ING to double mutual funds business via TMB
The new distribution channel, set to open in June, is expected to double ING FundÆs mutual funds business in Thailand to Bt80 billion ($2.52 billion).
ING Funds (Thailand), a member of the ING Group, is scheduled to distribute its funds through the TMB Bank network of 472 branches starting June, in a move that is expected to double the firmÆs mutual funds business by year-end.
ING Funds managing director, Maris Tarab, says tapping into TMBÆs nationwide branch network presents a huge opportunity for the firm. He expects ING FundÆs mutual funds business to grow to Bt80 billion ($2.52 billion) in assets by year-end from the current Bt40 billion ($1.26 billion), mainly due to this new distribution channel that will reach a wider retail market.
Last year, ING Group bought a 30% stake in TMB, previously known as the Thai Military Bank, during a $1.1 billion recapitalisation exercise, ousting DBS Group as the Thai bankÆs strategic partner. Shareholders of TMB are expected to meet on April 25 and ING Group is expected to brief them about its plans for the bank. Analysts expect ING to improve TMBÆs bancassurance and asset management operations, leading to a fee income growth of around 20% for 2008.
The mutual funds business is only one component of ING FundsÆ overall operations in Thailand, where the firm has around Bt192 billion ($6.06 billion) in assets under management in total from mutual, private, property, and provident funds.
Prior to the TMB deal, ING Funds û like other fund management companies that are not part of a local bank û didnÆt have any access to any local network to help it reach the wider retail market. Banks with asset management arms in Thailand tend to follow a closed business architecture whereby they distribute only their own fund products and donÆt leave room for third-party funds.
Up to now, ING Funds has mainly distributed its mutual funds through foreign banking channels, namely Citi, Standard Chartered, HSBC, Deutsche Bank and UOB Bank. ING Funds also has its own sales force that deals with third-parties, but that brings into the company only around 30% of its mutual funds business.
The first set of products to be distributed through the TMB network in June will be simple products, likely one money market fund and some short-term fixed income funds that are already being offered by ING Funds through its existing channels.
ôWe will start with these types of products because they are normally easy to understand for Thai depositors. After that, we will have more sophisticated productsö for distribution, Maris says.
ING Funds has a full range of products, numbering around 90, which include money market, fixed-income, balanced, equities, tax savings, retirement, and offshore products. The firmÆs best selling products are the low-risk products such as the money market or short-term fixed-income funds that have three-, six-, nine- or 12-month maturities with an auto-redemption feature. ING Funds is ranked fifth among fund management companies in Thailand in terms of assets under management.
Maris expects around 70-80% of the new assets from the TMB branch network to come from retail investors in Bangkok, a reflection of the lack of strong demand for funds outside the capital.
ôThailand still has a pretty new fund industry that began in 1995-1996. The knowledge of mutual fund investments is still limited and mainly concentrated in and around Bangkok,ö he says.
To prepare for the use of TMBÆs distribution network, ING Funds began training the bankÆs personnel in terms of the firmÆs products, interaction with customers, and customer support. Training started on April 19 and will be held every weekend until June 12, which is the start-date for the distribution of funds.
ING Funds was established in 1996 as a joint venture company between Siam City Bank and ING Group under the name of Siam City Asset Management. In was renamed to ING Funds in 2000 and became a member of ING Investment Management Global Network.
ING Funds managing director, Maris Tarab, says tapping into TMBÆs nationwide branch network presents a huge opportunity for the firm. He expects ING FundÆs mutual funds business to grow to Bt80 billion ($2.52 billion) in assets by year-end from the current Bt40 billion ($1.26 billion), mainly due to this new distribution channel that will reach a wider retail market.
Last year, ING Group bought a 30% stake in TMB, previously known as the Thai Military Bank, during a $1.1 billion recapitalisation exercise, ousting DBS Group as the Thai bankÆs strategic partner. Shareholders of TMB are expected to meet on April 25 and ING Group is expected to brief them about its plans for the bank. Analysts expect ING to improve TMBÆs bancassurance and asset management operations, leading to a fee income growth of around 20% for 2008.
The mutual funds business is only one component of ING FundsÆ overall operations in Thailand, where the firm has around Bt192 billion ($6.06 billion) in assets under management in total from mutual, private, property, and provident funds.
Prior to the TMB deal, ING Funds û like other fund management companies that are not part of a local bank û didnÆt have any access to any local network to help it reach the wider retail market. Banks with asset management arms in Thailand tend to follow a closed business architecture whereby they distribute only their own fund products and donÆt leave room for third-party funds.
Up to now, ING Funds has mainly distributed its mutual funds through foreign banking channels, namely Citi, Standard Chartered, HSBC, Deutsche Bank and UOB Bank. ING Funds also has its own sales force that deals with third-parties, but that brings into the company only around 30% of its mutual funds business.
The first set of products to be distributed through the TMB network in June will be simple products, likely one money market fund and some short-term fixed income funds that are already being offered by ING Funds through its existing channels.
ôWe will start with these types of products because they are normally easy to understand for Thai depositors. After that, we will have more sophisticated productsö for distribution, Maris says.
ING Funds has a full range of products, numbering around 90, which include money market, fixed-income, balanced, equities, tax savings, retirement, and offshore products. The firmÆs best selling products are the low-risk products such as the money market or short-term fixed-income funds that have three-, six-, nine- or 12-month maturities with an auto-redemption feature. ING Funds is ranked fifth among fund management companies in Thailand in terms of assets under management.
Maris expects around 70-80% of the new assets from the TMB branch network to come from retail investors in Bangkok, a reflection of the lack of strong demand for funds outside the capital.
ôThailand still has a pretty new fund industry that began in 1995-1996. The knowledge of mutual fund investments is still limited and mainly concentrated in and around Bangkok,ö he says.
To prepare for the use of TMBÆs distribution network, ING Funds began training the bankÆs personnel in terms of the firmÆs products, interaction with customers, and customer support. Training started on April 19 and will be held every weekend until June 12, which is the start-date for the distribution of funds.
ING Funds was established in 1996 as a joint venture company between Siam City Bank and ING Group under the name of Siam City Asset Management. In was renamed to ING Funds in 2000 and became a member of ING Investment Management Global Network.
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