Natixis and La Banque Postale completed the combination of the fixed-income and insurance-related asset management businesses of Ostrum Asset Management and La Banque Postale Asset Management on October 31, 2020. Ostrum Asset Management, an asset management affiliate of Natixis Investment Managers, now ranks in the top ten asset managers supporting large institutional clients in Europe(1) with than €430 billion(2) in assets under management and over €590 billion(2) under administration through its services platform as at end-September 2020. Interview with Philippe Setbon, Chief Executive Officer at Ostrum Asset Management.
Chief Executive Officer of Ostrum Asset Management and member of the executive committee of Natixis.
Ostrum Asset Management is welcoming La Banque Postale Asset Management's fixed-income and insurance-related asset management activities and teams, and enhancing its value proposition for institutional clients. Can you tell us more about the creation of the newly combined company?
The two companies already boasted strong expertise on fixed-income and insurance-related asset management activities, so by joining forces we can now offer an even more relevant approach. On November 2, 106(3) new staff joined Ostrum AM, bringing a range of talent and new skills to further enhance our investment management, research, development, and middle and back office teams. This business combination makes a great deal of sense when we consider fundamental trends across the European asset management market, with structurally low interest rates – and the health crisis has further amplified this impact – pressure on management fees, along with the hefty investment required to stay competitive and address increasingly stringent regulation. Our clients are also faced with this same environment we have to tackle – both asset managers and institutional investors – so our goal is to offer them the best response to these major challenges.
We have a fairly unique positioning, as our growth strategy draws on two aspects i.e. asset management on the one hand of course, and an extensive investment services range on the other. On the asset management side, we offer our clients the expertise of more than 80 portfolio managers and 35 analysts(3), including a devoted ESG research and strategy team. With highly renowned knowhow on the market, our track record on both insurance-related and fixed-income asset management stretches back more than 35 years(4). We also offer an extensive and modular services range, including post-trade activities such as operations, risk management, compliance as well as reporting. Our platform works on an open architecture model, so our clients can combine a number of service components to provide a customized response to meet their own requirements and fit with their operational models.
We are now in a position to draw on scale effects as a result of our size, thereby freeing up resources to innovate and better support our clients as we help them address their challenges, while also offering competitive pricing. If we look at our assets, Ostrum AM manages €430 billion(2) for our large institutional clients, including more than €300 billion(2) in insurance-related assets, while we have €590 billion2 under administration on our services platform. We also offer this activity for third-party clients – whether asset managers or large institutional clients – and this accounts for more than 20% of our revenues currently. Once again we take a unique approach as we work for some clients while only managing part of their assets, or none: these clients must adapt their investment ecosystem for the reasons we mention above, while they also want to feel at home when they use our services.
So we will draw on these two growth sources – asset management and services – to further develop our business going forward and rank among the leading asset managers in Europe supporting institutional, liability-driven investors i.e. insurers, pension funds, large corporates, etc.
This combination is also an opportunity to unveil your new identity, can you tell us what this symbolizes for you?
To embody our new strategy and support our company's growth ambitions, we have evolved our positioning and identity while retaining our brand name. The dot as the focal point in our logo and the human-oriented choice of colors reflect Ostrum AM's strategy to make its organization both client-centric and staff-focused. Our new tagline "Enhancing your power to act" refers to Ostrum AM's ultimate mission: to support its clients in delivering on their commitments to their own clients and in underpinning the long-term goals, health and retirement of European citizens. Our new identity truly reflects the social utility of what we do.
Can you tell us about your responsible investment pledges?
We have ambitious SRI (socially responsible investment) goals and very clearly set targets for the years ahead. We already manage more than €8bn in green bond assets with a devoted analysis set-up for this segment, and we now also boast a larger research team as well as a cross-sector team of ESG strategists. Meanwhile, we also bolster our engagement policy through consistent and constructive dialogue with issuers and we will strengthen our climate goals via our more stringent coal policy. We also aim to take this strategy considerably further and in 2021, 100% of our assets will be screened for ESG criteria, while by 2022, 98% of AuM in our open-ended funds will carry SRI labels(5).
(1) IPE Top 500 Asset Managers 2020 ranked Ostrum AM as the 77th largest asset manager, as at 12/31/2019. Any references to a ranking are not a reliable indicator of the asset management company's future results.
(2) Source: Ostrum Asset Management, consolidated data at end-September 2020. Assets under administration include Ostrum AM's assets under management. Services for a given client may only include certain aspects.
(3) Source: Ostrum Asset Management, data at 11/02/2020.
(4) Via the capital transactions that led to the creation of Ostrum on October 1, 2018.
(5) The SRI label is a tool for choosing responsible and sustainable investments. It was created and supported by the French Ministry of Finance, and is designed to increase the visibility of socially responsible investment products (SRI) among savers in France and Europe. For more details, visit https://www.lelabelisr.fr/en/