Transtasman financial services reshaped after major mergers

By Chris Hutching

Friday 3rd May 2002

Funds managers mix it up

Rothschild merges asset management and advisory services with Westpac
ANZ and ING merge funds management and life insurance businesses
Rothschild executives lead the merger
Implications for New Zealand uncertain

The financial services industry is undergoing another shakeup with the merger of Rothschild and Westpac's asset management and advisory support services in Australia and New Zealand.

The move follows a similar joint venture between ING and ANZ, announced a few weeks ago.

Many of the major players in the financial services industry involved were in Christchurch this week at a 500-delegate conference being held by Count Financial, an Australian-listed company that offers a franchise arrangement for accounting firms moving into the area of financial planning and investment advice.

Among the Rothschild contingent attending the conference was the director of Australian equities, Andrew Brown, and associate director of adviser services, Stephen Karrasch, who said the merger had been driven largely by Rothschild senior executives, such as managing director Peter Martin. He will head the new, as-yet unnamed merged entity, which will become the fifth largest retail asset manager in Australasia and eighth overall. The implications for the New Zealand operations of the respective companies are unclear because the architects of the venture had yet to work out details, Mr Karrasch said.

Rothschild reduced its presence in this country three years ago but retains marketing links for its retail and wholesale funds through some of the investment menus available on electronic networks developed by investment advisory groups in this country (for example, the Aegis system).

Westpac Banking Corporation will acquire the Rothschild Australia Asset Management business for $A323 million but Rothschild senior executives will take key executive roles in the new company.

The international Rothschild family company is relinquishing its interest in funds management and advisory services to focus on its merchant banking activities in the same way it quit those activities in Canada in 1999.

Rothschild's Mr Martin will report to David Clarke, Westpac's group executive, business and consumer banking in Australia. The company will have its own board and within three months, a new name.

The purchase of the Roths- child operation adds $10 billion to the assets of the new company, which will be the fifth largest retail funds manager in Australia with $A17 billion of retail funds under management, and the eighth largest funds manager overall with $A34 billion in retail and wholesale funds under management.

In Australia, Rothschild supports a 1000-strong advisory network while Westpac has 765 advisers in its branch network. The move will strengthen Westpac's distribution and provide Rothschild with growth prospects, according to the companies.

An issue yet to be settled involves a contract that Westpac has with ING, which manages about $1 billion worth of its funds.

But ING and ANZ Group recently concluded a joint-venture agreement for their funds management and insurance businesses, renamed ING, and began operations on May 1.

The new Rothschild/ Westpac company would be competing with the ING group that controls some of its funds as a result.

It is expected the arrangement will either be unwound or will run the course of its contract over the next 18 months. ING will become the fourth largest player in Australia and the largest retail funds manager in New Zealand.

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