Abrdn announces pre-tax loss of £320m for first half of 2022

Investment group goes into red amid ‘market turbulence’ and withdrawal of £24bn linked to cancelled Lloyds deal

The investment group Abrdn plunged into the red in the first half of the year, after being hit by market turmoil and the withdrawal of more than £24bn of assets linked to a cancelled deal with Lloyds Banking Group.

Stephen Bird, the chief executive who scrapped the Standard Life Aberdeen brand for a new name last year, said the pre-tax loss of £320m in the six months to June “largely reflected the challenging global economic environment and market turbulence”. The group had reported profits of £113m a year earlier.

Customers also pulled their cash from Abrdn amid worsening market conditions, resulting in total net outflows of nearly £36bn. It contributed to a 6% drop in assets under management to £508bn, compared with £542bn a year earlier.

It also suffered the withdrawal of about £24.4bn worth of funds that it originally secured as part of a deal that pre-dated the merger of Aberdeen with Standard Life in 2017.

Lloyds Banking Group, which owns the insurance and pensions firm Scottish Widows, argued the merger posed a potential conflict of interest with its own business.

The drawn-out battle eventually led to a settlement in 2019, with Lloyds agreeing to withdraw its funds in tranches. Lloyds took out the final portion earlier this year, leaving Abrdn with £7.5bn of Lloyds funds.

“We can draw a line under the episode of Lloyds moving away from us, but they remain a significant customer,” Bird said.

The Edinburgh-headquartered firm also highlighted the performance of investment platform Interactive Investor, which it bought in a £1.5bn deal first announced in December.

“When I became CEO in late 2020 I said that we would pursue a strategy of diversification by refocusing our investments business in to areas of strength, where we have scale … lean into global growth trends and also significantly expand our reach into the higher-growth UK wealth market,” Bird said.

“We are doing exactly that and the addition of Interactive Investor transforms our UK retail presence and future revenue streams. The strength of our balance sheet means that we can continue to invest and reward shareholders.”

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Shares in Abrdn were down 5.5% in afternoon trading, having plunged as much as 10% earlier in the day.

Meanwhile, the German investment bank Berenberg reportedly told staff it was cutting about 30 of its 500 London employees, making it one of the first investment banks to shed jobs amid the grim economic outlook.

It comes after the Bank of England said it was expecting inflation to push past 13%, triggering a recession lasting more than a year.

Contributor

Kalyeena Makortoff Banking correspondent

The GuardianTramp

Related Content

Article image
Abrdn to buy online platform Interactive Investor for £1.5bn
Asset manager says it is acquiring fast-growing business from majority shareholder JC Flowers

Rob Davies

02, Dec, 2021 @4:46 PM

Article image
Investors received record-breaking dividends in 2017, research shows
Shareholders in companies on London’s main market received £33.3bn during second quarter, up 14.5% year on year

Simon Goodley

17, Jul, 2017 @6:01 AM

Article image
Revealed: UK local councils deposit taxpayers’ cash in Qatar state bank
Town halls and finance firms say they support LGBT rights but send money to World Cup host where homosexuality is illegal

Rob Davies and Joseph Smith

12, Nov, 2022 @11:00 AM

Article image
Lloyds share sale attracts first-time investors, says Hargreaves Lansdown
One in eight of the 170,000 people who registered interest with financial firm are first-time investors

Jill Treanor

26, Oct, 2015 @12:01 AM

Article image
Lloyds profits soar as Covid loan loss provisions released
Banking group claws back £459m from cash pile meant to cover bad debts

Kalyeena Makortoff Banking correspondent

28, Apr, 2021 @7:25 AM

Article image
Sainsbury’s to splash out £150m on price cuts as it slumps to first-half loss
From Libor rigging and sanction busting to forex manipulation, a look back at the global banking industry’s offences and penalties

Julia Kollewe and Sarah Butler

12, Nov, 2014 @8:38 PM

Article image
TSB to float next month with teaser for small investors

Lloyds expects to beat 'flotation fatigue' by offering one free share for every 20 bought by retail investors

Julia Kollewe

27, May, 2014 @11:00 AM

Article image
Lloyds to raise £400m selling part of St James's Place stake
Move to sell off part of its stake in wealth management group will bolster bailed-out bank's capital cushion

Jill Treanor, City editor

11, Mar, 2013 @6:51 PM

Article image
Lloyds bank share sale: all you need to know
The chancellor is offering ‘very generous’ terms for smaller investors, particularly if the bank starts to pay dividends

Jill Treanor

05, Oct, 2015 @2:32 PM

Article image
Osborne prepares to pick right moment for Lloyds share sale
Chancellor will be keeping close eye on banking group’s share price to ensure taxpayer does not lose out in public privatisation

Jill Treanor City editor

01, Jan, 2016 @4:21 PM