AMP gives up on risk taking
at 3:00 pm on January 25, 2017 | 21 comments
http://www.macrobusiness.com.au/2017/01/amp-gives-risk-taking/
Well this is no surprise in the “innovation” economy.
From the AFR:
Beleaguered financial giant AMP has shut down its venture capital unit less than two years after it was established, with plans to invest millions in disruptive digital businesses.
All roles within the unit, which was known as AMP New Ventures and came under the purview of AMP’s chief innovation officer Jonathan Deane, have been axed following a strategic review.
In an email to staff last week obtained by The Australian Financial Review, AMP group executive, wealth solution and customer Paul Sainsbury said the group leadership team had been “prioritising capital” that was core to the performance of the business.
“The decision was made to not allocate capital for new ventures,” he wrote. “As a result, our New Ventures team won’t continue and the team’s roles have been made redundant. We have spoken to all of the team members, and will be supporting them through redeployment.”
While this has been spun as part of cost cutting, its really just a cornerstone of Corporate Australia – take no risks
when you can profit off subsidised mortgage selling and ticket clipping.
More:
Last October, AMP wrote down the value of its life insurance arm by $668 million, which saw its shares tumble by more than 10 per cent.
The following month AMP shook up its executive team with three senior executives, including the head of its insurance division, leaving the company.
Credit Suisse analyst Andrew Adams said there was building expectations of another cost-out program by AMP, accompanied by capital management, but both of which may disappoint in the near-term,.
“AMP has done and continues to do a good job on cost-control. However, achieving cost-savings beyond expectations of a few percentage points of controllable cost decline in the near-term is a very tough ask,” he said.
Morningstar senior equities analyst David Ellis said further that the sentiment around AMP remains negative.
“The CEO is under pressure from the board to improve short term performance. I don’t think there is a quick fix for AMP,” he said.
“AMP have a deserved reputation as tight managers of costs … wealth management is the largest division and possibly an opportunity to cut costs there.”
Yes, the all important short term performance mindset that pervades boards in corporate Australia. Why have a
vision of one year or hell, five years ahead when all that matters is your next dividend cheque and bonus?
When will the real risk takers stand up in corporate Australia? Or should we start to equate these cushy jobs with that of the higher bureaucracies in the public services that have a similar mindset?
If PM Turnbull want a lasting legacy, perhaps kicking the corporate boards into action with the same fervour as
Centerlink is kicking disability pensioners to “pay their way” would start to foster an “Innovation Australia” .
Or at the very least, stop subsidising the banks disguised as mortgage credit unions and make them pay for the risk
the whole Commonwealth bears for their super profits?