M&G launches redundancy scheme to cut staff costs
M&G has launched a voluntary redundancy programme to slash staff costs by 10% as it saw annual profits slump by nearly a third.
The group – which was spun out from Prudential last October – said the move comes as part of wider efforts under a five-year overhaul to cut annual costs by £145 million after being hit by the shift away from active stock pickers.
It saw underlying operating pre-tax profits tumble 29% to £1.15 billion last year, with clients withdrawing £7.5 billion from its fund management arm.
But this was partially offset by inflows of £6.2 billion into its retail savings business, leaving net client outflows at £1.3 billion overall.
The group said: “Active managers continue to face pressure on profitability because of the popularity of passives and changes in the distribution landscape.”
It is leading a turnaround to help address the industry challenges, including “reducing costs through restructuring and by concentrating our resources on areas where client demand is rising and profit margins are resilient”.
“As part of this programme, we have launched a voluntary redundancy scheme with the aim of reducing total staff costs by 10% in 2020,” the group added.
M&G did not disclose how many jobs are expected to go in the redundancy programme.
The firm employs around 5,600 staff in the UK and worldwide, with major British offices in London, Craigforth in Stirling, Edinburgh and Reading.
M&G also cautioned over the impact of coronavirus on equity markets and warned that further turbulence could hit its capital strength.
But it gave assurances that its balance sheet was currently “well within our risk appetite”.
M&G was recently forced to suspend its £2.5 billion property fund after seeing a mass exodus of client cash.
Prior to the suspension in December, industry tracker Morningstar said around £750 million was drawn out of M&G’s property portfolio during the first eight months of 2019.
Full-year results showed overall group assets under management and administration lifted 9% to £352 billion in 2019.
M&G is previously the UK business of insurer Prudential, which was spun off in a bid to separate from the rest of the insurer’s mainly Asia-focused business.
Prudential owners were given one share in M&G for every one they own in its former parent.