Personal finance: Everyone is waiting to see who the next victim of globalisation will be

There was an inevitability about the bid for Mercury Asset Management that should, with the benefit of hindsight, have seen arbitrageurs building their stakes in the company. Just a few days earlier the noble Liechtenstein owners of LGT put the fund manager up for sale.

At pounds 40bn of funds under management, this previously British company is less than half MAM's size, but no small player either. Yet the reason for the sale was given as the globalisation of the fund management industry. It seems in the view of the owners, LGT was too small to survive by itself.

In a comparatively short space of time a large number of seemingly impregnable British financial institutions have fallen to foreign predators - all in the cause of globalisation.

Warburgs is now part of Swiss Bank Corporation, Kleinworts of Dresdner Bank. Morgan Grenfell fell to Deutsche Bank some years back, but perhaps that just shows the prescience of Germany's leading bank.

The deals have come thick and fast recently. The acquisition of BA Financial Services, which includes such household names as Allied Dunbar and Eagle Star in the UK, by Swiss insurance giant Zurich, has also created a major multinational fund management force.

It seems these days that big really is beautiful.

Naturally enough, speculation is now rife on who will be the next to fall. The trouble is that most of the players in the UK are simply not big enough to interest the likes of the major US houses. The MAM deal puts Merrill firmly in the No 2 position in the world, behind Fidelity of America.

Consolidation in the US has been taking place already and some domestic companies, such as Invesco, the fund management group that has its origins in the old Slater Walker investment banking business, have turned their attentions to the other side of the Atlantic as the only way of achieving the size that many perceive now to be necessary to win the major institutional mandates that are so highly sought after.

The investment clout that these institutional funds provide can allow the development of retail products, which both adds to and benefits from the public perception of the fund management operation. And it does no harm to have your most senior fired manager dubbed the most powerful woman in Britain either.

In practice it is very difficult to spot the next takeover victim. Few would have expected MAM to be a willing target - but this is an agreed bid from America's most powerful brokerage house.

Fund management is, after all, a people business. The assets Merrill Lynch are buying are principally individuals, people well skilled in winning and retaining investment portfolios.

Make a mess of managing a business like that and your expensively acquired assets walk out the door. There are always many willing to recruit, not least being Nicola Horlick, who was herself once at Mercury.

If investment attention is firmly focused on domestic players in investment management, it can only be because the Far East is being studiously ignored by managers in London at present.

If it had not been for the US brokers' largesse in London, I would have been writing about Japan.

The market there has been plunging up and down in a fashion that should be a comedy writer's delight. First economic measures are badly received, then a bank goes bust - and shares rise.

Then worries filter through that the authorities might just bail out the beleaguered financial sector - leading to a sharp downward correction. And, of course, in the end buyers start bargain hunting - up we go again.

Except, of course, it is not really the end. What the final act will usher in for the market that was once bigger even than Wall Street is hard to gauge.

Most foreign investors are sitting on the sidelines, either having withdrawn from an investment area where damage has been meted out on both the currency and share front, or wishing fervently that they had the foresightedness to have withdrawn, as Templeton did back in the late 1980s.

Deregulation looks more of a reality now, but the financial sector, and the economy for that matter, is in a mess.

Just over the sea, another major local economy is also suffering from the aftershocks that have travelled around the region.

Korea is fortunately trying to tough it out. Quite whether the IMF would be able to bail out an economy that is comprehensively bigger than most of the other so-called Tigers in the region put together is a moot point.

In the meantime it looks a "won-way" ticket to nowhere.

Brian Tora is chairman of the Investment Strategy Committee of stockbrokers Greig Middleton.

Have you tried new the Independent Digital Edition apps?
ebooks
ebookA delicious collection of 50 meaty main courses
Life and Style
ebookNow available in paperback
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Ashdown Group: Data Scientist - London - £50,000 + bonus

    £35000 - £50000 per annum + generous bonus: Ashdown Group: Business Analytics ...

    Ashdown Group: IT Project Coordinator (Software Development) - Kingston

    £45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power