European asset managers are experiencing a wave of consolidation, driven by pressure on fees and the need for greater scale. This trend is largely in response to the growing dominance of large US asset managers in the European market. US firms, buoyed by strong domestic securities markets, can spread technology and compliance costs across a larger asset base, making them highly competitive. They have significantly increased their assets under management in the UK and Europe, from $2.1 trillion in 2014 to $4.5 trillion by the end of September, and now manage nearly half of all European assets. American firms are also globally dominant in areas like UK tracker funds, where they manage 59% of assets, and the fast-growing active ETF sector, controlling three-quarters of the market.
Key acquisitions and mergers highlight this trend. Nuveen's proposed $13.3 billion acquisition of UK asset manager Schroders would create a firm with $2.5 trillion in assets under management. This deal underscores the strategic challenges faced by European firms that are neither niche boutiques nor large enough to compete with US giants like BlackRock, which manages $14 trillion. Goldman Sachs also expanded its European footprint with a $1.6 billion purchase of NN Group's investment management arm in 2021. Even as European firms attempt to consolidate, US rivals continue to advance; seven of the ten fastest-growing fund groups in Europe this year are American.
European firms are attempting to counter this trend through their own mergers, such as UBS's acquisition of Credit Suisse, creating an asset management business with $5.7 trillion under management, and Axa's talks to sell its $800 billion asset management business to BNP Paribas, which would result in a combined entity with $1.5 trillion under management. Other European consolidation efforts include ongoing talks between Natixis and Generali for a joint venture and Banco BPM Spa's bid for Anima Holding. However, some US executives caution that scale alone is not a guarantee of success, emphasizing that mergers must be client-centric rather than solely focused on achieving size to compete with US firms.
