AWD blames credit crunch and regulation for UK losses

AWD's UK business, which includes its Chase de Vere and Moneyextra operations, slipped to a loss last year as the impact of the credit crunch was compounded by the cost of regulatory changes and currency fluctuations.

Earnings before interest and tax (ebit) dropped to a €3.5 million loss in 2007 from a €3.7 million profit in 2006 as the credit crunch hit investment and mortgage business in the second half of the year. The German-based advisory group reported that UK revenues fell 6.7% to €141.9 million last year, hampered also by the weakness of the pound against the euro.

In its annual report the company said the UK performance represented a 'significant shortfall' against expectations. It partly blamed the implementation of treating customers fairly and the retail distribution review for incurring extra costs and for depressing adviser numbers which ell 2.6% or 12 to 448 at the end of 2007.

However, longer term Carsten Maschmeyer, AWD's founder and chairman of its board of management, said the regulatory changes represented an opportunity to acquire new customers and retain a greater proportion of existing clients.

The group, which earlier this year agreed to be acquired by Swiss Life, reported overall group net profits rose 1.1% to €57.4 million after fourth quarter net profits slumped 31% to €12 million.