(Bloomberg) -- GAM Holding AG will post a large loss, scrapped its dividend and eliminate 10 percent of jobs as the firm struggles to contain a scandal prompted by the suspension of a star fund manager.
The Swiss asset manager is forecasting a 925 million-franc ($931 million) loss for the full-year related to a series of goodwill charges at the group and its Cantab quant funds, it said in a statement on Thursday. Assets under management have declined by a further 7 billion francs since the end of September and the group has started a restructuring program.
The tumult was precipitated by the suspension of bond manager Tim Haywood in July after the company said he breached certain internal rules, prompting the first wave of outflows and a tumbling share price. GAM has reacted to the crisis by redoubling its efforts to keep important employees, while reducing costs elsewhere, with the expected loss and impairment charges being the first important financial impact of the scandal.
Haywood’s suspension came as GAM was already buffeted by headwinds in the asset-management industry. Volatile returns and an investor flight to low-fee products have squeezed profits, forcing many money managers to consolidate. Assets under management declined by about $18 billion in the third quarter as Haywood’s funds were liquidated and clients pulled money from other strategies.
GAM got a rare boost recently from Mario Gabelli, the 76-year-old billionaire head of Gamco Investors. He’s built a stake of around 3 percent in GAM, according to a filing.
To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Vernon Wessels
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