Nedcor lets Old Mutual down

Poor results from its South African banking subsidiary, Nedcor, which were heavily impacted by the holding of excess US dollars when the rand was strengthening, spoiled the 2003 results of insurance giant, Old Mutual.

It ended up with a net profit of 273 million pounds sterling, a slight increase from 199 million pounds in 2002.

The poor performance prompted the company to restructure the bank's management.

A new chief executive, Tom Boardman, was appointed.

The company seconded its director of group strategy, Bob Head, as acting chief financial officer until a permanent replacement is recruited.

Seven new executive members were also appointed.

Old Mutual, which holds 52 percent of Nedcor, one of the largest financial institutions in South Africa, also conducted a thorough review of the bank's balance sheet and has mandated the new management to focus on ensuring that Nedcor "returns to producing results commensurate with its status as a premier South African bank".

Old Mutual said it was going to back Nedcor's R5 billion rights issue to make sure that the bank gets back on track.

"Nedcor is an important part of Old Mutual. Decisive action has to be taken to address its problems and management will not countenance any shortfall from the highest standards of integrity and transparency," the insurance giant says.

According to its results, group operating profit dropped from 724 million pounds to 650 million pounds.

There were solid profits in the South African insurance business as well as growth in the UK and US insurance businesses.

The asset management business made a significant impact for the first time bringing in a net inflow of 340 million pounds.

The company sold off Gerrad after putting it back on profit and bought Sage Life, an annuity provider, which brought in 165 million pounds in eight months. The US life business grew by 27 percent.

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