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Cultural change now ‘top priority’, AMP chief says

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AMP has rolled out new internal committees and is set to bring in external help to remedy its culture, with the chief admitting the company has a “lot more to do”.

The wealth giant has launched a board cultural working group and an employee-led inclusion task force (which is chaired by Francesco De Ferrari), in its immediate efforts to improve diversity and inclusion. It is also in the process of appointing an external expert to drive inclusive leadership across the group.

“We know we have more to do in improving diversity and inclusion, the transformation of culture is now my top priority,” Mr De Ferrari said.

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Last week, AMP Australia chief Alex Wade departed the group, with his resignation being sudden and immediate. His exit had followed the departure of four other executives in the AMP Capital team, after controversy arose over a resurfaced sexual harassment claim against the newly appointed CEO of the investment arm, Boe Pahari.

Media reports on Monday alleged Mr Wade, the former wealth and banking boss, had sent explicit photos to female staff. 

While chief executive Mr De Ferrari dodged and expressed frustration at questions from journalists about Mr’s Wade’s resignation during the group’s results briefing on Thursday morning, the CEO conceded he was accountable for his appointment. Mr Wade had previously worked with Mr De Ferrari at Credit Suisse.

“A decision to hire an executive that reports to me, is my responsibility as CEO of the company,” the AMP boss said.

“Obviously while all my direct reports would need to have also the approval of the board, ultimately it’s my decision.”

AMP last year indicated it would be introducing changes to improve accountability and execution, when it appointed Mr De Ferrari in the CEO role. He is now one year into leading the group through its three-year transformation strategy. 

“The transformation of AMP I think when I joined was called ‘the most challenging corporate transformation in corporate Australia’,” the CEO said.

“I was very clear from the beginning, this does not happen overnight. And typically, the way these transformations work, having gone through a number of them before, there’s a lot of tough decisions you need to take [everyday]. 

“There’s a lot of really hard execution work that needs me to deliver, which doesn’t show up in results on day one. It takes time, there’s always a lag. It’s about really staying focused on the strategy.”

Meanwhile AMP had managed a net profit of $203 million, in contrast to its loss of $2.2 billion in the first half of 2019. 

The wealth group reported its underlying profit for the first half of the year had almost halved to $149 million, from its previous $256 million in the prior corresponding period. 

The COVID crisis and lowered revenues from decreased average assets under management had squeezed total operating earnings across the group, which were down by 37 per cent to $199 million year-on-year.

Wealth management earnings were down by 43 per cent to $59 million, AMP Capital dropped by 40 per cent drop to $72 million, the banking segment fell by 30 per cent drop by $50 million and New Zealand wealth decreased by 18 per cent to $18 million.

Despite the downfalls, shareholders will be receiving a special dividend of 10 cents per share, a total of $344 million collectively, while AMP commences a share buyback over the next year, which could see it pay out up to $200 million.

But the board does not expect to declare a final FY20 dividend.

AMP’s share price responded positively to the news on Thursday, rising to $1.54 following the release of the results. The price was $1.38 on Wednesday afternoon.

Transformation of AMP Capital starting with full ownership

Mr De Ferrari gave details on Thursday morning around the investment arm’s new business strategy, which will see it aim to boost its private markets divison by chasing opportunities in infrastructure and real estate. 

AMP had signalled it would be taking full ownership of the investment group, repurchasing Mitsubishi UFJ Banking Group’s 15 per cent stake for $460 million

Chief financial officer James Georgeson said AMP had come to the decision to separate after watching MUTB buy local rival Colonial First State Global Asset Management, now rebranded as First Sentier, during 2019.

“For us, it was critical to have strategic control of 100 per cent of our fastest growing business and we thought it was absolutely in the interest of shareholders to be able to do that because we have a number of key decisions that we need to take and we have a really exciting growth path ahead,” Mr De Ferrari added. 

“And so being in control, and not having a minority shareholder that owns a competitor was the right way forward.”

 

Cultural change now ‘top priority’, AMP chief says
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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