GAM set to cut 10% of investment staff – reports

Embattled Swiss fund manager GAM is set to cut a number of jobs as interim CEO David Jacob looks to restructure the firm’s equity and bond divisions just two weeks after taking on the role.

According to Financial Times, GAM is set to cut around 10% of its 188 investment staff as it strives to find ways to cope with recent damaging events.

In an memo to staff, the interim CEO said: “By consolidating some teams we will be better able to deliver scalable products to our clients worldwide. This will mean that a number of current investment roles will become redundant.”

Jacob was appointed interim CEO of the firm earlier in the month, after previous chief executive Alexander Friedman stepped down after four years at the helm.

It was reported in early August the chief executive was facing shareholder pressure to step down following a series of crises at the firm since he took over in 2014.

During his tenure, the group has overseen a profits warning caused by an unsuccessful acquisition, a faltering share price and, most recently, from the suspension of Tim Haywood.

Suspended
Haywood was suspended following whistleblowing claims of issues relating to his risk management procedures and record keeping.
GAM subsequently liquidated the £8.5bn absolute return bond strategy on the back of high levels of redemption requests.

According to the FT, the remaining staff members will be incentivised to remain in their job by being offered deferred payments that pay out over the next two to three years.

Restructure
As part of the restructure, the firm plans to bring together fixed income teams from London, Zurich and New York teams to focus on four key areas — emerging markets, global credit, structured credit and global strategic bonds, which will incorporate the old total return bond strategies. European equities will also be consolidated into a single team.

Jacob said: “I am fully aware that this is difficult for the organisation, and particularly so for colleagues who are directly affected by these changes, but we have to ensure that we have an efficient business with a clear and compelling investment proposition for our clients.”

In a regulatory filing on Tuesday (21 November), the firm said Mario Gabelli, the majority owner of Gamco, a $43bn New York-listed value focused investment manager, had built a 3% stake in the business; BlackRock also own just over 3%.

Since the beginning of the year, GAM’s share price has plummeted by over 60% to treade at CHF6 amid the ongoing issues.

This article was first featured on International Investment’s sister title Investment Week.