Star falls but doesn't wane
Research house Morningstar has, as expected, downgraded BT Funds Management's star rating from a five to a four while future ownership of the organisation is sorted out.
Tuesday, April 6th 1999, 12:00AM
Research house Morningstar has, as expected, downgraded BT Funds Management's star rating from a five to a four while future ownership of the organisation is sorted out.The downgrade is primarily related to a partial reassessment of BT's corporate strength and investment management ratings.
Morningstar, while reasonably confident the sale won't lead to wholesale changes, notes that "long-term strategic planning must be in abeyance pending a decision on the new ownership."
Meanwhile, Jarden Morgan Investment Services, which advises Colonial on the funds in the Navigator master fund, has recommended that BT stays in the selected menu subject to a further review closer to the sale.
Jarden Morgan says any change to BT's successful active management style could well jeopardise retention of existing business.
BT has recognised the importance of retaining key personnel and moved quickly to put in place both long term and short strategies for staff retention based on guaranteed bonus pools and specific retention packages.
For the period leading up the sale nearly all the staff have remuneration entitlements which include a pro-rated bonus payable to those staff employed at the date of closure of the transaction. In addition, all staff of vice president or above have equity entitlements in Bankers Trust Company which vest on the completion of the Deutsche transaction.
There is also a post sale strategy which includes guaranteed bonus pools and key staff retention packages. Retention strategies have also been established for a number of key executive and funds management staff.
The effect of this is that BT does not expect abnormal staff turnover, and to date this has been the experience.
Jarden Morgan says, on balance, it does not believe any buyer of BT would significantly alter the currently successful formula for funds management.
An information memorandum for the sale of the business is due to be released this week. The Australian Financial Review says in that document there will be a clause which prevents potential bidders from employing BT staff for a year after the sale.
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