New voice for EFAMA

The European Fund and Asset Management Association (EFAMA) recently announced the election of Dr Mathias Bauer as President at its Annual General Meeting in Copenhagen. So how does Bauer feel about taking over the reigns at one of the most challenging times in European history? Francesca Fabrizi finds out

Dr Mathias Bauer is no stranger to fund and asset management both on a national and international level. Current CEO of Raiffeisen Capital Management (RCM) in Vienna, the Austrian Market Leader, he previously served as Vice-President of the European Fund and Asset Management Association (EFAMA) and was President of the Austrian Association of Investment Funds (VÖIG) from 1992 to early 2007.

His experience goes as far back as 1985 when he helped to establish RCM in Austria and joined the firm as its first employee. Twenty-two years on, he heads up the group as Chief Executive Officer and has seen it evolve from what began as a very small company to one that now has €42billion AUM, employs more than 300 people, has 400 funds and boasts no less than 35 asset management mandates.

As well as growing the company, Bauer has also been instrumental in changing its direction in order to meet market demands. He explains: “When we started, we were a purely domestic business with a domestic focus, so early investment funds were domestic products focusing on Austrian bonds, Austrian money markets and Austrian equities.

“This has changed completely over the past 20 years and we have now become an international company both in terms of our investments and our sales. We cover global markets in bonds, equities, money markets and derivatives;
we have registered the core of the product line of our funds in more than 15 countries in Europe; and now aim to sell institutional mandates outside of Europe.”

The firm also stands out for being heavily focused on Central and Eastern Europe, both on the investment and the sales/savings side, as its banking group is one of the strongest in the region with more than 12 million customers.
Going forward, RCM is sharing the fate of all the other European asset management companies, having
to constantly move into a broader range of asset classes as well as hone its risk management skills; and this is where the firm's existing expertise can also be adapted, says Bauer, to meet the demands of the Austrian pension funds.

“RCM plays a substantial role as an asset manager for pension funds in Austria who are looking at the role of alternative asset classes as well as looking to implement a risk management concept behind their asset allocation decisions.

“So while pension funds are closely following the development of the fund and asset management industry, they are one step behind. This means that what we have already achieved in the fund and asset management business is now on the agenda for the pension fund business and therefore we are in a good position to offer our expertise to pension funds.”

Taking over the reigns
For the past 15 years Bauer has been President of the Austria’s VÖIG as well as VP for the European equivalent, EFAMA, where he has now taken on what he deems “the honour and the challenge” of the role of President.
With the aim of being the representative association for the European investment management industry, the scope of EFAMA is considerable. Part of its mission statement includes “bringing about conditions conducive to promoting the growth of the industry; strengthening the competitiveness and service quality of the industry by promoting the completion of an effective single European market; and influencing and improving the legal, fiscal and regulatory environment for the investment management industry going forward.”

Jean-Baptiste de Franssu was elected as the Association’s new VP and together the newly appointed heads aim to continue the successful work of former President Stefan Bichsel in putting EFAMA firmly on the map as the sole voice for the European fund and asset management industry. EFAMA’s main focus areas in the coming years include the realisation of a true single market for investment management, the global promotion of UCITS as a flagship product, the implementation of industry standards and the realisation of a level playing field for all pension, saving and investment products.

Picking up on this latter point, Bauer confirms that he will be ensuring EFAMA remains instrumental in the fight for a level playing field at the point of sale across Europe as he feels that this is where the very strictly regulated UCITs investment funds – which obviously benefit investors – are at a disadvantage.

He adds: “Whether we are looking at unit-linked life insurance products or structured products offered by investment banks, all of them have their importance and all of them have their markets, but they should be sold at the same level of transparency to the investor and this is a call for fairness at the point of sale.”

Bauer’s second biggest concern relates to the development of UCITs III. “In the past two years the European Commission has issued both a Green Paper and a White Paper in relation to improving UCITs III and moving towards a UCITs IV, and I think this development is very important for the industry as the issues addressed here all relate to the formation of a single market – they influence cross border notification, the collaboration of supervisors in the EU countries, cross border pooling, cross border mergers, management company passports that would allow companies to issue funds cross border into a different jurisdiction and so on. These are all issues that will in the long run allow for investors to have better choice and allow for the asset management companies to gain greater economic efficiency.”

The third big issue Bauer plans to focus on is the changing role of asset management in the pension arena. “We feel that the role of the asset manager in the past has been solely confined to a deliverer of asset management provision to the pension funds and insurance companies, but we believe that this role could be strengthened – for example, the Pension Directive should allow for pension products to be issued directly by asset management companies to include such things as individual personal pension accounts.”

Along these lines, EFAMA launched the groundbreaking concept of the European Personal Pension Account (EPPA) in 2005, which would allow individuals to accumulate their pension rights in personal accounts and transfer their account balance from one provider to another while changing jobs.

To allow this to happen within a Single market framework, Member States would need to permit financial institutions to provide EPPAs on a cross-border basis, which could be possible under the Institutions for Occupational Retirement Provision Directive (IORP).

But is this any closer to becoming a reality? “I think the EPPA could come through in the next three or four years”, argues Bauer. “What we need for it to work is for the legislative background both on the European and the national level to be set; we have already seen improvement in some countries on the national level and are asking the European Commission when the next amendment to the Pension Directive is done to improve the role of the fund and asset management in it and I think it is realistic to say in the next three or four years we will get closer to that realisation.”

Looking ahead, while Bauer certainly has his work cut out for him, he is feeling both positive and excited: “My Presidency began on 22 June with a general meeting in Copenhagen and will last for two years and I am very excited about it – it is a very big challenge, especially when you are coming from a comparably small country, and it is also a huge honour to be elected to take on the role; but I have always done my best in the past and will continue to do so into the future.

“I am generally a very big optimist and while things don't necessarily pass through the European regulators as quickly as I would like them to, I do think we'll get there in the end and I have every reason to be optimistic. We just have to be a bit patient sometimes.”

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