A year after the creation of the giant European asset manager Amundi, CEO Yves Perrier has a keen eye on costs and plans to recruit a new head of global equities to attract more instituional business, finds Angele Spiteri Paris
Leading a now enormous firm out of the recession and also out of a high-profile merger must not be easy. But Yves Perrier is carrying it off with panache. He looks confident, at ease and very sure about what he’s doing and where he’s taking Amundi.
CEO Perrier says: “By the end of the year the merger will be complete and it will be behind us. We’ve had to first concentrate on the merger and now it’s time to focus on development.”
Amundi was officially created on the first of January 2010, made up of 75% Crédit Agricole Asset Management (Caam) and 25% Société Générale Asset Management (SGAM). The firm has €700bn in assets under management (AuM), making it the third largest asset manager in Europe, after Allianz and Axa.
One of the difficulties of coming out of a merger is handling the cost synergies (as highlighted in our piece on consolidation on pp12-16). But Perrier is doing his utmost to cut costs and integrate the businesses to the best of his abilities.
“Our objectives were to implement the integration of the businesses and to retain the good dynamics that existed within Caam. It’s important to keep the momentum of the business,” says Perrier.
And it looks as though he is succeeding: “I’m glad to say that during the integration process, sales have continued and they’ve been good. We saw net inflows in the first half of the year with strong new money flows into bonds and structured products.”
But a business this size will not work unless some streamlining is put into place and several efforts are being made in this regard. Perrier says: “In June we signed the agreement with the unions on a voluntary redundancy plan of 260 people, which will be implemented in the second half of this year. Also, at the end of September, all employees will be relocated to the Montparnasse village. We also carried out the first IT migration in May.”
These changes will represent significant cost savings. Perrier is serioius about costs and he’s determined to control them.
Perrier says: “Our cost/income ratio saw an improvement of seven points. Before synergies our cost/income ratio was 53%, while after synergies it will be lower than 50%.
“Our average cost as a proportion of AuM is 12bps and once we bring that to under 10bps we would have a significant competitive edge which is important in a context of low interest rates.”
According to Perrier: “A low cost base is the best way to manage risk because it means you are not desperate for revenue. It offers you the opportunity to say no.
“The 2011 total costs of Amundi, that is Caam and SGAM together, will be 10% higher than the cost of Caam when I joined.”
He also claims that cost efficiency is particularly important in a retail context because the mass-affluent client base needs simple products.
Currently, two-thirds of the Amundi business is retail and one third is institutional, so the retail market does represent a large portion of revenues.
Perrier is realistic about the firm’s strengths and weaknesses in terms of investment expertise. He says: “We have a good position in fixed income and credit and an average one in equity.” But this will change. Perrier says: “If we want to be successful with institutional investors we need to strengthen our expertise and reinforce our capacity in equities. We want to recruit a new global head of equity. We’re doing this to address a lack of strength in this area and I believe the market timing is now good to address this.”
Regarding other areas of the business, the CEO says: “We’re strong in emerging markets, structured products and are coming up in the ETF world.”
Pre-merger, Casam (Crédit Agricole Structured Asset Management) had been making a frantic push into the ETF market, launching tens of ETFs at a time. Interestingly, the Amundi ETF business is now in direct competition with Société Générale group subsidiary Lyxor.
But a bit of friendly competition won’t sour relationships with the Société Générale group. Perrier says: “We wanted to build a strong relationship with Société Générale and it has been developed as a partnership. Our platform, with Société Générale Gestion, our dedicated subsidiary to Société Générale’s network, has recreated the intimacy between the network and asset management, which existed in the 1990s and was lost somewhere along the way.”
But although much of his time has been taken up by the integration, Perrier has always had a clear plan for the future. He says: “We’re present in 30 countries and have investment management expertise in five; France, UK, Japan, Hong Kong and a FoHF capability is the US. The plan is to continue to expand in Europe and Asia.
“The bulk of our expansion needs to come from organic growth – on the retail side through partnerships with banks and on the institutional side from strengthening our sales force and our communications.”
Perrier has other big plans for Amundi. “I aim to change the culture of the firm and how we do business with our clients. When I joined Caam, only a small part of the assets had performance fees. My aim is to have 75% of assets working under a performance fee structure. All our funds currently have performance fees but only 30% of mandates do. It’s a matter of culture and it needs to change.”
So his focus on Europe is apparent but asked about the US, Perrier says the firm made a conscious decision to stay out: “The US is not our priority. We decided to not take control of TCW [the Société Générale subsidiary in the US] and we’re happy about that decision. It’s not easy to manage American people as a European institution. The risk of execution is very high when a European firm tries to buy a US company.”
©2010 funds europe