The umbilical cord that binds mutual fund managers to mother banks

Between ongoing and announced transactions, the current effervescence of the Italian financial market does not only concern banks, but also investment houses and insurance companies. Credit institutions are seeking cost and scale synergies and are moving swiftly towards an integrated development model, increasingly incorporating insurance and asset management activities to diversify their sources of income. This is also in view of the reduction in banks' financial margins, which have reached record levels in recent years, thanks to the high rate differentials (also record high) applied and recognised to customers with unilateral, unidirectional and sometimes even unjustified changes to contractual conditions, but permitted by the supervisory authorities.

However, the banks' links with mutual fund management companies in Italy are nothing new, indeed we could almost say that they are the practice. With all the consequences of the case. The latest Financial Stability Report, released this week by the Bank of Italy, certified that at the end of 2024 around 60% of Italian fund assets were in the hands of management companies controlled by banking or insurance groups. A percentage that has risen further in recent weeks with Banco Bpm's successful takeover bid for Anima Holding shares, which 'was' the largest independent investment house in the Italian asset management sector that also ended up under the wing of a banking group.

There is really no intention to cut the umbilical cord. The link that unites managers to the mother-bank is therefore tending to strengthen, although according to the operators themselves it represents the true original sin of Italian asset management.

In the competitive arena of asset management, banks are increasingly focused on packaging and placing house investment products to their clients, which provide greater benefits to their balance sheets. In Italy in particular, asset managers manage to turn over to placement agents an average of over 70 per cent of the management commissions collected from mutual fund subscribers, with peaks of 91 per cent. This average figure has remained more or less stable over the years, testifying even more to the subordination of management companies to the banking world. In the special ranking of the management companies that are the most generous with placers, the captive asset management companies (controlled by banks) stand out at the top, as they retrocede significantly higher commissions than the small and increasingly rare independent entities. With such high levels of retrocessions, one has to wonder how many resources remain in the management companies' coffers for product innovation and enhancing the quality of management activity. And in an increasingly competitive international environment, also helped by the emergence of the more efficient ETFs, Italian managers have much to worry about.