Fitch Rating has today affirmed the Asset Manager Rating on BNP Paribas Asset Management's (BNPP AM) asset management activities, bar alternative investments, based in Paris, London and Hong Kong at 'AM2+'.
This rating also covers the global fixed-income activities, which are wholly delegated to BNPP AM's strategic partner, Fischer Francis Trees & Watts (FFTW).
This rating reflects the financial strength of BNPP AM, its high-quality risk control and rigorous management systems based on well-defined fundamental and quantitative analyses as well as the robustness of its IT infrastructure.
Fitch notes that management has been reinforced, while ensuring the continuity of its operations and development strategy. BNPP AM has seen an increased use of the core-satellite approach through the launch of new equity products with higher risks and a broader range of high value-added fixed-income products. With the creation of the High Alpha team (managing pure credit products) and FFTW soon to become a subsidiary, BNPP AM is demonstrating its ambitions to become a global bond platform.
The rating also factors in the need to consolidate the organisation of the High Alpha team, and to reinforce resources and financial risk control applications. It also considers the need to implement the portfolio management Sophis system and to prevent overlap between BNPP AM and FFTW on the more innovative products (high yield, corporate, CDOs, leverage finance).
The IT architecture remains solid, with various projects finalised last year such as the deployment of Verdi (central financial data base supplying all the front-office applications), the consolidation of the MAP (management allocation process) tool for balanced management, and the testing of a financial risk analytical tool RiskMetrics. There has been no fundamental change in the investment processes for European and international equities and European fixed income. International equities management is taking time to construct its global equity product. Convertibles management, strengthened by its success, benefited from additional resources but could profit from further analytical tools. FFTW has enhanced its international bond processes in terms of financial research and quantitative analysis.
Furthermore, the rebuilding of the French institutionals team, which was finalised last year, has helped revive sales, which until then had been subdued.
At end-2005, the group BNPP AM's assets under management represented more than EUR 274 billion, including EUR 160bn that is covered under the 'AM2+' rating. FFTW manages EUR 35bn in assets, including EUR 6bn under delegated management on behalf of BNPP AM. BNPP AM's product offering includes equity, bond, money-market, balanced and structured product management. FFTW is a fixed-income product specialist - its flagship strategies are global fixed-income, short term fixed-income and US fixed-income. BNPP AM has around 1,360 employees, including 250 managers and analysts