Axa Boss Speaks On Banks
The Age
Friday July 12, 2002
Banks worldwide had failed to provide good competition for specialist wealth-management companies in distributing investment products, according to the chief executive of the French insurance giant AXA.
Henri de Castries, in Australia to tour operations of AXA Asia Pacific, which AXA owns 51 per cent, said the level of savings flowing to investment products offered by banks had been dropping around the world.
``Contrary to what some people say, the competition from the banks is not that good," he said yesterday.
Mr de Castries predicted that investors would pay more attention to the risk component of investments and would make a ``flight to quality" as a result of the negative returns in the latest financial year.
``(Investors) have forgotten the risk premium because of 20 good years of investment," Mr de Castries said.
But he said demand for savings had not changed despite poor equity markets that caused the value of investments to drop in 2001-02.
In fact, the reduction in the size of retirement savings meant people might have to save more to reach savings goals over the same period of time.
Mr de Castries said global markets would recover when companies started to grow through stronger revenue rather than by cost-cutting.
AXA is Europe's second-biggest insurance company and one of the five biggest global investment managers.
AXA Asia Pacific competes directly with banks in Australia, New Zealand and Hong Kong for investment mandates.
Group chief executive Les Owen said yesterday the retail market contained the greatest growth potential because of mandated superannuation.
Asked about the potential effect of the Sandler review of the UK's retail savings market, Mr Owen said that although promoting transparency and simpler products was admirable, it was likely to fail to encourage more people to save without putting in place incentives such as tax concessions or education.
He said it was unclear at what cost banks distributed their wealth-management products because their funds-management operations tended to be cross-subsidised.
© 2002 The Age
