GAM is still in intensive care: the battered asset manager kept dropping assets in the first half, and a net loss looms.

The Swiss-based asset manager said it expects to swing to a first-half loss of 14 million Swiss francs ($14.1 million), from a 25.4 million franc year-ago profit, it said in a statement on Wednesday. The news comes as GAM shuts down the troubled bond fund which began the company's downward spiral ten months ago. 

Since then, GAM scrapped its dividend after reporting a net loss last year and began slashing spending in a recovery effort under an emergency CEO. The company's management and board were denied a key approval by shareholders in May, and an influential politician in the U.K. is calling for deeper regulatory scrutiny of GAM.

Bright Spot

A look forward is anything but encouraging: GAM's assets in investment management tanked to 51 billion francs, from a year-ago 84.4 billion francs. Clients withdrew 5.1 billion francs since January. For asset managers like GAM, funds are a key bellwether of future revenue because they are linked to lucrative performance fees.

The firm, which reports complete results July 30, didn't disclose revenue, beyond saying it had dropped in the first half because of the slide in assets. GAM's private label funds were a rare bright spot in the first half: assets rose to 84 billion francs, from 76.1 billion at year-end.

Returning Assets

A whistleblowing case around GAM fund manager Tim Haywood has wrought havoc – clients left in droves after the star bond fund was suspended nearly one year ago. Emergency CEO David Jacob was brought in after the scandal toppled previous CEO Alex Friedman; Jacob told finews.com in May that he is confident GAM can recover. 

The company wants to have Haywood's old fund wound down and disposed of by the end of this week. It is expected to return nearly all or more of clients' money held in the absolute return bond fund business, which sparked its troubles.

New Deal

art of the wind-down is a deal with long-time counterparty GFG Alliance on outstanding power purchase receivables notes – the very instruments which sparked the whistleblowing. GAM is quietly starting back up a similar fund under new management, as finews.com reported last month.