Swiss asset manager GAM Holding is still floundering after shutting down its absolute-return unconstrained bond funds in August.
The firm announced Thursday that it has begun comprehensive restructuring program that includes a reduction of its staff and other cost savings strategies. GAM will reduce its staff by about 10 percent, a process already underway that will continue through 2019.
GAM has been troubled since announcing in August that it had suspended the head of its unconstrained bond unit, Tim Haywood, after an internal investigation found issues with his risk management and record keeping procedures.
That announcement had a domino effect: GAM had to liquidate its absolute-return unconstrained bond funds, which oversaw about $7 billion of assets at the time, and it lost two executives. Former chief executive officer Alexander Friedman stepped down in November, while earlier in the fall, compliance chief Natalie Baylis left the firm after mere months in her role, according to GAM announcements at the time.
The firm has struggled amid this upheaval. Assets under management (excluding those from the shuttered bond funds) dropped to 60.8 billion Swiss francs ($61.2 billion) at the end of last month, from 66.6 billion Swiss francs at the end of September, according to the statement Thursday.
“While the net flow trend was improving in the first three weeks of October 2018, with net outflows diminishing, it worsened thereafter as the market environment remained challenging for the industry,” GAM said.
The financial turmoil likely isn’t over yet for the firm.
GAM expects that its 2019 financial results will be “materially below” those recorded in 2018. Shareholders may not receive dividend payouts this year, the firm said, as it expects to propose suspending them to speed up the process of rebuilding capital at the firm. As for dividends in 2019 and beyond, shareholders will receive a minimum payout of 50 percent of underlying net profit, according to the announcement.
Meanwhile, the liquidation of its bond fund is continuing, with all funds expected to be returned to clients in the first quarter, GAM said.
“With today’s announcement we are seeking to give our shareholders and our clients the clearest assessment of our financial situation,” David Jacob, the firm’s CEO, said in a statement. “We are taking decisive action to rebase costs and support profitability, whilst maintaining our focus on client service and control functions.”
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GAM also plans to review its corporate structure to reduce complexity and reprioritize projects, according to the announcement. Additionally, Larry Hatheway, head of GAM Investment Solutions, and Tim Dana, head of corporate development will step down from their board roles while continuing to work on the firm’s staff.
Shares of GAM fell 21 percent Thursday to 3.58 Swiss francs each.
A spokesperson for the firm declined to comment on its financial results.