Banco Bradesco SA Brazil’s No. 2 private-sector bank has begun exclusive talks to acquire HSBC Holdings Plc’s Brazilian unit, according to a person with direct knowledge of the transaction who talked to Reuters.
In the event that HSBC accepts Bradesco’s binding offer, a deal could be announced before the end of the month, said the source, who requested anonymity because the process is private. The bid values HSBC Bank Brasil Banco Múltiplo, as the unit is formally known, at about BRL 12 billion (US$ 3.75 billion), or 1.2 times book value, the source added.
The source did not say whether Bradesco will pay in cash for the unit, which had assets of about BRL 170 billion at the end of March. Sources familiar with the plans announced last month that HSBC expected to have the sale finalised by August.
The run-up to HSBC Brasil’s sale has quickly gathered momentum since the plans were first made public in May. Analysts say that HSBC’s exit from Brazil comes as large local lenders outperform smaller rivals and gain more muscle to ride out a deteriorating economic outlook.
Slow asset growth prevented HSBC Brasil from gaining scale to win market share, leading return on equity to post a negative 4.2 percent last year, compared with 15.5 percent at the end of 2011.
Representatives at Bradesco could not be reached for comment to Reuters. A spokesman for HSBC in São Paulo declined to comment to the agency.
The European Fund and Asset Management Association (EFAMA) has today published its latest Investment Funds Industry Fact Sheet, which provides net sales of UCITS and non-UCITS for May 2015.
27 associations representing more than 99.6 percent of total UCITS and non-UCITS assets at end May 2015 provided us with net sales and/or net assets data.
The main developments in May 2015 in the reporting countries can be summarized as follows:
– Net sales of UCITS decreased to EUR 32 billion in May, down from EUR 83 billion in April. This decrease can be attributed to a slowdown in net sales of long-term UCITS and a sharp turnaround in net sales of money market funds during the month.
– Long-term UCITS (UCITS excluding money market funds) continued to register net inflows in May of EUR 47 billion, albeit at a slower pace compared to April when net sales totaled EUR 66 billion.
Net sales of bond funds posted reduced to EUR 9 billion, down from EUR 22 billion April.
Equity funds experienced a decrease in net inflows, registering EUR 2 billion compared to EUR 6 billion in April.
Balanced fund net sales remained steady at EUR 29 billion for the second consecutive month.
– Money market funds registered a turnaround in net sales posting net outflows of EUR 15 million, compared to net inflows of EUR 16 billion in April.
– Total non-UCITS net sales amounted to EUR 21 billion, up from EUR 16 billion in April. Net sales of special funds (funds reserved to institutional investors) registered EUR 16 billion, up from EUR 12 billion in April.
– Net assets of UCITS stood at EUR 9,158 billion at end May 2015, representing an increase of 1.4 percent during the month, whilst net assets of non-UCITS increased by 0.7 percent to stand at EUR 3,580 billion at month end. Overall, total net assets of the European investment fund industry increased 1.2 percent to stand at EUR 12,738 billion at end May 2015.
Bernard Delbecque, Director of Economics and Research commented: “Strong demand for balanced funds continued in May whereas greater volatility in stock markets and sharply rising long-dated government bond yields weighed on investor demand for equity and bond funds.”
Barend Fruithof is to join the Executive Board of Bank Julius Baer and become the new Region Head Switzerland with effect from 1 October 2015. He succeeds Giovanni Flury, who will switch to the Executive Board of Julius Baer Group as of 1 January 2016.
Additionally, Barend Fruithof will be responsible for Julius Baer’s Global Custody business. He has a successful track record in the Swiss financial industry stretching back over 20 years, with his most recent position being at Credit Suisse, where he has been Head Corporate Clients from 2008 and member of the Private Banking & Wealth Management Committee from 2011. Prior to this, he was CFO and member of the Executive Board of the Raiffeisen Group during five years. As of 1992, he spent eight years at Zürcher Kantonalbank. Set to join the Bank on 1 September 2015, Barend Fruithof will bring extensive experience not only in banking and client business but also in finance, IT and operations. He holds a degree in Business Economics from the former KLZ business school in Zurich and an Executive MBA from the University of St. Gallen.
After 30 years in the financial industry, Giovanni M.S. Flury, currently Region Head Switzerland at Bank Julius Baer, will switch to the Executive Board of Julius Baer Group Ltd. effective from 1 January 2016, where he will contribute his wealth of expertise in private banking. He will be involved in various strategic projects. Additionally, he will continue serving as a member of the Board of Directors of Milan-based Kairos Investment Management SpA, the strategic partnership in which Julius Baer currently holds a 19.9% stake. He will also remain a board member of the Julius Baer Foundation.
Boris F.J. Collardi, Chief Executive Officer of Julius Baer Group, says: “In Barend Fruithof, we have succeeded in recruiting a seasoned banking expert with an in-depth knowledge of Switzerland, an outstanding track record and extensive management experience. This makes him the ideal person to spearhead the continued expansion of Julius Baer’s activities in its key home market of Switzerland.”
Boris F.J. Collardi adds: “Since 2005, Giovanni Flury has given vital support to Julius Baer in several capacities, also as Region Head Switzerland since 2013. In this role, he proved very successful in strengthening the various regions of the Swiss market as a single entity and in significantly improving our strategy, structures and financial results. We are pleased that we will still be able to count on his wide-ranging experience in wealth management.”
Generali Real Estate (GRE), the real estate asset manager of the Generali Group, announces the creation of two new functions and the hiring of Anthony Butler as its Head of Corporate Finance.
Butler joins GRE after a significant experience with several major real estate institutional investors such as TIAA Henderson, MGPA and RREEF. In his new role, the Hong Kong-born British manager will focus on coordinating and developing GRE’s sourcing capabilities as well as financially structuring the main real estate transactions. He will also be in charge of monitoring the indirect real estate investments of the Group.
The second new function has been entrusted to Cristiano Stampa, who has been working for Generali since 2003. As GRE’s Head of Fund Management and International Investments, Stampa will coordinate the investment strategies proposed to the Group insurance companies, the commercial real estate lending activity and the cross border fund management.
Three other long term Generali professionals have also been assigned to senior-level management roles.
Davy Gomes, who joined GRE in 2009 as the Head of Corporate Strategic Planning & Finance, is the new Chief Financial Officer, while the French branch is now directed by Sebastien Pezet, who took over from the recently retired Philippe Brion. Alberto Agazzi, within the Group since 2005 and former Head of GRE real estate services in Italy, will run GRE’s Italian operations as CEO and Managing Director of GRE SGR S.p.A.
Christian Delaire, CEO of Generali Real Estate, said: “These moves mark a significant step forward for our company, which now counts on a best-in-class management team. By hiring Anthony we have added a talented professional with an outstanding international experience, while with Cristiano, Davy, Alberto and Sebastien we already had the four best possible options within our ranks. As we keep diversifying our portfolio and rolling out a global investment program, their broad knowledge of the business and the markets will play a key role in achieving these goals.”
The five managers will also sit in the Generali Real Estate Steering Committee, together with CEO Christian Delaire, Head of German branch Martin Schramm and Head of Human Resources Anna Manto.
New research from global analytics firm Cerulli Associates finds that expanded advice and service offerings are essential to sustained success for wealth managers in the United States.
“One of the most common issues facing wealth management providers is devising a targeted marketing strategy to grow their business,” explains Scott Smith, director at Cerulli. “Investor willingness to pay for advice continues to climb, as does households interest in receiving more financial advice.”
Cerulli believes that pairing a human element with technology solutions will maximize addressable marketshare of financial service providers by broadening the scope of their advice.
Investors widely prefer providers that can address the entirety of their financial advice needs. In many cases, traditional providers have already moved to embrace the idea of “advice beyond investing” and are now making firm-wide efforts to encourage their advisors to adopt this approach.
By creating an ongoing goal-based dialogue with clients, providers are better able to identify product placement opportunities that will legitimately increase the long-term outcomes of the client, and not just the provider.
Photo: -Gio -Iab. Moody's: Chile's Resilient Economy Will Weather Slowdown in Investment and Consumption
Despite the Chile’s strong credit profile, slowing growth will strain profitability and demand for companies that rely on consumption, while weak commodities prices and rising production costs will weigh on Chile’s mining sector, says Moody’s Investors Service.
“A series of fiscal reforms in 2014 strengthened Chile’s fiscal policy and commitment to debt reduction, but in the process also led to a temporary reduction in investment and consumer spending,” says Moody’s Vice President and Senior Credit Officer, Barbara Mattos.
“Weaker investment has had a particularly negative effect on Chile’s economic growth. Commodities producers, especially copper, which represents over half of Chile’s exports and about 12% of its GDP, have delayed some investments in a time of narrow profits,” says Mattos in the report “Corporate Credit Quality in Chile: Investment, Consumption Will Slow Briefly in Otherwise Resilient Economy.”
The weakness of Chile’s peso against the US dollar further strains companies that derive most of their revenue from domestic consumption and have significant dollar-denominated debt on their balance sheets coming due in 2015.
However, the weak peso benefits producers of chemicals, metals, and paper and forest products, which are export-dependent.
Moody’s also notes that sectors that already have global exposure or can expand globally will be better able to weather this period of slower economic growth and lower consumer spending.
Five of the 11 rated Chilean companies had negative outlooks at the end of June 2015, which reflect company-specific conditions, such as tight liquidity, debt-financed expansions or weaker demand for commodities, rather than Chile’s macroeconomic environment.
“Chile’s economy is recovering from a growth rate of 1.9% in 2014, its weakest growth rate in five years,” says Mattos. “As the economy continues to recover in 2015 and 2016, companies will continue to benefit from Chile’s solid financial system.”
Julius Baer announced on the presentation of 2015 half-year results that it has agreed to acquire, for an undisclosed amount, 40% of NSC Asesores, S.A. de C.V. (NSC), the largest independent financial advisory firm in Mexico. NSC, which is based in Mexico City, manages assets of close to US$ 3 billion and has enjoyed strong growth in the past years. The acquisition would mark Julius Baer’s entry in the second largest wealth management market in Latin America.
NSC specialises in discretionary portfolio management and advisory services for high net worth individuals, based on independent and unbiased advice, which makes it a particularly good cultural fit. The company was founded in 1989 and is currently led by its 12 partners, of whom Claudio Núñez acts as CEO and Mariví Esteve as CFO & Head of Strategic Planning. It employs a total staff of 46.
The current management team will continue to run the business independently with the existing staff and pursue the same client-focused strategy. Julius Baer will be represented on the Board of Directors of NSC by two members. Both parties are confident that the future close cooperation will add further growth momentum to NSC’s business development.
The stock market falls in June illustrate the extent to which the financial markets are becoming increasingly dependent on political decisions while at the same time reflecting economic reality less and less. This is the view of Guy Wagner, Chief Investment Officer at Banque de Luxembourg, and his team, published in their monthly analysis, ‘Highlights’.
The lack of agreement between Greece and its creditors hung over the stock markets in June. The S&P 500 in the United States, the Stoxx 600 in Europe, the Topix in Japan and the MSCI Emerging Markets all fell. “The market falls illustrate just how dependent the financial markets have become on political decisions even though these are increasingly divorced from economic reality,” says Guy Wagner, Chief Investment Officer at Banque de Luxembourg and Managing Director of BLI – Banque de Luxembourg Investments. “Provided the political blackmail strategies like those we saw in the negotiations between Greece and its creditors do not lead to a general destabilisation of the financial system, investors are likely to continue to favour equities due to the lack of prospects of an increase in yields on the bond and money markets.”
Static global economic situation
The global economic situation is fairly static, with no major signs of picking up or slowing down. In the United States, activity is getting back to normal after a weak start to the year. In Europe, the economic situation is improving slightly due to the weak euro, albeit without any sign of a significant recovery. In Japan, the economy is continuing to mark time. In emerging markets, there is continuing fragility in several of the major economies, such as China, Brazil and Russia.
Eurozone inflation should stay in positive territory in the coming months
With the stabilisation of oil prices, inflation rates have consolidated at low levels. In the United States, inflation edged up from -0.2% in April to 0% in May. In the eurozone, the inflation rate remained in positive territory, at 0.2% in June compared to 0.3% in May. “Unless oil prices drop back, eurozone inflation should stay in positive territory in the coming months,” says Guy Wagner.
Core eurozone countries’ long rates still unattractive
The upturn in long rates that began at the end of April continued in June. The rise in bond yields affected the peripheral countries rather than the core eurozone countries due to the uncertainty over the situation in Greece. Over the whole month, the 10-year government bond yield rose in Germany, Italy, Spain and the United States. “Despite the rise, the long rates of core eurozone countries are still unattractive. In industrialised countries, US government bond yields are the only valid alternative given that they still have potential to appreciate if deflationary pressures set in,” suggests the Luxembourg economist.
Markets no longer worried by Greece’s possible exit from the eurozone
Despite the uncertainties over Greece, the euro firmed slightly in June. Greece’s possible exit from the eurozone no longer seems to concern the markets unduly, given that there is only a low risk of contagion to other peripheral countries. And given the last news and the deal with Europe. According to Guy Wagner: “Despite the recent stabilisation of the euro, the dollar’s upward trend that began in May 2014 is set to continue as long as a US interest rate hike in the second half of the year remains the most likely scenario.”
Old Mutual Global Investors announces that, subject to shareholder approval, the US $212m Old Mutual Asian Equity Fund managed by Josh Crabb, Head of Asian Equities, will evolve into an equity income generating strategy.
With a target date of 30 July 2015, the Fund will be renamed the Old Mutual Asian Equity Income Fund.
The Fund, which has been managed by Crabb since October 2014, is a sub-fund of the Dublin domiciled Old Mutual Global Investors Series plc umbrella fund. It is managed by Crabb and his team, who are based in Old Mutual Global Investors’ Hong Kong office. Since Josh took over as manager, the Fund has been in the first quartile of its peer group and has delivered 4.18% above the index (MSCI AC Asia Pacific ex Japan) ².
The Fund’s investment objective is evolving based on client demand and the change of name reflects this. The Fund aims to deliver a total return for investors, with a focus on income, as well as capital growth. It will invest in companies from across the market cap spectrum and will aim to pay an above market yield from across the economic cycle.
Old Mutual Global Investors believes this development will benefit clients as they will be able to access the region’s growing dividend stream as well as obtaining above average earnings per share growth. Studies show that the Asia Pacific region over a ten-year cumulative period has paid consistently higher dividends as a percentage of total returns than both the US and Europe, as well as delivering overall higher total shareholder returns.
Crabb has an investment career spanning over 18 years, which includes a proven track record of managing Asian income funds.
Josh Crabb comments: “As the worldwide population ages, the search for income, and in particular equity income, is at the top of the investment agenda. By evolving the Old Mutual Asian Equity Fund into an income fund we are aiming to meet the demands of those investors who look to receive an inflation-proofed income, without sacrificing their capital growth.
According to the latest research from global analytics firm Cerulli Associates, anticipated reforms in Mexico have created opportunities for international asset managers. These findings and more are from Latin American Distribution Dynamics 2015: Economic Challenges at Home Forcing Global Investment Approach, a just-released report developed in partnership between Cerulli Associates and Latin Asset Management.
The Mexican mutual fund industry’s assets under management (AUM) grew by 10% in 2014, marking its third double-digit rise in three years.
The combined AUM of the Afore and mutual fund industries in Mexico stood at over US$277 billion as of year-end 2014, which puts Mexico in the second spot, behind Brazil, in terms of total AUM for locally regulated companies. Yet most market participants acknowledge that AUM should be much, much larger considering the country’s size.
Reforms in both pension and mutual funds are under consideration in Mexico, and the implementation of many new rules are expected to be rolled out soon.
“On the pension side, the new rules include measures to strengthen the social safety net, which will likely lead to larger flows directed at Afore pension managers, and will make the Afore investment regimen more flexible,” explains Thomas V. Ciampi, founder and director of Latin Asset Management. “A big part of this added flexibility will include greater margins for international investment via separate-account mandates.”
“On the mutual fund side, major reform is underway with some structural changes to the industry, as well as a planned rollout of new open-architecture fund platforms that regulators hope will lead to a new era of third-party distribution, new product development, enhanced advisory services, and increasedinvestor sophistication,” Ciampi continues.
