By Valentina Za
MILAN (Reuters) - UniCredit (LON:0RLS) has been trimming the proportion of Amundi funds in its total assets under management as a decade-long deal between the companies enters its final years, a person close to the matter said, the latest sign it may not be renewed.
Under an agreement struck in 2017, when UniCredit sold Amundi its in-house asset management operations, the French group's funds must account for a predefined portion of the total AUMs at the bank, two people said. That share is set at 80%, one person added.
UniCredit has started scaling down Amundi's role as a share of its AUMs, paying penalties outlined under the contract, the source said, without providing further details.
The charges are not material, another person with knowledge of the matter said, allowing the bank to refrain from disclosing them publicly. Representatives for both UniCredit and Amundi declined to comment.
CEO Andrea Orcel is keen to rebuild parts of UniCredit's own fund management business to boost fee revenue. He has not ruled out that UniCredit, which oversaw 195 billion euros ($214.66 billion) in AUMs at the end of March, may not renew the contract with Amundi.
Relations between the two companies soured when Orcel, after taking the helm at UniCredit in April 2021, unsuccessfully tried to amend the terms of the distribution accord struck by his predecessor.
Further straining the relationship, Credit Agricole (EPA:CAGR), which owns 69% of Amundi, in April 2022 took a stake in Banco BPM, becoming the main investor in a bank which UniCredit had considered taking over. To recreate in-house asset management skills, Orcel last year set up a team to work closely with partners such as BlackRock (NYSE:BLK), Fidelity and JPMorgan (NYSE:JPM), as well as Amundi, to offer customers more closely tailored funds.
In December he went further by striking a deal with fund manager Azimut that gives UniCredit the option of taking control of an asset management company Azimut is setting up in Ireland to serve UniCredit's 7 million Italian customers.
As it weighs options for its Italian business, Amundi has also discussed with UniCredit the possibility of carving out its operations with UniCredit to sell them back to the Italian bank, sources had previously told Reuters.
However, three sources close to the matter said such an option held little attraction for the Italian bank.
Kepler Cheuvreux analysts calculated that, if the contract ended in 2027, it would take at least until 2030 for UniCredit to retrieve the more than 100 billion euros of AUMs currently invested in Amundi products.
UniCredit's move to scale back Amundi's funds among its AUMs hastens the process of releasing clients' money that could be invested elsewhere.
"Italy was a steadfast contributor to (Amundi's) inflows in 2021 and 2022. These should slow from 2024 onwards," Kepler Cheuvreux said.
Amundi's Italian AUMs totalled 213 billion euros as of March 30, or 11% of the group total. Amundi paid 3.55 billion euros in 2017 for UniCredit's asset manger arm Pioneer, after a 315 million euro extraordinary dividend the bank cashed in from the unit before the sale.
($1 = 0.9084 euros)