EUROPE – Mellon Financial Corp. has reached agreement with German Landesbank WestLB to launch a 50-50 joint asset management venture from January 2006.
The tie-up, which still must be formally approved by both sides, envisages Mellon merging its German activities only with WestAM, WestLB’s asset management arm. Financial terms of the venture were not disclosed.
Beyond Germany, where it manages €27bn in assets, WestAM is active in the UK, Italy, Spain, France, Australia and Japan. It is primarily an institutional fund provider, with €67bn in assets under management worldwide.
If the venture is launched in January, WestAM would distribute its own funds as well as Mellon’s in Germany and in France. Mellon, meanwhile, would distribute its and WestAM’s funds globally.
The merger partners said the venture would begin with 220 employees and €40bn in AUM, including the €27bn that WestAM runs in Germany.
WestAM noted that the tie-up was mutually beneficial, since Sparkassen, or German savings banks that partly own WestLB, would get access to Mellon’s funds, while Mellon could better establish itself in Europe.
“For Mellon, this is an excellent opportunity to establish a leading presence in Germany – a strategic priority for us – and to accelerate our growth in France,” commented Ron O’Hanley, president of Mellon’s institutional asset management group.
Confirmation of the tie-up comes a month after a German newspaper said Mellon was considering taking up to a 50% stake in WestAM in order to break into Europe’s institutional market.
By tying up with WestAM, Mellon gets a specialist in fixed income, which accounts for more than three quarters of its €67bn portfolio. Banks, most notably Sparkassen, are one of its biggest clients. Pension funds only make up 3% of WestAM’s €27bn in German assets.
Mellon is the world’s second-biggest asset manager with $738bn (€604bn) under management.