As the Spanish fund industry consolidates - and parent banks merge or are taken over - there will be fewer private bank fund selectors and changes to access third-party funds.
As the Spanish fund industry consolidates – and parent banks merge or are taken over – there will be fewer private bank fund selectors and changes to access third-party funds.
Spain's third-largest bank La Caixa has announced plans to merge with struggling rival Cívica. La Caixa intends to pay a discount on Cívica's poorly performing share price, which has dropped by one-third in value since listing in July 2011. Merging their fund arms InverCaixa and Banco Cívica Gestión de Activos could create a €17.5bn asset pool.
The proposed merger kicks off a second round of bank consolidation and further reductions in the number of captive asset managers. Fund selectors will consolidate their powers. Product developers will rework unfettered fund of fund portfolios.
The new Partido Popular government has adopted a tough line with Spain's debt-ridden banks. It has asked them to find €50bn in fresh provisions and capital to clean their lending books.
The sum equates to 15% of Spanish GDP. New measures cover additional provisioning on loans to buyers and property developers, and the writing down of repossessed properties and those held by struggling property investment funds.
With many banks and mutually owned cajas in a fragile state, another wave of mergers is expected. Caja numbers are down from 45 to 15. This could fall further as the Spanish Fund for the Orderly Bank Restructuring, known as FROB, sells off nationalised lenders.
Each new deal entails fresh restructuring of the Spanish mutual fund sector. FundsPeople, a local fund news website, says one in eight captive managers was in the process of merging before the Cívica deal was announced.
Jaime Pérez-Maure (pictured), director of fund platform Allfunds Bank, thinks bank consolidation will lead to more wrapped and packaged products. Merged retail and private banks are already putting together new funds of funds ranges, with third-party funds included in portfolios.
"Once the cajas get rid of their conservative image, they will have to compete more aggressively with the banks and offer lots of funds from foreigners," he says. But he also warns a concentrated banking sector will mean fewer fund selectors. He believes the 10 leading distributors already control 90% of distribution. With fewer packagers, he says, there will be fewer counterparties selected.
Consolidating overlapping asset management arms is often messy. BBVA recently agreed to take over the nationalised Unnim Banc for €1. The deal comes with a ten-year state-backed guarantee on potential Unnim property portfolio losses.
BBVA gained about €160m in fund assets run by Unnim Gesfons. There are ten Unnim funds and four SICAVs previously run by Caixa Terrassa, one of the three merged cajas that formed Unnim in 2010.