A significant part of the reconstitution of the Nedcor Group - in association with its parent, Old Mutual - will affect the investment services offered by its previously disparate components.
In announcing details of the reconstitution of Nedcor and and how the company will shake up the market with its owner, Old Mutual, Nedcor says that existing products will disappear or be merged or offered under new names.
Currently, 27 companies in the greater Nedcor group (including the BoE stable) are involved in wealth management both here and offshore.
The most high profile of the changes will occur in the area of unit trusts, where 52 funds are currently available, many of which offer the same investment profile. Within the Nedcor arena there are currently four unit trust management companies, excluding Community Growth, which is a Nedcor joint venture with an outside consortium.
These four are: BoE Unit Trust Management Company; Franklin Templeton NIB Investments Management Company; Nedcor Bank Management Company; and NIBi Multi-Manager Management Company. All are now 100 percent owned by Nedcor and will be operated out of the Wealth Management Division, which is a Nedcor/Old Mutual joint venture company.
However, United States-based asset manager Franklin Templeton has been bought out of the former arrangement with Nedcor Investment Bank.
"We recognise that there is an opportunity to create one business and possibly reduce the number of unit trust funds offered by the four management companies," Paul Hutchinson, of Nedcor, says.
This, however, is not likely to happen overnight and will require approval from the Financial Services Board. Unitholders will have to be given the opportunity to vote in favour of or against any management company and/or fund amalgamations.
Nedcor has been through a fund merger exercise before, with the merger of UAL and Syfrets and its conversion to Nedcor Investment Bank (NIB).
Old Mutual unit trusts will remain unaffected.
Tom Boardman, the head of BoE Wealth, says Nedcor and Old Mutual will work together where it makes sense.
Asset management will be divided between BoE Wealth (the Nedcor/Old Mutual joint venture), which will take over all the unit trust funds, except the BoE-labelled funds. The BoE funds will be managed by BoE Asset Management, which is now controlled by an empowerment group, Aka.
Old Mutual will also have a stake in BoE Asset management.
Specialist investments services, such as alternative investments, multi-management and linked product services, will be provided by different divisions of the Nedcor Group and Old Mutual.
For example, linked product company BoE Investment Administrators has been sold to Old Mutual. It will be aligned with Old Mutual's Fairbairn Capital, which includes its linked product offerings of Galaxy and Investment Frontiers. Fairbairn Capital says that for the foreseeable future it will continue to operate BoE Investment Administrators as a stand-alone, independent entity within Fairbairn Capital.
Both Edge Multi-Management and NIBi (the local multi-manager component) are now fully owned by Old Mutual and they will be incorporated into Old Mutual's multi-manager, Symmetry.
In a further enhancement of the Nedcor Old Mutual bancassurance model, BoE Life Assurance will be incorporated into a 50/50 joint venture between Nedcor and Old Mutual. The focus will be on providing credit protection products, such as life assurance against homeloan debt, and other niche investment products.
Trusts and fiduciary services will also fall into the Nedcor/Old Mutual private wealth joint venture with the intention of bringing together the trust and fiduciary services part of BoE Private Bank, Syfrets Trust and Old Mutual. They will, however, continue to operate their respective brands for existing clients because of legal requirements.
The Nedcor/Old Mutual alliance will also provide offshore investment products and other services, such as the administration of trusts and banking.
General financial services are to be supplied to all clients in the Nedcor stable as follows:
Four current unit trust management companies - BoE Unit Trust Management Company, Franklin Templeton NIB Investments Management Company, Nedcor Bank Management Company and NIBi Multi-Manager Management Company - will be operated out of the Wealth Management Division under one business head. Plans are underway to reduce the current number of 51 funds. Community Growth Management Company will continue to operate independently and will retain its separate identity because it has an outside shareholder.
Products such as guaranteed equity schemes, inflation-linked funds and structured investments will be provided by divisions within the Nedcor Group.
These will fall under single administrator, Old Mutual's Fairbairn Capital. This will include Old Mutual's Galaxy and Investment Frontiers and BoE Investment Managers, which has been sold to Old Mutual.
Both Edge Multi-Management and NIBi (the South African component) have been sold to Old Mutual SA. They will be incorporated into Old Mutual's multi-manager, Symmetry.
BoE Life Assurance will be incorporated into a 50/50 joint venture between Nedcor and Old Mutual. The focus will be on providing credit protection products and other niche investment products.
Life legal umbrellas for investment products: Nedcor Group through the companies BoE Life Limited and NIB Life Limited.
Trusts and fiduciary services are part of the private wealth joint venture (50/50 Nedcor/Old Mutual). There's a possibility of the trust and fiduciary services part of BoE Private Bank, Syfrets Trust and Old Mutual being brought together, but the respective brands will continue to operate for existing clients as in many instances there are corporate trustees.
To be provided by Nedbank and Mutual & Federal.