The AMP (ASX: AMP) share price is trailing the ASX 200 by 60% over the past year

The financial giant has had its own annus horribilus.

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The AMP Ltd (ASX: AMP) share price is having a year to forget.

Over the past 12 months, shares in the financial institution have fallen nearly 40%. The S&P/ASX 200 Index (ASX: XJO) is up about 21% in the same time period – a gigantic 61 percentage points reversal against the beleaguered company.

Here we will take a look at some of the biggest stories that have affected the AMP share price.

The AMP share price over the last year

Controversies

AMP has been embroiled in much controversy over the last 52 weeks. It started on the tail end of the Hayne Royal Commission findings into the banking sector. AMP came in for scathing criticism for its conduct – including alleged deductions of service fees and premiums from deceased customers.

Criminal proceedings were brought against the bank for allegedly deducting fees for financial advice to customers who did not receive said advice. These were recently dropped by ASIC.

When the public’s ire looked like it was fading, it rallied again when reports of sexual misconduct at senior levels of the company were made public.

Boe Pahari was promoted to Chief Executive of AMP Capital, despite the board being made aware of several allegations of sexual misconduct against him. Initially deciding not to fire anyone, the company did an about-face and removed Pahari from his role. The Chair, David Murray, also resigned in the wake of the scandal.

Pahari received a $1 million bonus for his 53 days in the role.

The reputational damage, plus serious questions over AMP’s governance structures, could have caused the massive decline in the AMP share price.

Aborted takeover bid and split with AMP Capital

In October 2020, Ares Management Corp (NYSE: ARES) approached AMP with an offer to buy 100% of the company at $1.85 per share – note this is 75% higher than its current market price.

Despite drawn-out negotiations, the takeover did not eventuate. A new joint venture between the companies was proposed in February in its place. Ares would take over 60% of its private markets business for $2.3 billion. The deal fell through one month later, delivering another blow to the AMP share price. Eventually, AMP decided to demerge its private markets business with a float on the ASX.

Financial performance

During this time, which also saw the departure of its CEO one week after denying he would leave, the company underperformed financially.

At the end of July last year, AMP downgraded its profit expectations for FY20 due to a range of factors, such as market volatility and a credit downgrade.

Its half-year performance for FY21 wasn’t much better. The AMP share price dropped 9% when it announced a 33% decline in net profits after tax for the 6 months ending 31 December.

Foolish takeaway

Obviously, it has not been a good 12 months for AMP shareholders. The company’s share price continues to break 52-week lows, seemingly every trading day. Only yesterday it hit another low of $1.05 per share.

It’s been a year to forget for many – doubly so for those invested in the AMP share price.

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Returns as of 15th February 2021

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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