Aberdeen may change brand for unit trusts

Aberdeen Asset Management, the struggling investment company at the heart of the split-capital débâcle, is considering abandoning its brand for core products in an attempt to revamp its tarnished image.

Martin Gilbert, the chief executive, said if the Aberdeen brand had not recovered from its association with stricken split caps in a couple of years, he would think seriously about using a different brand for the company's unit trust business.

The company might sell unit trusts under the Prolific banner, after its purchase of a business under that name from Scottish Provident in July 1997 for £61m.

"It is not an immediate decision, but we would look at other brands if Aberdeen doesn't recover. Prolific is a very good brand," Mr Gilbert said.

Mr Gilbert flagged up the possible change as Aberdeen announced it would slash its final dividend by two-thirds to 2.15p and posted a 15.5 per cent drop in pre-tax profits before goodwill and amortisation to £40.7m in the 12 months to 30 September.

Aberdeen is being investigated along with other fund managers by the Financial Services Authority over allegations that some companies mis-sold split-capital investment trusts and even took part in a "magic circle" which colluded to keep the value of certain trusts artificially high.

Aberdeen has been struggling for months to shrug off allegations that it is guilty of mis-selling and said it has not made any provisions for potential compensation payments.

The revelation surprised some in the City as Brewin Dolphin, a stockbroker which is closely linked to the split-cap sector, last week said it had provisioned £2.5m for costs relating to potential claims from split-cap investors who have lost most or all of their investments.

Aberdeen said in a statement: "We believe that at all times we have acted with complete integrity and in accordance with all relevant regulations and laws."

Mr Gilbert indicated Aberdeen had taken some steps to prepare for potential compensation, if the FSA finds against it. He said: "Our strategy is to ensure that we pay down our bank debt in order to meet any future obligations we have."

Aberdeen has £122m of bank debt, which it hopes to clear by the end of the first quarter next year. This will be repaid partly by its planned disposal of its successful property asset management business, which analysts value at between £100m and £120m.

The company said it has "received approaches from a wide range of financial institutions expressing interest in purchasing [Aberdeen Property Investors]. These are being given due consideration by the board."

Aberdeen's shares climbed 6.5p to 67p, but remain more than 80 per cent down from the end of 2001.

Martin Cross, an analyst at Teather & Greenwood, said: "People are relieved that the net inflow of funds is not far short in the second half of what it was in the first half. That is an extremely good achievement for Aberdeen whose reputation was allegedly shot to pieces over its involvement with split caps."

Aberdeen managed 19 split caps, so called because they contain both shares that were meant to produce growth and shares intended for income. The sector has been hit particularly hard by the decline in the stock market in the past two and a half years because most of the trusts were highly geared.

Aberdeen has sliced 10 per cent of its fund management headcount, amounting to 88 people, and also cut down dramatically on advertising spending in order to produce £30m of savings this year.