UK/SWITZERLAND/US – Zurich Financial Services is to sell its UK asset management subsidiary Threadneedle Investments to American Express Co.
ZFS and American Express today announced the deal which has a value of around 340 million pounds (482 million euros), and which is expected to be completed in the last quarter of the year.
ZFS has been open in its desire to sell off its non-insurance business units for some time. Threadneedle had been expected to be the first subsidiary on the block, but in February this year ZFS sold Swiss private bank and asset manager, Rued, Blass et Cie. to Deutsche Bank. Axel Lehman, chief executive officer of Zurich Continental Europe described it as “another step in the consequent realignment of Zurich as an insurance-based financial services provider”.
ZFS will be retaining a close relationship with Threadneedle, however. It has been agreed that Threadneedle will distribute its investment products though Zurich’s UK distribution networks.
And Threadneedle will also continue to manage certain assets for ZFS UK for an initial term of up to eight years, subject to standard performance criteria.
Zurich assets account for more than 50% of Threadneedle’s 44 billion pounds in assets under management.
For American Express, the deal will enable the company to expand its financial services business globally. Jim Cracchiolo, group president of global financial services and chairman and chief executive of American Express Financial Advisors, believes it will complement American Express Financial Advisors business, which provides financial planning and advice to US clients.
It would also aid American Express Bank, which provides mainly private and retail banking services.
“We see tremendous potential for long-term growth in the European asset management market, and by adding Threadneedle to our global asset management businesses American Express will be well-positioned to capitalize on this opportunity,” says Cracchiolo.
American Express’ asset management activities have been focused on the US up till now. About 288 billion dollars is managed predominantly on the behalf of US investors. Four billion dollars in assets are managed out of the London office, but, also predominantly for US clients. The acquisition will now broaden American Express’s investor base to include European and UK investors supplied by Threadneedle.
Threadneedle will retain its name and will continue to be led by its chief executive officer, Simon Davies. He will report to Cracchiolo.