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Aviva has suspended trading in its £1.8 billion property fund as investors scramble to pull their money out of UK commercial property holdings following the Brexit vote.
"Extraordinary market circumstances" - @avivainvestors suspends £1.7bn UK property fund. Some investors clear feel it's not worth that now.
The move follows Standard Life Investments, which made the same move on Monday, halting dealings in its £2.7 billion UK property fund.
Over recent months we have been experiencing higher than usual volumes of requests to sell units in the trust, and this, coupled with challenging market conditions in light of investor sentiment regarding the EU referendum, has reduced the amount of cash held by the trust.
As it takes a considerable time to sell properties, we have had to suspend dealing until the amount of cash held in the trust increases.
The suspension means that investors are now restricted from buying or selling shares in the fund.
Aviva said it is acting in the interests of all investors, adding that it was unable to give a timeframe for when the suspension would be lifted.
It's probably only a matter of time before we see other funds follow suit. The problem these funds face is that it takes time to sell commercial property to meet withdrawals, and the cash buffers built up by the managers have been eroded by investors heading for the door, both in the run-up to the EU referendum, and in the aftermath.
Pension providers have seen their share price fall in the wake of a series of announcements from the Chancellor affecting the industry.
The latest figures from the London Stock Exchange show drops in share prices across major providers.
Legal & General -10.7%
Standard Life - 3.28%
Aviva has told staff it has reviewed employment policies.
"Aviva has decided to introduce a revised redundancy policy for all employees on UK contracts. This will bring Aviva’s redundancy terms in line with market practice in the UK which will remain significantly above the statutory provisions.
"Importantly, the changes to redundancy terms will be implemented in two phases so that those impacted in the next six months will still receive the current four weeks’ redundancy pay for each year of service.
This is intended to minimise the impact on employees and follows consultations with Aviva employee forums and Unite.
Mark Wilson the Chief Executive issued this statement:
I know this is difficult news for our employees but these changes are essential if we are to remain competitive.
Aviva needs to become a more efficient and agile organisation to unlock its potential. We must take tough decisions on costs to provide our customers with great value products and ensure our future success. I am determined that Aviva gets through this phase of our business transformation as quickly as possible.
Aviva has announced plans to cut 2,000 jobs worldwide.
The company said the job losses are necessary in order to achieve £400m in savings. Previous cost cutting has netted £275m in savings.
The new head of insurance giant Aviva has stunned the City by cutting the company's dividend payment to shareholders.
Mark Wilson said the 44 percent cut in the full-year dividend to 9p a share would put the Norwich-based company in a "sound position for the future".
But the move is a big blow to many of Britain's major pension funds, who hold the firm's shares because of its attractive dividend yield.
Aviva shares slumped on the London Stock Exchange by as much as 15 percent earlier today, wiping £1.5 billion off its market value.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said the dividend cut from Aviva was a major disappointment, but added, "On calm reflection, this may prove to be a pivotal point" for the company.
Labour says Government plans to reform corporate Britain do not go far enough.
The Shadow Business Secretary says more should be done to empower shareholders. It comes in the wake of the departure of Andrew Moss from Aviva amid investor revolts on pay and remuneration.
Over the last fortnight shareholders at Citigroup, Credit Suisse, Barclays and Mann Group, among others, have protested and/or voted against senior executive remuneration.
“Now is not the time to row back from reform – shareholders are becoming far more engaged and active, so policy makers should do all we can to support and encourage them. The latest shareholder revolts are a sign that there clearly needs to be a much greater alignment between what directors do and shareholder interests – we must promote that.