Skandia Australia laid off nearly 10 per cent of its workforce last Thursday, amid growing speculation that the platform provider and asset consultant will soon be sold.

Skandia’s general manager of retail, Andrew Black, said 17 people were let go from the Skandia platform business out of the previous 210, and 5 people were retrenched from InTech’s 45-person headcount.

Black said the cuts were made only after all other avenues of cost savings had been exhausted, and included staff from all levels of seniority.

One of the positions made redundant was a direct report to Black – the role of general manager product and marketing – while another was a direct report to InTech general manager John Gethin-Jones – the role of InTech head of operations.

Black said most of the job cuts were related to growth initiatives, which were less relevant in an environment where "everyone’s gone to cash". Customer-facing roles were the least affected.

Skandia’s parent, South Africa’s Old Mutual, has informed its operations around the world that it will not draw down on capital in 2009, making it imperative that Skandia Australia be at least a break-even business, Black said.

That has become more difficult in an environment where Skandia’s funds under administration, on which its fee income is based, has shrunk from $5.4 billion to $4 billion while InTech’s funds under advice have dwindled to $3 billion after the recent loss of big clients such as NSW State Super.

The embattled Old Mutual has undertaken a "strategic review" of its Skandia business, and Black confirmed a joint venture, merger or acquisition by another player were all options on the table. 

An information memorandum on Skandia is understood to have circulated among large retail players, including the big four banks, however industry observers say dealer group (and owner of several platforms) Australian Wealth Management has come closest to making a deal.

Ian Knox, of dealer group strategy house Paragem Partners, said Skandia was "unlikely to survive in this market without aligned distribution".

He said the business, as it is, faces the dual challenge of a large expenditure being required on its unit registry system, at the same time as revenue is falling due to the market correction and investors hoarding cash. 

Black said that Skandia had contracted Hudsons to provide outplacement services to the retrenched staff, and had a psychologist on hand for any staff who needed one last week.

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