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Battered asset manager GAM warned of a full-year loss following a scandal at a showcase bond fund. The company is scotching its dividend as well as cutting 10 percent of jobs.

Swiss-based GAM said it will suspend dividend payouts to shareholders this year as it embarks on a major restructuring and cost-cutting program. The move follows a profit warning for this year, when GAM expects to post a loss, as well as next, when underlying profits will fall.

The problems piling up on GAM include a whistleblowing scandal at a prominent bond fund which has involved the British regulator and the unsuccessful acquisition of systematic trading boutique Cantab two years ago. A raft of GAM executives including CEO Alex Friedman and top regulatory watchdog Nathalie Baylis have exited. GAM now finds itself struggling to survive.

«With today’s announcement we are seeking to give our shareholders and our clients the clearest assessment of our financial situation,» CEO David Jacob, who replaced Alex Friedman in the job five weeks ago, said in a statement.

Deep Losses

The situation is dire: GAM expects a full-year loss of 925 million Swiss francs ($931.3 million) for 2018, and for underlying profits to fall short of this year's, it said. This year's loss is due to a 885 million franc writeoff to account for roughly 4 billion francs of asset outflows since the bond fund scandal emerged in July. The withdrawals have in turn hit performance fees, from which GAM lives.