BNY Mellon IM's Asia retail appetite doubted

BNY Mellon Investment Management is believed to be considering the future of its retail business in Asia after seeing departures from its mutual funds operation and carrying out a restructuring.

Sources have told AsianInvestor the firm is looking to exit retail distribution in the region. Currently the firm manages $102 billion in Asia, of which two-thirds comes from institutional business.

Certainly the landscape has changed dramatically since Alan Harden, BNY Mellon IM's Asia-Pacific chief executive, set out plans in early 2012 to build local distribution and manufacturing teams in Asia. The costs of running local investment operations have risen sharply amid growing regulatory pressure to set up onshore.

This July, Stuart Guinness left his role at the firm as managing director and product director for mutual funds. That was followed in September by product manager Dickson Mak moving to join Old Mutual Global Investors as a senior product and strategy manager. AsianInvestor could not ascertain Guinness's next move, while Mak had been working on a temporary contract. 

Both had been with BNY Mellon IM in Hong Kong for about a year and neither is due to be replaced, sources said. The firm declined to comment.

BNY Mellon IM's sales team also saw turnover as well as a restructuring earlier this year. Navin Suri, Asia head of intermediary distribution, and his number two, Eric Fu, left earlier in March. Fu moved to become Asia chief executive at HSBC Broking Services, while AsianInvestor could not determine Suri's next destination.

BNY Mellon IM's intermediary business has since been folded into the remit of Mark Speciale, its Asia-Pacific head of institutional and retail business, as part of a restructuring. Richard Collis, managing director for insurance and pensions who took on Suri's former role, still covers retail distribution relationships, said a BNY Mellon spokeswoman.

Nonetheless, there appears to be uncertainty about BNY Mellon IM's retail distribution set-up in Asia. Speciale acknowledged that Asia is seeing dramatic growth in retail and private banking businesses. “But you can’t be everything to everyone unless you have bottomless resources,” he noted.

Speciale suggested that whether BNY Mellon IM continues to run a retail business in the region would depend on the business plan the firm decides to put in place.

But he did point to difficulties that asset managers face in servicing retail and private banking segments in Asia, and said these were a driver of BNY Mellon IM's recent restructuring.

“We want to have a consolidated approach to our distribution in the region because there are so many overlaps that occur," he told AsianInvestor. "It’s hard really to define where private banks fit or smaller institutions or pension funds. The level of sophistication is so high."

Pulling those segments together under one team should make it easier to decide how to allocate resources to each channel, Speciale argued.

It has become more difficult to penetrate retail markets in Asia, as regulators are seen to be tightening restrictions on offshore funds and looking to boost their domestic fund industries. China and Taiwan are two examples.

Asia's three planned fund passporting schemes – Asean, mutual recognition and Asia Region Fund Passport – are designed to encourage the build-up of domestic asset management markets. Clearly it is taking longer for offshore products to be approved in several Asian markets than it used to.

While BNY Mellon IM has the licence it needs to run locally domiciled funds in Singapore, sources suggest it does not have the staff to run an investment operation there. They applied this rationale to several local markets, in fact, and questioned whether BNY Mellon IM has the appetite for this.

At the same time there are a number of fund houses seeking to strengthen their retail and wealth management focus by putting more sales and investment management coverage in place. BlackRock, Goldman Sachs Asset Management, JP Morgan Asset Management and Neuberger Berman are among those to have made recent moves.