In these times, aim for profit not growth

Yuri Bender examines fund management and back-office issues discussed at the Sibos conference in Switzerland.

Donald Brydon, chief executive of E270bn French funds house Axa Investment Managers, gave back office specialists gathered at the annual Sibos summit, organised by Swift in Geneva, some food for thought. For fund houses, which have survived the obliteration of E8000bn in equity values, client care is once more at the top of the agenda, said Mr Brydon. A leaner operating environment means assets must be managed for profit rather than growth, which will particularly impact recent new owners of funds business. “It is now conventional wisdom that many of the bull market acquisitions will unravel,” believes Mr Brydon. Rather than the launch of more indistinguishable products, he expects greater collaboration between competing firms. “I anticipate that a number of the financial conglomerates will seek opportunities to link distribution and manufacturing deals where effectively there is a swap of one for the other,” said Mr Brydon. A call for operational efficiency was echoed by many exhibitors at Sibos. Omgeo, provider of trade management solutions, announced details of 10 new clients at the fair, including Brown Brothers Harriman, BNP Paribas, JP Morgan Chase, Société Générale and ABN Amro. Omgeo was busy spreading the word about failed trades to wealth managers, after releasing a research report with Fulcrum. This showed a mismatch of perceptions between front and back offices. Fund managers and sales agents wrongly believed a failed trade costs just E120, while the back office guessed at E700m. The true cost is closer to the E600 mark, according to Omgeo. The gulf between front and back office culture did not appear so pronounced at leading Greek institution EFG Eurobank Ergasias, set up in 1990 by the colourful Latsis shipping family. The bank’s head of operations Nelly Tzakou-Lambropoulou, promotes the bank’s private banking services, as well as custody operations. Up to 1000 wealthy clients also buy the full EFG custody package. “This is private banking with the Greek model,” said Ms Tzakou-Lambropoulou. “Very powerful and knowledgeable people in our head office judge what the markets are doing and give daily instructions to all our private bankers in the branches.”