When Yves Perrier (pictured right) took over the tiller of Crédit Agricole Asset Management (CAAM) last September, his immediate objective was to ensure that the company had not sprung any serious leaks in the financial storm that had broken the month before.
“My first objective was to ensure that everything was OK in the context of the financial crisis,” he recalls. “And I can say that CAAM was one of the asset management companies that went through this crisis without any problems, especially problems of liquidity. CAAM had no sub-prime exposure in its funds.”
As a precaution, Perrier has tightened procedures. “For example,” he says, “each investment strategy is now reviewed once a year by a special committee to ensure that what we are selling to our clients is compliant with our philosophy, and that the execution of this investment strategy is compliant with what has been decided.”
During the first quarter of this year, assets under management fell by 12% in Spain, 8% in Italy and 6% in France. But over the period CAAM was down significantly less than the market.
Perrier says investors have, understandably, become more risk-averse. “In this situation, it’s quite natural that investors should switch from equity absolute return to no-risk money funds. As a result, we experienced a shift of assets. There was a very strong increase in monetary funds, due to the fact that performance was good, and that clients were looking for security. Crédit Agricole, plus the quality of its funds, is viewed clearly as a safe haven.
“On the downside, we experienced a decrease in equity and the absolute return products.
“Yet we have increased our market share in assets managed in open funds distributed in France from 18% to 19%, and we have maintained our position of leader on the same criteria in Europe with market share of 4.1%.”
The tough climate has not deterred CAAM from expansion, he says. “It’s in difficult times that we have to take the offensive.”
Perrier’s second objective after taking the top job at CAAM was to review the strategy and to develop an action plan for the next two years. The main plank of this action plan is to re-shape and grow CAAM’s client base. Currently, two-thirds of the company’s assets under management belong to clients in the domestic market and one-third to international clients. There is a similar division of business between retail and institutional investors.
“Our aim is to increase the proportion of institutional investors and distributors, and to increase the proportion of international clients,” says Perrier. “The plan is to have 50% of clients through the retail network and 50% institutional clients and distributors. Of the institutional client and distributors, we plan to have 50% in France and 50% internationally. ”
Winning institutional business means maintaining CAAM’s positioning as a multi-expertise asset manager, he says. “For institutional investors there are three important parameters. The first is performance, the second is performance and the third is performance.
“We have developed a multi-boutique, multi-expertise organisation to achieve this performance. The idea behind multi-expertise is that some expertises will be successful and will be promoted by the organisation. Others won’t be successful and their funds will be closed.
The current environment justifies the multi-boutique approach, he says. “There is no class of assets with a definite superiority to other classes of assets, nor is there a style of management with a definite superiority to other styles.
“We have aligned the parameters of management to performance. The manager’s remuneration is linked very significantly to performance. We changed the level of commissions in order to reduce fixed fees and to increase the proportion that is linked to outperformance.”
Potential new institutional clients will include sovereign wealth funds, Perrier says. “We have built a global team to cover sovereign funds and to increase our position.”
European pensions are another potential market. “We intend to build a special company - Credit Agricole Pension Funds - using the expertise of the insurance and asset management teams in order to create global solutions,” he says.
“We are convinced that the winners of the competition for pension fund business will be those that can provide a pension fund with a global solution. We have the ability within the group to provide the breadth of expertise needed, because we are a banker, an asset manager and an insurer.”
Perrier’s strategy is to expand CAAM’s business along four axes - improving the products, reinforcing the commercial teams, building further joint ventures and reducing costs by increasing productivity.
CAAM plans to improve products across the asset classes. “We will, of course, reinforce our strong position in fixed income. We will reinforce our position in structured products and guaranteed funds, where we are number one in France, with a 30% market share.
“We have begun to sell these products outside France - in Japan, for example, where we have a distribution agreement with a Japanese bank - in Italy and more recently in Finland.
“We will also continue to expand our business in alternative asset management, where we have €25bn assets managed by a team based in Chicago. We think that these products, distributed through our international network, can be a blockbuster.”
The asset class which needs most reinforcement, however, is equities, he says. “When people think of CAAM, they generally think of an expertise in fixed income rather than equities, so we know we have work to do in this area.
“Yet our ambition is not to be a global competitor. We want to be successful in some areas of expertise.” CAAM funds have already focused on areas within equities such as volatility and emerging markets, with considerable success.
The aim of these funds is to attract institutional investors, reiterates Perrier. “Currently, most of our equities funds are distributed through the retail network. Our objective is to increase our position with institutional investors.”
The second axis of CAAM’s strategy is selling its products more effectively. The firm has operations in 22 countries. Of these, 17 are solely commercial operations which distribute the products of its five investment management platforms in Paris, London, Milan, Hong Kong and Singapore.
“We have embarked on a programme to recruit 200 sales people over the next two years to reinforce these commercial teams,” says Perrier. “We will do this country by country. Obviously, we will push more in those countries where the potential is highest.
“In the Middle East the amount of money available is huge. In China, the amount of savings is growing ever larger.
Perrier does not rule out expansion in Europe. “Even in countries like Italy, Spain and Germany there is room for companies like CAAM to gain market share,” he says.
Selling CAAM products internationally means teaming up with local players, and the third axis of Perrier’s strategy is to develop further joint ventures with banks and other distributors. The firm already has some ambitious joint ventures in place. In 2003 it joined with Korea’s National Agricultural Cooperative Federation to create Nonghyup CA Asset Management. In 2006, CAAM formed a joint venture in Beijing with the Agricultural Bank of China.
The fourth and, Perrier believes, most important axis of CAAM’s strategy is cost reduction. “We have been living through a period where AUM revenues have increased 15% a year, so costs could increase 15%. Now the market has changed completely, and we must reduce costs if we are to remain efficient.
“My philosophy of management is to combine innovation, entrepreneurial spirit and an organisation with the industrialisation of process, to minimise the operational risk and to lower the cost.”
Yves Perrier joined Crédit Lyonnais in 1999 at the time of its privatisation. He oversaw the financial operation that led to the merger with Crédit Agricole in 2002. In 2004 he was appointed chief executive of Calyon in charge of structured finance, brokerage, risk and support functions. and in 2007 became chairman and CEO of Crédit Agricole Asset Management (CAAM) and CAAM Group.
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