Welcome to the big leagues, Ameriprise Financial.
Already one of the largest financial advisory firms in the U.S., Ameriprise today became one of the largest asset-managers as well with the acquisition of Columbia Management’s long-term fund business from Bank of America. (It didn’t buy the money-market funds business).
Ameriprise is picking up an asset management busiess that appears to be on the mend. Net outflows from Columbia’s equity business are slowing and there have been net inflows on the fixed-income side. (See flow charts below)
Ameriprise and Morgan Stanley are now the two largest brokerages-asset managers not owned by a bank (Merrill is under the Bank of America umbrella, Painewebber is under UBS’s wings until it gets around to selling it off, Wachovia’s advisory business – which included parts of the old Prudential and A.G. Edwards – are now under Wells Fargo).Not being connected to a bank has its advantages. Banks remain constrained from the financial crisis they got themselves into. And in terms of reputation, bankers these days are probably even less thought of than lobbyists and lawyers.
What Ameriprise has going for it is that it largely avoided the mess of the financial crisis. It didn’t get stuck with bad subprime mortgage securities that forced huge writedowns. It didn’t hold risky commercial real estate loans and mortgages. Morgan Stanley did and is still working through those problems.
Another sign of a smart move by Ameriprise – other financial services companies were tapping the stock market earlier this year to get their capital ratios into compliance with the Feds. Ameriprise raised nearly $900 million in June for general corporate purposes, which included possible acquisitions. They pre-funded this purchase.
Ameriprise now becomes the eighth largest asset manager in the U.S.; before it was number 31. The question is where does it go from here?
Last year it bought the financial advisory business from struggling H&R Block. And it bought a small asset manager in J&W Seligman. There had been talk earlier this year that it was interested in buying the advisory business of AIG (which has about 5,000 advisors) but AIG has since pulled plans to sell that unit, for now anyway.
Earlier this week in an interview with the Financial Times, UBS CEO Oswald Grubel said the PaineWebber unit was “non-core” and confirmed that UBS had entertained offers for unit but felt they were too low at this time. (See article by clicking here)
Perhaps once Ameriprise finishing digesting this acquisition it will make one more big-time leap?