why the big UK puke ...

Hmmm... even the big guys can fark it up ...

Date 06/08/2002

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>From the desk of the Australian's Robert Gottliebsen...host of
Business Daily.
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AMP's Paul Batchelor and Allied Domecq's Philip Bowman face different versions of the same problem.

Neither conceived that the UK leading share index would 30 percent in just over two months to July 24 Allied Domecq is a major UK food and beverage company but it funds a staff pension scheme that is now larger than the company so the share fall gives Allied a huge potential long-term bill.

And its by no means the only one Britain's 100 largest companies have a combined pension fund deficit of at least 25 billion pounds are hiding the deficit behind shoddy accounting standards.

Amazingly the companies managed to defer the introduction of the accounting standards that would force disclosure until 2005 but the concealment increases the market nervousness.

AMP's UK operation issued a large number of policies with benefits that were capital guaranteed.

Then AMP invested part of the premiums and required capital in the UK stock market.

Worse still it leveraged the capital with borrowings so the company was all geared for a bull market.

Instead it got a bear market.

As the UK share market falls so the AMP must top up the capital behind the policies which is why AMP shares follow the FTSE index."

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We all knew the recent AUD1Billion transfer of Oz funds was a 'heart-starter' for the UK operation...

With NAB running the ruler over AMP currently, wouldn't take a lot to mount a takeover ... a steal at these price levels.

That din you ask is Paul Batchelor's clacker ...



This is only my view ... read the red stuff.