Will Aberdeen job cuts hit Scotland?

In spite of increased profits and swelling assets under management (AUM), Aberdeen Asset Management has ear-marked 57m for cost savings, 10.3m of which has been implemented to September 2008. While redundancies look likely within the firm, it seems that the Scottish team may be spared.

Aberdeen's AUM grew to 111.1bn, up from 95.3bn in 2007, and profit increased marginally to 95.1bn (from 94.3bn last year). Nonetheless, the firm has enacted a hiring freeze, and Martin Gilbert, chief executive of the firm, has admitted "some" job cuts might be necessary.

"Conditions in the asset management industry are tough and will remain so for some time," he said.

Aberdeen has acquired three firms this year, mainly in property, and operating costs have increased by 32%. It's thought that the integration of Goodman Property Investors and Degi with Aberdeen Property Investors could see some overlaps and therefore cuts.

The firm has already outsourced 200 jobs in its property arm, and is not replacing staff who leave.

Even if redundancies do spread to the investment teams, its Edinburgh-based global equities team has "continued to deliver performance well ahead of benchmark over both the short and long term", according to chairman Charles Irby.

The fixed income team in London, meanwhile, has "experienced unprecedented market conditions because of the global credit crunch".

However, Aberdeen says the majority of its clients are institutional investors with a long-term horizon and lengthy lock-in periods. This will reduce the need for quick-fire redundancies.

One Edinburgh-based fund management headhunter says that if a member of Aberdeen's investment team were turfed out, they'd have no shortage of suitors.

"Aberdeen's investment team is well-regarded in Edinburgh," they said. "I think they'll be largely sitting pretty, but if they were to go, local competitors would be keen to talk even in the current market conditions."

Aberdeen is also rumoured to be continuing its acquisition spree and has been linked to the troubled asset manager New Star.