Speculation that BT Funds Management may be sold off by its new owner Deutsche Bank has been scotched.
Deutsche Bank has announced that once its acquisition of Bankers Trust is complete the BT funds management business will be run as a separate investment management business, offering an active fund management capability, working alongside other members of the Deutsche group.
There has been much speculation leading up to this announcement as both BT and Deutsche's funds management arm Morgan Grenfell command significant positions in the Australian market.
The three basic options available to Deutsche, with regards to BT Funds Management, included an out right sale, merging the business into Morgan Grenfell or keeping it as a stand-alone operation
IPAC Securities general manager David van Schaardenburg says there are three significant problems to this decision.
BT and Morgan Grenfell have very distinct cultures, with the former having a more aggressive style that may not sit comfortably with its new owners.
Secondly there are a number of regulations which need to be satisfied so both businesses can be managed separately under the same ownership.
"It is not a simple task to meet these regulations," van Schaardenburg says.
The decision to keep the two operations separate also denies Deutsche the opportunity to extract cost savings through staff layoffs.
The decision does mean that there is more certainty for BT unitholders, compared to what would happen if BT was sold.
Deutsche says the decision means that it can capitalise on the strong BT brand.
Elizabeth Bryan, the chief executive of Morgan Grenfell, says brands are becoming important in the funds management business.
"The recognised strengths of BT Funds Management's business, brand name and distinctive investment style will complement the existing capabilities of Deutsche Bank's Asset Management Division, further enhancing our ability to capitalise on our strong distribution capabilities."
Keeping the two brands also provides some protection during the inevitable periods when one of those fund managers was underperforming the market.
A major benefit of this decision is that the companies will be able to pool their technology.
Speculation that BT Funds Management may be sold off by its new owner Deutsche Bank has been scotched.