CBA ties cut in CFSGAM rebrand

CBA’s wealth management exit takes another step on Monday when CFSGAM rebrands itself First Sentier Investors.

Mark Steinberg, chief executive of First Sentier Investors, previously known as Colonial First State Global Asset Management. Picture: Britta Campion.

The Commonwealth Bank’s exit from wealth management takes another step on Monday as the $223bn Colonial First State Global Asset Management (CFSGAM) rebrands itself as First Sentier Investors.

It follows CBA’s sale of CFSGAM to Japan’s Mitsubishi UFJ Trust and Banking Corporation which was finalised last month. The name change coincides with the business’s move from the CBA headquarters in Sydney’s Sussex Street to the new precinct in Barangaroo.

First Sentier chief executive Mark Steinberg said the name had been chosen to retain the world “first” in its title as a link to its past, with the word “Sentier” chosen as it is the French word for path and pathway.

“Our new brand name reflects our commitment to follow our own path, investing responsibly to create a better future for our clients, employees and the companies in which we invest,” he said.

Mr Steinberg said the rebranding in Australia would be rolled out internationally in a process expected to be completed by mid-2020.

The name change finalises the cutting of ties between the business and CBA, which bought the ASX-listed Colonial in June 2000 as part of its big move into wealth management under the leadership of then chief executive David Murray.

The big banks have announced moves recently to cut back or exit their wealth management businesses in the wake of the Hayne royal commission into misconduct into the financial system.

CBA scuttled plans to list CFSGAM on the ASX last year as part of a package of wealth management assets, announcing in October that it would be selling the business for $4.1bn to Japan’s largest financial group.

In an interview with The Australian, Mr Steinberg said First Sentier was now in a position to expand the business under its new Japanese ownership.

“Over the past couple of years, banks have put a real focus on returning to their core banking business and largely getting out of wealth management,” he said. “The CBA was a very supportive and good owner of the business but, for the last few years under their ownership, we were not a core asset.

“Our ability to grow and get capital allocated towards our business was quite difficult as they wanted to support their go-forward businesses.”

But he said Mitsubishi’s decision to buy the company had been driven by its desire to do more business outside Japan and to expand outside its traditional banking business.

“They bought us … with the intention to help them to grow their investment management outside of Japan,” he said. “We are going to look at our business through a lens of where we think we could add capacity we don’t have today which is relevant in the markets in which we operate and would be attractive to clients who want to invest with us.

“Our ability to expand over the next few years will certainly be enhanced. It will be up to us to find the right opportunity to make that investment or achieve that growth and expansion.”

But Mr Steinberg said First Sentier would not be changing its approach to investment under its new management.

“We won’t change the way we invest,” he said. “We regard ourselves as long-term investors with a focus on responsible investment and preserving our clients’ capital.”

First Sentier has assets of $223bn which it manages on ­behalf of an international client base in Australasia, Asia, Europe and North America.

It has 800 staff worldwide, including 300 based in Australia.

The name change will allow the company, which has been known as First State Investments offshore, to have a new name with the same initials, FSI.

FSI has more than half of its assets invested offshore and its main revenue is also derived from offshore.

“Although we have a strong name in the Australian market where we have been known as a large fund manager for many years now, we have had a more substantial business outside of Australia than inside,” Mr Steinberg said.

“We have been able to grow at a faster rate outside of Australia. The assets we manage outside of Australia have a slightly higher margin than those we manage inside of Australia.”

He said FSI had not adopted the Mitsubishi name as it is being run as a stand-alone business from its Japanese parent. This would eventually see the company appoint more independent directors to its board.

He said Mitsubishi already ran a large investment management business in Japan but it would be using FSI to expand this business offshore.

“The attraction of buying our business was to get a presence outside of Japan in markets like Australia and Asia which have got more attractive growth profiles,” he said.

Mitsubishi received about five per cent of its total group revenue from investment management businesses. “They want to grow it to something like 10 per cent,” he said. “I don’t think they would be able to achieve that by staying in their home market.”