Nordea’s Asset Managers to Be Spared Cuts Facing Rest of Bank
(Bloomberg) -- Nordea Asset Management is looking into how best to grow in an industry in which scale is becoming increasingly important.
To that end, the $243 billion unit of the biggest Nordic bank is turning to machine learning to provide the extra resources it needs. And while the rest of the organization is still in the process of absorbing about 6,000 job cuts to make way for robots, the asset management unit might even be in a position to hire, according to Nils Bolmstrand, its chief executive officer.
“We’re still in a growth market,” Bolmstrand said in an interview in Stockholm. “So keeping our current market share would mean growth, but of course, I want to win more market share.”
Nordea stands out as a bank that has embraced automation over humans where feasible, with its group CEO Casper von Koskull famously predicting that his industry will probably have half as many human employees within the next decade. But according to Bolmstrand the portfolio managers in his unit don’t need to worry that they’ll be replaced by robots.
“Machine learning is more a scalability question for me than a person versus machine question,” he said. “It could for example be a tool for analysts, freeing time for them to cover larger sectors.”
Nordea has so far indicated it’s not interested in mergers or joint ventures as a fast-track to scale. Snorre Storset, who oversees all of Nordea’s wealth management from Oslo, said in early May that Nordea isn’t looking into any kind of partnership deals. According to Bolmstrand, Nordea is keen to build on its distribution credentials in the Nordics and target markets outside the region.
Nordea will first and foremost have a Nordic and European strategy, and has “built a strong distribution power in continental Europe as well as certain segments in the U.K.,” Bolmstrand said. “We want to continue to deepen that and to grow.” He says that ambition means Nordea wants to increase its asset management business outside Europe, and build on existing operations in America and Asia.
In the Nordics, a key success parameter for asset managers is the ability to offer clients ethical investing standards when it comes to environmental, social and governance (ESG) considerations.
“Today it’s impossible to meet a larger fund distributor in the Nordics and not talk sustainability,” Bolmstrand said. “There’s also a clear push from lawmakers to drive these questions, so we’ll see even more of a top-down drive on this.”
But there’s a lot of inconsistency in the terminology in this growing field of investment, which creates a need for a more standardized set of parameters for ESG classifications, according to Bolmstrand.
“Otherwise, this could turn into a trade barrier, putting obstacles on free trade,” he said. “The EU could have an important role here. However, I don’t think new laws per se would change behavior. It’s up to industries and companies to find a taxonomy and a way to provide us with information.”
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