AMP will slash 1500 jobs from its UK operations in an 18-month $260 million cost-cutting program. The aim is to improve profits and returns for its UK life business, which is reshaping into a leaner operation.

The redundancies mean AMP UK Financial Services will be left with 5000 staff by the end of next year. About 800 back office jobs in finance, human resources, information technology, sales support and customer service will be axed by the end of the year. But savings won’t come into the equation until next year because the job cuts will cost $65-$78 million.

The redundancies follow the company’s moves to adopt a single-operation marketing strategy, rationalising products and bringing the main brands under the AMP brand. CEO Paul Batchelor said the next stage “involves improving operational efficiencies by reducing duplication, while phase three will involve a focus on growth which will include initiatives such as enhanced distribution and improved customer segmentation”.

Mr Batchelor expects 65% of the eventual cost savings will affect bottom-line factors like pre-tax operating margins. He said the move is “in line” with the company’s current UK focus on cost control and capital management.

But going by the financial media’s lukewarm reception to the move, there is scepticism about the projected cost savings and the extent to which the cuts will translate into higher earnings. Analysts said increased competition and a lack of new business will mean costs savings are minimal.

Tom Fraser, MD for the UK operation, said the staff cuts won’t impact AMP’s plans to increase revenue and distribution. “We will be able to enhance our customer service through simpler product offerings and we do not expect revenues to be negatively impacted by these changes,” he said.

“We are now running one business with three brands under the AMP umbrella, rather than three businesses, giving us the opportunity to achieve significant savings by reducing the duplication in back office functions.”