EUROPE – The merged F&C-ISIS is poised to issue an announcement tomorrow about the outsourcing deals the combined group has with J P Morgan and Mellon.
At the time of their merger announcement in July the two companies said they would review their outsourcing arrangements. F&C had outsourced fund administration to Mellon in 2003 while ISIS had a similar deal with J P Morgan.
Institutional head Alain Grisay told IPE in an interview today: “It will be a real statement to the financial markets. It could mean the first indication about where the market will go the next years.”
Grisay told IPE in July that the merger would mean an unspecified number of jobs were set to go. Grisay said today that most of the stated annual savings of 33 million pounds (47 million euros) would not come just from job cuts.
Although salary costs are a major part of the total savings targeted, immediate savings would also come with the incorporation of the two companies into one London office and marketing and sales.
F&C has been in the news recently as it emerged that the 14 billion-euro Dutch metal workers fund PME had switched one billion euros of assets away from F&C Management to new providers.
Grisay said this was no surprise, adding the move was known about before the merger. PME had already informed F&C that it wanted to change its asset allocation from equities into commodities.
“This was a very good choice,” Grisay said. “Due to the fact that F&C is not involved in commodities, this meant the latter relation needed to change.”
The Dutch market as a whole is in a flux, Grisay stated, but this will only mean that there will be ample opportunities for it to open new markets.
“As solidarity in pension land will become more difficult to sustain, due to the ageing of society, financial figures are not anymore counting up in relation to projected population.”
Grisay foresees a more private/personally orientated pension system. Pay-as-you-go does not work anymore, he stated. Possible consolidation is expected, but largely concentrated on the smaller corporate pension funds, which will need to assess the need of mergers inside of an industry-wide pension fund or other.
It also will become increasingly difficult for pension funds to survive the increased pressure of research and other costs.
In August IPE reported that F&C lost almost four percent of its institutional assets under management – a net 1.1 billion pounds - the first half of 2004.