UniCredit Group's announcement that it will keep its Pioneer Investments' money management arm could mark the end of a spate of recent divestments, and the start of a period in which banks are focused instead on building their asset management affiliates.
Milan, Italy-based UniCredit's April 21 decision — almost a year after the top Italian bank said it would consider all options for its $274 billion money management operation — removed what was far and away the biggest potential prize in play on the mergers and acquisitions scene.
Over the past three years, a number of hefty lenders — including Barclays Bank and Bank of America — unloaded their asset management businesses to bolster capital that had been depleted by the global financial crisis.
UniCredit executives, in a news release, said the decision to work on a “focused strategy” to build on Pioneer's recent organic growth was cemented by the “market evolution of the past 12 months,” which saw both the money manager's revenues and profits jump 13% for the year ended Dec. 31.
Some observers saw politics lurking behind UniCredit's decision, amid apparent resistance in Rome to the idea of selling a major Italian-owned asset manager to a French bank such as Natixis, which was seen as the top bidder.
Paola Di Raimondo, a Milan-based spokeswoman with UniCredit, said asset management remains a “core part” of the bank's portfolio of businesses.
But others say broader factors could be prompting banks to put a higher value on the advantages of owning a money management affiliate.
In a recent conversation with Pensions & Investments, Laurence D. Fink, chairman and CEO of BlackRock Inc., predicted that stricter capital requirements under the Basel III global bank regulatory standards will leave banks more interested in acquiring money management affiliates for the steady revenues they provide without taxing the parent company's capital base.
“I'm sure that's going to happen,” agreed Richard Bove, a Lutz, Fla.-based banking analyst with Rochdale Securities LLC. He cited asset management as one of the fee-based businesses that banks will pursue because of the attractive mix of high returns on investment and low capital requirements.
The recent wave of divestments was, at the same time, a sign of weakness for banks and evidence of just how attractive asset management is, insofar as there proved to be a ready market to sell those businesses even at a time of extreme stress and uncertainty, Mr. Bove said.
There have been multiple forays by banks into money management over the years, ending more often than not in tears. Opinion among investment bankers and analysts remains sharply divided as to whether the lessons of past failures can lead to better outcomes next time around.