MADRID, Spain - Banco Santander Central Hispano SA, Santander, has pulled out of U.S. institutional asset management and will concentrate on retail business in Spain and elsewhere.
Santander Global Advisors Inc., Boston, will be shuttered next month, as will a small London operation, Santander Global Advisers (UK) Inc.
"The United States is not core for us. We have to center in the areas where we are profitable. It would not be wise to be closed to the United States forever, but we have other priorities these days," said Edward Suarez, joint managing director of BSCH Gestion SA, Madrid.
One account
Since its launch in November 1997, Santander Global, with $1.5 billion in assets under management, had won only one third-party institutional account, of $100 million from TRW Inc. It also managed $600 million in assets for Metropolitan Life Insurance Co., New York, which owns 25% of the company, and $800 million in mutual fund assets for parent BSCH, said Kathryn Matthews, a founding partner of SGA and joint chief investment officer based in London.
Bob Hamje, president and chief investment officer of TRW Investment Management Co., Cleveland, confirmed the company had a portfolio with Santander, but refused to comment further.
MetLife has decided to take over the management of its $600 million, said a spokeswoman.
Altogether, 42 staff members will be laid off, but Ms. Matthews said she and Phillip Bullen, joint CIO in Boston, were in talks with a number of parties interested in acquiring parts of the company.
Both Ms. Matthews and Mr. Bullen worked for Baring Asset Management before setting up SGA in 1997.
One consultant, who requested anonymity, said the Spanish retail market offers BSCH the best short-term opportunities for profit growth. Building up an institutional asset management business can be expensive, and the Spanish corporate pensions market is still relatively young.
BSCH decided to centralize its asset management operations in Madrid following the merger earlier this year of Banco Santander SA, Santander, and Banco Central Hispanoamericano SA, Madrid. The merged bank now has a team of 70 asset managers based in Madrid.
$74 billion business
According to figures published at the end of September, Santander manages $74 billion in mutual funds, pension funds and managed portfolios for European and Latin American clients. Currently just under 10% of the assets are managed for institutional clients, said Mr. Suarez.
Having promised shareholders annual earnings growth of 25%, the bank has to focus on the areas where it is strongest, which at the moment are Latin America, Spain and Portugal.
The retail markets of Latin America and Spain are the group's largest sources of business. Local consultants said the firm does not have a very large domestic corporate pension fund business.
Sources said the group's decision to focus on its European retail business might have been the result of a power struggle - shortly after the merger in January - between the heads of each bank's asset management operations.
