FSA rules delay AMP's demerger

BELEAGUERED Australian financial services group AMP warned that it was delaying until next month the issue of details on the planned demerger of its British operations, stoking speculation the split could be set back to next year.

The company, which owns Pearl, NPI and Henderson Global Investors in Britain, said its explanatory memorandum originally due this week would now be issued in October.

The delay was triggered by the need for AMP to incorporate into the document the impact of new rules on capital requirements from the Financial Services Authority in Britain. AMP's actuaries are working through the FSA's proposals to ensure that the new UK business will conform to the regulations planned for 2004.

AMP chief executive Andrew Mohl said the demerger should be completed this year, a timetable which the group insisted on Tuesday remained realistic.

Mohl said: 'Subject to receiving necessary regulatory and board approvals, AMP will provide details of the capital structures of the new AMP and demerged UK group, to be called Henderson, to the market in October. While our timetable is tight, demerger is achievable by the end of 2003.'

Australian analysts are concerned that the FSA may demand that AMP inject more capital into its struggling British life insurance operations before approving the demerger.

One Sydney broker said: 'If that happens, I reckon they will be lucky to get this demerger through this year as planned, despite what they say.'

Last week, AMP confirmed it was pondering a A$1.15bn (£477m) capital-raising to shore up its position before the demerger, with speculation of a rights issue.

Any delay could also hit the ambitions of the National Australia Bank, which has stated its interest in a merger with AMP's Australian operations once the British units are hived off. The NAB now holds about 5% of AMP, but botched an attempt to grab 11% of the company in a share market raid last month.

Meanwhile, speculation is mounting that NAB rival Westpac Banking is running the rule over AMP and could enter a bidding war for the Australian operations.

Westpac's decision to pull out of the running for Lloyds TSB unit the National Bank of New Zealand last week has fuelled the rumours of an AMP bid, which is seen as a much better fit for Westpac's wealth management business.

AMP shares, which have spiked 30% since the NAB raid, fell back 1.3% to A$6.64 on Tuesday but are still well above recent lows of A$4.70.