Nov 21, 2023 10:17 PM EST
According to a source familiar with the situation, Amundi is considering providing UniCredit better conditions in order to renew a distribution agreement that binds the French asset management to the Italian bank and its largest international market.
Renewing the arrangement would safeguard Europe's largest fund manager's presence in a market that accounts for about one-fifth of its assets under management (AUM) outside of France.
Amundi did not respond. UniCredit's representative declined to comment. Relations between the two partners have deteriorated since Andrea Orcel attempted in vain to revise the terms of the agreement after taking over as UniCredit CEO in 2021, according to multiple sources.
When Amundi paid 3.6 billion euros for UniCredit's Pioneer Investments, it signed a 10-year distribution agreement.
To make matters worse, Amundi's principal shareholder, Credit Agricole, last year became the single largest stakeholder in Banco BPM (BAMI.MI), an Italian mid-sized bank for which UniCredit was close to making a takeover bid.
Credit Agricole CEO Philippe Brassac told reporters earlier this month that UniCredit was looking for ways to "optimize" the agreement with Amundi. According to reports, Orcel is dissatisfied with the amount of Amundi money that the agreement requires UniCredit to deposit with consumers.
Amundi must account for 80 percent of UniCredit's entire AUM in Italy, but penalties for failing to reach that proportion become more severe only if it falls below a lower 65-70% level, according to two people familiar with the situation.
To increase UniCredit's fee income, Orcel established an internal team that repackages funds given by global players under the bank's own 'onemarkets' moniker.
Meanwhile, the Italian asset management Azimut (AZMT.MI) is establishing an Irish subsidiary that will develop and sell funds to UniCredit customers and eventually become a subsidiary of the bank.
As of September 30, UniCredit has 134 billion euros in AUM from fund and portfolio management.
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Orcel has not ruled out terminating the deal with Amundi, but a source close to the situation told Reuters that he is pleased to keep a partner who ranks among the top 10 asset managers internationally and gives solid assistance to the bank's sales network.
If the deal is renewed, Orcel would prefer to negotiate on better terms in 2024, according to the individual. If their partnership terminated after 2027, UniCredit would still need time to replace Amundi funds with alternative products.
Orcel stated last month that it was "rebalancing" its relationship with Amundi somewhat and will continue to do so in order to increase the fees UniCredit retains on the sale of funds to clients by making place for more profitable products.
In Italy, where distribution is important in the fund business, banks keep at least 60% of the fees, up to 80% when the lender controls the asset manager or there are multi-year agreements in place.
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