According to a familiar source, Amundi (AMUN.PA) is thinking of providing UniCredit (CRDI.MI) with better terms so that it can extend a distribution agreement linking the French asset manager to the Italian bank and its largest overseas market. By extending the contract, the biggest fund manager in Europe would maintain its position in a market that supplies almost half of its assets under management (AUM) outside of France.
Concerns about the potential loss of Amundi’s contract with its primary distributor in Italy, where its AUM is 10% of its total at 197 billion euros ($215 billion), have been raised by analysts.
According to multiple sources who have previously stated as much, the two partners’ relationship has deteriorated since Andrea Orcel made unsuccessful attempts to renegotiate the terms of the agreement after becoming UniCredit CEO in 2021. When Amundi paid 3.6 billion euros to acquire Pioneer Investments from UniCredit in 2017, the two parties agreed to a 10-year distribution agreement.
To make matters more complicated, Credit Agricole, the primary shareholder of Amundi, emerged as the single biggest investor in Banco BPM (BAMI.MI), an Italian mid-sized bank, for which UniCredit was briefly considering making a takeover offer.
It was no secret that UniCredit was looking at ways “to optimize” the agreement with Amundi, as Credit Agricole CEO Philippe Brassac told reporters this month. “With partners, things are always difficult because there are always demands, but it’s a partnership that works well and in which we will find an equilibrium … which suits both sides,” Brassac, who also chairs Amundi, said.
According to sources, Orcel is not happy with the amount of Amundi funds that UniCredit is required to place with customers under the agreement. According to two sources, Amundi must make up 80% of UniCredit’s overall AUM in Italy. However, the contract’s penalties for falling short of that percentage only get harsher below a lower 65-70% threshold.
Orcel established an internal team that repackages money provided by international players under the bank’s own ‘onemarkets’ label in order to increase UniCredit’s fee income. Azimut (AZMT.MI), an Italian asset manager, is currently constructing an Irish company that will generate and market funds to UniCredit customers, with the ultimate goal of merging with the bank.
As of September 30, UniCredit’s AUM from fund and portfolio management stood at 134 billion euros. Orcel has not ruled out terminating the agreement with Amundi, but he is pleased to have a partner that is ranked in the top 10 asset managers worldwide and offers strong support to the bank’s sales network.
As per the source, “Orcel would like to agree on improved terms in the course of 2024 if the contract is to be extended.” UniCredit would still need time to replace Amundi funds with other products if their relationship ended after 2027. In an effort to increase the fees UniCredit receives from the sale of funds to customers by making room for more lucrative offerings, Orcel announced last month that it was “rebalancing” its partnership with Amundi to some extent and would keep doing so.
In Italy, where distribution is crucial to the fund business, banks keep at least 60% of the fees; this amount rises to over 80% in cases where the lender also owns the asset manager or long-term agreements are in place.
- Published By Team Genuine Reporter