Aberdeen ordered to increase capital insulation

The City watchdog told the firm that it had to build up its cushion from £435 million to £475 million to insulate it against large financial shocks.

A spokesperson for Aberdeen, which had a self-imposed headroom of £100 million prior to the FCA’s intervention, said: “The increase in minimum regulatory capital has two roughly equal components. First, the FCA has removed the benefit of insurance mitigation when modelling operational risk secondly, the FCA included an allowance to cover any unsighted and unquantifiable risks that may emerge.”

The spokespersonsaid that Aberdeen’s “available capital remains comfortably above this new minimum requirement”.

“It seems the FCA’s regulatory gaze has now fixed upon the asset managers and so we would be surprised if Aberdeen is alone among its peer group in being required to hold more capital,” a

Aberdeen says the group’s remain “comfortably” above the new minimum requirement, which the FCA imposed following a periodic review.

Aberdeen said the increase in the requirement was due to the FCA removing insurance mitigation when modelling operational risk and introducing an allowance to cover “unsighted and unquantifiable” risks.

Aberdeen said it had previously tried to address this with its self-imposed headroom, which the board has now decided to remove.

Aberdeen’s share price held up yesterday on the news.

Although the firm’s share price dipped to 314p immediately after it announced its new capital adequacy requirement to the Stock Exchange, by the close it had risen to 320.1p, which is around the level it has been trading at for the past couple of months.

An analyst with Credit Suisse said there was a “good chance” the asset manager would maintain its dividend.