Jardine Matheson Holdings (JMH) says it has taken a US$26 million charge to cover itself against last year's trading scandal at Jardine Fleming (JF), its 50 per cent-owned investment banking joint venture.
JF, which was forced to pay fines and compensation of about HK$158 million after one of its senior fund managers was found guilty of abusing client funds, said that even before such exceptional items, profits at the beleaguered group were down 11 per cent to US$108 million.
'The shortcomings which gave rise to [regulatory] issues have been fully addressed by Jardine Fleming, which is committed to ensuring that its controls keep pace with best international practice,' JMH said.
Announcing its 1996 results, it said the JF scandal and the poor performance of Asia-Pacific equity markets had particularly hit Jardine Fleming Investment Management, pulling funds under management to US$20 billion from $22 billion in 1995.
Officials said some 50 per cent of this was caused directly by fund management loss, although market movements, particularly in Japan and Thailand, had also served to reduce funds under management.
In contrast, the group said Jardine Fleming's unit trust operation was still the market leader in Hong Kong and had raised US$100 million.
'After two comparatively flat years, Jardine Fleming expects that many Asian markets are set to perform well in 1997,' it said.