AMP may still offer some NZ banking services

By NZPA

Friday 15th November 2002

Financial services company AMP is withdrawing its banking divisions from New Zealand with the possible loss of 70 jobs, but it may still offer some banking services, according to a banking expert.

In a move to improve returns to shareholders, AMP said yesterday that it would slash jobs and banking activities in Australia, Britain and New Zealand, as it winds back years of empire building.

AMP's New Zealand business includes fund management and insurance.

Massey University senior banking lecturer David Tripe said AMP would still be able to provide some banking services, despite halting its own banking products.

"I don't think it's much of a disaster for the banking public," Mr Tripe told National Radio.

"The main real business that AMP Banking was doing was to provide loans. I don't think those loans are going to suddenly disappear -- I'm sure somebody else will be happy to pick up that loan business if AMP doesn't want to keep it.

"I gather they're only suggestions that that part of the business may be for sale," Mr Tripe said.

"AMP had certainly been much less than a success, and probably something of a disappointment, in terms of getting an operation up and running.

"That doesn't mean they were necessarily wrong ... One of the problems AMP's had may have been is they started off from several different angles and they've had to try and merge those into a single business."

AMP could adapt by selling loans sourced from other companies as part of its financial services packages for customers, he said.

The company said yesterday it also plans to sell its property finance portfolios in both Australia and New Zealand, its British and New Zealand mortgage businesses, and its New Zealand rural business.

It also plans to stop manufacturing credit card products in Australasia, and has entered discussions with American Express over selling that portfolio.

The major restructuring plans announced yesterday will result in the loss of more than 1000 jobs across the group, including slashing most of its 600 banking staff to fewer than 100 employees by the end of next year.

About 70 of the 600 staff are in New Zealand.

Michael Guggenheimer, head of AMP retail banking in New Zealand and Australia, said the bulk of the 70 banking staff were in Auckland, but the number of jobs at risk depended on what the portfolio purchasers decided.

AMP currently holds about $2.7 million in New Zealand mortgages and deposits of around $500 million.

Sydney-based AMP is reviewing all operations after its shares slumped to historic lows in September following revelations that its UK Pearl life insurance unit's solvency had slipped below levels allowed by regulators.

"Tough times call for tough measures," chief executive Andrew Mohl said in a statement to the Australian Stock Exchange yesterday.

Mr Mohl said cost savings of $A40 million ($NZ45.6 million) were expected in calendar 2003, and the group expected to increase its 18-month cost-saving target of Stg100 million in Britain.

AMP Banking used the Internet and telephone banking as distribution channels and has no branches in New Zealand.

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