AMP AMP Limited

By Robb M. Stewart and David Winning

SYDNEY--AMP Ltd. (AMP.AU), Australia's biggest wealth manager, is turning to investors for cash and will accept less for unwanted assets as it seeks the money to reinvent itself after a surge in fund outflows.

The financial-services provider has been struggling with the loss of funds after a government-ordered probe in 2018 of misconduct in the country's financial industry heard it was among companies that had charged fees for customer advice it didn't provide and that it had sought to mislead regulators. Early last year, the company's chief executive, chairman and several board members resigned.

On Thursday, the company said it planned to invest heavily in a three-year plan to rebuild its wealth-management business, tackle legacy issues and position AMP Capital and its banking arm for growth.

It has booked impairment charges of 2.35 billion Australian dollars (US$1.59 billion), pitching it to a A$2.3 billion net loss in the six months through June from a A$115 million profit in the first half of the prior financial year.

The loss reflected the challenges facing AMP and the actions taken to address them, said Francesco De Ferrari, the former head of Credit Suisse's Asia-Pacific private banking business who joined AMP as CEO in December. He added the impairment didn't materially impact financial stability and shouldn't overshadow a resilient underlying performance, particularly from AMP Capital and AMP Bank during the first half.

AMP recorded net cash outflows of A$3.1 billion in the six months through June, compared with A$873 million outflows in the same period last year, which it said was a reflection of reputation damage and a focus on client retention. There were signs of improvement emerging toward the end of the first half, it said.

AMP said it would invest between A$1 billion and A$1.3 billion in order to return to growth and deliver A$300 million in running annual cost savings by 2022.

AMP would seek to raise A$650 million selling shares at a discount to institutional shareholders in an underwritten placement and offer shares to small shareholders, to bolster its balance sheet.

It would also work on a revised deal to sell AMP Life, a basket of mature businesses and its Australian and New Zealand wealth-protection insurance unit. An earlier agreement to sell AMP Life to Resolution Life Group Holdings LP for A$3.3 billion was derailed this year by the concerns of New Zealand's central bank.

AMP said it had also cut the price of a deal with Resolution Life, and would now accept A$2.5 billion in cash and a 20% equity interest worth about A$500 million in a new Australian company controlled by Resolution Life that would become the owner of AMP Life. The pair were working with regulators in Australia and New Zealand to address requirements for a change in control of the assets, it said.

AMP has suspended dividend payments and said it was on track to complete a customer compensation and remediation program during 2021.

It also said Chief Financial officer-designate John Moorhead had decided to leave to pursue other opportunities, and Deputy CFO James Georgeson would step in on an acting basis as retiring finance chief Gordon Lefevre prepares to hand over the role.

Write to Robb M. Stewart and robb.stewart@wsj.com and David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 07, 2019 21:19 ET (01:19 GMT)

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