AMP in tatters after dismal end to David Murray’s revival effort

David Murray resigned from AMP last year after just two years as chair and a string of poor personnel choices at both executive and board level. Picture: AAP

Former CBA boss David Murray’s failed attempt to revive AMP is heading to a dismal conclusion with his hand-picked chief, Francesco De Ferrari on track for an early exit in a move which will leave the financial services firm in tatters.

AMP went into a trading halt and late Thursday issued a short statement saying De Ferrari remains in the role.

Even so, speculation around his future sweeping the market on Thursday was evidence enough that Murray’s tenure was an unmitigated disaster and the only good from De Ferrari’s departure is that he has gone.

When Murray took the job in 2018, he said he had avoided board seats because he only wanted to be involved where he could make a difference.

Just what happens from here with a half-completed sale of the prized assets to Ares Management and its other businesses in decline is unclear.

AMP chief executive Francesco De Ferrari. Picture: Britta Campion

When Murray selected De Ferrari from Credit Suisse in Asia with the job of restoring AMP, it was at the time the last best chance to save the place.

That was a joke and in the end the only thing De Ferrari was good at was asking for more money.

He did well there, pulling out $8m in cash in his 2½ years at the company, including $3m in bonuses plus stock.

Shareholders have seen their wealth fall, with AMP’s stock falling from around $2.10 when he joined (down from a $4.52 high in 2018) to $1.35 on Thursday, when the stock went into a pause.

The Boe Pahari and Alex Wade scandals that rocked the company both happened under De Ferrari and Murray’s watch.

Murray resigned last year after just two years as chair and a string of poor personnel choices at both executive and board level.

Present chair Debra Hazelton to her credit is doing the best she can, left picking up the pieces.

To be fair to Murray, the AMP franchise has been in decline for many years, from a once dominant player in the Australian ­financial market to one that is looking increasingly irrelevant by the day.

Murray, who made his name with his successful tenure as CBA’s boss and as author of the landmark report on the industry in 2014, was not able to put his experience to value.

Having lost a chair last year and a CEO this year, suffice to say AMP is on the edge of a cliff in an unstable position.

Tunnel ruling

Former WA Chief Justice Wayne Martin will next week hand down a crucial ruling on just who is responsible for the clean-up of contaminated soil in the $6.7bn West Gate Tunnel ­project.

The non-binding ruling will help clarify the boundaries in an ongoing dispute between the Victorian government, Transurban and its contractors John Holland and CIMIC.

The PFAS contaminated soil has proved a stumbling block for the project because of changes in government thinking on the danger levels involved.

Transurban’s Scott Charlton said the project would be finished in 2022, which was later changed to 2023, and at last count no final date is set. The issue is important to Charlton because under the original deal his CityLink monopoly was extended for 10 years from 2034 at higher annual toll increases of 4.25 per cent.

It is also important for John Holland and CIMIC because if they are forced to pay more to remove the contaminated soil, this will destroy profit margins on the project.

In strict legal terms, Transurban may well be in the box seat, but this ruling goes to equity.

Martin’s determination on just who is responsible, while not strictly binding, will help set the guidelines that will play a key part in the government’s attitude to the project and the bargaining position of the contractors and Transurban.

The latter has managed to build an enviable position on the eastern seaboard as the monopoly provider of toll roads by separating itself from the contractors that do the work and the head company that collects the monopoly rent.

In project finance terms, this has proved a boon because it can leverage its cheaper cost of debt against rivals that pay for single project finance fees. Transurban’s balance sheet is in turn buoyed by the state-sponsored monopolies, which are its supporting assets.

The contractors in the West Gate Tunnel project have helped select a suitable site to dump the contaminated solid after several false starts, with the Victorian EPA selecting a site at Bulla, near Sunbury on Melbourne’s northern outskirts.

The decision still faces community protests.

The advantage for Transurban is that many of its key road projects, like the West Gate Tunnel, are election-winning projects for the respective governments, which helps boost the company’s leverage because the fine details of the deal are kept well away from the punters on the street.

Former Westpac boss and JC Flowers partner David Morgan will join the local board at CBOE. Picture: James Croucher

Door opens for CBOE

CBOE’s purchase of Chi-X Asia Pacific opens the way for potentially more competition as ASIC continues to investigate the ASX’s ongoing technology snafus.

Chicago-based options and ­derivatives house CBOE has ­established clearing facilities in Europe, which opens the door to allow it to provide an alternate service in Australia against the ASX monopoly.

Chi-X Australia chief Vic Jokovic is poised for a promotion in the deal, which sees private equity player JC Flowers sell the Asian operations to CBOE.

Chi-X has about 10 per cent market share, handling about $1.5bn worth of trade against the ASX, which handles 1.7 million trades a day valued at $6bn.

The problem with the Australian structure is that when the ASX has its increasingly frequent technology issues, it also controls just how orders already in the system can be treated.

This, combined with the fact many brokers have not invested to trade on both systems, helps maintain the ASX stranglehold.

With Canberra’s backing, ASIC wants to break this stranglehold, but final decisions are still some time away.

CBOE comes to Australia as a high-frequency trading specialist with particular strength in ­options, electronic-traded funds and derivatives.

Options trading is declining in Australia and Europe but is booming in the US, and CBOE argues increased competition in Australia will see more options trading.

Former Westpac boss and JC Flowers partner David Morgan will join the local board at CBOE, having chaired Chi-X Asia Pacific.

Cybersecurity boost

Canberra-based cybersecurity firm Penten has boosted its talent with the appointment of former army cybersecurity chief Marcus Thompson to its board.

Thompson left the army in January after 34 years. He is also on the board of ParaFlare and his move proved the demand as corporate Australia awakes to the ­cybersecurity threat.

Penten is focused on government work and earns $34m in revenue with its work for the UK government. Its local work is expected to boost revenues to $55m next year.

Wylie’s Humm move

Humm Group director John Wylie has purchased 495,000 shares in the diversified financial group to bring his group total to 27.3 million shares.

The $485,397 spent on the stock was the first from Wylie ­directly, with the others purchased through his Tanarra Capital, which has just over 5 per cent of the stock.