Reuters: In new trend, European fund firms become banks in all but name

Wed May 27, 2015 4:13am EDT
LONDON | By Sinead Cruise and Simon Jessop

Australian Symon Drake-Brockman is on the front line of a revolution in European finance.

The former head of global debt markets at Royal Bank of Scotland (RBS.L) now runs Pemberton Asset Management in London’s genteel Belgravia, several miles from the “Square Mile” City of London financial district where bankers work.

He spends his days making deals in partnership with British insurer Legal&General (LGEN.L) but by lending, rather than investing, its cash.

Drake-Brockman is one of a growing number of financiers who are teaming up with insurers and pension funds to build loan books to rival banks, turning some fund firms into banks in all but name.

“We operate more like a lender … we are constantly meeting with borrowers, developing relationships in a similar way to how we would if we were sitting within RBS or ING, where I was before,” Drake-Brockman said.

“You will see a number of us develop what I would consider as large regional lending businesses, where the scale of what we do will be not dissimilar to some of the banking groups active in mid-market corporate lending,” he added.

Investors in the United States already out-lend domestic banks by buying huge volumes of corporate, municipal and government bonds and the European Commission is looking to broaden Europe’s sources of funding in a similar way by launching a Capital Markets Union to lessen the region’s reliance on bank finance.

The full article is available at http://www.reuters.com/article/2015/05/27/us-funds-lending-insight-idUSKBN0OC0OY20150527

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