As we say farewell to about $1.8 billion heading off to prop up R&SA, it’s time to take a look at another great contributor of Australian capital to the British economy: AMP. The reasons behind AMP’s decision to split its UK operations into another company are still being pondered by the market pundits.

As Channel 9 business commentator Ross Greenwood pointed out on Business Sunday, the likely catalyst was the UK regulator, the Financial Services Authority (FSA).

Why did the company need to urgently raise $1.2 billion from institutional investors, which caused the share price to plunge at a time when the company's fortunes seemed to be improving? Greenwood says AMP CEO Andrew Mohl “clearly believed” in February that the UK operations did not need to raise more capital, and since then the UK equity market has risen nearly 11%.

“Mohl and Chairman Peter Willcox were so confident in the AMP they bought more shares in early March – Willcox 20,000 at $6.75 and Mohl 14,841 at $6.68. Only a madman would buy shares in a company that might very shortly have a rights issue. Mohl and Willcox…  must not have known of the AMP’s dire financial need at this time.”

Actuary Michael Rice said the FSA may have “had a very good look at Pearl and the other AMP businesses” and concluded more capital was needed for them.

“I can only presume that happened after the annual accounts were made, because there doesn’t appear to be any other logical reason,” he said. “[The FSA] … has decided that as a stand-alone operation it can’t survive, so [AMP] has had to pump more money into it.”