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London HQ for merged BAT and Zurich business

The merger of Zurich and BAT Industries' financial services group should place London at the core of the new group's European asset management business.

Announcing the creation of Zurich Financial Services Group, Rolf Hüp-pi, chairman and CEO of Zurich Group and of the new entity said: London will probably be the European investment centre and Threadneedle Asset Management will constitute part of the core of that centre."

The merger, to be finalised late next year, will create the world's second largest insurer by premiums with $36bn and the world's seventh largest asset manager by assets with $342bn. BAT will become a separate listed company.

Discussing the constituent companies, Hüppi said the mergers would happen where appropriate with other businesses remaining separate. However, it appears likely that the asset management businesses will be integrated. In the asset management business, research needs to be global. All asset management businesses will be brought together."

The asset management groups un-der the Zurich umbrella - now joined by Threadneedle - include Zurich Investment Management in Europe and the largely US-based Zurich Kemper (from a previous acquisition) and Scudder Stevens & Clark. These companies are still integrating.

On suggestion that some clients may be unsettled by the ownership changes, Hüppi said: "In the US, the Scudder and Kemper link has been extremely well received. We have not lost one corporate customer and sales figures have increased.

"Their response has been: 'Does the new company have the research ex-pertise globally and does it have the local expertise which can feed into this system?' That is our challenge.""

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