An ad agency has taken the ballsy decision to punt a major client – none other than Nivea – after an alleged homophobic slur in front of a gay staffer.

New York-based creative agency FCB (Foote, Cone & Belding) severed ties with the German-based cosmetics firm after it showed its latest campaign showing two men holding hands to Nivea executives. One senior executive apparently responding, “We don’t do gay.”

The comment was allegedly made during a teleconference that included an FCB creative who was openly gay.

FCB has held the Nivea account for 100 years.

The decision to sever ties with Nivea was announced by FCB CEO Carter Murray in a company-wide email.

Murray didn’t mention the slur directly, but added the decision came after “much reflection and discussion on our creative ambitions”.

He added: “There comes a point in every longterm relationship when you reflect on what you’ve accomplished together and set your sails for where your journey will take you next. Sometimes that journey ahead demands tough choices that lead down different paths.”

Despite spending a reported $A400 million a year on advertising, FCB has said that the Nivea business represented just one per cent of its annual turnover.

A spokesperson for Beiersdorf (Nivea’s parent company) did not confirm that the slur took place, however, added that such behaviour would not be tolerated by the global giant.

In a statement to US industry site Campaign, a company spokesperson said: “We understand the emotions and news interest are intensified when longtime business relationships come to an end – however, we ask for understanding that we don’t comment on unsubstantiated speculations around this matter.

“Nonetheless we wish to express our concern on the reported allegations as they do not reflect the values of Beiersdorf, Nivea and our employees worldwide. No form of discrimination, direct and indirect, is or will be tolerated. We are strongly committed to diversity, mutual respect, equal opportunity and tolerance.”