Natixis AM chief promotes Paris as post-Brexit financial centre
Matthieu Duncan upbeat about domestic labour reforms and expansion beyond France
Early September is traditionally a bleak period for the French. This year, the misery of la rentrée — the return to office life after the long August holiday — was compounded by growing disenchantment with their new president.
But such gloom eludes Matthieu Duncan. He is chief executive of Natixis Asset Management, one of the country’s biggest fund houses, with €368bn of assets under management at the end of June.
“We are pretty optimistic,” he says when describing the post-election landscape in France and the performance of Emmanuel Macron, the 39-year-old who had never held elected office before. “It’s still early days, but [he] is off to a decent start.”
With investors having held their breath after Mr Macron went head to head in the final round against Marine Le Pen, the Eurosceptic leader of the far-right National Front, he describes the president’s victory in May as “a pretty important psychological turning point”.
Perhaps the sunny outlook can be attributed to his American heritage, but two months ago Mr Duncan’s mood was considerably less sanguine.
In July Natixis AM was fined a record €35m by the French markets regulator for overcharging investors in connection with its formula funds, a type of structured product that guarantees the capital invested in addition to a return determined by a mathematical formula.
The Autorité des Marchés Financiers said Natixis had breached its professional obligations in the management of the funds between 2012 and 2015. The watchdog claimed it had identified several failings in connection with redemption fees.
Mr Duncan, who denies there had been any detriment to clients, immediately hit back, saying the company would appeal against the “unjustified and disproportionate” decision. Arguing there was a lack of guidance over how such funds should be governed, he said the company would fight the decision in the French supreme court.
A few weeks on, fresh off the Eurostar train from Paris and sitting in an office of parent group Natixis Global Asset Management overlooking St Paul’s Cathedral, his tone appears to have softened. He states that the company is “considering” and “likely” to appeal, though he says their position has not changed.
The affair has not altered his belief that Paris has much to offer asset managers. He says it is not well known that the city is Europe’s second-largest centre for the asset management industry after London. Around 650 companies have a presence there.
Although Frankfurt may be more successful than Paris, Dublin and Madrid in persuading banks to siphon staff out of London as part of their Brexit planning, he is optimistic the French capital can strengthen its appeal.
“There is a clear willingness [by the authorities] to highlight the attractiveness of Paris as a financial centre. My personal view is, that for them to really have a chance of material change, you need labour and fiscal reform,” he says. “The government is announcing changes on both these fronts.”
Raised and educated largely in the US, working in France has made him aware of another potential advantage. “The French education system is very strong on quantitative and analytical skills. I think the asset management industry is moving towards that approach,” says Mr Duncan, whose accent is faintly American with the odd French inflection.
The role at Natixis technically marks the second occasion he has been immersed in a Parisian workplace, given a previous role as co-head of Goldman Sachs’s Paris office. Joining from Quilter Cheviot Investment Management, he took the helm in April last year with a mandate to expand the business beyond its home market.
His business sits within a sprawling group whose structure can be confusing to outsiders. BPCE, the French bank, owns 70 per cent of Natixis, the French financial services group. Natixis’ eponymous asset management unit, Natixis Global Asset Management, is a holding group with more than 20 affiliates, of which Natixis AM is the largest by assets. Its services are distributed solely through Natixis GAM.
Natixis GAM is run by Jean Raby, a dual Canadian and French citizen who also worked at Goldman Sachs. He and Mr Duncan crossed paths at the bank but do not know each other well.
While Mr Raby is in acquisition mode, having recently signalled his desire to expand in Asia, Mr Duncan wants to beef up Natixis AM’s capabilities in the US and Singapore, where it already has small offices, to be closer to clients and to expand its emerging markets equity business. “Those two businesses are beachheads,” he says. “We have portfolio managers and research analysts on the ground.”
But the plan is to expand “in a progressive way” rather than doing “a big bang”.
Natixis AM has tended to favour gradual change. Twenty years ago the business was focused almost exclusively on French assets, then the introduction of the euro tilted the business towards the rest of continental Europe. Around 70 per cent of the business is focused on fixed income products.
Closer to home, uncertainties remain. The triple risks of Brexit, reforms not materialising in France and Mifid II, a set of sweeping regulations that come into force in January, are all on the horizon. As we spoke, the CGT union, France’s second largest, was gearing up for large-scale protests regarding labour reform measures.
“It is par for the course in France,” says Mr Duncan.
Brexit is brushed aside less easily. “Everyone’s a bit unsettled,” he says, highlighting that asset managers based on the continent are as concerned as their UK-based counterparts about market access. “There is a lot of discussion about what the post-Brexit investment management landscape is going to look like.”
Natixis AM has also not made the final decision on whether it will stop charging investors for analyst research. Mifid II will end the system of fund managers receiving external analyst research for free in return for placing trades with banks and brokers. Natixis AM says discussions continue with its research providers.
But for now, buoyed by the freshness of the chief executive role, Mr Duncan remains upbeat. Natixis AM is well known in France but less so internationally, he says. “Part of my mandate is to help change that.”