UniCredit CEO says fund manager Amundi's future role hinges on mutual benefits

UniCredit CEO Andrea Orcel indicated that the bank's asset management partnership with Amundi, set to expire in 2027, will only be extended if it proves mutually beneficial, signaling a strategic rebalancing away from Amundi. UniCredit has been actively reducing Amundi's share of client portfolios to enhance its fee income, favoring internal funds and a venture with Azimut, aiming to increase its retained share of assets under management from 78-79% to 85%. This shift, partly driven by strained relations and past actions by Amundi's owner Credit Agricole, underscores UniCredit's focus on maximizing asset management revenue, a development that has already caused concerns for Amundi's earnings and share performance.

Analysis

UniCredit CEO Andrea Orcel indicated that the bank's asset management partnership with Amundi, set to expire in 2027, faces an uncertain future, contingent on mutual benefits. This follows a strategic rebalancing initiated by Orcel, who has been reducing Amundi's 80% share of UniCredit's assets under management (AUM) since 2021 to enhance fee income. The CEO questioned whether Amundi acts as a "partner or a provider," suggesting dissatisfaction with the current relationship dynamics.

UniCredit aims to increase its retained share of assets under management from the current 78-79% (up from 65% in 2021) to 85% within two years. This is being achieved by favoring internal Onemarkets funds and a venture with Azimut, which UniCredit has an option to acquire. Orcel noted that reaching 85% retention would make owning an asset manager less viable due to associated costs.

The potential non-renewal of the Amundi contract has already negatively impacted Amundi shares, with analysts citing risks to its earnings. Underlying tensions include strained relations stemming from Amundi's owner, Credit Agricole, assisting Banco BPM in its defense against UniCredit. This strategic shift underscores UniCredit's focus on maximizing its asset management revenue streams.

Key Decisions for Investors

• Amundi investors should closely monitor the evolution of its partnership with UniCredit, as the potential non-renewal of the 2027 contract poses a material risk to its earnings and AUM base.
• UniCredit investors should assess the bank's execution of its asset management strategy, specifically its ability to increase retained AUM share to 85% and the resulting positive impact on fee income and profitability.
• Institutional investors should observe this situation as a precedent for potential shifts in bank-asset manager relationships across the European market, signaling a trend towards greater internalization of asset management functions by banks.