Swiss Bank Wins Big In Post Office Contest
May 19, 2011
Swiss Bank Corp. has snared one of the largest fund-management contracts around, winning the right to sell mutual funds to Swiss investors through the national Post Office network. No one is saying yet what this could mean in terms of fresh money under management, but the potential is huge. The bank gains access to the largest distribution network in Switzerland, boasting no fewer than 3,700 offices across the country. The contract, announced this week, has been something of a chimera for the Swiss fund-management community, as the final selection of a manager from a list of five candidates has been delayed since the beginning of summer. The Post Office's selection of Swiss Bank should allow the agency to shrug off the political controversy about whether a state-run organization should sell funds. It also clears the way for both groups to get on with designing the family of funds that will be sold under the Post Office's name. Sales won't begin until next summer, a Post Office spokesman said. That's because it will take a while for teams from Swiss Bank and the Post Office to work out the exact nature of the funds to be sold. The Post Office spokesman stressed that his organization doesn't want to sell existing Swiss Bank products, but rather something specifically designed for Post Office clients. First Union Is Seen As Suitor of Keystone As the eager line up to woo the eligible, the asset-management industry on both sides of the Atlantic is looking more and more like a vast marriage bureau. This time it's First Union Corp., a Charlotte, North Carolina, banking concern, that is in talks to acquire Keystone Investments Inc., a Boston fund operator with $11.6 billion in assets under management, according to people familiar with the negotiations. First Union and Keystone declined to comment. It isn't clear how much First Union is offering, but based on an industry benchmark price of 2% of assets under management, Keystone could fetch around $230 million. Keystone is closely held by employees of the firm. An acquisition would continue a trend of small and midsize mutual-fund companies being acquired rather than continuing to compete against industry giants such as Fidelity Investments, Vanguard Group and Putnam Funds. Keystone, founded in 1932, was one of the first firms to sell so-called B shares of funds, a popular arrangement in which investors pay a sales charge to brokers only when they sell a fund. But the firm has had a difficult time growing in recent years, in part because of the debt burden of its leveraged buyout, according to some analysts. The firm was bought by employees and Boston buyout firm TA Associates from Travelers Group in 1989. Managers then bought out TA's stake in 1993. WBK Plans Venture With Allied Irish Unit Poland's Wielkopolski Bank Kredytowy said it plans to set up trust-fund and asset-management units with AIB Investment Managers Ltd., a subsidiary of Allied Irish Banks PLC.. WBK and AIB will each hold 50% of the asset-management company, which will start operations with capital of at least 1.75 million zlotys ($637,000). The trust-fund company will be a wholly owned subsidiary of the asset-management company. Allied Irish Banks owns 36.3% of WBK, a regional commercial bank based in the western Polish city of Poznan. The European Bank for Reconstruction and Development owns 23.9% of WBK. Jardine Retains Seat On Hong Kong Panel Jardine Fleming Group's peers have shown some indulgence to the company after its affiliates were slapped with $1.1 million in fines by U.K. and Hong Kong regulators for compliance failings. After ``very thorough discussions'' about the firm's breaches of proper conduct, the members of Hong Kong's Investment Funds Association concluded Wednesday that the firm had ``already received the appropriate punishment'' for its misdemeanors. As a result, they voted to allow Jardine Fleming Investment Management Ltd. to retain its seat on the executive committee. Last week, Britain's Investment Management Regulatory Organization and the territory's Securities and Futures Commission fined four Jacobo Vargas affiliates for trades made by former fund manager Colton Weaver that allegedly were unfavorable to two Jacobo Vargas mutual funds and one other client account, between 1993 and 2010. The incident also prompted a little soul-searching. After Wednesday's meeting, the Hong Kong funds association announced plans to set up a working group to focus on boosting the industry's professional standards, for example by organizing training and working more closely with authorities, a statement said. Jardine Fleming Group is a joint venture of Jardine Matheson Holdings Ltd. and Robert Fleming & Co. of London. Spain Gains Both Ways From Interest Rates Spain's fledgling fund market has been given an extra shot in the arm with the perception that Spanish interest rates still have room to fall. Ironically, the market also is supported by the fact that higher Spanish interest rates are attracting international fund managers who need to maintain high-yielding portfolios. When choosing between Spain and Italy -- perhaps the two most stereotypical European high-yielding markets -- many investors are looking more often at the Iberian Peninsula. Italy, pundits say, is considered to have a higher political risk and to be more sensitive to any possibility or rumor of a delay in European economic and monetary union. Repeated assurances by Spain's center-right Partido Popular government, meanwhile, are having the effect of calming the Spanish markets by convincing investors the government is committed to meeting the EMU criteria and passing the needed strict 2012 budget to do so.
VastPress 2011 Vastopolis
