DBRS Confirms Aberdeen Asset Management at BBB (high), Negative, Following Announcement of Partial Acquisition of Credit Suisse Global Investors Business

DBRS has today confirmed the ratings of Aberdeen Asset Management PLC (Aberdeen or the Company), including its Issuer and Senior Unsecured Debt ratings of BBB (high). The trend on all ratings remains Negative.

This rating action follows Aberdeen’s announcement on 31 December 2008 that it had entered into an agreement with Credit Suisse AG (Credit Suisse) to acquire certain fund management assets and businesses of Credit Suisse’s Global Investors business. In consideration Credit Suisse will receive a maximum of 240 million new ordinary shares in Aberdeen, equivalent to 24.97% of the enlarged Company. Based on Aberdeen’s 30 December 2008 closing price, the value of these shares is GBP 250 million. The actual number of shares to be issued to Credit Suisse will depend on the level of run-rate revenues delivered at closing, which is expected to occur on 30 June 2009.

The assets under management (AuM) subject to the acquisition totalled GBP 40 billion at 30 November 2008, with associated run-rate revenues of GBP 118 million. At the end of its fiscal year, 30 September 2008, Aberdeen had GBP 111.1 billion of AuM and total revenues of GBP 430.1 million.

DBRS views the acquisition as a long-term positive for Aberdeen, as it does not include the issuance of any new debt and on a pro-forma basis will significantly reduce gearing. Additionally, Aberdeen expects the transaction to be accretive to earnings upon closing. Furthermore, the acquisition will provide Aberdeen with greater scale in markets where it currently has a presence, including the U.K., Australia, Germany, Switzerland and Japan. Moreover, Aberdeen will have greater access to the distribution network of both Credit Suisse and Credit Suisse’s Private Banking division, which is one of the largest wealth managers in the world. That said, DBRS notes that there are short-term risks involved, as is the case with any acquisition in the asset management industry. These risks include the retention of key personnel, the retention of key customers and the prevention of any significant attrition of the acquired AuM. Given the track record of Aberdeen’s management in integrating previous acquisitions, DBRS believes that these risks will be well managed.

The trend on the ratings remains Negative, reflecting DBRS’s concern that the global downturn in the investment markets may negatively impact Aberdeen’s earnings in the near term and thereby potentially slow expected debt reduction, which is a requisite for rating stability. DBRS notes, however, that the successful execution of this transaction will likely reduce gearing, which in the longer term would be viewed positively. The Negative trend also reflects the sizeable integration risks that are inherent with a transaction of this magnitude. As discussed above, asset and key personnel retention is vital to the long-term success of this transaction. Ratings could be pressured by noteworthy attrition of AuM or key personal.

The current rating reflects DBRS’s expectation that the Company will significantly reduce its overall debt burden and gearing ratios into 2009. Furthermore, while DBRS’s ratings provide for the likelihood of negative earnings pressure through the economic cycle, any prolonged period of reduced earnings evidencing damage to the franchise would have negative consequences in terms of potential rating actions.

Aberdeen is a regulated institutional asset manager with headquarters in Aberdeen, United Kingdom. It was formed by a management buyout in 1983. The Company has been listed on the London Stock Exchange since 1991. Since 1997, it has grown significantly through a number of acquisitions. At the end of September 2008, Aberdeen had GBP 111.1 billion in AuM.

Notes:
The applicable methodology is Analytical Background and Methodology for European Bank Ratings, Second Edition, which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.