Munich, a city of many parts, is savouring a new role – that of being a financial centre. “Munich is more on the map,” declares Hans-Peter Strubreiter, managing director of Bayern-Invest, the KAG of the Bayerische Landesbank. “Corporates doing their roadshows increasingly come to Munich. Before they were focused on Frankfurt, but now they visit us here, since there are more fund managers here.”
Klaus Esswein, managing director of State Street Global Advisors, a long-term Munich resident, agrees: “Munich is growing and becoming more important as an asset management centre, but Frankfurt is without doubt the financial centre.”
He reckons that the real development in Munich probably came about when the two insurance mega groups with their head offices structure restructure themselves and as a consequence the German insurance market as well.
Germany largest insurer, the Allianz, is forging an investment operation with E650bn under management after its acquisition of US group PIMCO. Munich Re formed the Ergo group by combining a number of major insurance groups and on the asset management side forming the the new MEAG.
Dieter Wolf is managing director of the MEAG KAG, which has around E30bn under management through a range of Spezialfonds. Woolf’s eyes are focused on developing the third-party institutional business. He expects MEAG to win an increasing share of institutional business in Germany, particularly from pension funds and corporate clients. “We will see the development of more pensions trusts and support funds.”
Part of the restructuring at Allianz meant relocating the group’s KAG from Stuggart to Munich as apart of the drive to put together a fighting fit investment machine operating across different markets including the institutional, and with its eyes on rolling products into Europe.
Bastian Schmedding, with responsibilities on the institutional marketing side at Allianz sees the coming pensions business as the prize for insurance groups such as theirs, able to use their strengths in managing the liabilities as well as the asset side.
At Bayern-Invest the emphasis is on pensions business, which at the moment only forms a small part of the business mix for assets under management. The KAG handles 145 Spezialfonds, with E15bn is assets. As part of the local savings bank and with a big Bavarian client base, however the investment approach has been conservative with 63% of assets in euro-denominated bonds and around 33% in equities, though this split is changing fast in favour of equities, says Strubreiter. For the group, the arrival of tax advantaged products products could means a drive into AS type and other retirement products.
The emergence of the Hypovereins Bank as a major force filling the number two slot in German banking, with total assets of E500bn and with E122bn within the asset management operation. From Munich institutional clients are looked after by allfonds-BKG, a KAG formed by merging those of the groups and which has E55bn in assets.
Head of institutional marketing Andreas Povell at all-Fonds points out that some 95% of the assets are managed through Spezialfonds. “We are very much an asset manager for insurance companies and pension funds,” he says. The aim is to build up a research led investment operation in Munich.
But another entrant to the financial scene is Siemens Financial Services, which runs asset management as well as other services for the group, and in Munich, where the Simens KAG (SKAG) is operates. About E12bn in pension assets are managed there.
Woolf at MEAG points to the pressures that this increasing demand for investment skills is bringing. “There are severe problems with investment management salaries in Germany, which are now very high.”
Bayern-Invest’s agrees with the difficulties in finding specialist staff in the overheated market. “Munich is a city where we need more infrastructure to develop asset management, but we see this growing and developing in the next few years. The roots have been established, though of course we will never overtake Frankfurt,” says Strubreiter.
SSGA’s Esswein sees no problems in working from Munich. “Frankfurt’s geographic positioning nearer the centre of the country, means Munich is on a bit of a limb, though it is good for visiting Austria.” The growth of smaller asset management firms is also a sign of Munich’s maturity. To prove the point, recently leading US mutual fund group Janus announced its intention to operate in Germany with a base in the city.