, compared with
The growth in the price of property in Scotland since the start of the pandemic in March 2020 has been little short of miraculous. It was anticipated this would be a time of considerable uncertainty for housing but has turned out to be one of the most prolonged periods of growth the market has experienced in decades.
People may have been unsure about many aspects of their lives but what is clear is that individuals continued to buy houses, and create a market which has boomed in the years since the pandemic began just under four years ago.
The latest official figures since the pandemic began, which run for the 45 months from March 2020 to November 2023, show that average house prices have risen by £43,381 to reach £194,006. This means that average home prices have risen by almost £1,000 each month for nearly four years.
Of course, the average price increases vary widely from the highest of £101,816 in East Lothian to the lowest in Aberdeen which has actually seen a decline in prices of £778. While in between you have East Renfrewshire rising by £79,734; Edinburgh up by £70,612; Highland increasing £46,179; Glasgow £42,299 higher; and Dundee up £26,681.
What these figures show is we have geographic pockets of growth which are doing very well and are outpacing much of the rest of Scotland. We also have property types where prices are soaring ahead.
It is among detached homes that the largest increases have been recorded. The average price of a detached home