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Standard Life Aberdeen dividend under threat as new boss takes reins says Berenberg

Analysts expect a 50% cut to next year's distribution with a stronger focus on retail proposition and M&A activity

Standard Life Aberdeen PLC - Standard Life Aberdeen new boss may signal fresh perspectives including dividend policy, says Berenberg

 

Standard Life Aberdeen PLC’s (LON:SLA) new boss could herald major changes to the group’s dividend policy, strategic direction and mergers and acquisitions, according to Berenberg.

Stephen Bird, who retired from a 21-year career at Citigroup last November, most recently headed the bank’s Global Consumer Banking business, so it may signal that the FTSE 100 group plans to refocus on its retail proposition and reemphasise its wealth and platform business, said the broker.

READ: Standard Life Aberdeen boss to step down for Citigroup executive

Bird’s focus was Asian operations at Citigroup and analysts think he may help accelerate the group’s sales efforts in this region.

A 50% cut to next year’s dividend might also be on the cards, said the broker. 

“We believe SLA’s current dividend is unsustainable and is essentially being funded by selling down the group’s ownership of high-growth joint ventures in India.

"Our analysis suggests the group generated roughly £160m of post-tax capital last year, but paid out £495m in dividends,” Berenberg noted.

The appointment of Bird, which surprised investors, will mean the investment group’s senior positions – chairman, chief executive and chief financial officer – will soon be held by individuals from outside of the group.

Current boss Keith Skeoch and former chairman Martin Gilbert, who left two months ago, were the respective heads of Aberdeen Asset Management and Standard Life when they merged in 2017.

“The merger is perceived to have been a strategic misstep by many investors, who point to the subsequent erosion of the group’s asset base and revenue dis-synergies arising from the partial loss of the Lloyds mandate,” Berenberg commented.

“While we view this is a little unfair (many of the issues would have still arisen in the absence of a merger), we also believe this perception would have made it hard for SLA to win shareholder support for further M&A.”

Shares added 4% to 276.3p on Tuesday at noon.

Quick facts: Standard Life Aberdeen PLC

Price: 217.7 GBX

LSE:SLA
Market: LSE
Market Cap: £4.82 billion
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