By Matt Scuffham and Joel Dimmock
LONDON, Dec 31 (Reuters) - Credit Suisse will sell a sizeable chunk of its fund management arm it considers as subscale to Aberdeen Asset Management at a loss, making Aberdeen the largest listed UK fund company.
In the all-share deal, the Swiss bank will receive a 25-percent stake worth around at 250 million pound ($363.3 million) in Aberdeen, and will book a 600 million Swiss franc ($570.3 million) fourth-quarter book loss.
'This agreement enables us to focus our resources on our alternative investments, asset allocation, and Swiss business, where we have strong performance and critical mass,' Credit Suisse said in a statement on Wednesday.
The deal will boost Aberdeen's assets under management by a third, making it the UK's largest listed asset manager -- and will add further clout to its sales and distribution network.
'The terms of the deal appear to be highly favourable to Aberdeen,' brokerage Daniel Stewart said in a note.
Aberdeen shares soared in the wake of the announcement, adding 15.2 pence to end the shortened trading day at 119.5 pence. Credit Suisse shares were not traded because of a holiday.
The sale is a significant move away from non-Swiss domiciled funds for CS, but is relatively small in comparison to its overall institutional asset management arm, which has 577 billion francs in clients' cash.
MIXED PERFORMANCE
Contrary to its thriving private clients business, CS has been seeking to better exploit its institutional clients business, which has been plagued by money outflows and which the bank has admitted in parts performed poorly.
The bank will now perform most of the business from Switzerland and focus on alternative investments and more profitable discretionary mandates.
But Aberdeen said the deal created the potential for 'substantial' cost efficiencies, as well as 'significant' earnings enhancement.
Chief Executive Martin Gilbert declined to give full details of cost cuts or future staffing levels in a conference call with journalists, however.
The Swiss bank has committed to hold its stake in Aberdeen for at least three years and will take a seat on the board.
The deal will boost Aberdeen's assets under management to about 150 billion pounds from 110 billion at present, depending on currency fluctuations.
Aberdeen said that the Credit Suisse move will give it greater scale for sales of funds in its existing markets such as the UK, Australia, Germany, Switzerland, and Japan.
Credit Suisse will continue to operate its Global Investor business in Brazil and through joint ventures worldwide.
Aberdeen noted it will gain another 'significant, long-term, quality shareholder'. British hedge fund Toscafund owns a stake of about 20 percent stake, and in October, Japan's Mitsubishi UFJ Trust and Banking Corp took a 9.9 percent holding as part of Aberdeen's bid to boost the distribution network.
Media have reported that Aberdeen could buy up all or part of New Star, the troubled British fund manager run by Gilbert's friend John Duffield.
The Aberdeen boss did not comment on that speculation, but refused to rule out further deals.
'There is a lot of transaction to be done. I've been doing this for more than 20 years, and I've never seen an opportunity like this,' he said.
($1=.6881 Pound)
($1=1.052 Swiss Franc)
(Additional reporting by Emma Thomasson in Zurich and Douwe Miedema in London; Editing by Douwe Miedema and Hans Peters) Keywords: ABERDEEN CREDITSUISSE/ (matthew.scuffham@reuters.com; +44 20 7542 6734) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, Dec 31 (Reuters) - Credit Suisse will sell a sizeable chunk of its fund management arm it considers as subscale to Aberdeen Asset Management at a loss, making Aberdeen the largest listed UK fund company.
In the all-share deal, the Swiss bank will receive a 25-percent stake worth around at 250 million pound ($363.3 million) in Aberdeen, and will book a 600 million Swiss franc ($570.3 million) fourth-quarter book loss.
'This agreement enables us to focus our resources on our alternative investments, asset allocation, and Swiss business, where we have strong performance and critical mass,' Credit Suisse said in a statement on Wednesday.
The deal will boost Aberdeen's assets under management by a third, making it the UK's largest listed asset manager -- and will add further clout to its sales and distribution network.
'The terms of the deal appear to be highly favourable to Aberdeen,' brokerage Daniel Stewart said in a note.
Aberdeen shares soared in the wake of the announcement, adding 15.2 pence to end the shortened trading day at 119.5 pence. Credit Suisse shares were not traded because of a holiday.
The sale is a significant move away from non-Swiss domiciled funds for CS, but is relatively small in comparison to its overall institutional asset management arm, which has 577 billion francs in clients' cash.
MIXED PERFORMANCE
Contrary to its thriving private clients business, CS has been seeking to better exploit its institutional clients business, which has been plagued by money outflows and which the bank has admitted in parts performed poorly.
The bank will now perform most of the business from Switzerland and focus on alternative investments and more profitable discretionary mandates.
But Aberdeen said the deal created the potential for 'substantial' cost efficiencies, as well as 'significant' earnings enhancement.
Chief Executive Martin Gilbert declined to give full details of cost cuts or future staffing levels in a conference call with journalists, however.
The Swiss bank has committed to hold its stake in Aberdeen for at least three years and will take a seat on the board.
The deal will boost Aberdeen's assets under management to about 150 billion pounds from 110 billion at present, depending on currency fluctuations.
Aberdeen said that the Credit Suisse move will give it greater scale for sales of funds in its existing markets such as the UK, Australia, Germany, Switzerland, and Japan.
Credit Suisse will continue to operate its Global Investor business in Brazil and through joint ventures worldwide.
Aberdeen noted it will gain another 'significant, long-term, quality shareholder'. British hedge fund Toscafund owns a stake of about 20 percent stake, and in October, Japan's Mitsubishi UFJ Trust and Banking Corp took a 9.9 percent holding as part of Aberdeen's bid to boost the distribution network.
Media have reported that Aberdeen could buy up all or part of New Star, the troubled British fund manager run by Gilbert's friend John Duffield.
The Aberdeen boss did not comment on that speculation, but refused to rule out further deals.
'There is a lot of transaction to be done. I've been doing this for more than 20 years, and I've never seen an opportunity like this,' he said.
($1=.6881 Pound)
($1=1.052 Swiss Franc)
(Additional reporting by Emma Thomasson in Zurich and Douwe Miedema in London; Editing by Douwe Miedema and Hans Peters) Keywords: ABERDEEN CREDITSUISSE/ (matthew.scuffham@reuters.com; +44 20 7542 6734) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
