Francesco De Ferrari remains CEO, says AMP

AMP’s strategic direction under a cloud even as it late Thursday issued a statement assuring investors Francesco De Ferrari remained in the role.

AMP CEO Francesco De Ferrari was confirmed as staying in the role late on Thursday. Picture: Britta Campion

The ongoing tenure of AMP chief executive Francesco De Ferrari and the strategic direction of the pressured 172-year-old wealth group remains clouded, even after the company late Thursday issued a statement assuring investors and staff he remained in the role.

In an a single-sentence ASX announcement, AMP said it noted media reports and confirmed Mr De Ferrari remained chief executive of the group. The company released the statement to clarify the position of the chief executive about three hours after a media report surfaced that said Mr De Ferrari was resigning.

AMP staff were sent an email late on Thursday saying Mr De Ferrari had not resigned, although that and the ASX statement did not allay fears that the CEO’s departure could be announced in coming weeks.

At least one institutional shareholder is said to have raised the issue of Mr De Ferrari’s accountability for a string of governance scandals last year at AMP, in a meeting with the company’s chairman Debra Hazelton this month.

Before the market closed AMP put its shares into a trading halt as investors responded to the reports of Mr De Ferrari’s potential resignation and pushed its shares down 3.6 per cent to $1.335 in afternoon trading.

Some observers have compared to the situation to the recent departure of Crown Resorts chief executive Ken Barton in the wake of the Bergin inquiry in NSW. On Friday February 12 Crown issued a statement saying that contrary to media reports, Mr Barton had not resigned, only to announce on Monday February 15 he was stepping down. It’s understood Mr Barton and Crown took several days to finalise the terms of his departure.

Questions about the tenure Mr De Ferrari come at a critical juncture for AMP given a 12 month period of heightened executive and board instability. AMP is also attempting to secure the sale of a majority stake of its marquee private markets business, which sits within its capital division, to US suitor Ares Management.

In another blow to AMP, The Australian revealed on Thursday it and Ares are leaning toward an extension of a key deal exclusivity period as negotiations drag on.

The parties are said to be close to sealing a short extension of the exclusive negotiating period to form a joint ownership structure for AMP’s private markets business.

The delays in securing a binding transaction will have investors nervous, given Ares already abandoned a $6bn whole of company bid for AMP.

Former Credit Suisse executive Mr De Ferrari started at AMP in December 2018, and has been attempting to execute a three-year turnaround plan. He joined at the height of controversy hitting AMP following the Hayne royal commission, at which the wealth group fared poorly, and damaging revelations claimed the job of former CEO Craig Meller, and the chairman at that time Catherine Brenner.

The changes at the helm of AMP were due to revelations AMP misled the regulator and provided customers with shoddy advice.

AMP shares have tumbled about 46 per cent since Mr De Ferrari started in the top job at the wealth group, with his own tenure also marred by several scandals.

AMP was embroiled in controversy last year when it promoted Boe Pahari to run AMP Capital, despite the executive being penalised for an earlier sexual harassment incident. After an investor backlash over the appointment, he was demoted and then chairman David Murray and non-executive director John Fraser stepped down to take accountability for the saga.

That came just months after AMP Australia boss Alex Wade left the company for inappropriate conduct that centred on him sending a lewd photo to a female employee.

Former Sunsuper boss Scott Hartley started in the role of head of AMP Australia in January, after an executive search process and is regarded as an internal candidate to take charge should Mr De Ferrari exit.

In February, Mr De Ferrari said the sale process for all and parts of AMP had been somewhat of a distraction, but despite that and the challenges of COVID-19 the group had met 90 per cent of its commitments under his three-year turnaround plan.

AMP and Ares had been hoping to have a binding agreement to cover the latter buying a controlling stake in AMP’s private markets business by the end of a 30-day exclusivity period, but negotiations are dragging on and there are still key matters to be resolved.

An announcement on whether the parties would secure a binding transaction had been expected on or before March 29, which is the first business day after the end of a 30-day exclusivity period.

If that transaction is sealed – even after an extended period of exclusive negotiations – the overall AMP business will be a lot smaller than that overseen by Mr De Ferrari when he arrived. The group also sold its life insurance unit to Resolution Life in a transaction that was completed last year.

A re-cut life insurance deal included a cash payment of $2.5bn to AMP and the company taking a $500m — or 20 per cent — ­equity interest in Resolution Life Australia.

AMP reported a 32.8 per cent slide in 2020 underlying profit to $295m, missing expectations, while statutory profit printed at $177m for the year ended December 31, compared to a bulging $2.5bn loss in 2019.
The company’s four key divisions – wealth management, the bank, AMP Capital and NZ wealth – all posted declines in underlying net profit for last year, compared to 2019.

Originally published as Francesco De Ferrari remains CEO, says AMP