Ameriprise Slumps as Client Pulls Funds in Liquidity Squeeze

  • Client making redemption said to be a sovereign wealth fund
  • Asset manager's stock slump extends to 18% this year

Ameriprise Financial Inc. slumped the most since August in New York trading after reporting that profit fell as customers pulled more funds.

The asset manager dropped $4.19, or 4.6 percent, to $86.92 at 4:02 p.m. in New York, extending its loss for the year to 18 percent. Fourth-quarter net income declined 16 percent to $357 million, the Minneapolis-based company said in a statement Wednesday after markets closed.

“We and others in the industry continue to experience outflows from a large client who redeemed from strong-performing strategies to address liquidity concerns,” Chief Executive Officer Jim Cracchiolo said Thursday in a conference call. “That was approximately $1.4 billion in the quarter, and we expect at least $1 billion of additional outflow in the first quarter.”

The client that the CEO was referring to is a sovereign wealth fund, according to a person familiar with the redemption who asked not to be identified discussing a private transaction. Sovereign funds from energy-producing countries are exacerbating a global market rout by selling assets to meet financial commitments amid slumping oil prices, Jefferies LLC said in a report this month.

“The tone of the call certainly wasn’t great, given the challenging macro backdrop,” Ryan Krueger, an analyst at Keefe, Bruyette & Woods, said in a note to clients after the CEO’s remarks. “This clearly isn’t a forgiving market.”

Money managers have struggled in recent months with volatile asset prices and client withdrawals. Consensus earnings estimates for asset managers in 2016 have fallen by a median 14 percent over the past six months for companies in the Bloomberg Intelligence industry index.

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