Man Group has confirmed with the Financial Conduct Authority (FCA) the change of its regulatory status from being a Full Scope Group to a Limited Licence Group.
As mentioned at Man’s 2012 results presentation, the group held a capital planning buffer of approximately USD300m which it is no longer required to hold by the FCA.
In light of the group’s change in status to a Limited Licence Group, it has also submitted a revised Internal Capital Adequacy Assessment Process (ICAAP) document to the FCA. The ICAAP is part of the mechanism through which regulated firms are set capital requirements by the FCA.
Consistent with the group‘s revised status, Man Group’s capital requirement is today approximately USD250m lower. This reduction has been possible primarily in light of the less balance sheet intensive nature of the company's activities relative to earlier years, for example with respect to fund seeding activities and the scale of the guaranteed products business. However, the ICAAP submission remains subject to review by the FCA, which is expected in the third quarter of 2013 and could result in higher or lower capital requirements in the future.
As disclosed in the 2012 year end results, Man Group’s pro forma surplus capital in excess of the capital planning buffer as at 1 January 2014 is USD370m, after taking into account the payment of the full year dividend in respect of 2012, which remains subject to shareholder approval, and the expected impact of the Capital Requirements Directive IV. This figure is increased by USD300m due to the removal of the capital planning buffer, and a further USD250m given reduced capital requirements as a Limited Licence Group. Pro forma for these changes therefore, Man Group would have surplus capital of up to approximately USD920m as at 1 January 2014, an increase of up to USD550m.
The board of Man Group will continue to assess the appropriate level of capital required to operate the business from time to time and the potential uses of any surplus capital, and will provide further detail in due course in connection with future results announcements.