St James's dives as alarm sounds

SIR Mark Weinberg's wealth management group St James's Place Capital saw its share price collapse 17% today as it warned of another fall in new business volumes during the second quarter of the year and changed its accounting practices.

Chairman Weinberg said a move to statutory accounting, which now excludes future profit assumptions, would see the group report a £6.6m loss for its past financial year, against a reported pre-tax profit under its former embedded value accounting system of £80.2m. 'This accounting change hasn't been forced upon us, it was a decision we made ourselves and it is the trend the market has been going in over the last couple of years,' he said.

The group, which saw a 19% slump in new business during the first quarter, has suffered badly as its rich investors refuse to buy into chaotic stock markets.

Shares in St James's Place were already close to five-year lows as talk of a gloomy trading statement went around the markets. 'The investment climate has worsened over the last three months,' the group said.

The shares tumbled 33 1/2p to 135p as analysts feared another bloodbath in the company's sales of investment products, which fell 26% in the first quarter. Unit trusts fared little better, off 25%. St James's is seen as being more exposed to volatile markets than its peers.