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Performance issue 25, January 2018

Interview: The asset management industry

Pascal Koenig, Investment Management Leader in France, had an interesting conversation with Yves Perrier, Chief Executive Officer of Amundi on the asset management industry, its challenges and prognosis for the future.

Yves Perrier
Yves Perrier is Chief Executive Officer of Amundi since its creation in 2010 and a member of the Executive Committee of Crédit Agricole since 2003. He is also Head of the Insurance Asset Management and Real Estate activities for Crédit Agricole Group. As such, along with his position of CEO of Amundi he supervises the Insurance division (Crédit Agricole Insurance) and the Real Estate division (Crédit Agricole Real Estate). Yves Perrier is also Honorary Chairman of the AFG (Association Française de Gestion Financière).


What has become of French boutiques?

The creation of a portfolio management company status in 1989, followed by the Financial Activity Modernization Act in 1996 recognized third-party management as a distinct business line. Building on this legitimacy and the growing professionalization of the risk diversification and asset allocation processes underlying savings and investment solutions, French third-party management has become a flagship of the French financial industry, alongside banking and insurance. In fact, with €4.0 trillion in assets under management, the French AM segment holds the top spot in continental Europe, with an annualized growth rate exceeding 5 percent since the low point of 2008.
 

A new world for real estate investors

Real estate rental market activity across Europe is flying high as business climate indicators hit their highest levels since the end of the recession in 2010-11. Investment has remained very strong, with €130 billion in investment (source: CBRE, LF GREIM Research), making H1 2017 one of the top two years since 2006 in terms of H1 performance. However, the headline figures mask some interesting geographical differences. The German investment market experienced a record-breaking start to the year with €26 billion in investment—up 44 percent on H1 2016. In the UK market, which is adjusting to the fallout from the EU referendum, investment nevertheless rose by 23 percent on H1 2016 to €44 billion.


Breathing a new life into investment taxation

On 21 November 2017, the lower house of the French parliament (Assemblée Nationale) adopted of the draft finance bill for 2018 (Projet de Loi de Finances pour 2018 or "PLF 2018") at the first reading.

Subject to amendments, noteworthy provisions of the finance bill 2018 will include:

  • The introduction of a 30 percent flat tax on investment income.
  • A new real estate wealth tax. Although the level of taxation would remain relatively substantial, asset managers and investors have high expectations for this proposed regime.


Insurance Distribution Directive

After months of rumors of a possible delay of the IDD, the European Commission has finally, just before the Christmas break on December 20, 2017, adopted a proposal1 to delay the application date of the Insurance Distribution Directive (IDD) until 1 October 2018. The transposition date for Member States remains 23 February 2018. The proposal will need to be discussed in the Council of the European Union and the European Parliament before it can be finalised. The Commission states in its legislative proposal that, given the short timeframe, the proposal should enter into force without delay. The European Parliament invited the Commission to adopt a legislative proposal setting 1 October 2018 as the application date of the IDD. It substantiated the request by the need to give insurance undertakings and insurance distributors more time to prepare for the implementation of the IDD and the necessary technical and organisational changes to comply with the Delegated Regulations.

In the pages that follow, we provide the results of an EMEA IDD analysis performed just before the summer of 2017 and updated in December 2017. We collected information on the IDD transposition and expected challenges and impacts from a number of EU countries, as well as information on similar legislation in a selection of third-party countries. The information was collected informally through our Deloitte network based on local market experience and expertise. Our main conclusion is that the IDD is expected to have a significant impact on the business strategy, and the (operational) organization of insurance companies and intermediaries. Firms that have just started will need a structured implementation approach in order to reach the deadline.
 

Brexit bill

With a little over a year to go until the UK’s departure from the EU, many UK-based asset managers are moving forward with Brexit restructuring plans. Significant business change always has tax consequences, and this is particularly so here. In this article we explore some of the emerging tax issues which businesses planning for Brexit need to consider.


International Investment Disclosure Trends

In 2018, regulatory change and competition for investors will support a global trend towards further transparency. As a result, international capital markets will require transaction costs to be included in investment products’ disclosures. This requirement is generating significant challenges for market participants.

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