Italian asset managers struggling with new rules, survey says
ITALY - Asset managers in Italy may be hard pressed to comply with new governance rules taking effect at the end of this month, according to a survey from RBC Dexia.
Only a quarter (26%) of respondents said they were fully prepared to comply with the rules, which were introduced by the Bank of Italy in 2009.
Despite the looming implementation date, 42% said they had only just begun to assess the impact of the new guidelines.
But a further 27% said they had a good understanding of the requirements and implications of the measures.
The survey was carried out to assess the effects of the financial crisis and new European and domestic regulation on the Italian investment sector.
A representative panel of 41 asset managers and private bankers - more than half handling assets of €1bn or more - was interviewed in March and April 2010.
The new governance measures are intended to protect investor interests by giving operational autonomy to investment companies belonging to larger financial groups.
Asset managers will be required to have independent control of their human, technological and financial resources and to conduct independent valuations of group financial products before offering them to clients.
They will also have to improve governance and transparency with more independent non-executive directors on their boards, and by disclosing potential conflicts of interest with their parent companies.
The survey found 71% of respondents expected the new Italian regulations and forthcoming EU rules to lead them to outsource more of their non-core activities.
Further, around two-thirds of asset managers thought the rules would force them to improve their capital adequacy positions (66%) and risk management and transparency processes (64%).
However, half of the respondents had in fact already strengthened their risk management processes this year, citing pressure from investors for a safer approach to risk as the number one driver (68%).
Similarly, 69% of respondents said they intended to boost transparency in the next 12 months to provide clients with more detail on fund pricing structures and the costs, risks and liquidity of their investments.
The survey also showed 75% of respondents believe the recent global financial crisis and outflow of assets under management in Italy will lead to greater market concentration, with many predicting these events will stimulate product innovation, increase product transparency and place greater focus on risk management.
Asset managers said they were considering a number of options to reinforce their risk analysis, management and control systems, including increasing general investment in this area (37%), upgrading their IT and software tools (26%) and using third-party service providers (21%).
See the Pensions in Italy section in July's IPE for information Italian pension funds and asset allocation.