Italy’s Pioneer remains on track for organic growth

After a year-long review, UniCredit Banca has decided that Pioneer, its asset management arm, should remain within the group.

Early this year, UniCredit Banca published an annual report that revealed a stronger than expected financial position. Immediately, it was clear the banking group was no longer under pressure to sell off its fund management arm, Pioneer Investments, as part of a strategy to improve is capital adequacy position.

In 2010, the group’s profits grew 13% on 2009, while assets under management grew from €176bn at end 2009 to €187bn year-on-year. Evidence of continued growth in asset gathering at Pioneer and improved market conditions over the past 12 months added to the view that Pioneer should remain within the group. It is now focusing on a strategy of improved product quality and customer service, to enable the firm to secure more growth opportunities ahead.

Throughout the strategic review, UniCredit had said that it would sell Pioneer only for the right price. It said in a statement: “The objective remains to explore strategic partnerships and other strategic options to maximise Pioneer Investments’ overall franchise value.”


A number of foreign parties expressed interest in acquiring Pioneer, including Amundi, Natixis and Resolution.

But it was undoubtedly the proposed merger of Pioneer with Eurizon Capital, part of the Intesa Sanpaolo group, that attracted the plaudits from the markets and government circles in Italy.

The proposed merger of the asset management arms of the two largest banking groups in Italy created the exciting prospect of an Italian fund manager with the scale, both in terms of its funds range and its distribution capacity, to take on the international funds houses that have recently been making inroads into the Italian funds market. The prospect of a national champion was an exciting one, but the real merit of such a merger would have been an integration of the two banking groups’ distribution networks.

“A key aspect of such a deal is the distribution of funds,” says Sergio Albarelli, managing director, Southern Europe and country head of Italy at Franklin Templeton. Together, the two networks would have provided the largest distribution platform in Italy, with substantial presence also in the resurgent markets of Central and Eastern Europe.

It was not to be. Such a merger of distribution networks could be justified for the synergies and scale it would bring. But ultimately, it is the expression of two parties struggling to make ends meet in difficult circumstances. While all the major Italian banks have had to undergo recapitalisation to meet new Basel III capital adequacy requirements, UniCredit found itself in a relatively healthy financial position, with a core Tier 1 of 8.58%.

This was despite problems arising from the acquisitions of Capitalia and HypoVereinsbank, both laden with toxic debt, which may have led to the ousting of UniCredit’s chief executive Alessandro Profumo last year. And with a €1.6bn exposure to the troubled markets of Portugal, Ireland, Greece and Spain, the expectation in the markets was not if UniCredit would recapitalise, but when.


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