The Swiss asset manager is suffering the fallout of the coronavirus crisis. A major write-down to definitively sever ties with its banking past is leading to a massive first-half loss.
GAM expects a net loss of 400 million Swiss francs ($421 million) in the first six months of this year, it said in a statement on Friday. The main contributor for the far deeper-than-expected loss is a 410 million franc write-down of goodwill dating back to the Swiss asset manager's acquisition by Julius Baer in 2005 – even UBS' in 1999. Full results are due August 4.
The Zurich-based firm was forced to take the write-down because of drop in its assets caused by the coronavirus pandemic, it said. Stripping out the goodwill write-down, GAM expects to record a pre-tax loss of 3 million francs, from a 2.1 million franc loss in the comparable period last year.
Assets Edge Higher
GAM, led by ex-Blackrock executive Peter Sanderson since last September, said it is healthily capitalized and free of debt, and that the massive write-down doesn't affect its cash pile or any business activity. Its client assets edged higher to nearly 119 billion at the end of last month, from 112 billion at the end of March.
Sanderson said GAM is making good progress with a technology plan as well as deepening initial cost cuts amid the crisis. «Despite the current challenging conditions, GAM’s avenues for growth remain robust.»
