Top fund bosses facing jobs cull

HUNDREDS of highly paid fund managers could lose their jobs if plans by financial groups to sell their asset management businesses continue to hit difficulties. At least three companies - Barclays, Commerzbank and Royal & SunAlliance - are trying to cut costs by offloading their asset management subsidiaries.

But a lack of buyers could force them - and others - to axe the staff who invest billions of pounds on behalf of pensioners and savers. One fund management executive said: 'What else are you going to cut? If you can't grow a business, you sell it. If you can't sell it, you outsource it.

'Costs have to come down and jobs might have to go.'

Asset management firms, which pay their star players some of the most impressive packages in the City, are desperate to cut costs. Their fees are shrinking because of competition, but also because stock market returns are likely to remain under pressure and big institutional clients are turning their attention to other investments, such as bonds.

Michael Dobson, the new chief executive at Schroders, is cutting 600 staff in his bid to reduce the firm's bulging costs.

Barclays revealed last week that it is looking to sell US-based Barclays Global Investors, possibly to a management team led by chief executive Pattie Dunn, one of the best-known female bosses in America.

Dunn has £530bn in funds at BGI, which Barclays bought for £300m in 1995 and which could now fetch up to £750m.

Commerzbank hired US investment bank Goldman Sachs in February to look at selling its fund manager Jupiter - the £11bn businesses set up by fund management supremo John Duffield. The German bank, which paid £800m for Jupiter two years ago, is believed to want £600m for the business. But sources say the figure is over-optimistic.

No firm bidder for Jupiter has emerged. Investec and Duffield's New Star Asset Management have ruled themselves out as buyers.

Bob Mendelsohn, chief executive of insurer Royal & SunAlliance, has been trying since last year to sell seven life assurance and asset management subsidiaries. Mendelsohn hopes to raise up to £800m, but has had inquiries about only five of the offshoots.

Two years of falling stock markets have hit funds' share prices as well as the value of assets under management. Virgin's retail fund has seen £300m wiped off its asset portfolio since December 2000, while Aberdeen Asset Management's share price has fallen from 600p in July last year to 250p.