Speaking at the release of the firm’s results for the half year, Alexander Friedman said the closures should “free up space” to enhance the firm’s product pipeline either through acquisition or in-house development.
The firm also announced the development of a new operating model that will see it reduce its headcount by around 15% as part of an effort to take out around CHF20m annually from its cost base.
Expected to take 18 months, the new plan aims to create a more consistent “operating backbone” for the business. This corporate development strategy will be lead by Tim Dana, who has been hired from Citigroup into the role of group head of corporate development.
The plan aims to focus GAM’s operations and IT function on core parts of the value chain: the support of portfolio management and client servicing activities.
It will outsource fund accounting and middle office processes to State Street and said, that “across the Group, remaining duplications in processes, structures and systems will progressively be reduced to further integrate our business.”
In terms of headcount, GAM said it will try to avoid redundancies as much as possible by “using the Group’s natural personnel turnover to find alternative roles in-house”.
The costs associated with the restructuring (including redundancy payments and, to a lesser extent, the expenses for the decommissioning of software) are expected to result in a one-time charge of approximately CHF 13m.
Reporting a 3% drop in underlying net profit for the first half of 2015 to CHF 81.2m, Friedman said: “GAM is in the midst of an ambitious and achievable growth agenda, which is well on track. At the same time, we have been successful in navigating the external headwinds during the first half of the year, with positive underlying business momentum delivering solid profitability and robust net new money inflows.”
The firm said the numbers were impacted significantly by the Swiss National Bank’s decision to unpeg its currency from the in January.
“Absent foreign exchange rate movements from year-end 2014, operating income for the first half of 2015 would have increased by approximately 4% and operating expenses would have been essentially flat compared to the second half of the previous year,” it said.
“The benefits from the changes we are implementing will not be fully realised overnight. We are highly confident that we have taken the right steps to significantly strengthen our company’s competitive advantage and secure our long-term success,” Friedman added.
