20th Oct 2016 11:33
LONDON (Alliance News) - Rathbone Brothers PLC said Thursday strong investment markets boosted its funds under management in the third quarter as it unveiled plans for a share placing to address its pension scheme deficit.
The private bank reported its total funds under management grew by 8.5% to GBP33.2 billion at September 30 from GBP30.6 billion at June 30. Net operating income was GBP65.9 million for the three months, a 19% increase from GBP55.6 million the year prior.
Rathbone Brothers said net organic inflows for the period were GBP200 million, broadly the same as the year prior, representing an underlying annualised growth rate of 3.0% for the third quarter.
The group said it was trading in line with its expectations for 2016 as a whole.
Rathbone Brothers also unveiled on Wednesday plans for a GBP38.0 million share placing in order to mitigate the deficit in its defined pension benefit schemes. The deficit rose to GBP58.3 million over the third quarter from GBP32.0 million at June 30.
"The collapse in long term bond yields was also a key feature of the quarter, re-emphasising the need for the review of our defined benefit pension schemes we announced in July. As a result, we have begun to engage the trustees and affected employees of these schemes with a view to their closure and have today announced a placing, primarily to increase the group's regulatory capital and also to provide additional financial flexibility," said Chief Executive Philip Howell.
Rathbone issued 2.2 million shares at 1,710 pence per share to raise the funds. The funds were raised in an accelerated bookbuild run by Peel Hunt and Canaccord Genuity. Shares in Rathbone were up 1.6% to 1,793.00p.
Rathbone Brothers said the measure is expected to generate a higher regulatory capital requirement in the near-term but reduce the rate of growth of regulatory capital needed to support the pension schemes. The bank also said it is now consulting over plans to cap pensionable salaries and close its defined benefit pension scheme to future service accrual with effect from July 2017.
By Adam Clark; [email protected]
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