AMP demerger gets green light from APRA

APRA/amp/compliance/gearing/enforceable-undertaking/chief-executive/ASX/

9 October 2003
| By Mike Taylor |

AMP Limitedhas cleared one of the final hurdles to the demerger of its Australian and UK operations, following receipt today of ‘in principle’ approval from theAustralian Prudential Regulation Authority(APRA).

The major conditions imposed by APRA are that the demerger gain the approval of the UK’s Financial Services Authority and that AMP must now remove any guarantees being provided by the Australian operation to any of its entities in the UK.

In an announcement to theAustralian Stock Exchange(ASX) this morning, AMP chief executive, Andrew Mohl describes the APRA approval and the approval provided by the UK’s FSA as “a key milestone in the demerger process”.

“AMP has worked closely with both regulators since the demerger proposal was announced in May and we welcome this outcome,” he says.

However reports from the UK say the FSA has revealed that as part of its compliance arrangements AMP has agreed to pay another $82 million to support the UK life business and funds management armAMP Henderson.

The reports also claim that, as part of the deal with the FSA, AMP will also take on $2.4 billion of the debt of the UK businesses.

As part of APRA’s review of the demerger, an enforceable undertaking was received from AMP Limited preventing any assumption of debt by the Australian entities and transfers of capital to its entities in the UK without APRA’s prior approval.

APRA says it will consent to the redemption of the reset preference securities provided that sufficient cash proceeds are raised from the AMP rights offer but warns that until the time that AMP redeems the reset preference securities, APRA reserves the right to instruct AMP to convert them to equity.

“APRA has consented to the capital structure proposed by AMP in respect of New AMP and therefore it intends to lift the enforceable undertaking received from AMP once the demerger is complete,” the APRA statement says.

However it says this consent will be reviewed if there are any changes to New AMP’s potential gearing levels and/or obligations during implementation.

APRA says all transactions between the entities in Australia and the UK will also need to be approved by APRA during the implementation period.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 1 week ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks 1 day ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

2 weeks ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks 1 day ago

TOP PERFORMING FUNDS