Once again this year asset managers have been scrambling for scale as the cult of big-is-beautiful continues to hold sway over the industry. With this in mind, banks have been attempting mergers and acquisitions wherever and whenever possible. Speculation constantly surrounds those businesses seen as ripe for a takeover. Meanwhile those institutions still digesting their recent acquisitions have been making it clear that they now operate as one global brand.
To this end, even famous old names in fund management, such as Morgan Grenfell, have been expunged for the greater good of Deutsche Asset Management. Another big UK name, Mercury, has been absorbed into Merrill Lynch Investment Managers.
The thinking is that distributing product via a single brand across all markets is the logical way to present a universal investment approach. In some instances this is causing severe disruption as teams from diverse operations are lumped together. The Scottish Widows and Hill Samuel experience is one such example of this where Lloyds TSB, in seeking to create a single asset management operation under the Scottish Widows brand, has seen a swathe of Hill Samuel portfolio managers defect to competitors rather than join the new operation in Edinburgh.
There have not been such heavy casualties in every instance. Not all mergers have involved sorting out big overlaps between organizations. Morley Fund Management’s merger with Norwich Union appears to have been conducted relatively amicably, with positions being found for most senior staff in the new organization.
In other takeovers, Gartmore, another UK stalwart, has been sold to Nationwide Mutual Insurance, the sixth largest life insurer in the US, in a deal which was seen as commanding a good price – over £1 billion ($1.6 billion) – for the fund manager while leaving it relatively independent of its new parent.
Elsewhere in Europe, ING Group has leapt up the scale, arriving in InterSec’s top 10 for the first time, rising from 17th last year. ING’s presence helps Europe to keep six names in the top 10, along with four Japanese organizations, of which Kampo retains top slot again.
UBS, Groupe Axa and Barclays Global Investors help to maintain the balance of power, each holding on to their respective rankings of second, third and fourth. Barclays continues to be the world leader in indexation as passive management still enjoys favour among clients. However recent improvements in performance by active managers mean that the indexers may not have such a good time of it in the next couple of years UBS which is still chasing Kampo for pole position, makes more money and attracts more funds under management through its private banking division than through its institutional asset management operation (see cover story) but its reorganization of its Phillips&Drew and Brinson brands under the UBS Asset Management umbrella, coupled with indications that value management is returning to favour, mean that this side of the business could start to punch above its weight in the future.
Other significant names among the top players include Allianz, which has enjoyed a mixed time of late. In the autumn of 1999 it successfully completed its acquisition of Pimco, the leading US fixed income house, for $4.7 billion, thereby making waves across the industry, not least in the US. Pimco, under the leadership of star bond manager Bill Gross, was considered one of the leading lights of US fund management in a country which prides itself on pioneering the industry.
However, if Pimco was a coup, more recently the collapse of the proposed Deutsche Bank and Dresdner Bank deal, which would have cleared the way for Allianz to scoop up Deutsche’s DWS division, was a severe, and very public, setback.
For its part Deutsche, the Dresdner deal aside, has had a good year. The bedding down of the former Bankers Trust business, and the resultant global branding of its asset management division, are hurdles it has now cleared. While some observers were surprised to see the Morgan Grenfell name dropped, Deutsche has planned for the future, and its move up the InterSec table to fifth place shows the organization to be in good health.
Other developments to have a bearing on this year’s table include the merger of BNP and Paribas in France. Previously BNP Gestions occupied 43rd place while Banque Paribas was 50th. Now the merged bank sits in 20th place.
Methodology
All institutions have their headquarters outside the US. They are ranked by assets under management at year-end 1999. Figures for institutions that have merged since then are not combined.
Asset managers: refers to institutions that have third party assets under discretionary management.
Insurance companies: figures are shown for insurance reserves and, where applicable, third party assets under discretionary management.
Pension funds: refers to funds where the majority of assets are internally managed.
Unit trust managers: figures are shown for total fund assets under management.
The ranking excludes all assets over which managers do not have full discretion, such as advisory or custodial relationships.
The types of institution ranked are banks (BK), independent asset managers (IM), insurance companies (IN), internally managed private and public pension funds (PF/PPF) and unit trust/mutual fund companies (UT). Other institutional investors such as venture capitalists, stockbrokers and central banks are excluded.
To avoid double counting, assets of subsidiaries, both domestic and foreign (including the US), are included in the assets of the parent company. Some figures are estimated by InterSec and have not been verified by the institution concerned.
InterSec Research Corp
InterSec provides research and consulting services about the structure and nature of the investment management industry, its client base, and related industries in over 50 countries. For further information about this listing, or other services, contact Kim Yates, director of marketing at InterSec Research in London on +44 207 545 3669 (telephone), 207 541 3669 (fax) or email at kim.yates@uk.intsec.com.
