Three countries for the price of one

A renewed flurry of merger activity is good news for distributors, who are taking on an increasingly global role. Distributors with greater power in terms of global reach and bargaining on pricing can call the shots on fund selection more and more. Not surprisingly, such banks are the key target audience being pursued by asset management groups, keen to secure berths on platforms giving access to affluent clients in not just one country, but often two, three or more. The ongoing merger between Italian banks UniCredit and Capitalia has propelled the two banks’ respective bosses, Alessandro Profumo and Cesare Geronzi into the European limelight, away from the Italian banking backwater. It will also bring together two networks of wealth advisers – promotori finanziari – under one 3,000 strong umbrella as the institutions’ private banking subsidiaries, Xelion and Fineco, also tie the knot. These groups of advisers – just like the one overseen by Banca Fideuram, itself in the throes of a merger with Intesa – are seen as providing huge sales of products for foreign managers. Figures from consultancy Feri FMI show sceptical Italian investors still reluctant to invest locally, cashing in domestic funds and buying foreign products. These are sub-advised by the likes of Goldman Sachs, JP Morgan and Merrill Lynch. The local sales forces long ago worked out the best way to guarantee their commissions would be for head office to tie up with these foreign groups. And the likes of GSAM know that when they are making their sales pitch, shelf space at Xelion, for instance, gives them more than just a stake in the volatile, but interesting Italian market. Xelion, through its parent UniCredit’s buy-up of HVB and banks in Central Europe, can already provide access to customers in Germany and also Poland’s booming retail funds market. BNP Paribas recently bought Italy’s BNL. BNP’s FundQuest facility soon sprang into action, being requested to create multi-manager products for the Italian network’s private banking and mass affluent segments. A good contact in this bank’s Paris-based operations room gets you into the French, Italian and UK markets, at the very least. And the bank is also buying up smaller institutions in Europe, new Europe and Asia, giving an even broader reach for its sub-advisers. With speculation of a BNP Paribas/Société Générale merger once again rearing its head – the groups have complimentary operations in India, Asia and in much of Eastern Europe – who knows how far the global distribution tendency can go? Traditionally, many PWM readers start their summer with a visit to Fund Forum, held during the first week of July in Monte Carlo. I look forward to talking to as many of you as possible at this year’s event, particularly on the Distribution Day. And whether you can make it or not, I wish you all an enjoyable summer, and look forward to communicating with you once more in the September issue of PWM.