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Aberdeen Asset Management is to slash costs to cope with troubled financial markets and the credit crunch.

The company has revealed it expects to make £57m in annual costs savings by reducing the number of people it employs, cutting staff bonuses and squeezing savings from deals with outside companies.

The City reacted well to the announcement and the company’s shares rose on the news.

Bill Rattray, finance director for Aberdeen AM, described the move as “good housekeeping”. He said the company was cutting costs that rose between 2003 summer 2007 on the back of the bull market.

In a trading update, Aberdeen said it has identified £27m of potential annual savings in its fund management division and £30m in the property division - around £7m of which would come following the acquisition of Goodman Property Investors, which it completed at the end of May, along with that of German property manager DEGI.

The company stated: “There will be some consequential reduction in annualised income from elimination of low-margin property business but we expect the net annualised benefit of these cost savings to be approximately £40m before tax.

“We expect about£3m of net benefit to be reflected in the second half of the current financial year, rising to approximately £35m for the financial year to September 30, 2009, with the full annualised benefit reflected in subsequent years.

“One-off costs associated with these cost savings are expected to be about £12m.”

The company managed to grow assets under management over the past three months from £107.3bn to £113.7bn, thanks to the acquisition of Goodman Property Investors, which brought with it some £7.3 bn.