Alan Smith makes way at Jardine Fleming

Alan Smith has quit as chairman of Jardine Fleming, the Asian bank whose fund management arm was hit by scandal last month. He had been with the bank, which yesterday announced a radical shake-up of its top management, for 24 years.

Jardine Fleming insisted Mr Smith, 53, had decided to retire despite speculation that he was paying the price for an embarrassing pounds 700,000 fine from Imro, the investment regulator, last month.

Imro also revoked the licence of Jardine Fleming Asset Management after discovering Colin Armstrong, a Hong-Kong based fund manager, had been benefiting personally from deals he executed for clients.

The scandal, which cost Jardine Fleming $19.3m in compensation to clients, had already caused casualties in high reaches of the organisation. Robert Thomas, the managing director of Jardine Fleming Asset Managment, lost his vital registration with Imro and yesterday he resigned as a director.

John Manser, chief executive of Robert Fleming, the merchant bank which is a joint partner in Jardine Fleming, acknowledged the fund management firm's reputation had been damaged.

"Clients have shown some anxieties. We had an extensive programme of calling on clients and stating precisely the circumstances," Mr Manser said. Jardine Matheson is the other partner in Jardine Fleming.

The move to revamp the management structure and create a new supervisory board headed by Alasdair Morrison, managing director of Jardine Matheson, is seen as a response to the incident. "It's about building confidence from your clients," said one banking source.

But Mr Manser said the move was also a recognition of the changing requirements of international regulators. "Increasingly regulators world-wide are looking through parent companies to their associates and their subsidiaries," Mr Manser said.

"If you're being held responsible for the action of another company you're going to have to be pretty certain they are being run in accordance with your wishes," he added.

This trend was prompted by the collapse of Barings last year when Nick Leeson, a trader based in Singapore, was responsible for bringing down the bank while most of his managers were based in London.

Mr Manser will sit on Jardine Fleming's supervisory board, which will meet quarterly. Peter Jamieson, William Garrett and Paul Bateman will also represent Robert Fleming on the board, while Mr Morrison will be joined by Christopther Cowan, Greg Terry and Rodey Leach.

Henry Strutt, managing director of Jardine Fleming, will also sit on the supervisory board, along with Tim Freshwater, who recently joined from Slaughter & May, the London law firm.

Jardine Fleming is also setting up a new role of head of investment banking for China, which offers opportunties for "substantive growth", Mr Manser said.

It has hired Patrick Sun from SBC Warburg to take on the job. Mr Manser said Jardine Fleming contributed around 30 to 45 per cent of Robert Fleming's earnings. Robert Fleming's half year ends at the end of the month, and Mr Manser confirmed that the signs were pointing to profits above last year's.