EMU implementation will pose many challenges for multinationals, but it will also give them some unique opportunities - so it is time to start considering the practical aspects. What are they? Emu will have some far-reaching strategic asset allocation implications, with risk/return objectives needing to be amended and where new European asset classes will emerge for bonds and equities, split between EMU and non-EMU countries.

So let's assume that one such asset class is European EMU bonds (versus today's local bonds). In many European countries legislation dictates the minimum investment percentage required in bonds, thus reinforcing the dominance of local bond assets. So the obvious question arises Does the local bond manager have the resources, skills, process, research etc. to move from managing locally to managing a (possible) 11- country European EMU bond portfolio?" It's a different beast; requires a different focus; needs different skills and, in my experience, is entirely the preserve of the local manager. The answer to my mind is very questionable!

But now comes the sting for the fund manager but also the opportunity for the multinational. In many multinationals there is a push to focus the management of world-wide assets with a small group of managers who have been carefully screened and selected. Suddenly an opportunity has opened up for the multinational to crack the strategy by replacing the multitude of local managers with a select core of EMU managers for use by its country funds, thus accelerating and benefiting from this strategic consolidation.

We also hear a lot about the frustrations of US managers. But things are changing. European institutions, by moving more into equities, are therefore beginning to appreciate the benefits of greater specialisation, plus the skills and disciplines, of the US manager when compared with many local European managers. EMU could give US managers a significant push forward.

The message is clear. Opportunity beckons for multinationals, where I know some of my erstwhile colleagues are starting to prepare and mull over such questions.

Nevill Brooke acts as an independent adviser to international pension schemes"

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