Fitch Affirms Robeco’s Asset Manager Rating at ‘M2+
Fitch Ratings has affirmed Robeco’s Asset Manager Rating at ‘M2+’, assigned to its mainstream asset management investment centres in Rotterdam and Paris.
“The main driver of the rating affirmation is the solid governance and effective risk management framework which underlies Robeco’s strategic reorientation,” the rating agency said in its note.
“The progression made to improve operational efficiency and continued growth restored profitability in 2010. It takes into account the successful streamlining of activities, consolidation of its fund range and tighter organisational focus without endangering the firm’s franchise. A further driver is the strengthening of investment capabilities in the asset allocation, liability driven, fiduciary and pension management domains.
“Challenges are for Robeco’s management to deliver on the strategic plan, while keeping the organisation stable. The second phase of the planned renewal of its investment infrastructure could also temporarily lead to higher operational risks. However, Fitch believes that the company has well integrated such initiatives into its robust risk monitoring and surveillance practices.
“Robeco’s ‘M2+’ rating is based on the following category scores, which represents a scale from 1 to 5, with 1 as the highest possible score:
– Company & Staffing: 2.25 from 2.50
– Risk Management & Controls: 1.75
-Portfolio Management: 2.25
– Investment Administration: 2.00
– Technology: 2.25
Company and staffing
“Robeco has a long history and experience in managing retail and institutional assets. A new management team is now fully in place, following the appointment of a global CIO in February 2010 and, more recently, a new CFO in March 2011. The focus on responsible investing is well underpinned, notably through resources at Sustainable Asset Management AG (SAM), its Zurich based subsidiary, to which Robeco has delegated management for European equities in Q111. Robeco’s financial standing improved in 2010, a trend that Fitch expects to continue in 2011, helped by ongoing growth of its business and well-maintained cost discipline.
Risk management and control
“Robeco’s group risk and compliance committee is supported by sub-committees such as the dedicated Financial Crisis Committee which met on various occasions in 2011. Market risk monitoring for equity and fixed income has migrated towards analysis based on risk metrics. A key focus is on operational risk management and particularly on monitoring of the individual processes and infrastructure projects which Fitch believes to be thoroughly covered despite challenges to rewrite all relevant system and process documentations.
“Robeco’s combined fundamental bottom-up and quantitative approach to portfolio management has remained intact. The organisation benefits from a clearer structure, with the investment solutions team which covers asset allocation and particularly pension fund needs, to be fully operational. The company’s capable research resources – consistent with larger peer group organisations – firmly underpin decision making. However, a key challenge for investment staff is to adapt to the forthcoming changes in the front-end infrastructure.
Investment administration and technology
“Robeco’s reporting services are transparent, investor-centric and aligned with underlying asset classes. Fitch expects this to be maintained despite a planned move to another reporting engine. Trade life cycle management is efficient and accounting reliably performed through Multifonds. Robeco will benefit from a leaner and less complex IT structure through the renewal of its infrastructure. Fitch believes this may temporarily increase relevant risks but at the same time, the agency takes comfort from the intense testing and change management oversight.
“Established in 1929, Robeco is a wholly-owned subsidiary of Rabobank – the second-largest Dutch banking group – and is positioned as the core unit for the group’s asset management business. With investment centres in Rotterdam, Paris, Hong Kong, Zurich and the US, Robeco managed €149.3bn of assets at end-June 2011. Almost half of those assets were included in the scope of this rating, managed from Rotterdam and Paris. Robeco has made responsible investing a key focus of its asset management business. On average, Robeco employed 1,528 staff in 2010, 59.5% of whom were based in Rotterdam.”