Colonial brand to take a back seat in New Zealand

Friday 25th May 2001

By Chris Hutching

The Commonwealth Bank group in New Zealand is consolidating its three retail brands with a decision to retire the non-performing Colonial First State Investments.

The move is another step by a major financial services company relocating more functions back to a head office in Sydney.

Now, Commonwealth will continue to distribute products through its ASB Bank and Sovereign Financial Services subsidiaries while transforming Colonial First State Investments brand into a "wholesale" entity providing investment advice for the group.

The listed property trust - Colonial First State Property - remains unaffected by the changes.

For Colonial First State Investments chief executive Bruce Abraham, it's a familiar situation but from a different perspective. He took over the job at Colonial First State Investments in Wellington in the mid-1990s to lift the inflow of funds the company manages. A couple of years ago he oversaw the takeover and downsizing of Prudential's insurance, property and investment operations which were incorporated into Colonial's own funds. But the funds under management at Colonial were little changed by March this year at $276 million.

With Commonwealth Bank's $A8 billion takeover of Colonial last year via Sovereign, Mr Abraham is looking at overseeing a drastically reduced management team in Wellington with most staff either being relocated back to Sydney or "let go" by the company. Mr Abraham said he would be around for a while but it seems unlikely his position would be justified once the Colonial team here is downsized.

ASB Bank will continue to offer passive funds to the retail market while Sovereign will stick with its multi-manager style and CFSI will manage active funds in a support role or as a wholesale investment manager offering services to the group.

Under the restructuring arrangement Sovereign picks up Colonial First State Investment's $276 million of funds under management, bringing the total amount it administers to more than $3.2 billion and making it one of the largest managed-funds providers in New Zealand.

The names of the Colonial First State Investment Series and Retirement Lifestyle Series will be changed to Sovereign.

The changes only affect distribution and names. The focus and management style of the funds under various different managers will remain the same.

Over the next three months Colonial First State Investments will move necessary staff to Sydney to manage all New Zealand investment funds from Sydney. A small CFSI team will remain in Wellington to oversee investment opportunities and provide support to distributors and report directly to the international CFSI group in Sydney.

Former Colonial subsidiary Jacques Martin will continue to operate independently as a specialist fund administrator.

All of CFSI's equities are already managed out of Sydney with the Wellington team's recent work involving asset allocation and global bond investments.

Sovereign's image primarily as a provider of insurance investments will provide it with some challenges as it transforms to a general financial services provider.

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