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Tuesday, 23rd April 2024
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BIAM Q&A Back  
William R. Cotter is Chief Executive Asset & Wealth Management Services at Bank of Ireland Group.
Bank of Ireland has built an international base of institutional clients in just over a decade. When you started, what were your targets for assets under management?

It was our experience in the Irish market, dealing with some of the most sophisticated customers - many of whom operate internationally themselves - that gave us the confidence to take what we had learnt and apply it overseas.

I know it probably sounds strange, but at the outset we didn’t have any targets, at least not financial ones. We had an idea that we could grow a customer base outside Ireland, because we had a good track record in managing money in international markets and we thought that if we tried hard and knocked on enough doors we would attract customers.

Looking back, I guess I had an unspoken hope that at some stage in the future, if we diversified our business so that 25 per cent of our revenues came from ‘exports’ then that would be very significant. Of course it turned out to be quite different and we now have about 70 per cent of our revenues coming from outside Ireland.

Over 50 per cent of your assets come from international clients. In what way has this changed your investment process?

Fundamentally, our investment process hasn’t changed. What has happened is that to meet the needs of our customers, both here in Ireland and internationally, we have worked very hard to provide greater clarity around our process - which is a very focussed and disciplined one. The needs of our customers the world over are becoming more diverse - as they in turn often have to communicate with a broad range of audiences. We probably first saw this in the US, but it is now a feature of every market we operate in.

To date, our major success overseas has been in the United States and Canada - both of which are very sophisticated markets - so when we are explaining our process to potential customers and their consultants we have to be very clear. Today we find that customers the world over look for those same qualities when they decide to do business with us.

What major challenges have you faced?

The first major challenge we faced was getting our first customer! This was no small task. It took us two years to make that first international breakthrough. I often think it was also a giant leap of faith for that first customer - in our business nobody likes to be the first to hire you.

While the transition from being an Irish-based to a multi-location business was a challenge, it was greatly eased by the fact that all the assets, international and domestic, are managed here in Ireland. All our administration is also done in Ireland. Our sales and service people are located all over the world - close to our customers. One of the main challenges in a multi-national investment management company is ensuring that our overseas-based sales and customer service staff are completely aware of what is happening within portfolios and why.

Another challenge we faced was the need to adapt to each of the new markets we entered - without losing the essence of what it is we do. I guess we are fortunate in that the ‘BIAM’ way of doing things has traveled well and we have developed a culture of hard work, compliance, and of helping each other out.

Do you think that BIAM was uniquely positioned among Irish investment mangers or could others have achieved the same result?

I don’t think we were unique at all. We might have had one advantage in that we had a substantial domestic business. Frankly, it’s very hard to export anything if you don’t have a reasonably strong domestic base to support the overseas venture. We were very fortunate in that we had a lot of experience in the Irish market that we were able to apply overseas. Maybe we were unique in one aspect and that was having the support and patience of our parent and successive Bank of Ireland Chief Executives.

How are margins and profitability in international equity management right now?

It’s quite profitable. The division I am responsible for (this includes Bank of Ireland Private Banking and Bank of Ireland Securities Services) made a pre-tax profit of E129 million last year. The bulk of this came from the asset management business. I know it often surprises people, but international customers pay more to have their money managed than Irish customers do. In fact, Ireland is one of the cheapest places in the world to have your money managed. So, having a substantial international business adds more relatively to the bottom line.

Why did you concentrate on public pension funds in the US initially?

To draw on a well-known phrase, ‘it’s where the money is’. Back in the late 1980s, the US public pension fund industry had very little money invested in non-US assets. We believed we were about to see a trend that would result in substantial assets moving into international investing - an area we felt we could add value.

The bulk of our international business still comes from North America. Of the E52 billion we manage, E27 billion is accounted for by North American customers, our other international operations contribute about E5 billion.

Our Irish business, which is hugely important to us and is the flagship, without which we would not have built an international business, accounts for E20 billion.

In terms of the mix of clients, the bulk of it comes from pension funds - but we have other sectors represented and they are growing fast. For example, we manage money for some of the large Foundations in the US. We also have what’s known in the trade as sub-advisory agreements with retail distributors and insurance companies. This is also a fast growing part of our business.

Looking at it now, how big could international asset management become for BIAM? Where do you expect to win new business?

This is an industry that measures success in terms of size, however, it is not what we are about. We will get as big as we can, consistent with delivering what we are hired to do. We have internal targets but I’ve learnt over the years not to take too much notice of them since we have always exceeded them through a combination of investment performance and new assets and hopefully this will continue to be the case.

We do need to expand our product range - because clients are looking for additional products and look to us to come up with the appropriate solutions and I think we are in a good position to do that.

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