The boss of France’s Natixis is on the lookout for international asset managers to buy and could list its recently scandal-hit division to build firepower for a large purchase.
“We are clearly the consolidators of this industry,” chief executive Nicolas Namias told the Financial Times, adding that “Asia is for sure an area for expansion”.
Namias added that he had “strategic manoeuvrability” and could “list the asset management arm to finance a big M&A project”.
The group’s asset and wealth management activities — the second-largest in Europe by assets under management after French rival Amundi — are currently centred in Europe and the US.
Namias, who has been at the helm of Natixis for a year, is seeking to transform the fortunes of the company after it faced intense scrutiny over its high-risk appetite and was dogged by losses, including at its beleaguered London-based subsidiary H2O Asset Management.
In 2019, the Financial Times revealed that H2O, which was previously the star performer in Natixis’s stable of asset managers, held more than €1bn in illiquid bonds linked to the controversial financier Lars Windhorst. Panicked investors withdrew billions of their money and regulators subsequently forced H2O to temporarily suspend trading in a series of its funds because of concerns over the valuations of investments.
Natixis has been seeking to sell its majority stake in H2O, which was also hit hard by the pandemic, back to its management since late last year, though this has so far faced obstacles from regulators.
Namias said H2O had now taken over the distribution of its own products and would no longer be included in Natixis’s financial results, but declined to comment on why the French investment bank has been unable to shed its stake and whether it was considering other buyers.
A director and two sales representatives from Natixis have joined H2O to set up a proprietary distribution team that the company is looking to grow to 15 people.
In spite of the reputational hit caused by the H2O scandal, Namias defended the asset manager’s multi-boutique model, whereby it takes majority stakes in smaller investment firms and offers them its marketing and distribution might.
Natixis was now the biggest investment manager in the world to have this kind of decentralised business structure, he said, which enabled the company to benefit from different investment strategies and talents, so long as there are good systems of compliance in place.
Natixis replaced its chief executive last year after a two-year term marked by doubts over the bank’s business model and risk management, and was taken private this year by its largest shareholder and French mutual bank, BPCE.
As part of a sweeping restructuring of its business operations, the company’s insurance and payments arms — representing about 20 per cent of the company’s sales and employees — have been transferred to BPCE.
This has left Natixis to focus on two core segments — corporate and investment banking and asset and wealth management, reducing its employee count from 16,300 to about 12,000.
In the first half of the year, gross operating income across both sectors — now named “Global Financial Services” — more than doubled to €1.1bn, supported by the post-pandemic recovery. The asset and wealth management division increased its gross operating income by 41 per cent to €400m, when excluding H2O asset management, but by only 12 per cent including the investment subsidiary.
Natixis has also sought to slash its exposure to risky products and diversify its areas of corporate banking expertise so it is less exposed to volatility in sectors such as oil and gas, and aerospace. As part of this drive, it has expanded into sectors including health.
“We will never be the largest corporate and investment bank in all geographies,” Namias said, but “we can enlarge the number of sectors [as part of] a ‘selective diversification’.”
Natixis’s exposure to equity derivatives, which led to hundreds of millions in losses in 2018 and 2020, had also been reduced, Namias said, although the bank has not stopped dealing in these products altogether given that there is still strong demand from clients.
“The business of banking is not to avoid risk but to choose your risks wisely,” he said.
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