Suncorp pulls $7.7b from Nikko

By Greg Bright

Pat Farrell, the newish CIO of Suncorp, has delivered on the well-telegraphed change of outsource arrangements for its $15.5 billion of discretionary funds under management.

The bank will this week transition most of its $9 billion managed by Nikko Asset Management in Australia to several other managers.

The $7.7 billion on the move, which is in cash and fixed interest, is to be transitioned mostly to PIMCO, BlackRock and QIC, plus a handful of others. There are also some Australian equities – about $200 million – and about $300 million in global equities still under management with Nikko following the expiry of an initial three-year deal that followed the Japanese company’s takeover of Tyndall in 2010. Tyndall was a Suncorp subsidiary.

For Nikko in Australia and its clients, the move confirmed last week is probably a good thing. It takes away the uncertainty about when its biggest client would move to a multi-manager strategy and it will allow for a new focus on Nikko’s value-add capabilities.

These include a best-in-class Asian equities capability, as you would expect, a large global multi-asset capability and a solid pure-value Australian equities capability, as well as the London-based global fixed income capability.

Management of the Australian-sourced fixed income, which used to be run by the highly rated Roger Bridges, who retired earlier this year, is being transferred to the Nikko London office, to be run by Andre Severino, the head of fixed income for Europe and the US. There will be a team of 13 in both Sydney and London managing the global fixed income assets. Three people so far have lost their jobs as a result. More will follow.

Sam Hallinan, Nikko’s head of Australia, said on Friday that the manager had been on a journey with Suncorp for a while as it transitioned to a multi-manager model. He said that the restructure, announced last week, gave Nikko a single “centre of excellence” in fixed income and allowed it to have a “globally connected hub”.

As part of the restructure, James Alexander, the head of Australian fixed income, will transfer to Singapore to join the multi-asset team, run by Al Clark, another Australian.

Hallinan declined to be drawn on other probable redundancies other than to say that when a manager lost a client as large and as complex as Suncorp there was obviously a need to reorganise its business.

Suncorp had been moving toward a multi-manager model prior to the retirement of the previous CIO, Nick Basile, mid-way through last year. Basile built the infrastructure to administer the multi-manager investment process and was replaced by Pat Farrell, who was previously the CIO at BT Financial Group, where he ran the Advance and BT multi-manager platforms totalling about $30 billion.

Farrell, in turn, was replaced at BTFG by the now-disgraced Martyn Wild. Corrin Collocott, the respected head of diversified portfolio management, is acting CIO while BTFG conducts a formal search for a full-time replacement CIO.

Meanwhile, Morningstar said about BTFG on Friday: “This latest episode means stability continues to be challenged at the firm. For this reason, we are placing this strategy ‘Under Review’ and will seek to gain more information about its prospects in the coming period.”