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J P Morgan sets up Master KAG in Germany

GERMANY – J P Morgan Chase is expanding its business in Germany by splitting its administration and asset management business and creating a Master KAG.

“Our aim is to strip out the administrative part of the J P Morgan Fleming KAG and decouple the asset management from this,” says Arnulf Manhold, business executive of J P Morgan Investor Services in Frankfurt.

A Master KAG is a specialist asset-management bank which can offer segmented Spezialfonds.

The two business sides were split at the beginning of July. “So physically, those people working at the new Master KAG provider, which is called JP Morgan Fonds Services GmbH, are separated from the asset manager,” he says. “We now have a 20 plus strong team here.”

“We find that our clients have a strong interest in the Master KAG approach,” says Manhold. “We are the first global custodian to take this step in Germany, which enables us to offer institutional investors the ability to group all their Spezialfonds into one structure and widen their access to international investment advisers.”

Manhold sees major opportunities as the German market faces inevitable consolidation among the active 80 KAGs. J P Morgan is understood to have just entered into such an agreement for another group’s KAG activities. “All of our asset management activities for the German market are now concentrated on the new legal entity which is named J P Morgan Fleming Asset Management (Europe) S.ar.l. Frankfurt Branch,” he says.

Manhold adds: “We will have an outsourcing arrangement with the asset management, who will use us for as an insourcer providing all the regulatory statutory reporting, accounting, NAV calculation required. J P Morgan Fleming will now be able to concentrate 100% on asset management.”

He believes the group has its timing right for this move. “This gives us good time to market, as many institutional investors are now thinking of moving their assets to one Master KAG.” Some market players are looking to gain additional asset management business by offering these services, while a number of others may decide to go the purely administrative route.

Martina Reichl will be chief executive and head of J P Morgan Fonds Services.

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