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AMP chief Batchelor steps down
By Geoff Hiscock
SYDNEY, Australia (CNN) -- AMP Ltd chief executive Paul Batchelor has resigned after shares in Australia's biggest life insurer and funds manager fell 15 percent in three days on concerns about the company's handling of troubles in its U.K. financial services business. In a statement to the Australian Stock Exchange Tuesday morning, AMP said Batchelor had stepped down and would be replaced for the time being by Andrew Mohl, the company's current chief operating officer of financial services. AMP also said chairman Stan Wallis would step down in six months, after overseeing the appointment of a new permanent CEO. The AMP board meets in London later Tuesday amid criticism of the company's level of disclosure about capital requirements at its Pearl "with-profits" fund in the U.K. AMP shares tumbled another 3.6 percent to a record low Monday of A$11.41 as the market digested the company's handling of the Pearl issue. They opened lower again Tuesday, down 1 percent to to A$11.28 in the first few minutes of trading. Trading had resumed Monday after AMP sought a halt Friday morning ahead of a statement on its Pearl operations. That followed the revelation that the capital position of its Pearl business was below the minimum capital requirements of the U.K. Financial Services Authority. Late on Friday night AMP issued a statement to the Australian Stock Exchange saying it would make available £500 million ($775 million) to support Pearl by the end of this year. It said it would look at putting more money in if the FTSE index on the London Stock Exchange fell below 3700 points. The FTSE closed Friday at 3860.10. Closes at A$11.41On Monday, AMP shares closed at Aust. $11.41, after going as low as A$11.25 early in the day. The broader Australian market, measured by the S&P/ASX200, lost 0.88 percent. Skittish sellers continued to strip millions of dollars from the company's market valuation as soon as trading began. AMP shares are now down almost 45 percent from a one-year high of A$19.76 in March, with the market questioning the company's credibility. The capital shortfall in the Pearl business was revealed in a prospectus last week for AMP to sell up to A$1 billion ($550 million) in new reset preference shares. AMP said in the prospectus it expected Pearl to meet the minimum capital requirements by year end, subject to capital management and no further "material deterioration" in its investment markets. That prompted an inquiry from Australia's corporate watchdog, the Australian Securities and Investments Commission (ASIC), about the level of disclosure being made to the market. Full disclosureOn Monday, ASIC said AMP had assured it that after Friday's statement it had now made full disclosure about the capital requirements of its U.K. operations. ASIC chairman David Knott said it would allow an updated AMP prospectus to be circulated, assuming that no new matters were raised. AMP, which has about 73 percent of its A$266 billion in assets under management in the U.K. and Europe, has been rocked by the fall in global equity markets this year. AMP noted in its statement Friday that the FTSE has fallen by 27 percent from its level of 5217.4 reached on December 31 last year. Last month, Paul Batchelor cited the toughest market conditions in 20 years for a 25 percent drop in first-half earnings to A$303 million ($165 million). (Full story) Batchelor said then that he believed the global economy would be stronger in 2003. Batchelor was appointed CEO of AMP in August 1999.
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