At ABN AMRO, the concept of the universal bank is taking on a new dimension as the Dutch group fulfils its global ambitions. It now operates in 71 countries in its quest for a worldwide franchise for its brand.
Jaap Fieret, CEO for the bank’s asset management arm, says: Our role within ABN AMRO is to provide a strong investment network”. His group now operates in 25 countries around the world and is expanding, with currently $80bn of assets, of which 32% is institutional. But these activities are done in a co-ordinated way with the bank’s other operations. In emerging markets it may operate with local partners. The asset management flag has been planted now in the Far East, Latin America, as well as eastern Europe and central Asia. “We were thefirst foreign entity to be licensed in Kazakstahn.”
The strategy at the local l evel is distinctive, he considers. The aim is to build up local teams of portfolio managers and analysts, who can be harnessed as part of the international network. “The sourcing of those local specialists will be easier for us than for our international competitors who are often just based in three or four locations worldwide. We think our philosophy is that bit different.” Full portfolio management services are now on offer in most European countries. “We think this presence is important as these markets become more efficient and transparent, since in order to spot the inefficiencies, local research is needed.” In Fie-ret’s view it will take time be-fore a universal market develops in Europe. “Our aim is to grow organically. Acquisition is not high on our priorities, but we can never say ‘never’, certainly it is not on the radar at present. The focus is internal growth.” He adds: “By building an organisation rather than acquiring one, you avoid the turmoil and it is likely to be cheaper considering current prices. With acquisitions you may achieve your objectives faster, but there is considerable downside.” Not all the international mergers will be successful, he predicts. “I do not see the world being dominated by a few giant asset managerment companies - the financial services market is too
fragmented currently.” He points out that these new groupings are production rath-er than distribution mergers. “There is no player in our business who is operating successfully in all European countries. That in itself will take time. Nor is there any organisation with a universal brand - as yet no Mc-Donald’s has appeared in the investment industry.” For Fie-ret the nub of success is in achieving the balance between investing in distribution capacity and in the brand name of the organisation, which is ultimately determined by the quality and performance of the products. The increasing size of groups will lead to better products being offered to cli-ents, he maintains. “Whatever the shakeout in terms of the players, the quality of the products will be higher than they are currently.” Paradoxically, it may mean that performance becomes more uniform, though at a higher level. “Assuming the best talent is gathered together in these groups, markets will become more efficient and outperformance more difficult.”As a consequence, asset management will move in the quantitative direction, since ‘traditional’ management will find it harder to deliver. “As more people arrive at the conclusion that there is no longer added value from active management, in-terest will move this way. It will not be just indexing, but the ‘active quant’ will become more important.” Up to now the bank’s approach has been act-ive both for fixed interest and equity, but ‘active quant’ will be one of the ways forward. With higher levels of education on the buy-side of the business, demand for quantitative products is growing, as will the use of the new communications technology. Fennell Betson”