Eurizon CEO on MIFID II and the future of asset management in Europe

Asset managers must become better service providers, instead of simply creating investment products, says Tommaso Corcos

Transcript

MiFID II comes into effect in January 2018, and Europe’s asset management industry is preparing to adapt. Tommaso Corcos, CEO of leading Italian asset manager Eurizon, explains how the industry is going to change – and discusses his company’s latest products. Watch the first half of our interview with Tommaso, where he explains how Eurizon engages with its investee companies to improve their ESG standards.

European CEO:  MiFID II comes into effect in January 2018; how is the asset management industry going to change?

Tommaso Corcos: There are certain changes that are definitely important. One is product governance; the second is further transparency; and the third point is the unbundling of research.

Let me say that MiFID II runs the risk to bring an effect on the profitability of asset management. And asset management companies must answer to this challenge, becoming more prone to transform themselves. Not only creating investment solutions; but giving a continuous, better service, to the distributors of their own product.

Another point that certainly is relevant for MiFID II is the fact that the asset management company will be more responsible for the whole life of the product. Also a better connection and stricter connection between producer and distributors. And this is something that the asset management company must exploit to improve the service that they give to the distributors and to the final customers.

European CEO: So how have you been working to prepare for this? To improve your transparency, your communication with your stakeholders?

Tommaso Corcos: We’ve been working hard with our distributors to prepare a template that will be given to the final customers in terms of transparency. And also we’re working with them to improve the final content that will be given to the retail investor, or to the institutional investor. And so this is something that for us has been very relevant.

European CEO: You’re exploring investment opportunities in illiquid assets; what’s driving this?

Tommaso Corcos: We are looking to have a more important role in sustaining the development of the real economy.

As you know, the banking system is transforming rapidly. There are more issues coming from the regulatory environment. And I think that there is a gap in terms of financing to the long-term projects mostly, that can be covered by companies like the asset management industry.

I’m thinking about infrastructure projects, I’m thinking about real estate development. I’m thinking also about the possibility, mostly in markets like the Italian ones that comes after years of financial crisis, to work on NPL issues, on non-performing loans.

So this is something that asset management companies can exploit to improve their capabilities of offering more products, mostly to institutional investors more than retail ones.

European CEO: What kind of products will you be offering?

Tommaso Corcos: I’m thinking about real estate debt products, about leverage loans, about also non-performing loans products that mostly in countries like Italy or Spain are the types of products from which you can get an interesting yield – mostly in environment like this in which the yield on assets are still pretty low.

European CEO: What else does the future hold for Eurizon?

Tommaso Corcos: We should be more international.

We are the leader in Italy, we are doing very well in China where we manage almost €80bn. We set up another initiative in China, in the province of Qingdao. We bought a company in London, and we are very happy on how things are evolving. We set up branches in France and Germany. And so this is a clear tendency to become and be more and more international. And this is certainly the direction for Eurizon.

European CEO: Tommaso, thank you very much.

Tommaso Corcos: Paul, thank you very much.

 

Eurizon CEO on MIFID II and the future of asset management in Europe

Asset managers must become better service providers, instead of simply creating investment products, says Tommaso Corcos

 
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4 Sep 2017

MiFID II comes into effect in January 2018, and Europe’s asset management industry is preparing to adapt. Tommaso Corcos, CEO of leading Italian asset manager Eurizon, explains how the industry is going to change – and discusses his company’s latest products. Watch the first half of our interview with Tommaso, where he explains how Eurizon engages with its investee companies to improve their ESG standards.

European CEO:  MiFID II comes into effect in January 2018; how is the asset management industry going to change?

Tommaso Corcos: There are certain changes that are definitely important. One is product governance; the second is further transparency; and the third point is the unbundling of research.

Let me say that MiFID II runs the risk to bring an effect on the profitability of asset management. And asset management companies must answer to this challenge, becoming more prone to transform themselves. Not only creating investment solutions; but giving a continuous, better service, to the distributors of their own product.

Another point that certainly is relevant for MiFID II is the fact that the asset management company will be more responsible for the whole life of the product. Also a better connection and stricter connection between producer and distributors. And this is something that the asset management company must exploit to improve the service that they give to the distributors and to the final customers.

European CEO: So how have you been working to prepare for this? To improve your transparency, your communication with your stakeholders?

Tommaso Corcos: We’ve been working hard with our distributors to prepare a template that will be given to the final customers in terms of transparency. And also we’re working with them to improve the final content that will be given to the retail investor, or to the institutional investor. And so this is something that for us has been very relevant.

European CEO: You’re exploring investment opportunities in illiquid assets; what’s driving this?

Tommaso Corcos: We are looking to have a more important role in sustaining the development of the real economy.

As you know, the banking system is transforming rapidly. There are more issues coming from the regulatory environment. And I think that there is a gap in terms of financing to the long-term projects mostly, that can be covered by companies like the asset management industry.

I’m thinking about infrastructure projects, I’m thinking about real estate development. I’m thinking also about the possibility, mostly in markets like the Italian ones that comes after years of financial crisis, to work on NPL issues, on non-performing loans.

So this is something that asset management companies can exploit to improve their capabilities of offering more products, mostly to institutional investors more than retail ones.

European CEO: What kind of products will you be offering?

Tommaso Corcos: I’m thinking about real estate debt products, about leverage loans, about also non-performing loans products that mostly in countries like Italy or Spain are the types of products from which you can get an interesting yield – mostly in environment like this in which the yield on assets are still pretty low.

European CEO: What else does the future hold for Eurizon?

Tommaso Corcos: We should be more international.

We are the leader in Italy, we are doing very well in China where we manage almost €80bn. We set up another initiative in China, in the province of Qingdao. We bought a company in London, and we are very happy on how things are evolving. We set up branches in France and Germany. And so this is a clear tendency to become and be more and more international. And this is certainly the direction for Eurizon.

European CEO: Tommaso, thank you very much.

Tommaso Corcos: Paul, thank you very much.